Capital adequacy implications on Islamic and non-Islamic bank's behavior: Does market power matter?

Salma Louati, Ilhem Gargouri Abida and Younes Boujelbene

Borsa Istanbul Review, 2015, vol. 15, issue 3, 192-204

Abstract: After each crisis, reforms are carried out to prevent a new episode of financial crises. In this context, our objective in this study is to examine and simultaneously compare the behavior of Islamic and conventional banks in relation to the ratio of the capital adequacy in different competitive circumstances. We used data from 12 MENA and South East Asian countries characterized by the coexistence of Islamic and conventional banks. We concluded that the funding ratio has a significant impact on the behavior of 70 conventional banks and 47 Islamic banks. However, competitive conditions have no significant effect on the relationship between the weighted assets ratio and Islamic bank behavior, which means that this type of banks is applying theoretical models based on the prohibition of the interest.

Keywords: Bank competition; Capital adequacy ratio; Deposits and loans (search for similar items in EconPapers)
JEL-codes: G21 G28 G32 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:bor:bistre:v:15:y:2015:i:3:p:192-204

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