Bitar, Mohammad and Tarazi, Amine,(2019), Creditor rights and bank capital decisions: Conventional vs. Islamic banking. , Journal of Corporate Finance, UNSPECIFIED
Text
Restricted to Repository staff only
Download (784kB) | Request a copy
Restricted to Repository staff only
Download (784kB) | Request a copy
Abstract
Using a sample of banks operating in 24 countries, we provide robust evidence that stronger
creditor rights are associated with higher capital adequacy ratios for conventional banks but not
for Islamic banks. Such results suggest that, under stronger creditor protection, only the managers
of conventional banks increase equity, presumably as a means of signalling better monitoring
efforts and of avoiding loss of control. A possible reason for the finding that Islamic banks
do not generally increase equity is that, under the profit loss sharing (PLS) principle, depositors
share profits and losses with the bank. The role of creditor protection is hence irrelevant in an
Islamic banking context. However, we show that in predominantly non-Muslim countries with
less competitive markets, Islamic banks show a similar association between creditor rights and
capital ratios as conventional banks.
Keywords : | Creditor rights, Market power, Religion, Bank capital ratios, Islamic banks, UNSPECIFIED |
---|---|
Journal or Publication Title: | Journal of Corporate Finance |
Volume: | 55 |
Number: | UNSPECIFIED |
Item Type: | Article |
Subjects: | Ekonomi Islam |
Depositing User: | Heru Prastyo |
Date Deposited: | 16 Dec 2019 07:10 |
Last Modified: | 16 Dec 2019 07:10 |
URI: | https://repofeb.undip.ac.id/id/eprint/214 |