BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 2/2010:
Do Islamic banks have greater market power?
Laurent Weill ()
Abstract: The aim of this paper is to investigate whether Islamic
banks have greater market power than con-ventional banks. An Islamic bank,
for example, might enjoy enhanced market power if a captive clientele
adhering to religious principles permits it to charge higher prices. To
measure market power, we compute Lerner indices for a sample of banks from
17 countries where Islamic and conventional banks coexist. Comparison of
Lerner indices shows no significant difference between Islamic banks and
conventional banks over the period 2000-2007. When including control
variables, regression of Lerner indices even suggests that Islamic banks
have less market power than conventional banks. A robustness check with the
Rosse-Panzar model confirms that Islamic banks are no less competitive than
conventional banks. Thus, any reduced market power of Islamic banks can be
attributed to differences in norms and incentives.
Keywords: Islamic banks; Lerner index; bank competition; (follow links to similar papers)
JEL-Codes: D43; D82; G21; (follow links to similar papers)
25 pages, February 26, 2010
Before downloading any of the electronic versions below
you should read our statement on
copyright.
Download GhostScript
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
DP0210.pdf 
Download Statistics
Questions (including download problems) about the papers in this series should be directed to Päivi Määttä ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Programing by
Design by Joachim Ekebom
