Purpose

This study aims to estimate the regulatory compliance impact on the risk of banks operating in Pakistan. The direct and indirect regulatory compliance of conventional banks with Islamic operations in terms of risk from 2009 to 2017 are estimated.

Design/methodology/approach

This study used a two-step system generalized method of moment (GMM) (dynamic panel) to examine the relationship between regulatory compliance, Islamic operations and the bank risk and tested the direct and indirect impacts of regulatory compliance and Islamic operations on the said risk.

Findings

Regulatory compliance has a significant and positive relation with bank risk, whereas the Islamic bank operations have a significant and negative relationship. Thus, regulatory compliance creates pressure on banks, but the Islamic operations of conventional banks reduce this pressure in direct and indirect ways.

Practical implications

Per the policy of State Bank of Pakistan (SBP), banks shall pursue Islamic operations to reduce regulatory pressure and widen their scope. The results suggest that regulatory compliance creates pressure on bank risk irrespective of the type of the bank. Thus, the SBP should seek the appropriate measure for this occurrence.

Originality/value

To the best of the authors’ knowledge, this work is the very first study that has considered the unique Islamic operations of conventional banks and estimated its impact on risk. Moreover, this work examined two types of bank risk instead of employing stability and market measure. This research is also the first to implement a two-step system GMM for the methodology.

中文翻译：

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监管合规和伊斯兰业务在银行风险中的作用：来自巴基斯坦的证据

目的

本研究旨在评估监管合规对在巴基斯坦经营的银行风险的影响。对 2009 年至 2017 年开展伊斯兰业务的传统银行在风险方面的直接和间接监管合规性进行了估计。

设计/方法/方法

本研究采用两步系统广义矩法（GMM）（动态面板）检验监管合规、伊斯兰经营和银行风险之间的关系，并检验监管合规和伊斯兰经营对上述风险的直接和间接影响。 .

发现

监管合规与银行风险呈显着正相关，而伊斯兰银行业务则呈显着负相关。因此，监管合规给银行带来了压力，但传统银行的伊斯兰业务以直接和间接的方式减轻了这种压力。

实际影响

根据巴基斯坦国家银行 (SBP) 的政策，银行应开展伊斯兰业务，以减轻监管压力并扩大经营范围。结果表明，无论银行类型如何，监管合规都会对银行风险产生压力。因此，SBP 应针对这种情况寻求适当的措施。

原创性/价值

据作者所知，这项工作是第一项考虑传统银行独特的伊斯兰业务并估计其对风险影响的研究。此外，这项工作检查了两种类型的银行风险，而不是采用稳定性和市场措施。这项研究也是第一个为该方法实施两步系统 GMM 的研究。