The Impact of Bank Capital and Institutional Quality on Lending: Empirical Evidence from the MENA Region

Maya El Hourani and Gerard Mondello

No 2019-34, GREDEG Working Papers from Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France

Abstract: This paper aims to investigate the influence of bank capitalization and institutional quality on the lending activity of commercial banks in the MENA region over the period from 2000 to 2016. By applying the fixed effect panel data estimator, we find that, commercial bank lending depends on bank-specific variables, macroeconomic variables and the institutional environment. Our results show that any increase in bank capitalization and the implementation of capital regulation (Basel II and Basel III) have negative impacts on the credit supply. We find, also, that political stability and good regulatory quality encourage foreign, domestic and private banks to improve their credit supply. However, commercial banks tend to behave cautiously when there is increasing government effectiveness and financial freedom.

Keywords: Bank capital; institutional quality; credit supply; MENA region (search for similar items in EconPapers)
Pages: 29 pages
Date: 2019-11
New Economics Papers: this item is included in nep-ara, nep-ban and nep-fdg
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Citations: View citations in EconPapers (3)

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http://195.220.190.85/GREDEG-WP-2019-34.pdf First version, 2019 (application/pdf)

Related works:
Working Paper: THE IMPACT OF BANK CAPITAL AND INSTITUTIONAL QUALITY ON LENDING: EMPIRICAL EVIDENCE FROM THE MENA REGION (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:gre:wpaper:2019-34

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