Evaluation of Structural Changes in Banking Market: The Case of Egypt
23 Pages Posted: 27 Oct 2009
Date Written: October 25, 2009
The structure of Egyptian banking market continues to experience dramatic changes, during the last three decades. The banking market experiences the wave of market entry in 1980s, the wave of M&As in 1990s, and the package of regulatory reforms starting with the new millennium. All of these changes influence the structure of Egyptian banking market. This paper concerns with the evaluation of the effects of these structural changes on the performance of Egyptian banking sector as a whole, during the period from 1996 to 2006. The results show that the higher the market concentration, the higher the liquidity, activity and capital adequacy, While it doesn’t affect profitability. Robustness check shows that market concentration, as measured by “Herfinhal- Herschman Index” affects liquidity and activity, where this is supported using assets, deposits and loans as measures of size.
Keywords: market concentration, Egyptian banks
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