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on Islamic Finance |
| By: | Omneya Abdelsalam (Durham University); Marwa Elnahass (Newcastle University); Sabur Mollah (School of Management, Swansea University) |
| Abstract: | We test the impact of religiosity and ownership structure on the risk profile of banks, which issued securitisation. We employ GMM estimation using unique database on asset securitization of 672 commercial banks (4889 year-observations) in 22 countries (from 2003-2012), which have dual banking system. We find that banks with higher securitisation activity have consistently shown a riskier profile by being significantly less adequately capitalised and offering higher ratio of net loans to total assets. Controlling for bank type (Islamic and conventional banks), we find that although Islamic banks, in general, show a conservative approach towards risk by keeping higher reserves and more liquidity, banks involved in new issuance of asset securitization as still exposed to a higher risk profile . Controlling for a country religiosity shows different risk profile of banks in countries with different religiosity thresholds. Controlling for different types of bank ownership highlights an additional exposure to credit risk in addition to capital adequacy and liquidity risks. Our results emphasize the importance of identifying the impact of bank type and the religiosity / culture factors in global banking studies. Our results are of importance to both local and international regulators as well as different stakeholders in banks. |
| Keywords: | Securitisation, Islamic banks, Conventional banks, Bank Risk, Capitalization. |
| JEL: | C23 G01 G21 G28 L50 M41 |
| Date: | 2018–02–24 |
| URL: | http://d.repec.org/n?u=RePEc:swn:wpaper:2018-17&r=isf |
| By: | Omneya Abdelsalam (Durham University); Marwa Elnahass (Newcastle University); Sabur Mollah (School of Management, Swansea University) |
| Abstract: | This study is among the first attempts to tests for the relative differences between Islamic and conventional asset securitizations on bases of bank’s capitalization and risk (credit risk and liquidity risk) during two evidential crises, financial crisis (2007-2009) and the political crisis (2011-2012). We employ GMM estimation for uniquely constructed data for global asset securitization of commercial banks in 22 countries in the years 2003 to 2012, data of 672 global banks (4889 year-observations). We find that on average, securitized banks are less capitalized but more liquid than non-securitized banks. Islamic banks (IBs) involved in securitization hold higher quality loan portfolios and are more prudent but less liquid than securitizing conventional banks (CBs). We find no relative differences between the two sectors with respect to capitalization. Results are robust during the financial crisis. Additional tests, distinguishes between retained and non-retained interests for asset securitizations to test whether the level of control of the securitizing assets affect banks’ risk and capital adequacy. We find that non-retain interests by banks over securitization indicate significantly high prudence by banks however; this is associated with lower liquidity Our results are of importance to both local and international regulators as well as different stakeholders in banks. The bank type does not matters but the relative size of retained interests to the total issuance is that matters because it shows that there is impact on credit risk. Constrained model of IBs do not improve their liquidity though but helped with loan portfolio. |
| Keywords: | Securitisation, Islamic banks, Conventional banks, Bank Risk, Capitalization. |
| JEL: | C23 G01 G21 G28 L50 M41 |
| Date: | 2018–02–24 |
| URL: | http://d.repec.org/n?u=RePEc:swn:wpaper:2018-15&r=isf |
| By: | International Monetary Fund |
| Abstract: | Selected Issues |
| Keywords: | Afghanistan, Islamic Republic of;Middle East; |
| Date: | 2017–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:17/378&r=isf |
| By: | International Monetary Fund |
| Abstract: | Mauritania is addressing decisively the aftermath of the terms-of-trade shock which slowed growth and widened imbalances. Following the sharp drop in iron ore prices in 2014–15 which halved export revenues, widened imbalances, and exposed financial vulnerabilities, the authorities cut the budget deficit by close to 5 percent of NEGDP in 2016–17, allowed the exchange rate to depreciate, and mobilized foreign grants and loans. These efforts succeeded in restoring macroeconomic stability and levelling off debt to 69 percent of GDP, while growth rebounded. In parallel, the authorities prepared an inclusive growth strategy covering 2017–30, including structural reforms and sizable foreign-financed infrastructure investment to support growth and diversification. Poverty, however, remains widespread at about 31 percent of the population. |
| Keywords: | Middle East;Mauritania; |
| Date: | 2017–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:17/369&r=isf |