EconPapers    
Economics at your fingertips  
 

Basel Accord and Lending Behavior: Evidence from MENA Region

Sami Ben Naceur () and Magda Kandil ()

No 385, Working Papers from Economic Research Forum

Abstract: In 1988, an agreement was reached in Basel to set common requirements of bank capital in order to promote the soundness and stability of the international banking system. In line with the agreement, banks were required to hold capital in proportion to their perceived credit risks, which may have caused a “credit crunch,” and a significant reduction in credit supply. We investigate the direct link between the implementation of the Basel Accord and lending activities using a data set of annual observations from 1989 to 2004 for banks in Egypt, Jordan, Lebanon, Morocco, and Tunisia. The results provide support evidence of a significant increase in credit growth following the implementation of capital regulations in general. Despite the higher capital adequacy ratio, banks expanded credit and assets. Credit growth appears to be driven by demand fluctuations attributed to real growth, cost of borrowing and exchange rate risk. Overall, the effects of macroeconomic variables, in contrast to capital adequacy, appear to be more dominant in determining credit growth, regardless of the capital adequacy ratio, and variation across banks by nationality, ownership, and listing.

Pages: 32
Date: 2008-01-01, Revised 2008-01-01
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Published by The Economic Research Forum (ERF)

Downloads: (external link)
http://erf.org.eg/wp-content/uploads/2016/04/385_paper_final.pdf (application/pdf)
http://bit.ly/2ntsJgv

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:erg:wpaper:385

Access Statistics for this paper

More papers in Working Papers from Economic Research Forum Contact information at EDIRC.
Bibliographic data for series maintained by Sherine Ghoneim ().

 
Page updated 2020-08-08
Handle: RePEc:erg:wpaper:385