Market Concentration, Competition And Efficiency Of Malaysian Banks : A Comparison Between Conventional And Islamic Ranks

Noor Shazreen, Mortadza (2016) Market Concentration, Competition And Efficiency Of Malaysian Banks : A Comparison Between Conventional And Islamic Ranks. [Final Year Project Report] (Unpublished)

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Abstract

The aim of this study is to examine the market concentration, competition and the efficiency performance of conventional and Islamic banks in Malaysian banking industry over the period of2008 to 2014. Bank refurm particularly in the late 1990's has changed the structure of Malaysian banking industry profoundly and triggered the competitiveness among the banks. This study employs concentration ratio (CR) and Herfmdahl-Hirschman Index (HHI) to measure the market concentration as the indicator of the market structure of Malaysian banks while H-statistics value generated by Panzar-Rosse method serves as the indicator as the indicator of the market competition Last but not least, this study utilizes Data Envelopment Analysis to assess the efficiency performance of Malaysian banks. The results of market concentration show that conventional banks are more concentrated. Next, the Hstatistics index indicates that conventional and Islamic banks in Malaysia are operating under monopolistic. Finally, the efficiency results show foreign banks in Malaysia are efficient under conventional banks while domestic banks are more efficient compare to foreign under Islamic. The results of this study imply that Malaysian banking industry are monopolistic and domestic banks are efficient under Islamic and foreign under conventional.

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