Bank capital and liquidity creation: evidence from Islamic and conventional MENA banks

Ahmad Sahyouni and Man Wang

Afro-Asian Journal of Finance and Accounting, 2022, vol. 12, issue 3, 291-311

Abstract: This paper estimates the amount of liquidity created by MENA banks over the period 2011-2016, and further investigates the impact of bank capital on liquidity creation, controlling for a set of bank-level and macro variables. The findings reveal that banks created 5.281 trillion US dollars of liquidity, which equals 28.4% of their total assets and conventional banks create more liquidity than Islamic banks, as do large banks compared to medium and small banks. But, the Islamic banks are the best in terms of liquidity creation per asset. The regression results also show a negative relationship between equity capital and liquidity creation, which support the financial fragility crowding-out hypothesis, but only for conventional banks and for large and small size banks. Finally, the study contains some implications for decision makers and regulators in the region.

Keywords: liquidity creation; bank capital; Islamic banks; conventional banks; MENA. (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=124247 (text/html)
Access to full text is restricted to subscribers.

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:ids:afasfa:v:12:y:2022:i:3:p:291-311

Access Statistics for this article

More articles in Afro-Asian Journal of Finance and Accounting from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().