Purpose

This paper aims to investigate the impact of capital requirements and bank competition on banks' risk-taking behavior in the Middle East and North Africa (MENA) region.

Design/methodology/approach

The study combines both descriptive and analytical approaches. It considers panel data sets and adopts panel data econometric techniques like fixed effects/random effects and generalized method of moments estimator.

Findings

Regulatory capital and market competition have different effects according to the bank’s type (Islamic or conventional). The results show that the capital adequacy ratio has a significant impact on the credit risk of conventional banks (CBs) while this effect is irrelevant for Islamic banks (IBs). However, market competition plays a significant role in shaping risk-taking behavior of Islamic banking institutions. Our results indicate that banks with strong market power may pursue risky strategies in the face of increased regulatory pressure (e.g. increased minimum capital requirements). The results were robust to alternative profitability measures and endogeneity checks.

Research limitations/implications

The most important limitation is the lack of data for some banks and years, and this paper had to exclude some variables because of missing observations. The second limitation concerns the number of IBs in the sample. However, this can be overcome by including more countries from MENA and other regions where Islamic banking is a growing phenomenon.

Practical implications

Our findings call for a change in Islamic banking’s traditional business model based on the prohibition of interest. The analysis indicates that market concentration moderates the association between capital requirements and the insolvency risk of IBs but not CBs. Therefore, regulatory authorities concerned with improving financial stability in the MENA region should set up their policies differently depending on the level of banking market concentration. Finally, bank managers are requested to apply a more disciplined approach to their lending decisions and build sufficient capital conservation buffers to limit the impact of downside risk from the depletion of capital buffers during the pandemic.

Originality/value

This study addresses banks’ risk-taking behavior and stability in the MENA region, which includes banks of different types (Islamic and conventional). This paper also contributes to the literature on bank stability by identifying the most critical factors that affect bank risk and stability in the MENA region, which can be relevant in the context of the new global (COVID-19) crisis.

中文翻译：

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中东和北非地区银行体系稳定性：市场力量和资本要求对银行风险承担行为的影响

目的

本文旨在调查中东和北非（MENA）地区资本要求和银行竞争对银行风险承担行为的影响。

设计/方法论/途径

该研究结合了描述性和分析性方法。它考虑面板数据集，采用固定效应/随机效应等面板数据计量经济学技术和广义矩估计方法。

发现

根据银行类型（伊斯兰银行或传统银行），监管资本和市场竞争会产生不同的影响。结果表明，资本充足率对传统银行（CB）的信用风险有显着影响，而这种影响对伊斯兰银行（IB）则无关。然而，市场竞争在塑造伊斯兰银行机构的风险承担行为方面发挥着重要作用。我们的研究结果表明，面对监管压力加大（例如提高最低资本要求），拥有强大市场力量的银行可能会采取高风险策略。结果对于替代盈利能力衡量和内生性检查是稳健的。

研究局限性/影响

最重要的限制是缺乏一些银行和年份的数据，并且由于缺少观察，本文不得不排除一些变量。第二个限制涉及样本中 IB 的数量。然而，通过纳入中东和北非地区的更多国家以及伊斯兰银行业日益盛行的其他地区，可以克服这一问题。

实际影响

我们的研究结果呼吁改变伊斯兰银行基于禁止利息的传统业务模式。分析表明，市场集中度调节了资本要求与投资银行（而非商业银行）破产风险之间的关联。因此，关心改善中东和北非地区金融稳定的监管机构应根据银行市场集中度的水平制定不同的政策。最后，要求银行管理者在贷款决策中采用更加严格的方法，并建立足够的资本储备缓冲，以限制大流行期间资本缓冲耗尽带来的下行风险的影响。

原创性/价值

本研究探讨了中东和北非地区银行的风险承担行为和稳定性，其中包括不同类型的银行（伊斯兰银行和传统银行）。本文还通过确定影响中东和北非地区银行风险和稳定性的最关键因素，为有关银行稳定性的文献做出贡献，这些因素在新的全球 (COVID-19) 危机的背景下可能具有相关性。