Bank risk-taking in the MENA region

Mokni, Rim Ben Selma; Rajhi, Mohamed Tahar; Rachdi, Houssem

doi:10.1108/ijse-03-2015-0050

Cited by 25 publications

(31 citation statements)

References 59 publications

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“…They justified their findings by stating that high capital requirements could constrain banks from taking a high risk. Similarly, Selma-Mokni, Rajhi and Rachdi (2016) analysed the data of 30 commercial banks in the MENA region. They concluded that capital adequacy ratios and investment in risky assets were significantly and negatively associated.…”

Section: Empirical Review Of Literaturementioning

confidence: 99%

Determinants of Banks’ Risk-Taking Behaviours in Africa: A Regulatory Perspective

Obadire¹,

Obadire²

2023

OJBM

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The intermediation role of banks between borrowers and savers exposes them to various risks which impact their risk appetite and behaviour. Using annual panel data for the period 2010 to 2019, this paper examines the determinants of risk-taking behaviours of banks within the African context. The study sampled 45 listed banks from African nations that have adopted the Basel III regulatory requirements and used the random effect estimator to fit the static panel data models established for the study. The study shows that minimum capital requirements, capital buffer premium and profitability were significant determinants of the risk-taking behaviour of the African banks. However, compared to other variables, the minimum capital requirement remained the most important factor in terms of determining the risk-taking behaviour of the selected African banks. This is because the minimum capital requirement determining measure is more significant across the three measures of the risk-taking behaviour of the African banks compared to others. The study recommends that African banks should establish risk limits, improve risk identification, and establish a platform for bank stress testing by using the key determinants of risk-taking behaviour in making strategic business decisions.

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Section: Empirical Review Of Literaturementioning

confidence: 99%

Determinants of Banks’ Risk-Taking Behaviours in Africa: A Regulatory Perspective

Obadire¹,

Obadire²

2023

OJBM

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“…In addition, the Z-score is used to measure bank's default and assess its bankruptcy (Demirgiic & Huizinga, 1999;Khan et al, 2017;Mokni et al, 2016). Z score is also used to measure the ability of capital and income to cover losses in a certain period (Lepetit & Strobel, 2015).…”

Section: Literature Reviewmentioning

confidence: 99%

Do stability and size affect the profitability of Islamic rural bank in Indonesia?

Sudarsono

Afriadi

Suciningtias

2021

JEKI

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Purpose -This study aims to analyze the effect of stability, size, financial performance and macroeconomic variables on the profitability of Islamic Rural Banks (BPRS) in Indonesia.Methodology -This study uses panel data consisting of 82 BPRS from December 2012 to December 2018. This study uses a dynamic model using GMM (General Method of Moments) developed by Arellano & Bover (1995) and Blundell & Bond (1998). GMM is used to describe the actual conditions in the analysis of profitability of Islamic Rural Banks.Findings -The findings of this study indicate that the stability and size of the BPRS have a negative effect on the level of ROA and ROE. Further, BAC has a positive effect on ROA but it has a negative effect on ROE. While the deposit structure (DS) is found to have a positive effect on ROA and ROE, FDR and the total deposit (DAR) is found to have a positive effect on both ROA and ROE. Meanwhile, the capital structure does not show a significant value on ROA. On the other hand, economic growth (GDP) and inflation (INF) do not show a significant relationship to ROA, but inflation is positively related to ROE.Originality -This study is to determine the effect of the stability and the size of BPRS on its profitability. This study uses 6 models to obtain a consistent variation of variables in influencing profitability.

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“…Alharthi (2017) described the quoted Islamic banks as being more stable than the unquoted Islamic banks and the banks listed had lower capitals as well. Mokni, Rajhi and Rachdi (2016) empirically found that MENA Islamic banks are less stable than conventional banks, and that they also have determinants of risk-taking. Abedifar, Molyneux and Tarazi (2013), Chakroun and Gallali (2013), and Čihák and Hesse (2010) analysed the risk of insolvency using the Z-score measurement usually found that small conventional banks have high default risk compared to small Islamic banks.…”

Section: Islamic Banks and Insolvency Riskmentioning

confidence: 99%

“…As for example, Khan and Ahmad (2001) remarked the inherent risk such as the credit risk of the Islamic banks which adopted interest rate as much as KLIBOR among the Malaysian Islamic banks. This situation encourages the Islamic banks giving too many loans to less creditworthy borrowers (Mokni, Rajhi, & Rachdi, 2016). In addition, liquidity risk, which is another type of risk owned by the Islamic banks, affects the capability of Islamic banks to fulfill their liability.…”

Section: Introductionmentioning

confidence: 99%

Shariah Governance Characteristics and Risk-Taking of Local and Foreign Islamic Banks in Malaysia: A Conceptual Model

Rasli¹,

Kassim²,

Bhuiyan³

2020

JAFEE

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Purpose: In Malaysia, since the global financial crisis in 2007 and 2008, the low level of stability, excessive risk-taking and weak governance structure in the dual banking system has become essential for deliberation. The purpose of this research is to develop a conceptual model on the effect of Shariah governance characteristics on risk-taking between local and foreign of Islamic banks in Malaysia. Design/Methodology/Approach: Based on prior review of indicators and findings, this research proposes a conceptual model of effective Shariah governance characteristics and its effect on risk-taking of Islamic banks. A self-develop of Shariah board index (SB-Index) based on SB size, education background, membership with IFSB and attendance in meeting. Insolvency risk, credit risk and liquidity risk are the proxy used for risk-taking measurement. The theory of stewardship and resource dependency theory are used as examples of the theories of corporate governance to support the conceptual framework suggested. Findings: The Islamic banks in Malaysia are assumed to have effective Shariah governance and there will be low impact on risk-taking. Implications/Originality/Value: The regulators of Islamic banks must prepare for the need to improve the current standards for corporate governance in Malaysia.

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Bank risk-taking in the MENA region

Cited by 25 publications

References 59 publications

Determinants of Banks’ Risk-Taking Behaviours in Africa: A Regulatory Perspective

Determinants of Banks’ Risk-Taking Behaviours in Africa: A Regulatory Perspective

Do stability and size affect the profitability of Islamic rural bank in Indonesia?

Shariah Governance Characteristics and Risk-Taking of Local and Foreign Islamic Banks in Malaysia: A Conceptual Model

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