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Institutional environment and bank capital ratios

Tammuz H. Alraheb, Christina Nicolas and Amine Tarazi

Journal of Financial Stability, 2019, vol. 43, issue C, 1-24

Abstract: We investigate the influence of the institutional environment on bank capital ratios. Using a sample of 160 banks operating in the Middle East and North Africa region for the period 2004–2014, we find that, when stock markets have little presence, institutional variables significantly affect risk-weighted regulatory capital ratios but not leverage ratios. Conversely, when stock markets are more developed, only leverage ratios are influenced by institutional factors. Our results also indicate that institutional variables affect non-weighted equity-to-asset ratios of banks that are listed on a stock exchange. Our findings contribute to the bank capital structure literature and have important policy implications for developing countries.

Keywords: Bank capital structure; Institutions; Bank regulation (search for similar items in EconPapers)
JEL-codes: G21 G28 G32 (search for similar items in EconPapers)
Date: 2019
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Related works:
Working Paper: Institutional Environment and Bank Capital Ratios (2019)
Working Paper: Institutional Environment and Bank Capital Ratios (2018) Downloads
Working Paper: Institutional Environment and Bank Capital Ratios (2003) Downloads
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DOI: 10.1016/j.jfs.2019.05.016

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