 Creditor rights and bank capital decisions: Conventional vs. Islamic bankingMohammad Bitar () and
Amine Tarazi
Post-Print from HAL Abstract: Using a sample of banks operating in 24 countries, we provide robust evidence that stronger creditor rights are associated with higher capital adequacy ratios of conventional banks but not of Islamic banks. Such results are more effective on bank core capital, suggesting that bank managers tend to increase pure equity to signal better monitoring efforts and avoid losing control in an environment characterized by strong creditor protection. Except in less religious countries with less competitive markets, Islamic banks appear to be less affected by creditor protection possibly because of the profit loss sharing (PLS) principle that considers depositors as investors who agree to share profits and losses with the bank, thus making the effect of creditor protection weaker or irrelevant in an Islamic banking context. Keywords: Creditor rights; market power; religion; bank capital ratios; Islamic banks (search for similar items in EconPapers) Published in Journal of Corporate Finance, 2019, 55, pp.69-104 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01943162 Access Statistics for this paper More papers in Post-Print from HAL |
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