The Impact of Banking Competitiveness in Economic Growth in Syria

Abstract

Purpose: This research aims to measure and analyze competitiveness in the Syrian banking sector, and test its impact on economic growth during the period (2009-2019).
Study design/methodology/approach: To achieve the objectives of the research, the banking concentration ratio (CRK) and Hirschman index (HHI) were used as structural measures of competitiveness, and the Panzar-Rosse approach (P-R) as a non-structural measure, the research used panel data models to reach P-R’s H- statistic value, the research also used (ARDL) model to test the impact of banking competitiveness (expressed as P-R’s H- statistic, CR4) in economic growth.
Sample and data: The study sample consisted of one public bank, and 14 private banks, where the secondary data published in the annual reports of the banks were relied upon.
Results: The Research concludes that competitiveness in the Syrian banking sector is weak according to structural measures, as the average value of CR4 exceeded 70%, And the value of HHI exceeded 1800 for each of the assets, deposits, and loans, which indicates the high concentration, meanwhile according to (P-R) there is a state of monopolistic competition in the Syrian banking sector, as The average value of P-R’s H- statistic during the study period reached 0.024, the research also concluded that there is a positive and significant effect of competitiveness on economic growth according to (P-R), and short term effect according to CR4.
Originality/value: This study is one of the first studies applied in Syria that measure competitiveness in the Syrian banking sector according to (P-R), and deal with the impact of banking competitiveness on economic growth in Syria.
Research limitations/implications: The study was limited to the period (2009-2019) due to the lack of necessary data on the commercial bank of Syria after 2019.