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THE PERFORMANCE OF ISLAMIC BANKS IN THE MENA REGION: ARE SPECIFIC RISKS A MINOR ATTRIBUTE?

Imène Berguiga (), Philippe Adair, Nadia Zrelli Ben Hamida () and Ali Abdallah ()
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Imène Berguiga: University of Sousse
Ali Abdallah: University of Sousse

No 1379, Working Papers from Economic Research Forum

Abstract: Islamic banks face specific risks related to Sharia-compliant contracts. We provide an exhaustive literature review addressing the methodological issues of the measurement of performance and document the main stylised facts regarding the performance of Islamic banks (IBs) in the MENA region. We investigate 53IBs in 11 MENA countries over 2007-2014, first using cross-sectional analysis as of year 2013. A panel data model with instrumental variables estimates the impact of risks upon the returns on assets and equity of Islamic banks. Four salient results emerge: Sharia compliance exerts an ambiguous effect upon performance; Islamic specificity is a minor attribute according to the insignificant share of profit and loss sharing (PLS) contracts in total assets; there is no relationship between Sharia compliance and specific risk; loan loss provisions do not restrict to specific risks (PLS), hedging all risks.

Pages: 21
Date: 2019-12-20, Revised 2019-12-20
New Economics Papers: this item is included in nep-ara, nep-eff, nep-isf and nep-rmg
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Published by The Economic Research Forum (ERF)

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Related works:
Journal Article: The performance of Islamic banks in the MENA region: Are specific risks a minor attribute? (2019) Downloads
Working Paper: The performance of Islamic banks in the MENA region: Are specific risks a minor attribute? (2019) Downloads
Working Paper: The performance of Islamic banks in the MENA region: Are specific risks a minor attribute? (2017) Downloads
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