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Competitive conditions in Islamic and conventional banking: A global perspective

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  • Ariss, Rima Turk

Abstract

I analyze the competitive conditions prevailing in Islamic and conventional global banking markets, and investigate the possible differences in profitability between these markets, using a sample of banks across 13 countries during 2000-2006. The results suggest that Islamic banks allocate a greater share of their assets to financing activities compared to conventional banks, and they are also better capitalized. Different computed measures of competition indicate that Islamic banking is less competitive compared to conventional banking. A second-stage analysis shows that profitability significantly increases with market power, but this does not warrant higher profitability levels for Islamic banks.

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Bibliographic Info

Article provided by Elsevier in its journal Review of Financial Economics.

Volume (Year): 19 (2010)
Issue (Month): 3 (August)
Pages: 101-108

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Handle: RePEc:eee:revfin:v:19:y:2010:i:3:p:101-108

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Web page: http://www.elsevier.com/locate/inca/620170

Related research

Keywords: Bank competition Panzar and Rosse method Lerner index Islamic banks;

References

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Citations

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Cited by:
  1. Jean-Yves MOISSERON & Bruno-Laurent MOSCHETTO & Frédéric TEULON, 2014. "Islamic finance a review of the literature," Working Papers 2014-093 Keywords : Islam, Department of Research, Ipag Business School.
  2. Beck, Thorsten & Demirgüç-Kunt, Asli & Merrouche, Ouarda, 2013. "Islamic vs. conventional banking: Business model, efficiency and stability," Journal of Banking & Finance, Elsevier, vol. 37(2), pages 433-447.
  3. Hassan Ghassan & Stefano Fachin & Abdelkarim Guendouz, 2013. "Financial Stability of Islamic and Conventional Banks in Saudi Arabia: a Time Series Analysis," DSS Empirical Economics and Econometrics Working Papers Series 2013/1, Centre for Empirical Economics and Econometrics, Department of Statistics, "Sapienza" University of Rome.
  4. Jan Aldert Bergstra, 2011. "Dialectical Roots for Interest Prohibition Theory," Papers 1105.2900, arXiv.org.

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