The competition and market structure in the Saudi Arabia banking

Saeed Al‐Muharrami

Journal of Economic Studies, 2009, vol. 36, issue 5, 446-460

Abstract: Purpose - The purpose of this paper is twofold: to investigate the market structure of Saudi Arabia banking industry; and to evaluate the monopoly power of banks during the years 1993‐2006. Design/methodology/approach - The paper is examining the market structure using the most frequently applied measures of concentrationk‐bank concentration ratio (CRk) and Herfindahl‐Hirschman Index (HHI) and it is evaluating the monopoly power of banks using the “H‐statistic” by Panzar and Rosse. Findings - The results show that Saudi Arabia has a moderately concentrated market and is moving to a less concentrated position. Both the concentration indices indicate that the country is moving toward a better position in terms of the market concentration. The Panzar and Rosse “H‐statistic” suggests that banks in Saudi Arabia operate under monopolistic competition. Research limitations/implications - These findings may be a temporary effect, evident during the sampled period only. To draw firmer conclusions a longer sample period is needed. Originality/value - Studies of banking market structure in the developed economies' banking are commonplace, however, very few studies are conducted for Saudi Arabia's banking industry.

Keywords: Saudi Arabia; Banking; Market system; Monopolies; Competitive strategy (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jespps:v:36:y:2009:i:5:p:446-460

DOI: 10.1108/01443580910992375

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