Impact of structural changes on bank competition in dual banking industry

Nafisah Mohammed, Junaina Muhammad

Research output: Contribution to journalArticle

Abstract

The banking industry in Malaysia has undergone a change in its market structure, especially in terms of competition due to several factors such as the implementation of the merger program, restructuring of the Islamic banking operations, liberalization and technological advancement. Therefore, this study is conducted to measure the changes in the degree of competition in the Malaysian dual banking due to structural changes occurring in the industry. The Panzar-Rosse (PR) method has been used to measure the degree of competition in the Malaysian dual banking market for the period 1997-2016. Present study uses static panel data estimation to estimate the developed models. The value of H-statistics indicates that Islamic and conventional banks operate in monopolistic competition market structure. The findings show that structural changes have increased the level of competition in the Malaysian banking industry. The results of the study show that policy changes made by Bank Negara Malaysia have improved the level of competition in the Islamic and conventional banking markets. Knowledge of competitive issues is crucial so that policy makers may formulate new policies for the banking industry that suit the current market structure.

Original languageEnglish
JournalJurnal Pengurusan
Volume54
Publication statusPublished - 1 Jan 2018

Fingerprint

Market structure
Structural change
Bank competition
Banking industry
Banking
Degree of competition
Malaysia
Factors
Islamic banking
Politicians
Policy change
Liberalization
Statistics
Panel data estimation
Mergers
Monopolistic competition
Industry

Keywords

  • Bank
  • Competition
  • Islamic banking
  • Market structure
  • Panzar-Rosse model

ASJC Scopus subject areas

  • Business and International Management
  • Accounting
  • Business, Management and Accounting (miscellaneous)

Cite this

Impact of structural changes on bank competition in dual banking industry. / Mohammed, Nafisah; Muhammad, Junaina.

In: Jurnal Pengurusan, Vol. 54, 01.01.2018.

Research output: Contribution to journalArticle

@article{b3170ad2492848328d69273d1af5baaa,
title = "Impact of structural changes on bank competition in dual banking industry",
abstract = "The banking industry in Malaysia has undergone a change in its market structure, especially in terms of competition due to several factors such as the implementation of the merger program, restructuring of the Islamic banking operations, liberalization and technological advancement. Therefore, this study is conducted to measure the changes in the degree of competition in the Malaysian dual banking due to structural changes occurring in the industry. The Panzar-Rosse (PR) method has been used to measure the degree of competition in the Malaysian dual banking market for the period 1997-2016. Present study uses static panel data estimation to estimate the developed models. The value of H-statistics indicates that Islamic and conventional banks operate in monopolistic competition market structure. The findings show that structural changes have increased the level of competition in the Malaysian banking industry. The results of the study show that policy changes made by Bank Negara Malaysia have improved the level of competition in the Islamic and conventional banking markets. Knowledge of competitive issues is crucial so that policy makers may formulate new policies for the banking industry that suit the current market structure.",
keywords = "Bank, Competition, Islamic banking, Market structure, Panzar-Rosse model",
author = "Nafisah Mohammed and Junaina Muhammad",
year = "2018",
month = "1",
day = "1",
language = "English",
volume = "54",
journal = "Jurnal Pengurusan",
issn = "0127-2713",
publisher = "Penerbit Universiti Kebangsaan Malaysia",

}

TY - JOUR

T1 - Impact of structural changes on bank competition in dual banking industry

AU - Mohammed, Nafisah

AU - Muhammad, Junaina

PY - 2018/1/1

Y1 - 2018/1/1

N2 - The banking industry in Malaysia has undergone a change in its market structure, especially in terms of competition due to several factors such as the implementation of the merger program, restructuring of the Islamic banking operations, liberalization and technological advancement. Therefore, this study is conducted to measure the changes in the degree of competition in the Malaysian dual banking due to structural changes occurring in the industry. The Panzar-Rosse (PR) method has been used to measure the degree of competition in the Malaysian dual banking market for the period 1997-2016. Present study uses static panel data estimation to estimate the developed models. The value of H-statistics indicates that Islamic and conventional banks operate in monopolistic competition market structure. The findings show that structural changes have increased the level of competition in the Malaysian banking industry. The results of the study show that policy changes made by Bank Negara Malaysia have improved the level of competition in the Islamic and conventional banking markets. Knowledge of competitive issues is crucial so that policy makers may formulate new policies for the banking industry that suit the current market structure.

AB - The banking industry in Malaysia has undergone a change in its market structure, especially in terms of competition due to several factors such as the implementation of the merger program, restructuring of the Islamic banking operations, liberalization and technological advancement. Therefore, this study is conducted to measure the changes in the degree of competition in the Malaysian dual banking due to structural changes occurring in the industry. The Panzar-Rosse (PR) method has been used to measure the degree of competition in the Malaysian dual banking market for the period 1997-2016. Present study uses static panel data estimation to estimate the developed models. The value of H-statistics indicates that Islamic and conventional banks operate in monopolistic competition market structure. The findings show that structural changes have increased the level of competition in the Malaysian banking industry. The results of the study show that policy changes made by Bank Negara Malaysia have improved the level of competition in the Islamic and conventional banking markets. Knowledge of competitive issues is crucial so that policy makers may formulate new policies for the banking industry that suit the current market structure.

KW - Bank

KW - Competition

KW - Islamic banking

KW - Market structure

KW - Panzar-Rosse model

UR - http://www.scopus.com/inward/record.url?scp=85061103977&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85061103977&partnerID=8YFLogxK

M3 - Article

VL - 54

JO - Jurnal Pengurusan

JF - Jurnal Pengurusan

SN - 0127-2713

ER -