Bank Risk and Performance in the MENA Region: The Importance of Capital Requirements

Mohammad Bitar, Wadad Saad and Mohammed Benlemlih
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Mohammad Bitar: CERAG - Centre d'études et de recherches appliquées à la gestion - UGA [2016-2019] - Université Grenoble Alpes [2016-2019], UGA [2016-2019] - Université Grenoble Alpes [2016-2019], CNRS - Centre National de la Recherche Scientifique
Wadad Saad: LU / ULB - الجامعة اللبنانية [بيروت] = Lebanese University [Beirut] = Université libanaise [Beyrouth]
Mohammed Benlemlih: UGA [2016-2019] - Université Grenoble Alpes [2016-2019], CERAG - Centre d'études et de recherches appliquées à la gestion - UGA [2016-2019] - Université Grenoble Alpes [2016-2019], CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper benefits from various risk- and non-risk-based regulatory capital ratios and examines their impact on bank risk and performance in the Middle East and North Africa (MENA) region. Our findings suggest that compliance with Basel capital requirements enhances bank protection against risk, and improves efficiency and profitability. The impact of capital requirements on bank performance is more pronounced for too-big-to-fail banks, banks in periods of crises and banks in countries with good governance. The results are also robust when controlling for the Arab Spring transition period. Finally, endogeneity checks, alternative risk and performance measures, a principal component analysis and other estimation techniques confirm findings.

Keywords: Too-big-to-fail; Basel capital; Risk; Efficiency; Arab Spring; Profitability (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (48)

Published in Economic Systems, 2016, 40 (3), pp.398-421. ⟨10.1016/j.ecosys.2015.12.001⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01321636

DOI: 10.1016/j.ecosys.2015.12.001

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