Market Structure and Technical Efficiency of Banks in the MENA Region

The banking sector is the main source of finance for firms in the Middle East and North Africa (MENA) region and has certain peculiarities, for example, the significant presence of Islamic banking and low levels of competition. This study examines the influence of market structure (concentration and...

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Detalhes bibliográficos
Autores: Maside Sanfiz, José Manuel, Iglesias Casal, Ana, Mazahreh, Qusay Ayman Sulaiman, López Andión, María del Carmen
Formato: artículo
Fecha de publicación:2025
País:España
Recursos:Universidad de Santiago de Compostela (USC)
Repositorio:Minerva. Repositorio Institucional de la Universidad de Santiago de Compostela
Idioma:inglés
OAI Identifier:oai:minerva.usc.gal:10347/42865
Acesso em linha:https://hdl.handle.net/10347/42865
Access Level:acceso abierto
Palavra-chave:MENA countries
Bank competition
Market power
Market concentration
Bank efficiency
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spelling Market Structure and Technical Efficiency of Banks in the MENA RegionMaside Sanfiz, José ManuelIglesias Casal, AnaMazahreh, Qusay Ayman SulaimanLópez Andión, María del CarmenMENA countriesBank competitionMarket powerMarket concentrationBank efficiencyThe banking sector is the main source of finance for firms in the Middle East and North Africa (MENA) region and has certain peculiarities, for example, the significant presence of Islamic banking and low levels of competition. This study examines the influence of market structure (concentration and competition) on efficiency in a sample of 239 banks operating in the MENA region over a period from 2011 to 2020. Banking efficiency scores have been obtained with the Data Envelopment Analysis (DEA), the level of concentration has been measured by the Herfindahl-Harshman index and competition has been proxied by the bank-level Lerner index. We have assessed the relationship between competition and concentration on efficiency using Simar and Wilson’s two-stage approach. The robustness has been tested using the Generalized Method of Moments (GMM) system to mitigate potential endogeneity. The results indicate that concentration influences efficiency positively and market power negatively; in terms of the interaction between both variables, bank efficiency increases, in line with the bank specificity hypothesis (BSH). Although previous papers have used various indicators of concentration and competition, to our knowledge, this study is the first to examine their combined effects on bank efficiency in the MENA region. In addition, bank-specific characteristics (size, profitability, and capitalization) and bank type (Islamic, domestic) positively affect efficiency, as do indicators of financial inclusion, institutional framework, and financial development. These aspects allow us to extract relevant results that offer a number of practical implications for managers and policy makers to improve bank efficiency.SAGE PublicationsUniversidade de Santiago de Compostela. Departamento de Economía Financeira e ContabilidadeUniversidade de Santiago de Compostela. Departamento de Economía Cuantitativa20252025-01-0120252025-01-01journal articlehttp://purl.org/coar/resource_type/c_6501VoRhttp://purl.org/coar/version/c_970fb48d4fbd8a85info:eu-repo/semantics/articleapplication/pdfhttps://hdl.handle.net/10347/42865reponame:Minerva. Repositorio Institucional de la Universidad de Santiago de Compostelainstname:Universidad de Santiago de Compostela (USC)Inglésengopen accesshttp://purl.org/coar/access_right/c_abf2Creative Commons CC BY: This article is distributed under the terms of the Creative Commons Attribution 4.0 Licensehttp://creativecommons.org/licenses/by/4.0/info:eu-repo/semantics/openAccessoai:minerva.usc.gal:10347/428652026-06-15T12:47:27Z
dc.title.none.fl_str_mv Market Structure and Technical Efficiency of Banks in the MENA Region
title Market Structure and Technical Efficiency of Banks in the MENA Region
spellingShingle Market Structure and Technical Efficiency of Banks in the MENA Region
Maside Sanfiz, José Manuel
MENA countries
Bank competition
Market power
Market concentration
Bank efficiency
title_short Market Structure and Technical Efficiency of Banks in the MENA Region
