Market power vs. financial stability: evidence from the MENA region's Islamic and conventional banking industries
by Louati Salma; Boujelbene Younes
International Journal of Monetary Economics and Finance (IJMEF), Vol. 7, No. 3, 2014

Abstract: This paper embodies a comparison of competitiveness between Islamic and conventional banks of the Middle East and North Africa (MENA) region. First, a descriptive study analysing the main characteristics of both sectors is introduced. Then, the level of competitiveness is measured in both types of banks using the Lerner index. Finally, the impact of the market power on the financial stability is analysed. The results of these analyses show that Islamic banks do not have a higher degree of market power compared to their conventional peers. As far as the effect of competitiveness is concerned, we can say that Islamic banks are less stable than the conventional ones and the decrease of competitiveness may lead to the improvement of stability.

Online publication date: Mon, 22-Dec-2014

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