The Relationship between Competition and Efficiency in the Banking Sector in Saudi Arabia

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REEM KHALED ALJABER
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The purpose of this paper is to empirically assess the relationship between competition and efficiency in the banking sector in Saudi Arabia during the period of 2009-2019. In order to measure the degree of competition, the study used the non-structural approach (H-statistic). On the other hand, the study used non-parametric approach (DEA) to assess the level of the banking efficiency. By using Granger causality test, this paper assessed the relationship between them. The results indicate that the Saudi banking industry is highly efficient and operates under monopolistic competition. Regarding the relationship between competition and efficiency, the researcher found that the efficiency in the Saudi banking sector precede (granger cause) the competition. However, the competition in the Saudi banking sector does not cause efficiency.
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