Gulf Cooperation Council Banks Research Articles

Market power versus efficient-structure in Arab GCC banking

This article evaluates the performance of the Arab Gulf Cooperation Council (GCC) banking industry in the context of the Structure-Conduct-Performance (SCP) hypothesis in the period 1993 to 2002. This article uses panel estimation differentiating between bank fixed effects and country fixed effects. It examines the Relative-Market-Power (RMP) and the Efficient-Structure (ES) hypotheses differentiating between the two by employing a nonparametric measure of technical efficiency, and finds that the banking industry in the Arab GCC countries is best explained by the mainstream SCP hypothesis. The empirical results do not find any support for the Hicks’ (1935) ‘Quiet Life’ (QL) version of the market power hypothesis.

A probabilistic neural network approach for modelling and classifying efficiency of GCC banks

Understanding the efficiency levels is crucial for understanding the competitive structure of a market and/or segments of a market. This study uses two artificial Neural Networks (NN) and a traditional statistical classification method to model and classify the relative efficiency of top Gulf Cooperation Council (GCC) banks. Accuracy indices are used to assess the classification accuracy of the models. Results indicate that the predictive accuracy of NN models is quite similar to that of traditional statistical methods. The study shows that the NN models have a great potential for the classification of banks' relative efficiency due to their robustness and flexibility of modelling algorithms. The implications of these results for potential efficiency programmes are discussed.

An examination of technical, pure technical and scale efficiencies in GCC banking

The paper uses DEA techniques to estimate technical, pure technical, and scale efficiency, using an input orientation for Gulf Cooperation Council (GCC) banks for the period 1993-2002. The paper highlighted several interesting findings regarding the GCC banking market. First, smaller banks exhibited superior performance in terms of overall technical efficiency than did larger ones. Second, big banks proved to be more successful in adopting the best available technology, while medium banks proved to be more successful in choosing optimal levels of output. Third, Islamic banks were more successful in both the adoption of the best available technology and choosing optimal levels of output. Fourth, banks in Bahrain, Qatar, Oman, UAE, Kuwait and Saudi Arabia ranked first to sixth, respectively, in terms of technical efficiency.

Modeling the efficiency of GCC banks: a data envelopment analysis approach

PurposeThe major aim of this research is to measure the relative efficiency of the top 50 Gulf Cooperation Council (GCC) banks. The sensitivity of the results is also investigated.Design/methodology/approachData envelopment analysis (DEA) was used to evaluate the relative efficiency of GCC banks. Cross‐sectional data for the year 2005 were used to conduct the analysis.FindingsThe results indicate that the performance of several banks is sub‐optimal, suggesting the potential for significant improvements. Separate benchmarks were derived for possible reductions in resources used, and significant savings are possible on this account.Originality/valueFrom a policy perspective, this study highlights the importance of encouraging increased efficiency throughout the banking industry in the GCC.

Non-Financial Performance Measurement in the banking sector: four grounded theory case studies

To understand the use of non-financial performance measurements (NFPMs), a programme of research was conducted in the banking sector of the GCC (Gulf Cooperation Council) countries. This study is exploratory and is the first attempt to study NFPMs in the banking sector within the GCC context. The data from the four case studies were collected and analysed using a grounded theory approach with a cross case analysis resulting in 16 hypotheses and a model of NFPMs in GCC banks. These hypotheses included reasons for adopting NFPMs, organisational and environmental influences on NFPMs, management strategies and consequences of using NFPMs.