THE DEGREE OF COMPETITIVENESS OF ISLAMIC BANKS COMPARED TO COMMERCIAL BANKS IN KUWAIT

Mohammad Alawin

Applied Econometrics and International Development, 2024, vol. 24, issue 1, 121-136

Abstract: The aim of this study is to examine the competitiveness level for Islamic and commercial banks in Kuwait during the period 2010 – 2021. The methodology of the study assessed the degree of competition among nine national Kuwaiti banks using the Panzar - Rosse model, or the H-statistic approach. The study assessed how close the two kinds of banks in Kuwait are to perfect competition or toward monopoly behavior. It built a model for the revenues of the banking sector in Kuwait. The model considered various specifications that affect the banking sector’s performance like deposits, credits and the costs of the main production inputs. Using the panel data methodology of estimation, the results revealed that the market structure for the banking sector in Kuwait is far from being a monopolistic behavior. In fact, it is ranged between monopolistic competition and perfect competition. Though the banking sector in Kuwait is still in its development stages, the results provided a signal to policy makers regarding their policies. One main implication and recommendation of the study is to keep strong competition among banks which requires maintaining the stability within the banking system.

Keywords: Competitiveness; Islamic Banks; Commercial Banks; Kuwait. (search for similar items in EconPapers)
Date: 2024
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