Market power in GCC banking sector

Abstract

This study attempts to find whether market concentration has been a main driver for market power in the Gulf Cooperation Council (GCC) banking industry over the period of 2002-2008. Using the methodology of the new empirical industrial organization approach that measures the Lerner index as a proxy of the market power, the results highlight evidence for market power in GCC banking sector with mean Lerner index of 42% for the period of study. The results, however, indicate that more concentration and consolidation contributed in lessening the market power in GCC countries over the study period.