THE ADJUSTED MARKET POWER, COMPETITION, AND PERFORMANCE: ISLAMIC VS CONVENTIONAL BANKS

This study explores the relationship between competition and performance in a dual-banking setting. More specifically, we compare whether using Traditional Lerner index (TLI) efficiency-adjusted (EALI) would yield different conclusions. We take data from 2008 to 2020 Malaysia as case study. Considering nature of dataset variables within, employ system Generalized Method Moments. Our findings reveal contradictory results when market power is measured differently. Based on overall sample, models adjusted supportive ‘competition-stability view’ while with TLI report evidence favor ‘competition-fragility view.’ The Islamic banks' support TLI. These are robust econometric estimators carry important policy implications.