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Market concentration of Malaysia’s Islamic banking industry

The aim of this paper is to evaluate the nature and changes of market concentration in the Malaysia’s Islamic banking due to the restructuring of Islamic banking industry within the liberalization wave in the banking market. A total of 17 Islamic banks operating over the period of 2000-2010 had be...

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Main Authors:	Nafisah Mohammed,, Abdul Ghafar Ismail,, Junaina Muhammad,, Suhaila Abdul Jalil,, Zaleha Mohd Noor,
Format:	Article
Language:	English
Published:	Penerbit Universiti Kebangsaan Malaysia 2015
Online Access:	http://journalarticle.ukm.my/9025/1/jeko_49%281%29-1.pdf http://journalarticle.ukm.my/9025/ http://www.ukm.my/fep/jem/content/2015.html
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id	my-ukm.journal.9025
record_format	eprints
spelling	my-ukm.journal.90252016-12-14T06:48:45Z http://journalarticle.ukm.my/9025/ Market concentration of Malaysia’s Islamic banking industry Nafisah Mohammed, Abdul Ghafar Ismail, Junaina Muhammad, Suhaila Abdul Jalil, Zaleha Mohd Noor, The aim of this paper is to evaluate the nature and changes of market concentration in the Malaysia’s Islamic banking due to the restructuring of Islamic banking industry within the liberalization wave in the banking market. A total of 17 Islamic banks operating over the period of 2000-2010 had been considered. The structural approach framework was used to evaluate the nature and changes of market concentration in the Islamic banking industry in Malaysia. Under this approach, various market concentration indexes has been calculated from year to year basis as proposed by the industrial organizational field. Findings herein supported the structure-conduct-performance (SCP) paradigm where different concentration ratios have decreased over the study’s period where this is reflected in the greater degree of competition in the Malaysia’s Islamic banking industry. This study found an evidence that structural changes in the Islamic banking market has changed the market structure of the respective market from moderately concentrated to low concentrated market; whereby supporting the existence of competitive environment in the Malaysian Islamic banking market. Present study contributed to new knowledge in banking market concentration particularly for Islamic banking industry in the emerging economies such as Malaysia. Many past studies studying this issue had extensively examined the conventional banking system, but only several studies were on Islamic banking market. Hence, this study may enrich the existing literature on this issue, particularly for the Islamic banking industry. Policy recommendation from the findings; first, Malaysian Islamic banking industry needs a contestable market environment as to enable them to achieve better profit and efficient operation. Second, concentration ratios from this study can be used to identify the optimal number of banking firms in the Islamic banking industry. Penerbit Universiti Kebangsaan Malaysia 2015 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/9025/1/jeko_49%281%29-1.pdf Nafisah Mohammed, and Abdul Ghafar Ismail, and Junaina Muhammad, and Suhaila Abdul Jalil, and Zaleha Mohd Noor, (2015) Market concentration of Malaysia’s Islamic banking industry. Jurnal Ekonomi Malaysia, 49 (1). pp. 3-14. ISSN 0127-1962 http://www.ukm.my/fep/jem/content/2015.html
institution	Universiti Kebangsaan Malaysia
building	Perpustakaan Tun Sri Lanang Library
collection	Institutional Repository
continent	Asia
country	Malaysia
content_provider	Universiti Kebangsaan Malaysia
content_source	UKM Journal Article Repository
url_provider	http://journalarticle.ukm.my/
language	English
description	The aim of this paper is to evaluate the nature and changes of market concentration in the Malaysia’s Islamic banking due to the restructuring of Islamic banking industry within the liberalization wave in the banking market. A total of 17 Islamic banks operating over the period of 2000-2010 had been considered. The structural approach framework was used to evaluate the nature and changes of market concentration in the Islamic banking industry in Malaysia. Under this approach, various market concentration indexes has been calculated from year to year basis as proposed by the industrial organizational field. Findings herein supported the structure-conduct-performance (SCP) paradigm where different concentration ratios have decreased over the study’s period where this is reflected in the greater degree of competition in the Malaysia’s Islamic banking industry. This study found an evidence that structural changes in the Islamic banking market has changed the market structure of the respective market from moderately concentrated to low concentrated market; whereby supporting the existence of competitive environment in the Malaysian Islamic banking market. Present study contributed to new knowledge in banking market concentration particularly for Islamic banking industry in the emerging economies such as Malaysia. Many past studies studying this issue had extensively examined the conventional banking system, but only several studies were on Islamic banking market. Hence, this study may enrich the existing literature on this issue, particularly for the Islamic banking industry. Policy recommendation from the findings; first, Malaysian Islamic banking industry needs a contestable market environment as to enable them to achieve better profit and efficient operation. Second, concentration ratios from this study can be used to identify the optimal number of banking firms in the Islamic banking industry.
format	Article
author	Nafisah Mohammed, Abdul Ghafar Ismail, Junaina Muhammad, Suhaila Abdul Jalil, Zaleha Mohd Noor,
spellingShingle	Nafisah Mohammed, Abdul Ghafar Ismail, Junaina Muhammad, Suhaila Abdul Jalil, Zaleha Mohd Noor, Market concentration of Malaysia’s Islamic banking industry
author_facet	Nafisah Mohammed, Abdul Ghafar Ismail, Junaina Muhammad, Suhaila Abdul Jalil, Zaleha Mohd Noor,
author_sort	Nafisah Mohammed,
title	Market concentration of Malaysia’s Islamic banking industry
title_short	Market concentration of Malaysia’s Islamic banking industry
title_full	Market concentration of Malaysia’s Islamic banking industry
title_fullStr	Market concentration of Malaysia’s Islamic banking industry
title_full_unstemmed	Market concentration of Malaysia’s Islamic banking industry
title_sort	market concentration of malaysia’s islamic banking industry
publisher	Penerbit Universiti Kebangsaan Malaysia
publishDate	2015
url	http://journalarticle.ukm.my/9025/1/jeko_49%281%29-1.pdf http://journalarticle.ukm.my/9025/ http://www.ukm.my/fep/jem/content/2015.html
_version_	1643737654686121984
score	13.211869

Market concentration of Malaysia’s Islamic banking industry

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