NDLI: Determinants of Bank Capital in Dual Banking Systems

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Determinants of Bank Capital in Dual Banking Systems

Content Provider	Scilit
Author	Bitar, Mohammad Hassan, M. Kabir Hippler, William
Copyright Year	2017
Description	Journal: SSRN Electronic Journal We report new evidence on the bank and country-level determinants of Islamic bank capital ratios in 28 countries between 1999 and 2013. Overall, we find that smaller, more profitable, and highly liquid Islamic banks are more highly capitalized. Additionally, improvements in the economic and financial environments and market discipline within a country correspond with higher Islamic bank capitalization. The results shed light on the impact that Sharia’a law restrictions have on Islamic banking capitalization. Our findings are most robust to banks that choose to hold capital well in excess of that required by regulators, consistent with traditional capital structure theory. Our results highlight the role that stable economic and political systems play in improving bank capitalization and reducing financial sector risk. By reducing political instability and corruption, improving legal systems, and encouraging access to capital markets, policymakers may incentivize mangers to make financing decisions that increase the capitalization of the Islamic banking industry in developing countries.
Related Links	http://www.indstate.edu/business/sites/business.indstate.edu/files/Docs/2017-WP-04_Bitar_Hassan_Hippler.pdf https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=3062686
ISSN	10914358
e-ISSN	15565068
DOI	10.2139/ssrn.3062686
Journal	SSRN Electronic Journal
Language	English
Publisher	Elsevier BV
Publisher Date	2017-10-31
Access Restriction	Open
Subject Keyword	Journal: SSRN Electronic Journal Political Science Bank Capitalization Islamic Banking Institutional Environment Political Distress Market Discipline
Content Type	Text
Resource Type	Article
Subject	Public Health, Environmental and Occupational Health Psychiatry and Mental Health

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