The Impact of Competition on Bank Performance

Abstract

This dissertation examines the impact of consolidation and competition status on the performance of the banking sector in Saudi Arabia. The study found that the market is moderately concentrated, with a significant increase in concentration levels in the last two years due to recent mergers and acquisitions as measured by the Herfindahl-Hirschman Index (HHI). The study concluded that the concentration level has positively impacted both stability and profitability, using the structure-conduct-performance (SCP) framework. This is due to the economies of scale and scope that larger banks can achieve.