2018
DOI: 10.1002/tie.22022
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Capital buffer and credit‐risk adjustments in Islamic and conventional banks

Abstract: The main purpose of this article is to empirically investigate the interactions between changes in capital buffer and changes in credit risk, using panel data of Islamic and conventional banks located in the Middle East and North Africa (MENA) region over the period 1999–2016. A negative two‐way relationship between the changes in capital buffer and the changes in credit risk is found for the two types of banks, that is, banks tend to decrease their capital buffers in response to an increase in risk exposure a… Show more

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Cited by 8 publications
(7 citation statements)
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“…Furthermore, for commercial banks of India during the period between 1998 and 2012, Maji and De (2015) found similar effects of regulatory capital on banks risk, where banks risk is negatively influenced by capital limitations especially after the introduction of Basel III. Another study by Bougatef and Korbi (2019) where banks from the Middle East and North Africa (MENA) were considered over the 1999-2016 period, the association between credit risk and capital buffer was examined for both CBs and IBs. The study revealed that the two variables are negatively associated for both types of banks in a bidirectional manner: in other words, bank react to the increase in capital buffer by lower their credit risk exposure and vice versa.…”
Section: Literature Reviewmentioning
confidence: 99%
“…Furthermore, for commercial banks of India during the period between 1998 and 2012, Maji and De (2015) found similar effects of regulatory capital on banks risk, where banks risk is negatively influenced by capital limitations especially after the introduction of Basel III. Another study by Bougatef and Korbi (2019) where banks from the Middle East and North Africa (MENA) were considered over the 1999-2016 period, the association between credit risk and capital buffer was examined for both CBs and IBs. The study revealed that the two variables are negatively associated for both types of banks in a bidirectional manner: in other words, bank react to the increase in capital buffer by lower their credit risk exposure and vice versa.…”
Section: Literature Reviewmentioning
confidence: 99%
“…Islamic banks generate a significant amount of income from their credit business (Muneer et al , 2020; Shaikh et al , 2020). Contemporary research on credit risk mainly deals with its determinants or its relation with monetary policies, whether it relates to an Islamic or a conventional bank (Ali et al , 2021; Bougatef and Korbi, 2019; Dione, 2020; Rosli et al , 2019). However, there is more to credit risk in Islamic banks because when Islamic banks finance their customers, they have to deal with the issue of compliance with Shariah as well (Bougatef and Korbi, 2019; Rosli et al , 2019; Sobarsyah et al , 2020).…”
Section: Literature Reviewmentioning
confidence: 99%
“…Islamic banking has shown its potential to stand against two major crises within a span of 12 years (Bilgin et al , 2021; Bougatef and Korbi, 2019; Rahahleh et al , 2019). The first one was the financial crisis of 2008, and the second one stemmed from the COVID-19 health crisis (Bilgin et al , 2021; Iqbal et al , 2022; Sobarsyah et al , 2020).…”
Section: Introductionmentioning
confidence: 99%
“…Lately, Bougatef and Korbi (2018) assess the interactions between changes in capital buffer and changes in credit risk of Islamic and conventional banks from the Middle East and North Africa (MENA) region for 1999-2016. Their results suggest that an increase in the changes in capital buffer has a negative effect on the changes in credit risk for the two types of banks.…”
Section: Table 1: Definitions Of Regulatory Pressurementioning
confidence: 99%