IDEAS home Printed from https://ideas.repec.org/a/ibn/ibrjnl/v17y2024i1p1.html
   My bibliography  Save this article

Financial Stability in the MENA Region: The Impact of Banking Capitalization and Institutional Environment on Credit Availability

Author

Listed:
  • Ibrahim Khalil ALLOUCHE
  • Nancy HIJAZI

Abstract

This study aims to analyze the applicability of the supply-side credit crunch in the MENA region by investigating the influence of bank capitalization and the institutional environment on the lending activities of banks operating in the region from 1999 to 2020. Employing the generalized method of moments (GMM) panel data estimator, our analysis reveals that bank lending is shaped by specific bank-related variables, country-level macroeconomic variables, and the quality of institutions. Our findings underscore that increases in bank capitalization levels, competition levels, or banks' liquidity ratios exert a negative impact on credit availability. Conversely, the size and profitability of banks have a positive effect on the accessibility of loans. It is evident that the banks under consideration consistently expand their credit supply in tandem with economic expansion and low inflation rates, thereby positively influencing credit demand. Furthermore, our study indicates that robust anti-corruption measures, political stability, and adherence to the rule of law act as catalysts, encouraging banks to enhance their lending availability.

Suggested Citation

  • Ibrahim Khalil ALLOUCHE & Nancy HIJAZI, 2024. "Financial Stability in the MENA Region: The Impact of Banking Capitalization and Institutional Environment on Credit Availability," International Business Research, Canadian Center of Science and Education, vol. 17(1), pages 1-1, February.
    • Handle: RePEc:ibn:ibrjnl:v:17:y:2024:i:1:p:1
    as

    Download full text from publisher

    File URL: https://ccsenet.org/journal/index.php/ibr/article/download/0/0/49714/53727
    Download Restriction: no
    File URL: https://ccsenet.org/journal/index.php/ibr/article/view/0/49714
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kee‐Hong Bae & Vidhan K. Goyal, 2009. "Creditor Rights, Enforcement, and Bank Loans," Journal of Finance, American Finance Association, vol. 64(2), pages 823-860, April.
    2. Awdeh, Ali & Hamadi, Hassan, 2011. "How Do Banks Set their Capital?," MPRA Paper 119116, University Library of Munich, Germany.
    3. Aiyar, Shekhar & Calomiris, Charles W. & Wieladek, Tomasz, 2016. "How does credit supply respond to monetary policy and bank minimum capital requirements?," European Economic Review, Elsevier, vol. 82(C), pages 142-165.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Apostolos Thomadakis, 2015. "Determinants of Credit Constrained Firms: Evidence from Central and Eastern Europe Region," Bank of Lithuania Working Paper Series 22, Bank of Lithuania.
    2. Haichao Fan & Xiang Gao, 2017. "Domestic Creditor Rights and External Private Debt," Economic Journal, Royal Economic Society, vol. 127(606), pages 2410-2440, November.
    3. Falavigna, Greta & Ippoliti, Roberto, 2023. "SMEs’ behavior under financial constraints: An empirical investigation on the legal environment and the substitution effect with tax arrears," The North American Journal of Economics and Finance, Elsevier, vol. 66(C).
    4. Florentina Melnic & Daniel Juravle, 2020. "Governance And Access To Finance," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 25, pages 151-168, June.
    5. Björn Imbierowicz & Axel Löffler & Ursula Vogel, 2021. "The transmission of bank capital requirements and monetary policy to bank lending in Germany," Review of International Economics, Wiley Blackwell, vol. 29(1), pages 144-164, February.
    6. Tobias Adrian & Nellie Liang, 2018. "Monetary Policy, Financial Conditions, and Financial Stability," International Journal of Central Banking, International Journal of Central Banking, vol. 14(1), pages 73-131, January.
    7. repec:nbb:reswpp:201606-306 is not listed on IDEAS
    8. Sikochi, Anywhere, 2020. "Corporate legal structure and bank loan spread," Journal of Corporate Finance, Elsevier, vol. 64(C).
    9. Nataliya G. Filatova, 2019. "Improving the Credit Rating of Loan Recipients Implementing Long-Term Investment Projects," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 4, pages 102-115, August.
    10. Hasan, Iftekhar & Kim, Suk-Joong & Politsidis, Panagiotis N. & Wu, Eliza, 2021. "Loan syndication under Basel II: How do firm credit ratings affect the cost of credit?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 72(C).
    11. Lazopoulos, Ioannis & Gabriel, Vasco, 2019. "Policy mandates and institutional architecture," Journal of Banking & Finance, Elsevier, vol. 100(C), pages 122-134.
    12. Rodano, Giacomo & Serrano-Velarde, Nicolas & Tarantino, Emanuele, 2016. "Bankruptcy law and bank financing," Journal of Financial Economics, Elsevier, vol. 120(2), pages 363-382.
    13. Machokoto, Michael & Areneke, Geofry, 2020. "Does innovation and financial constraints affect the propensity to save in emerging markets?," Research in International Business and Finance, Elsevier, vol. 52(C).
    14. Elien Meuleman & Rudi Vander Vennet, 2022. "Macroprudential Policy, Monetary Policy, and Euro Zone Bank Risk," International Journal of Central Banking, International Journal of Central Banking, vol. 18(4), pages 1-52, October.
    15. Nan Zhang & Qiaozhuan Liang & Huiying Li & Xiao Wang, 2022. "The organizational relationship–based political connection and debt financing: Evidence from Chinese private firms," Bulletin of Economic Research, Wiley Blackwell, vol. 74(1), pages 69-105, January.
    16. Love, Inessa & Peria, Maria Soledad Martinez & Singh, Sandeep, 2013. "Collateral registries for movable assets : does their introduction spur firms'access to bank finance ?," Policy Research Working Paper Series 6477, The World Bank.
    17. Retselisitsoe I. Thamae & Nicholas M. Odhiambo, 2022. "The impact of bank regulation on bank lending: a review of international literature," Journal of Banking Regulation, Palgrave Macmillan, vol. 23(4), pages 405-418, December.
    18. Hasan, Iftekhar & Politsidis, Panagiotis N. & Sharma, Zenu, 2021. "Global syndicated lending during the COVID-19 pandemic," Journal of Banking & Finance, Elsevier, vol. 133(C).
    19. Pezone, Vincenzo, 2020. "The real effects of judicial enforcement," SAFE Working Paper Series 192, Leibniz Institute for Financial Research SAFE, revised 2020.
    20. Borisova, Ginka & Fotak, Veljko & Holland, Kateryna & Megginson, William L., 2015. "Government ownership and the cost of debt: Evidence from government investments in publicly traded firms," Journal of Financial Economics, Elsevier, vol. 118(1), pages 168-191.
    21. Wenli Li & Ishani Tewari & Michelle J. White, 2014. "Using bankruptcy to reduce foreclosures: does strip-down of mortgages affect the supply of mortgage credit?," Working Papers 14-35, Federal Reserve Bank of Philadelphia.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibn:ibrjnl:v:17:y:2024:i:1:p:1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Canadian Center of Science and Education (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.