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The effects of bank competition, financial stability and ownership structure: evidence from the Middle East and North African (MENA) countries

Syed Moudud-Ul-Huq, Tanmay Biswas, Md. Abdul Halim, Miroslav Mateev, Imran Yousaf, Abedin Abedin

International Journal of Islamic and Middle Eastern Finance and Management, Volume: 15, Issue: 4, Pages: 717 - 738

Swansea University Author: Abedin Abedin

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DOI (Published version): 10.1108/imefm-05-2020-0214

Abstract

Purpose: This study aims to show the relationship between competition, financial stability and ownership structure of banks in the Middle East and North African (MENA) countries. Design/methodology/approach: This study uses the generalized method of moments (GMM) estimators to generate research resu...

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Published in: International Journal of Islamic and Middle Eastern Finance and Management
ISSN: 1753-8394 1753-8394
Published: Emerald 2022
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URI: https://cronfa.swan.ac.uk/Record/cronfa64254
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spelling v2 64254 2023-08-31 The effects of bank competition, financial stability and ownership structure: evidence from the Middle East and North African (MENA) countries 4ed8c020eae0c9bec4f5d9495d86d415 Abedin Abedin Abedin Abedin true false 2023-08-31 BAF Purpose: This study aims to show the relationship between competition, financial stability and ownership structure of banks in the Middle East and North African (MENA) countries. Design/methodology/approach: This study uses the generalized method of moments (GMM) estimators to generate research results. This study uses an unbalanced panel dynamic data set. It covers the period 2011 to 2017 in MENA banks. Findings: This study implies that there is a significant and positive relationship between market power and the financial stability of banks in MENA countries. It explains a competitive market focus on credit risk, which turns them risky. From the bank’s ownership view, Islamic banks are in a less risky position which means Islamic banks are more stable than other ownership structures. On the other hand, government specialized institute displays their poor financial stability and risky from other ownership structures. Unfortunately, there is no significant impact of ownership structure on competition unless Islamic banks prove that they (Islamic banks) perform better in market power. Practical implications: The empirical findings of this study suggest that MENA banks should improve the process of managing and monitoring the non-performing loan (loan segment business). It reduces the level of credit risk, which leads to achieving more profit. It also recommends that loan quality should improve immediately in this region for declining financial disruption. Based on the ownership structure, policymakers and stakeholders should adjust their risk and financial stability. Notably, the stakeholders can focus on Islamic banks in this region as this type of ownership structure showing superiority over other ownership structures. Originality/value: This study is based on the latest data set and produced outcomes by using a GMM estimator. It also uses multiple measures of competition and risk variables to get robust results. Moreover, to the best of the knowledge, this study is the pioneer to examine the competition, risk (financial stability) and ownership structure of banks in the MENA countries. Journal Article International Journal of Islamic and Middle Eastern Finance and Management 15 4 717 738 Emerald 1753-8394 1753-8394 Competition, Financial stability, Credit risk, Ownership structure, MENA countries 3 8 2022 2022-08-03 10.1108/imefm-05-2020-0214 http://dx.doi.org/10.1108/imefm-05-2020-0214 COLLEGE NANME Accounting and Finance COLLEGE CODE BAF Swansea University 2023-09-20T10:34:17.9670944 2023-08-31T17:54:25.5808311 Faculty of Humanities and Social Sciences School of Management - Accounting and Finance Syed Moudud-Ul-Huq 1 Tanmay Biswas 2 Md. Abdul Halim 3 Miroslav Mateev 4 Imran Yousaf 5 Abedin Abedin 6
title The effects of bank competition, financial stability and ownership structure: evidence from the Middle East and North African (MENA) countries
spellingShingle The effects of bank competition, financial stability and ownership structure: evidence from the Middle East and North African (MENA) countries
Abedin Abedin
title_short The effects of bank competition, financial stability and ownership structure: evidence from the Middle East and North African (MENA) countries
title_full The effects of bank competition, financial stability and ownership structure: evidence from the Middle East and North African (MENA) countries
title_fullStr The effects of bank competition, financial stability and ownership structure: evidence from the Middle East and North African (MENA) countries
title_full_unstemmed The effects of bank competition, financial stability and ownership structure: evidence from the Middle East and North African (MENA) countries
title_sort The effects of bank competition, financial stability and ownership structure: evidence from the Middle East and North African (MENA) countries
author_id_str_mv 4ed8c020eae0c9bec4f5d9495d86d415
author_id_fullname_str_mv 4ed8c020eae0c9bec4f5d9495d86d415_***_Abedin Abedin
author Abedin Abedin
author2 Syed Moudud-Ul-Huq
Tanmay Biswas
Md. Abdul Halim
Miroslav Mateev
Imran Yousaf
Abedin Abedin
format Journal article
container_title International Journal of Islamic and Middle Eastern Finance and Management
container_volume 15
container_issue 4
container_start_page 717
publishDate 2022
institution Swansea University
issn 1753-8394
1753-8394
doi_str_mv 10.1108/imefm-05-2020-0214
publisher Emerald
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
url http://dx.doi.org/10.1108/imefm-05-2020-0214
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description Purpose: This study aims to show the relationship between competition, financial stability and ownership structure of banks in the Middle East and North African (MENA) countries. Design/methodology/approach: This study uses the generalized method of moments (GMM) estimators to generate research results. This study uses an unbalanced panel dynamic data set. It covers the period 2011 to 2017 in MENA banks. Findings: This study implies that there is a significant and positive relationship between market power and the financial stability of banks in MENA countries. It explains a competitive market focus on credit risk, which turns them risky. From the bank’s ownership view, Islamic banks are in a less risky position which means Islamic banks are more stable than other ownership structures. On the other hand, government specialized institute displays their poor financial stability and risky from other ownership structures. Unfortunately, there is no significant impact of ownership structure on competition unless Islamic banks prove that they (Islamic banks) perform better in market power. Practical implications: The empirical findings of this study suggest that MENA banks should improve the process of managing and monitoring the non-performing loan (loan segment business). It reduces the level of credit risk, which leads to achieving more profit. It also recommends that loan quality should improve immediately in this region for declining financial disruption. Based on the ownership structure, policymakers and stakeholders should adjust their risk and financial stability. Notably, the stakeholders can focus on Islamic banks in this region as this type of ownership structure showing superiority over other ownership structures. Originality/value: This study is based on the latest data set and produced outcomes by using a GMM estimator. It also uses multiple measures of competition and risk variables to get robust results. Moreover, to the best of the knowledge, this study is the pioneer to examine the competition, risk (financial stability) and ownership structure of banks in the MENA countries.
published_date 2022-08-03T10:34:15Z
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