GRM 2010 GRM 2011

Abstract Details

Family Name:
First Name:
Title of Paper:
Structure and Performance - GCC Banks
Paper Proposal Text :
It has long been established that a well-developed financial system contributes to economic growth. GCC financial systems are bank dominated and have been facing serious challenges in the wake of the global financial crisis. Despite the slow turnaround over the past few months, concerns over the banking sector’s ability to carry its intermediation role is lingering following months of shrinking assets, plunging credit, tight liquidity, negative profits, record level of provisioning against impaired loans, and credit downgrading at all levels. Against this background, I conduct this study with the aim of assessing the structure, efficiency, ownership of and performance of GCC banks. I first review trends and developments in the GCC banking industry following the financial crisis. I bring a particular emphasis to the increasing role of Islamic banks their sustainability as a source of financing. Market concentration measures are used to assess the structure of the banking system in the GCC countries and analyze trends in market concentration and diffusion of Islamic banking over time. Frontier Analysis is used to test for bank production and cost efficiency. Panel data is used to investigate the effect of efficiency, ownership, and concentration on bank performance while controlling for bank-specific and environmental factors. I hypothesize a positive relationship between bank performance and concentration, efficiency and ownership. We further investigate differences in performance between Islamic and Conventional Banks using MANOVA analysis. Research findings will be used to gain insight into areas of vulnerability, recommend best practices in addressing them, and set a research agenda towards future investigation of the banking and finance industry.