Funding liquidity risk and banks' risk-taking: Evidence from Islamic and conventional banks

Smaoui, Houcem; Mimouni, Karim; Miniaoui, Héla; Temimi, Akram

doi:10.1016/j.pacfin.2020.101436

Cited by 43 publications

(51 citation statements)

References 46 publications

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“…Our findings suggest that the bank types differ significantly based on their risk-taking, with Islamic banks showing a higher degree, but a lower degree of bank stability), compared to conventional banks. Our findings are in line with those of Bitar, Naceur, Ayadi, & Walker (2020) and Smaoui, Mimouni, Miniaoui, & Temimi (2020), who found that Islamic banks took more risks than conventional ones.…”

Section: Discussionsupporting

confidence: 92%

Does Digital Financial Inclusion Matter for Bank Risk-Taking? Evidence From the Dual-Banking System

Banna

Alam

2021

JIMF

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This paper examines the nexus between digital financial inclusion (DFI) and levels of bank risk-taking, using a sample of 283 commercial banks (Islamic and conventional) from six countries over the period 2011 to 2019 and deploying panel-corrected standard errors, two-stage least squares-instrumental variables and dynamic panel two-step generalized method of moments estimators. The findings suggest that Islamic banks take more risks than their counterpart conventional banks. The empirical evidence also indicates that an increase in the DFI index score reduces the overall level of bank risktaking and increases that of banking stability for commercial and conventional banks compared to Islamic ones. A strong association between DFI and bank risk-taking suggests that DFI not only reduces the default risk, leverage risk and portfolio risk of banks, but also increases financial mobility in the sample countries. Consequently, an inclusive digitalised banking industry ensures sustainable economic growth, which is likely to help maintain financial sustainability in times of crisis such as the Covid-19 pandemic. Our results are shown to be robust by various robustness checks. The study contributes to both the Islamic and conventional banking, as well as the digital financial inclusion, literature. The findings of the study provide various policy implications for policymakers and standard-setters in the countries examined.

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Section: Discussionsupporting

confidence: 92%

Does Digital Financial Inclusion Matter for Bank Risk-Taking? Evidence From the Dual-Banking System

Banna

Alam

2021

JIMF

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“…Ketika dana yang tersalurkan kepada masyarakat dalam bentuk kredit semakin besar, maka sisi likuiditas mempunyai tekanan tersendiri yakni persiapan cadangan pemenuhan modal bank agar tidak terjadi risiko likuiditas. Risiko likuiditas dapat terjadi ketika bank tidak dapat memenuhi permintaan penarikan dana dan permintaan kredit oleh nasabah (Djebali & Zaghdoudi, 2020;Smaoui et al, 2020;Soula, 2017). Adanya risiko terkait dengan likuiditas membuat bank wajib memenuhi berbagai kepentingan masyarakat baik penarikan dana maupun permintaan dana (kredit).…”

Section: Pendahuluanunclassified

“…Sejalan dengan hasil penelitian di Indonesia yang dilakukan oleh Pratama (2018) bahwa terdapat pengaruh yang signifikan antara penyaluran kredit terhadap likuiditas yakni semakin tinggi penyaluran kredit maka likuiditas juga semakin tinggi. Ini dapat berarti penyaluran kredit yang besar dapat memperkuat tingkat likuiditas (Meriläinen & Junttila, 2020;Smaoui et al, 2020). Hackethal et al (2010) membuktikan bahwa bank dengan pinjaman dalam jumlah besar menciptakan lebih banyak likuiditas, demikian pula dalam analisisnya terhadap bank-bank komersial yang terdaftar di Eropa dan Amerika Serikat.…”

