Basel Compliance and Financial Stability; Evidence from Islamic Banks
Sami Ben Naceur (),
Rym Ayadi and
No 17/161, IMF Working Papers from International Monetary Fund
The paper provides robust evidence that compliance with Basel Core Principles (BCPs) has a strong positive effect on the Z-score of conventional banks, albeit less pronounced on the Zscore of Islamic banks. Using a sample of banks operating in 19 developing countries, the results appear to be driven by capital ratios, a component of Z-score for the two types of banks. Even though smaller on Islamic banks, individual chapters of BCPs also suggest a positive effect on the stability of conventional banks. The findings support the effective role of BCP standards in improving bank stability, whose important implications led to the Islamic Financial Services Board (IFSB) publication of new recommendations in 2015 to bring BCP standards in line with the Core Principles for Islamic Finance Regulation (CPIFRs) standards. Our findings suggest that because Islamic banks are benchmarked closely to BCPs, the implementation of CPFIRs should also positively affect their stability.
Keywords: Basel Core Principles; Islamic banking; Banks; Bank supervision; Bank regulations; Econometric models; Albania; Bahrain; Bangladesh; Egypt; Indonesia; Jordan; Kenya; Kuwait; Lebanon; Malaysia; Pakistan; Saudi Arabia; Singapore; South Africa; Syria; Tunisia; United Arab Emirates; United Kingdom; BCPs, CPIFRs, Stability, Islamic banks, Government Policy and Regulation, Comparative Analysis of Economic Systems (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba
References: Add references at CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:17/161
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Jim Beardow ().