Corporate Governance and Bank Competition Empirical Study on the Jordanian Commercial Banks Listed in Amman Stock Exchange over the Period (2001-2014)

Abstract

The purpose of this paper is to identify the effect of corporate governance implementation on the commercial banks’ competition in Jordan. Bank competition is tested by using Panzar and Rosse H statistics model and the researchers applied it on the collected data into two periods of time (2001-2007 and 2008-2014), taking into consideration that corporate governance was first implemented in the Jordanian banking sector on 31/12/2007. The researchers used Mann-Whitney Test to compare the results of both time phases. The results showed insignificant effect of corporate governance on bank competition that can be linked to certain reasons including the immaturity of corporate governance’s implementation in the Jordanian banking sector, the socio political upheavals that affected Jordan, and the differentiation of bank services between banks led to a more monopolistic behavior. This paper urges other researchers and practitioners to take their role into updating and modifying corporate governance to positively enhance bank competition taking into account the political turbulences in the neighboring countries and the movement of cash across the region and passing the country.