Market Concentration, Foreign Ownership and Determinants of Bank Financial Performance: Evidence from MENA Countries

Elfeituri, H. (2018). Market concentration, foreign ownership and determinants of bank financial performance: Evidence from MENA countries. Corporate Ownership & Control, 15(3), 9-22. DOI/10.22495/cocv15i3art1

Posted: 14 Jun 2018

See all articles by Hatem Elfeituri

Hatem Elfeituri

University of Benghazi (University of Garyounis)

Date Written: March 21, 2018

Abstract

The purpose of this paper is to investigate the market concentration, foreign ownership and determinants of profitability for commercial banks operating in the MENA economies over the period 1999-2012. This paper uses panel analysis via GMM estimation to examine a large sample of banks for a period that includes the recent global crisis and Arab uprising, marked by political changes, liberalisation and market transformation. Findings indicate that the SCP hypothesis is not rejected; highlighting that increased market power yields monopoly profits. The fact that the impact of market concentration is positive in MENA economies is vital evidence, at least to a certain extent that bank performance is explained by market concentration. Findings also confirm that there is a positive and significant relationship between profitability and capital adequacy, confirming that regulators and policy makers should ensure banks are well capitalised to guarantee survival and stability for MENA banks. Cost efficiency and bank size have decreased profitability of banks, and banks with foreign ownership are more profitable and perform better than state banks. Overall, the paper finds evidence of structural reforms and uncovers measures that have led to the improvement of regulation, and the implementation of frameworks which should continue to improve competitiveness within MENA banking sectors. In addition, future policy on the banking sector should take account of intervention to change the market structure and to stimulate competition.

Keywords: Banks, Market Concentration, Capital Structure, Profitability, Regulation, MENA

JEL Classification: C23, C26, F36, G21, F62, G31, G38, L41, M48, O16

Suggested Citation

Elfeituri, Hatem, Market Concentration, Foreign Ownership and Determinants of Bank Financial Performance: Evidence from MENA Countries (March 21, 2018). Elfeituri, H. (2018). Market concentration, foreign ownership and determinants of bank financial performance: Evidence from MENA countries. Corporate Ownership & Control, 15(3), 9-22. DOI/10.22495/cocv15i3art1, Available at SSRN: https://ssrn.com/abstract=3195237

Hatem Elfeituri (Contact Author)

University of Benghazi (University of Garyounis) ( email )

Tripoli road
Libya
Benghazi
Libya

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