Baldwin, Kenneth and Alhalboni, Maryam (2023) A value-based measure of market power for the participatory deposits of Islamic banks. Journal of International Financial Markets, Institutions and Money. 101809. ISSN 1042-4431
Abstract
Traditional earnings-based measures of market power cannot be applied to Islamic banks since depositors are investors and not creditors. We develop a new market power measure based on the capitalized value of a bank’s deposit funds’ management fees in which more powerful banks price deposits to create greater long-term value, whilst less powerful banks target short-term earnings or risk management goals. Applying panel VAR and two-step system GMM to international data from 1990-2022, we validate the measure by showing that deposit growth rates (Granger) cause market power and are the only significant determinant across all two-step system GMM model and sub-sample variants.
Metadata
Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2023 The Author(s) |
Keywords: | Market Power, Value-Based Measure, Deposits, Islamic Banking, Optimal Profit-Sharing Ratio |
Dates: |
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Institution: | The University of York |
Academic Units: | The University of York > Faculty of Social Sciences (York) > The York Management School |
Depositing User: | Pure (York) |
Date Deposited: | 23 Aug 2023 08:20 |
Last Modified: | 06 Dec 2023 15:15 |
Published Version: | https://doi.org/10.1016/j.intfin.2023.101809 |
Status: | Published |
Refereed: | Yes |
Identification Number: | https://doi.org/10.1016/j.intfin.2023.101809 |
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Description: A value-based measure of market power for the participatory deposits of Islamic banks
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