No Cover Image

Journal article 829 views 86 downloads

Impact of bank regulation on risk of Islamic and conventional banks

Hafiz Hoque Orcid Logo, Heng Liu Orcid Logo

International Journal of Finance & Economics, Volume: 28, Issue: 1, Pages: 1025 - 1062

Swansea University Author: Hafiz Hoque Orcid Logo

  • 59596.pdf

    PDF | Version of Record

    © 2021 The Authors. This is an open access article under the terms of the Creative Commons Attribution License

    Download (2.33MB)

Check full text

DOI (Published version): 10.1002/ijfe.2462

Abstract

We analyse the impact of bank regulation on the risks of Islamic banks (IBs) and conventional banks (CBs) between 2004 and 2015 by employing 455 CBs and 95 IBs from 22 countries where IBs and CBs coexist. Since the objective of Basel regulations is to achieve a stable banking sector by mitigating ri...

Full description

Published in: International Journal of Finance & Economics
ISSN: 1076-9307 1099-1158
Published: Wiley 2023
Online Access: Check full text

URI: https://cronfa.swan.ac.uk/Record/cronfa59596
first_indexed 2022-03-22T16:01:45Z
last_indexed 2023-03-10T04:09:23Z
id cronfa59596
recordtype SURis
fullrecord <?xml version="1.0"?><rfc1807><datestamp>2023-03-09T15:17:15.9722694</datestamp><bib-version>v2</bib-version><id>59596</id><entry>2022-03-13</entry><title>Impact of bank regulation on risk of Islamic and conventional banks</title><swanseaauthors><author><sid>06d1239b4524fff9c0a0f52a2a368910</sid><ORCID>0000-0002-4354-3895</ORCID><firstname>Hafiz</firstname><surname>Hoque</surname><name>Hafiz Hoque</name><active>true</active><ethesisStudent>false</ethesisStudent></author></swanseaauthors><date>2022-03-13</date><deptcode>CBAE</deptcode><abstract>We analyse the impact of bank regulation on the risks of Islamic banks (IBs) and conventional banks (CBs) between 2004 and 2015 by employing 455 CBs and 95 IBs from 22 countries where IBs and CBs coexist. Since the objective of Basel regulations is to achieve a stable banking sector by mitigating risks, we examine the impact of bank regulations on various risks of IBs and CBs by using a regression framework. We examine solvency risk, credit risk, idiosyncratic risk and systemic risk by using capital oversight, restriction on activities, private monitoring and supervisory power bank regulation data provided by the World Bank. The findings show that though the Basel regulations were originally developed for CBs, our results imply that they are effective for IBs as well as CBs. However, our study also shows that regulations affect IBs and CBs differently as their business models are different. More targeted regulations towards IBs would be necessary to support IBs. Additionally, in regions with higher economic freedom indexes, banking regulations can mitigate the risk of IBs and CBs to a greater extent. Our results imply that the combination of free economic policies and banking supervision addresses risks in banking effectively. Finally, the bank regulations did not appear to be able to control the risk of the sample banks during the 2007&#x2013;2009 crisis. Hence, the Basel committee needs to rethink about regulations during crisis times.</abstract><type>Journal Article</type><journal>International Journal of Finance &amp;amp; Economics</journal><volume>28</volume><journalNumber>1</journalNumber><paginationStart>1025</paginationStart><paginationEnd>1062</paginationEnd><publisher>Wiley</publisher><placeOfPublication/><isbnPrint/><isbnElectronic/><issnPrint>1076-9307</issnPrint><issnElectronic>1099-1158</issnElectronic><keywords>bank regulation, financial crisis, insolvency risk, Islamic banking, systemic risk</keywords><publishedDay>1</publishedDay><publishedMonth>1</publishedMonth><publishedYear>2023</publishedYear><publishedDate>2023-01-01</publishedDate><doi>10.1002/ijfe.2462</doi><url/><notes/><college>COLLEGE NANME</college><department>Management School</department><CollegeCode>COLLEGE CODE</CollegeCode><DepartmentCode>CBAE</DepartmentCode><institution>Swansea University</institution><apcterm/><funders/><projectreference/><lastEdited>2023-03-09T15:17:15.9722694</lastEdited><Created>2022-03-13T13:48:51.7411725</Created><path><level id="1">Faculty of Humanities and Social Sciences</level><level id="2">School of Management - Accounting and Finance</level></path><authors><author><firstname>Hafiz</firstname><surname>Hoque</surname><orcid>0000-0002-4354-3895</orcid><order>1</order></author><author><firstname>Heng</firstname><surname>Liu</surname><orcid>0000-0003-1607-8067</orcid><order>2</order></author></authors><documents><document><filename>59596__22651__c0a11fcb98ff4970ac26f4a121adc196.pdf</filename><originalFilename>59596.pdf</originalFilename><uploaded>2022-03-22T16:01:16.0443559</uploaded><type>Output</type><contentLength>2440402</contentLength><contentType>application/pdf</contentType><version>Version of Record</version><cronfaStatus>true</cronfaStatus><documentNotes>&#xA9; 2021 The Authors. This is an open access article under the terms of the Creative Commons Attribution License</documentNotes><copyrightCorrect>true</copyrightCorrect><language>eng</language><licence>http://creativecommons.org/licenses/by/4.0/</licence></document></documents><OutputDurs/></rfc1807>
