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The Nexus between Economic Freedom and Islamic Bank Profitability in the MENA Banking Sectors

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  • Fadzlan Sufian
  • Muhamed Zulkhibri

Abstract

The study examines the impact of economic freedom on Islamic banks’ profitability in the Middle East and North Africa (MENA) banking sectors during the period 2000–2010 using dynamic panel model. The findings suggest that greater financial freedom positively influences the profitability of Islamic banks in the MENA banking sectors, implying that lower intervention in the system increases Islamic banks’ profitability. Furthermore, the larger, more diversified and better-capitalized Islamic banks are relatively more profitable, while credit risk and expenses preference behaviour negatively impact on Islamic bank profitability as expected.

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  • Fadzlan Sufian & Muhamed Zulkhibri, 2015. "The Nexus between Economic Freedom and Islamic Bank Profitability in the MENA Banking Sectors," Global Business Review, International Management Institute, vol. 16(5_suppl), pages 58-81, October.
    • Handle: RePEc:sae:globus:v:16:y:2015:i:5_suppl:p:58s-81s
    DOI: 10.1177/0972150915601256
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    2. Hafiz Hoque & Heng Liu, 2023. "Impact of bank regulation on risk of Islamic and conventional banks," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 1025-1062, January.
    3. Faisal Abbas & Shoaib Ali, 2022. "Is Economic Freedom a Moderator of the Relationship Between Bank Capital and Profitability?," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 69(2), pages 273-292, June.
    4. Nurhafiza Abdul Kader Malim & M.K. Normalini, 2018. "Factors Influencing the Margins of Islamic Banks," Global Business Review, International Management Institute, vol. 19(4), pages 1026-1036, August.
    5. Anwar Al-Gasaymeh, 2020. "Economic Freedom, Country Risk and Cost Efficiency in Jordan and the GCC Countries," Global Business Review, International Management Institute, vol. 21(1), pages 1-17, February.

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    More about this item

    Keywords

    Economic freedom; Islamic banks; profitability; panel regression analysis; MENA;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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