title_full Market Structure and Technical Efficiency of Banks in the MENA Region
title_fullStr Market Structure and Technical Efficiency of Banks in the MENA Region
title_full_unstemmed Market Structure and Technical Efficiency of Banks in the MENA Region
title_sort Market Structure and Technical Efficiency of Banks in the MENA Region
dc.creator.none.fl_str_mv Maside Sanfiz, José Manuel
Iglesias Casal, Ana
Mazahreh, Qusay Ayman Sulaiman
López Andión, María del Carmen
author Maside Sanfiz, José Manuel
author_facet Maside Sanfiz, José Manuel
Iglesias Casal, Ana
Mazahreh, Qusay Ayman Sulaiman
López Andión, María del Carmen
author_role author
author2 Iglesias Casal, Ana
Mazahreh, Qusay Ayman Sulaiman
López Andión, María del Carmen
author2_role author
author
author
dc.contributor.none.fl_str_mv Universidade de Santiago de Compostela. Departamento de Economía Financeira e Contabilidade
Universidade de Santiago de Compostela. Departamento de Economía Cuantitativa
dc.subject.none.fl_str_mv MENA countries
Bank competition
Market power
Market concentration
Bank efficiency
topic MENA countries
Bank competition
Market power
Market concentration
Bank efficiency
description The banking sector is the main source of finance for firms in the Middle East and North Africa (MENA) region and has certain peculiarities, for example, the significant presence of Islamic banking and low levels of competition. This study examines the influence of market structure (concentration and competition) on efficiency in a sample of 239 banks operating in the MENA region over a period from 2011 to 2020. Banking efficiency scores have been obtained with the Data Envelopment Analysis (DEA), the level of concentration has been measured by the Herfindahl-Harshman index and competition has been proxied by the bank-level Lerner index. We have assessed the relationship between competition and concentration on efficiency using Simar and Wilson’s two-stage approach. The robustness has been tested using the Generalized Method of Moments (GMM) system to mitigate potential endogeneity. The results indicate that concentration influences efficiency positively and market power negatively; in terms of the interaction between both variables, bank efficiency increases, in line with the bank specificity hypothesis (BSH). Although previous papers have used various indicators of concentration and competition, to our knowledge, this study is the first to examine their combined effects on bank efficiency in the MENA region. In addition, bank-specific characteristics (size, profitability, and capitalization) and bank type (Islamic, domestic) positively affect efficiency, as do indicators of financial inclusion, institutional framework, and financial development. These aspects allow us to extract relevant results that offer a number of practical implications for managers and policy makers to improve bank efficiency.
publishDate 2025
dc.date.none.fl_str_mv 2025
2025-01-01
2025
2025-01-01
dc.type.none.fl_str_mv journal article
http://purl.org/coar/resource_type/c_6501
VoR
http://purl.org/coar/version/c_970fb48d4fbd8a85
dc.type.openaire.fl_str_mv info:eu-repo/semantics/article
format article
dc.identifier.none.fl_str_mv https://hdl.handle.net/10347/42865
url https://hdl.handle.net/10347/42865
dc.language.none.fl_str_mv Inglés
eng
language_invalid_str_mv Inglés
language eng
dc.rights.none.fl_str_mv open access
http://purl.org/coar/access_right/c_abf2
http://creativecommons.org/licenses/by/4.0/
dc.rights.openaire.fl_str_mv info:eu-repo/semantics/openAccess
rights_invalid_str_mv open access
http://purl.org/coar/access_right/c_abf2
http://creativecommons.org/licenses/by/4.0/
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv SAGE Publications
publisher.none.fl_str_mv SAGE Publications
dc.source.none.fl_str_mv reponame:Minerva. Repositorio Institucional de la Universidad de Santiago de Compostela
instname:Universidad de Santiago de Compostela (USC)
instname_str Universidad de Santiago de Compostela (USC)
reponame_str Minerva. Repositorio Institucional de la Universidad de Santiago de Compostela
collection Minerva. Repositorio Institucional de la Universidad de Santiago de Compostela
repository.name.fl_str_mv
repository.mail.fl_str_mv
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score 15.228081

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