Political risk and bank stability in the Middle East and North Africa region

Mohammad Al-Shboul, Aktham Maghyereh, Abul Hassan and Philip Molyneux ()

Pacific-Basin Finance Journal, 2020, vol. 60, issue C

Abstract: This paper examines the relationship between political risk and bank stability in the Middle East and North Africa (MENA) region. We find that political risk is adversely associated with bank stability, generally supporting the financial fragility hypothesis. The analysis suggests that political risk differentially influences the level of stability of conventional and Islamic banks. Political risk has a less detrimental effect on the riskiness of Islamic banks compared with conventional banks. Our analysis also suggests that Islamic banks in the Gulf Cooperative Council (GCC) sub-region are less exposed to political risk compared with those operating in the non-GCC countries (other countries in the MENA region outside of the GCC sub-region).

Keywords: Political risk; Bank stability; Bank risk-taking; Islamic banks; Financial crises; Middle East and North Africa region (search for similar items in EconPapers)
JEL-codes: D81 E50 G01 G21 G32 N25 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pacfin:v:60:y:2020:i:c:s0927538x19303609

DOI: 10.1016/j.pacfin.2020.101291

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