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The Effect of the 2008 Global Financial Crisis on the Capital Structures of Conventional and Islamic Banks in the Gulf Cooperation Council Region

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  • Talla M. Aldeehani

    (College of Business Administration, Kuwait University, Kuwait.)

Abstract

The paper investigates the determinants of capital structures of conventional banks (CBs) and Islamic banks (IBs) before and after the 2008 global financial crisis. We gathered data on the banking industry of the Gulf Cooperation Countries for the period 2003 - 2016 covering 53 banks, 10 of which are Islamic. Our results indicate that the crisis had significant effects on bank liquidity, lending, profitability, size and growth. They also indicate that the capital structures of CBs and IBs, before and after the crisis are determined differently. Due to the contractual setup and capital adequacy requirements, we believe that IBs, had it not been for the faith, do not enjoy enough maneuverability space to enhance shareholders wealth. Accordingly, questions regarding how much IBs' clients know about faith and the contradicting provisions of Islamic law in the context of investment decision making were raised. Practical and theoretical implications and recommendations are discussed.

Suggested Citation

  • Talla M. Aldeehani, 2019. "The Effect of the 2008 Global Financial Crisis on the Capital Structures of Conventional and Islamic Banks in the Gulf Cooperation Council Region," International Journal of Economics and Financial Issues, Econjournals, vol. 9(2), pages 12-23.
    • Handle: RePEc:eco:journ1:2019-02-2
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    References listed on IDEAS

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    Cited by:

    1. Khalil Ullah Mohammad & Mohsin Raza Khan, 2021. "Bank Capital Structure Dynamics and Covid-19: Evidence from South Asia," iRASD Journal of Economics, International Research Alliance for Sustainable Development (iRASD), vol. 3(3), pages 293-304, December.

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    More about this item

    Keywords

    s Capital structure; Islamic banks; financial crisis;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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