The Nexus of Competition, Loan Quality, and Ownership Structure for Risk-Taking Behaviour

Syed Moudud-Ul-Huq, Md. Abdul Halim (), Farid Ahammad Sobhani, Ziaul Karim and Zinnatun Nesa
Additional contact information
Syed Moudud-Ul-Huq: Department of Accounting, Mawlana Bhashani Science and Technology University, Santosh, Tangail 1902, Bangladesh
Md. Abdul Halim: Institute for Advanced Research, United International University, Dhaka 1212, Bangladesh
Farid Ahammad Sobhani: School of Business and Economics, United International University, Dhaka 1212, Bangladesh
Ziaul Karim: School of Business and Economics, United International University, Dhaka 1212, Bangladesh
Zinnatun Nesa: School of Business and Economics, United International University, Dhaka 1212, Bangladesh

Risks, 2023, vol. 11, issue 4, 1-22

Abstract: “The core purpose is to explore the relationship between competition, loan quality, ownership structure, and risk for MENA economies.” In addition, this study examines the financial stability level of dual banking and explores the bidirectional causality of competition and risk concerning the impact of ownership structure. This study uses 748 observations from 2011 to 2020 in MENA countries. The Generalized Method of Moments (GMM) is an econometric technique used to estimate the parameters of a statistical model. The study findings indicate a negative (positive) relationship between MENA bank competition and risk (financial stability). It indicates that lower bank competition reduces bank credit risk and increases financial stability in MENA countries. Regarding ownership structure, Islamic banks display a stronger position in MENA economies than that of Commercial banks and Specialized Government Institutions. In contrast, specialized government institutions are riskier than commercial banks and Islamic banks. Loan quality shows the two-way causality between the degree to which banks compete and the quality of their loans to customers in the MENA markets. This study sets itself apart from other studies by creating a new segmented literature review portion. Finally, a significant policy implication is provided for academics, researchers, and policymakers interested in applying these findings.

Keywords: GMM; risk; financial stability; competition; ownership structure; loan quality (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.mdpi.com/2227-9091/11/4/68/pdf (application/pdf)
https://www.mdpi.com/2227-9091/11/4/68/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jrisks:v:11:y:2023:i:4:p:68-:d:1110362

Access Statistics for this article

Risks is currently edited by Mr. Claude Zhang

More articles in Risks from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().