Market Discipline in Banking: The Jordanian Experience

Omet, Ghassan; Al-Hassan, Shorouq; Yaseen, Hadeel

doi:10.17261/pressacademia.2015211616

Cited by 1 publication

(2 citation statements)

References 11 publications

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“…In the Middle East, Omet et al (2007Omet et al ( , 2015 prove depositor monitoring in Jordan but find no evidence in Kuwait, Oman and KSA. A.…”

Section: Literature Reviewmentioning

confidence: 86%

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Investment account holders’ market discipline in GCC countries

Guermazi

2020

JIABR

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Purpose The purpose of this study is to investigate the two components of market discipline, investment account holder (IAH) monitoring and the consequent reaction of the Islamic banks in GCC countries for the 2004–2013 period, including the recent financial crisis of 2008. Design/methodology/approach We address the research question that Investment Account holders (IAH) in GCC countries suc as Kingdom of Saudi Arabia (KSA), Bahrain and United Arab Emirates (UAE) monitor their banks. Regression analysis was used to examine the dependence level of profit-sharing investment account (PSIA) growth rate on bank risk characteristics (CAMEL variables). Then, the reaction of banks by regression influencing CAMEL variables of one-lagged period on PSIA growth rate was verified. Findings The results provide evidence of the first component of market discipline, i.e. the IAH monitoring, in KSA, Bahrain and UAE. The common result to the three countries is that market actors are concerned with accounting information on capital adequacy. However, in UAE, they are also interested in assets performance, whereas they look more at earnings in Bahrain. The results show evidence of the second component in Bahrain; the bank reaction to IAH monitoring and subsequently IAH discipline in Bahrain. Finally, the results do not support any impact of the financial crisis. Research limitations/implications The sample size is small although it is constituted by banks having a sufficient number of observations. Practical implications This study highlights the importance of IAH discipline, which would help prudential bank monitoring by regulators and wealth development for both investors and managers. It should increase the disclosure of relevant information as for the part of effective accountability of Islamic banks’ governance. Originality/value This study contributes to the literature on market discipline by dealing with Islamic banks. It is one of the very few studies to investigate IAH discipline in Islamic banks and the second component of market discipline, i.e. the influence of monitoring on banks.

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“…In the Middle East, Omet et al (2007Omet et al ( , 2015 prove depositor monitoring in Jordan but find no evidence in Kuwait, Oman and KSA. A.…”

Section: Literature Reviewmentioning

confidence: 86%

“…In the Middle East, Omet et al (2007, 2015) prove depositor monitoring in Jordan but find no evidence in Kuwait, Oman and KSA. A.El-Shazly (2001) found no evidence of the Egyptian depositor market discipline.…”

Section: Literature Reviewmentioning

confidence: 95%

Investment account holders’ market discipline in GCC countries

Guermazi

2020

JIABR

View full text Add to dashboard Cite

show abstract

Market Discipline in Banking: The Jordanian Experience

Cited by 1 publication

References 11 publications

Investment account holders’ market discipline in GCC countries

Investment account holders’ market discipline in GCC countries

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