spelling 2023-03-09T15:17:15.9722694 v2 59596 2022-03-13 Impact of bank regulation on risk of Islamic and conventional banks 06d1239b4524fff9c0a0f52a2a368910 0000-0002-4354-3895 Hafiz Hoque Hafiz Hoque true false 2022-03-13 CBAE We analyse the impact of bank regulation on the risks of Islamic banks (IBs) and conventional banks (CBs) between 2004 and 2015 by employing 455 CBs and 95 IBs from 22 countries where IBs and CBs coexist. Since the objective of Basel regulations is to achieve a stable banking sector by mitigating risks, we examine the impact of bank regulations on various risks of IBs and CBs by using a regression framework. We examine solvency risk, credit risk, idiosyncratic risk and systemic risk by using capital oversight, restriction on activities, private monitoring and supervisory power bank regulation data provided by the World Bank. The findings show that though the Basel regulations were originally developed for CBs, our results imply that they are effective for IBs as well as CBs. However, our study also shows that regulations affect IBs and CBs differently as their business models are different. More targeted regulations towards IBs would be necessary to support IBs. Additionally, in regions with higher economic freedom indexes, banking regulations can mitigate the risk of IBs and CBs to a greater extent. Our results imply that the combination of free economic policies and banking supervision addresses risks in banking effectively. Finally, the bank regulations did not appear to be able to control the risk of the sample banks during the 2007–2009 crisis. Hence, the Basel committee needs to rethink about regulations during crisis times. Journal Article International Journal of Finance &amp; Economics 28 1 1025 1062 Wiley 1076-9307 1099-1158 bank regulation, financial crisis, insolvency risk, Islamic banking, systemic risk 1 1 2023 2023-01-01 10.1002/ijfe.2462 COLLEGE NANME Management School COLLEGE CODE CBAE Swansea University 2023-03-09T15:17:15.9722694 2022-03-13T13:48:51.7411725 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Hafiz Hoque 0000-0002-4354-3895 1 Heng Liu 0000-0003-1607-8067 2 59596__22651__c0a11fcb98ff4970ac26f4a121adc196.pdf 59596.pdf 2022-03-22T16:01:16.0443559 Output 2440402 application/pdf Version of Record true © 2021 The Authors. This is an open access article under the terms of the Creative Commons Attribution License true eng http://creativecommons.org/licenses/by/4.0/
title Impact of bank regulation on risk of Islamic and conventional banks
spellingShingle Impact of bank regulation on risk of Islamic and conventional banks
Hafiz Hoque
title_short Impact of bank regulation on risk of Islamic and conventional banks
title_full Impact of bank regulation on risk of Islamic and conventional banks
title_fullStr Impact of bank regulation on risk of Islamic and conventional banks
title_full_unstemmed Impact of bank regulation on risk of Islamic and conventional banks
title_sort Impact of bank regulation on risk of Islamic and conventional banks
author_id_str_mv 06d1239b4524fff9c0a0f52a2a368910
author_id_fullname_str_mv 06d1239b4524fff9c0a0f52a2a368910_***_Hafiz Hoque
author Hafiz Hoque
author2 Hafiz Hoque
Heng Liu
format Journal article
container_title International Journal of Finance &amp; Economics
container_volume 28
container_issue 1
container_start_page 1025
publishDate 2023
institution Swansea University
issn 1076-9307
1099-1158
doi_str_mv 10.1002/ijfe.2462
publisher Wiley
college_str Faculty of Humanities and Social Sciences
hierarchytype
hierarchy_top_id facultyofhumanitiesandsocialsciences
hierarchy_top_title Faculty of Humanities and Social Sciences
hierarchy_parent_id facultyofhumanitiesandsocialsciences
hierarchy_parent_title Faculty of Humanities and Social Sciences
department_str School of Management - Accounting and Finance{{{_:::_}}}Faculty of Humanities and Social Sciences{{{_:::_}}}School of Management - Accounting and Finance
document_store_str 1
active_str 0
description We analyse the impact of bank regulation on the risks of Islamic banks (IBs) and conventional banks (CBs) between 2004 and 2015 by employing 455 CBs and 95 IBs from 22 countries where IBs and CBs coexist. Since the objective of Basel regulations is to achieve a stable banking sector by mitigating risks, we examine the impact of bank regulations on various risks of IBs and CBs by using a regression framework. We examine solvency risk, credit risk, idiosyncratic risk and systemic risk by using capital oversight, restriction on activities, private monitoring and supervisory power bank regulation data provided by the World Bank. The findings show that though the Basel regulations were originally developed for CBs, our results imply that they are effective for IBs as well as CBs. However, our study also shows that regulations affect IBs and CBs differently as their business models are different. More targeted regulations towards IBs would be necessary to support IBs. Additionally, in regions with higher economic freedom indexes, banking regulations can mitigate the risk of IBs and CBs to a greater extent. Our results imply that the combination of free economic policies and banking supervision addresses risks in banking effectively. Finally, the bank regulations did not appear to be able to control the risk of the sample banks during the 2007–2009 crisis. Hence, the Basel committee needs to rethink about regulations during crisis times.
published_date 2023-01-01T05:14:11Z
_version_ 1821381179387936768
score 11.29607

Similar Items