The Compare of Concentration and Efficiency in Banking Industry: Evidence from the OPEC Countries
Keywords:Structure-Conduct-Performance, Efficiency Structure, Banking Industry, OPEC Countries; Profitability
The purpose of this paper is studying that whether the profitability from banking industry comes from the market power or it is a result of their high efficiency level. For this act, we have exerted structuralism and Chicago models versus X-and scale efficiency. Our sample covers the banks in the OPEC countries in the period 1995-2009. The results for all countries in our sample show that X-and scale efficiency have the positive and significant effect on profitability but, concentration variable decreases profitability. Overall the results above support that the market power hypotheses are rejected for the OPEC countries, while efficiency gains appear to have a positive and significant impact on banking profitability.