Is MENA Banking Sector Competitive?

Abstract

This paper investigates the competitive conditions and revenues drivers of commercial banks in MENA region in the context of Panzar-Rosse model. It is the first study of its kind that examines a large sample of MENA banks for an extensive period (1999-2012) during an era of political and economic unrest and transformation that includes the 2007 global crisis, providing the ability to draw reliable conclusions. We find that MENA banks operate under monopolistic competition. Our findings indicate that policies that favoured relaxing capital adequacy requirements, decreasing state role and mergers are not empirically justified for MENA banks during this period.

Keywords: Structure Conduct Performance, Competition, Profitability, Deregulation, MENA

JEL Classification: G21