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Comparative Analysis of Risks and Their Impacts on the Banking Stability of Islamic and Conventional Banks in the MENA Region

Author

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  • Ines Hedhili
  • Adnene Ajimi

Abstract

This study aims to analyze and compare the impact of risks on banking stability associated with Islamic banks in comparison to their conventional counterparts in the MENA region. In this process, we first examine the correlation between liquidity risk and credit risk. Secondly, we assess whether these two types of risks are related to banking stability within both categories of banks. Using the PVAR (Panel Vector Auto Regression) econometric model on a sample of 110 conventional and Islamic banks in the MENA region, our results indicate that liquidity risk and credit risk exhibit a negative relationship in both types of banks. Furthermore, our findings suggest that there is no correlation between these risks and banking stability in both types of banks. Our conclusions have significant implications for banking institutions regarding the strategies and approaches required to manage these risks and ensure the stability of their banking operations.

Suggested Citation

  • Ines Hedhili & Adnene Ajimi, 2024. "Comparative Analysis of Risks and Their Impacts on the Banking Stability of Islamic and Conventional Banks in the MENA Region," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 15(3), pages 1-19, July.
    • Handle: RePEc:jfr:ijfr11:v:15:y:2024:i:3:p:1-19
    DOI: 10.5430/ijfr.v15n3p1
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    References listed on IDEAS

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    1. Trust R. Mpofu & Eftychia Nikolaidou, 2018. "Determinants of Credit Risk in the Banking system in Sub-Saharan Africa," School of Economics Macroeconomic Discussion Paper Series 2018-04, School of Economics, University of Cape Town.
    2. Tijani Amara & Mohamed Mabrouki, 2019. "The Impact Of Liquidity And Credit Risks On The Bank Stability," Journal of Smart Economic Growth, , vol. 4(2), pages 97-116, September.
    3. Mr. Joe Crowley, 2008. "Credit Growth in the Middle East, North Africa, and Central Asia Region," IMF Working Papers 2008/184, International Monetary Fund.
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