MENA Banking Competitiveness in the New Era of Global Financial Crisis and Increasing Political Risk

Abstract

This paper investigates competitive conditions and the role of institutional environment and political risk as revenue drivers of commercial banks in the Middle East and North Africa (MENA) region. In this paper, we examine an extended period (1999-2015) consist of political and economic unrest and transformation that includes the 2007 global crisis and the recent Arab uprising. The Panzar-Rosse model and Arrelano-Bond and System GMM methodologies have been employed to examine such issues. Our findings indicate that MENA banks are still operating under monopolistic competition conditions. With regards to political instability, bank revenues is negatively affected by such matter and policies that favour deregulation and a more inclusive role for all stakeholders in the banking system stimulate growth. The findings are beneficial in terms of valuable policy implications to structure the banking system of these countries optimally.