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Qusay Mazahreh

PhD Abstract

This thesis investigates three important topics that contribute to the examination and analysis of the influence of competition on bank efficiency, profitability, stability, and environmental and social performance of banks operating in the Middle Eastern and North African (MENA) region. In Chapter 1, we conduct an empirical study to assess the impact of market structure and other determinants on the technical efficiency of banks in MENA countries. Chapter 2 analyzes the influence of competition and other factors on bank profitability and stability in the MENA countries. Finally, Chapter 3 empirically examines the effect of competition and other determinants on the environmental and social performance of banks in the MENA nations. Our thesis comprises three chapters that vary in methodological approaches, analysis techniques, and findings. However, these chapters demonstrate thematic coherence by examining how competition affects the technical efficiency, profitability, stability, and corporate social responsibility (CSR) of banks in the MENA region. The results indicate that the concentration positively affects efficiency, which refutes the Quiet Life hypothesis (QLH). Market power negatively influences efficiency, thus supporting QLH. With regard to the combined effect of both variables, the coexistence of higher concentration and market power increases bank efficiency, supporting the Banking Specificities hypothesis (BSH). Furthermore, the empirical findings suggest that the impact of bank competition on stability can vary depending on the measure of stability used. While an increase in market power may lead to higher bank profitability and solvency, thus supporting the competitionfragility theory, it could also result in elevated credit risk, thus providing supportive evidence for the competition-stability hypothesis, indicating that these viewpoints are not mutually exclusive but can coexist within the banking system. The last chapter reveals that increased competition among banks is associated with higher levels of environmental and social performance. This indicates that when financial institutions are forced to compete for customers, they are more likely to prioritize CSR initiatives. This agrees with the Stakeholder Theory, which suggests that competition compels banks to intensify environmental and social initiatives to gain stakeholder confidence

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