The impact of prudential regulation on risk-taking within dual banking systems: interest-free vs. interest-based banking industries
by Ameni Ghenimi; Algia Hammami; Mohamed Ali Brahim Omri
International Journal of Accounting and Finance (IJAF), Vol. 8, No. 3, 2018

Abstract: This paper investigates the impact of regulatory capital on banks' risk-taking. We use a panel of 19 Islamic and 49 conventional banks operating in the MENA region over the period 2006-2013 employing the dynamic panel data model. Our results show that regulatory capital has a positive impact on the financial stability of Islamic and conventional banks. In other words, regulatory capital reduces the banks risk-taking. Our results provide new insights about the relationship between regulatory capital and risk-taking, which makes them useful for a wide range of audiences, including regulators, bankers, policymakers, as well as practitioners and researchers.

Online publication date: Wed, 02-Jan-2019

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