Efficiency, capital and risk in banking industry: the case of Middle East and North Africa (MENA) countries
by Christos Lemonakis; Fotini Voulgaris; Konstantinos Vassakis; Stylianos Christakis
International Journal of Financial Engineering and Risk Management (IJFERM), Vol. 2, No. 2, 2015

Abstract: The purpose of this study is to measure the efficiency of the banking industry in the Middle East and North Africa (MENA) region and to investigate its effect on capitalisation and risk during the period: 2003-2012. The study, based on banks' financial data, attempts to present new evidence on the relationship between efficiency, capital and risk of MENA region's banking industry, using external and internal to the firm factors and panel data econometric modelling. This is the first study that investigates the relationships between efficiency, capital and risk in banking industry of MENA region. The results indicate that bank capitalisation is positively related to efficiency and profitability and negatively to size, amount and quality of loans and risk measured with Altman's Z-score. Efficiency and risk are also negatively related. The findings can lead to policy implications for banks' managers in order to facilitate the increase of efficiency and decrease of risk in the financial institutions in this region.

Online publication date: Sun, 03-Jan-2016

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