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Institutional Environment and Bank Capital Ratios

Tammuz Alraheb Ab, Christina Nicolas and Amine Tarazi
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Tammuz Alraheb Ab: LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges
Christina Nicolas: LAPE - Laboratoire d'Analyse et de Prospective Economique - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges

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Abstract: We investigate the influence of the institutional environment on bank capital ratios. Using a sample of 149 banks operating in the Middle East and North Africa region for the period 2004 to 2014, we find that, when stock markets have little presence, institutional variables significantly affect risk-weighted regulatory capital ratios but not leverage ratios. Conversely, when stock markets are more developed, only leverage ratios are influenced by institutional factors. Our results also indicate that institutional variables affect non-weighted equity-to-asset ratios of banks that are listed on a stock exchange. Our findings contribute to the bank capital structure literature and have important policy implications for developing countries.

Keywords: Bank Regulation; MENA Region; Bank Capital Structure; Institutions (search for similar items in EconPapers)
Date: 2019
Note: View the original document on HAL open archive server: https://hal-unilim.archives-ouvertes.fr/hal-02131621
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Published in Journal of Financial Stability, Elsevier, 2019, 43, pp.1-24

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Journal Article: Institutional environment and bank capital ratios (2019) Downloads
Working Paper: Institutional Environment and Bank Capital Ratios (2018) Downloads
Working Paper: Institutional Environment and Bank Capital Ratios (2003) Downloads
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