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Volume :40 Issue : 152 2014      Add To Cart                                                                    Download

The Market Structure-Profit Relationship in Bahrain and Kuwait:

Auther : Dr. Allam M. Hamdan - Dr. Ali A. Shaheen - Dr. Mohammed S. Anasweh

      This study examines the structure-profit relationship in the Bahrain's and Kuwait's banking industry. The study sample consists of all the local banks operating in the market (23 banks) over the 2005-2010 period. The hypotheses related to the market power structure which includes the traditional Structure-Conduct-Performance Hypothesis (SCP), and the traditional Efficiency Hypothesis (EH). Tests of the hypotheses are performed by regressing profits against measures of concentration, and market share. The emprical results generally support the (SCP) Hypothesis in Bahrain's banking industry. The study found that the hypothesis which depends on (SCP) is rejected in the case of Kuwait's banking industry, and the results doesn't provide support to the hypothesis of traditional efficiency. Thus, the main implication of these results for the policymakers, of Bahrain's and of Kuwait's banking sector, is to expand the ongoing deregulation efforts with the aim of reducing the industry concentration and enhancing the market competitiveness.

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