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Are Islamic Banks Subject To Depositor Discipline?

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  • AHMET F. AYSAN

    (Central Bank of the Republic of Turkey, Istiklal Caddesi 10, Ulus, 06100 Ankara, Turkey)

  • MUSTAFA DISLI

    (Department of General Economics, Ghent University, Tweekerkenstraat 2, 9000 Gent, Belgium)

  • HUSEYIN OZTURK

    (The Undersecretariat of the Turkish Treasury, İnonu Bulvarı 36, Emek, 06510, Ankara, Turkey)

  • IBRAHIM M. TURHAN

    (Borsa Istanbul, Resitpasa Mahallesi, Tuncay Artun Caddesi, Emirgan, 34467 İstanbul, Turkey)

Abstract

We look at market discipline in the Islamic deposit market of Turkey for the period after the 2000 crisis. We find support for quantity based disciplining of Islamic banks through the capital ratio. The evidence for price disciplining is, however, less convincing. In addition, we also look at the effect of the deposit insurance reform in which the dual deposit insurance was revised and all banks were put under the same deposit insurance company in December 2005. We observe that the reform increased quantity based disciplining in the Turkish Islamic deposit market.

Suggested Citation

  • Ahmet F. Aysan & Mustafa Disli & Huseyin Ozturk & Ibrahim M. Turhan, 2015. "Are Islamic Banks Subject To Depositor Discipline?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 60(01), pages 1-16.
  • Handle: RePEc:wsi:serxxx:v:60:y:2015:i:01:n:s0217590815500071
    DOI: 10.1142/S0217590815500071
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    More about this item

    Keywords

    Depositor discipline; Islamic banks; G23; G28; O52;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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