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Jurnal Ekonomi Malaysia

52 (3) 2018 71 – 89

The Degree of Competition in the Malaysian Dual Banking Industry
Darjah Persaingan dalam Industri Dwi Perbankan di Malaysia

Pusat Global dan Ekonomi Digital
Fakulti Ekonomi dan Pengurusan
Universiti Kebangsaan Malaysia
43600 Bangi Selangor
MALAYSIA

nafisah@ukm.edu.my

Jabatan Perakaunan dan Kewangan
Fakulti Ekonomi dan Pengurusan
Universiti Putra Malaysia,
43400 Serdang Selangor
MALAYSIA

junaina2012@gmail.com

Chief Executive/Professor of Islamic Financial Economics
Johor Islamic Studies College
Jalan Herman, Kg Aman Larkin Jaya
80350 Johor Bahru
MALAYSIA

Chairperson
Organization of Islamic Studies and Thoughts
45719, Desa Damai Putra
Teras Jernang
43650 Bandar Baru Bangi
Selangor Darul Ehsan
MALAYSIA

agibab62@gmail.com

Abstract

The purpose of this study is to evaluate the degree of competition in the Malaysian dual banking industry to address the question of whether Islamic banks are able to cope with competition from the well-established conventional banks. The Panzar-Rosse (PR) method has been used to measure the degree of competition in Islamic compared with conventional banking market over the period of 1997-2016. Present study uses static panel data estimation to estimate the developed models. Results from the H-statistics values using total income show that level of competition in the Islamic banking market is more intense than conventional banking market. Hence, providing evidence that Islamic banks are able to compete with conventional banks that have long history of establishment. The H-statistic values using total interest income also indicate the same result, hence supporting the robustness of these results. The findings also show the effectiveness of policy changes adopted by Bank Negara Malaysia in order to increase level of competition in both banking markets. Hence, knowledge on this issue is important to the policy makers for them to formulate new policy regarding banking competition.

Keywords

Bank; competition; market structure; Panzar-Rosse model
http://dx.doi.org/10.17576/JEM-2018-5203-6
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Mohammed, , Muhammad, , & ismail, (2018). The Degree of Competition in the Malaysian Dual Banking Industry. Jurnal Ekonomi Malaysia, 52(3), 71–89. http://dx.doi.org/10.17576/JEM-2018-5203-6

@article{mohammed2018degree,
  title={The Degree of Competition in the Malaysian Dual Banking Industry},
  author={Mohammed, Nafisah and Muhammad, Junaina and ismail, abdul},
  journal={Jurnal Ekonomi Malaysia},
  volume={52},
  number={3},
  pages={71—89},
 

year={2018},
}

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