Abstract

This study aims to test market power theories and their role inexplaining the performance of Islamic banks in the Middle East andNorth Africa MENA countries, based on data from 47 Islamic banksfor the period 2017–18 by using standard forms. The study revealedthat market power theories were unable to explain the returns ofMENA Islamic banks. Therefore, these results deny the effect of eithermonopoly in the Islamic banking sector structure or traditionalefficiency on this sector’s performance. This sector is characterised byhigh competitiveness and market share dispersion. The future researchshould investigate the role of economic efficiency theories inexplaining the returns of Islamic banking industry in the MENA.