Section: Pendahuluanunclassified

“…Angora dan Roulet (2011) berpendapat bahwa penciptaan likuiditas akan lebih rendah jika pemberian pinjaman terkonsentrasi pada pinjaman likuid. Hal senada juga dinyatakan oleh Meriläinen dan Junttila (2020), Smaoui et al (2020), Horváth et al (2014, serta Lei dan Song (2012) yang menyatakan bahwa pengaruh risiko kredit terhadap liquidity creation adalah positif. Namun pendapat ini berbeda dengan riset yang menemukan bahwa ketika penyaluran kredit meningkat, maka kemampuan bank dalam penciptaan likuiditas menurun.…”

Section: Pendahuluanunclassified

“…Hasil penelitian ini sejalan dengan penelitian yang dilakukan oleh Pratama (2018). Hasil penelitian ini juga mendukung Meriläinen dan Junttila (2020), Smaoui et al (2020), serta Hackethal et al (2010 yang mengatakan bahwa semakin besar penyaluran kredit maka tingkat likuiditas akan semakin baik. Penelitian juga mendukung teori risk absorption hypothesis (Berger & Bouwman, 2009), penyaluran kredit berpengaruh positif terhadap likuiditas.…”

Section: Pembahasanunclassified

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Penyaluran Kredit dan Tingkat Likuiditas: Bukti Empiris pada Bank Umum di Indonesia

Bhoka

Yuniarti

Burhan

2021

J. Manaj. dan Kewirausahaan

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This paper examines the effect of bank lending on liquidity. We use the loan-to-deposit ratio as a proxy for liquidity and total loan as a proxy for bank lending. We also consider the measurement of liquidity with non-performing loans (NPL) and return on assets (ROA) as control variables. The sample used is the banks listed on the Indonesia Stock Exchange as many as 42 banks with a total of 184 observations from unbalanced panel data. The analysis used is panel data regression (generalized least squares) with random effects as the best estimation model. We find bank lending to have a positive effect on liquidity, especially for banks that go public. We argue that banks avoid bankruptcy by increasing the proportion of reserves to absorb risk. The results support the “risk absorption” hypothesis (Berger Bouwman, 2009). We also find that return on assets (ROA) has a significant effect on liquidity, but non-performing loans (NPL) have no significant effect on liquidity, proving that banks has managed their reserves by absorbing risk properly.

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Behavioural implications of risk–return associations based on the adjusted thermal optimal path method: Large versus small banks

Trichilli,

Kharrat,

Boujelbène

2023

Int. J Fin Econ

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This article investigates the impact of bank size and business model on bank risk‐taking within the framework of the prospect theory. To fulfil this objective, we use the adjusted thermal optimal path model. The results suggest that conventional banks adopt the same risk‐taking behaviour for performance measures, regardless of their size. However, the size mainly influences the attitudes of managers towards Islamic banks. On the other hand, small Islamic banks, whether under‐ or over‐performing, take excessive risks. This behaviour is mainly explained by loss aversion. However, large Islamic banks that situated above the target are risk‐averse, since they adopt defensive behaviour. The results reveal that for risk measures and for both small and large banks, a bank's business model does not affect managers' attitude to risk. Therefore, small (large) banks adopt excessive risk‐taking (risk‐averse) behaviour and an offensive (defensive) strategy. The study has important implications for GCC banking regulators, supervisors, and market participants. Thus, our findings imply that understanding the impact of the bank size and business model on the risk‐taking behaviour of Islamic and conventional banks can help them reduce their risk and mitigate moral hazard and regulatory arbitrage behaviour.

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Funding liquidity risk and banks' risk-taking: Evidence from Islamic and conventional banks

Cited by 43 publications

References 46 publications

Does Digital Financial Inclusion Matter for Bank Risk-Taking? Evidence From the Dual-Banking System

Does Digital Financial Inclusion Matter for Bank Risk-Taking? Evidence From the Dual-Banking System

Penyaluran Kredit dan Tingkat Likuiditas: Bukti Empiris pada Bank Umum di Indonesia

Behavioural implications of risk–return associations based on the adjusted thermal optimal path method: Large versus small banks

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