Title: Competition law and the Malaysian financial services market: an analysis of the structure and level of competition in the market
Authors: Nasarudin Abdul Rahman; Mohd Hasbullah Mohamad Faudzi; Haniff Ahamat; Zuhairah Ariff Abd Ghadas
Civil Law Department, Ahmad Ibrahim Faculty of Laws, International Islamic University Malaysia, P.O. Box 10, 50728, Kuala Lumpur Malaysia
Faculty of Economics and Management, International Islamic University Malaysia, P.O. Box 10, 50728 Kuala Lumpur, Malaysia
Civil Law Department, Ahmad Ibrahim Faculty of Laws, International Islamic University Malaysia, P.O. Box 10, 50728, Kuala Lumpur, Malaysia
Faculty of Law, Accountancy and International Relations, Campus Gong Badak, Universiti Sultan Zainal Abidin, 21300 Kuala Terengganu, Terengganu, Malaysia
Abstract: The main objective of competition law is to protect the process of competition by preventing anti-competitive behaviour such as abuse of dominant position and anti-competitive mergers. The assessment of market structure and the level of competition in the financial sector are important for the exercise of the competition authority's power to enforce the national competition law. It helps the competition authority to better understand the nature of the financial services market such as the existence of market power and features that facilitate anti-competitive behaviour. This paper attempts to analyse structure of the market and the level of competition in the Malaysian financial market using two measures, namely concentration ratio (CR) and Herfindahl-Hirschman index (HHI). The study shows that the banking sector can be considered as 'unconcentrated'. However, based on ownership (foreign or local) the study indicates such sector is 'moderately' concentrated. For the insurance sector, general insurance can be considered as 'unconcentrated', whereas life insurance is 'highly concentrated'.
Keywords: competition law; market concentration; financial services; market structure; market power; oligopoly; monopoly; concerted practice; Herfindahl-Hirschman index; Malaysia; anti-competitive behaviour; concentration ratio; banking industry; ownership; insurance industry; life insurance.
Int. J. of Monetary Economics and Finance, 2016 Vol.9, No.4, pp.353 - 362
Available online: 24 Oct 2016