Welcome to the Islamic Finance Resources blog, a grassroots initiative started by industry professionals and supported by practitioners from around the globe.

We constantly update this site and its overall content, and encourage you to use the various navigation tools available and welcome your feedback and comments.
A few of the resources that you can find in this site:
- Funds@Work: Network Analysis Among Sharia Scholars v 4.0
- ISRA: Islamic Finance Knowledge Repository
- IFSB-IRTI-IDB Islamic Finance and Global Stability Report
- Sukuk Reports: I, II, III, and IV
Much more available under 'Industry Reports' and 'Academic Papers' (right hand side menus)

Islamic Finance in the News

Islamic Finance Gateway on Twitter

4.10.09

Do Islamic Banks Have Greater Market Power?

Time and again we hear about how Islamic banking has proven to be on par with conventional banking (whether that is good is another discussion!), here we profile a recent paper that provides a similar conclusion although it uses a far more technical (and substantiated) approach.

Laurent Weill
Laboratoire de Recherche en Gestion (LARGE) (Management Research Laboratory)
Université de Strasbourg
February 2009
Abstract: "The aim of this paper is to investigate whether Islamic banks have greater market power than conventional banks. Indeed Islamic banks may benefit from a captive clientele, owing to religious principles, which would be charged greater prices. To measure market power, we compute Lerner indices on a sample of banks from 17 countries in which Islamic and conventional banks coexist over the period 2000-2007. Comparison of Lerner indices shows no significant difference between Islamic banks and conventional banks. When including control variables, regression of Lerner indices even suggests that Islamic banks have a lower market power than conventional banks. A robustness check with the Rosse-Panzar model confirms that Islamic banks are not less competitive than conventional banks. The lower market power of Islamic banks can be explained by their different norms and their different incentives."

Share/Bookmark

No comments:

Post a Comment