A value-based measure of market power for the participatory deposits of Islamic banks

Baldwin, K. ORCID: 0000-0003-0606-5553 and Alhalboni, M., 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

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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 capitalised 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.

Item Type:	Journal article
Publication Title:	Journal of International Financial Markets, Institutions and Money
Creators:	Baldwin, K. and Alhalboni, M.
Publisher:	Elsevier
Date:	29 July 2023
ISSN:	1042-4431
Identifiers:	Number Type 10.1016/j.intfin.2023.101809 DOI 1786318 Other
Divisions:	Schools > Nottingham Business School
Record created by:	Laura Ward
Date Added:	03 Aug 2023 08:23
Last Modified:	03 Aug 2023 08:23
URI:	https://irep.ntu.ac.uk/id/eprint/49491

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