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Determinants of financial stability of conventional and Islamic banks in GCC and selected non-GCC countries

Mohammad, Ahmed Rufai (2020) Determinants of financial stability of conventional and Islamic banks in GCC and selected non-GCC countries. Doctoral thesis, Universiti Utara Malaysia.

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Abstract

The study is conducted to explore the determinants of stability in the banking sector of ten Middle East countries, both members and non-members of the Gulf Cooperation Council (GCC). Financial instability is identified to be the major weakness of the banking sector in performing the intermediation role due to several factors, such as bank-specific, institutional, or macroeconomic factors. In this study, banking stability is measured using the z-score and probability of default. A sample of 167 conventional banks and Islamic banks covering the period from 2008 to 2016 is employed. The generalized dynamic method of moment (GMM) estimator shows that capital adequacy, liquidity, control of corruption, inflation, GDP, and oil price have significant effects on the banking stability in the ten Middle East countries. The results remain consistent when the impacts of the bankspecific, institutional, and macroeconomic factors on conventional and Islamic banks are compared. The result suggests that capital adequacy and liquidity have a positive and significant effect on banking stability in all the subgroups except the liquidity of Islamic banks in non-GCC countries. Proper measures to strengthen the corruption control will transmit a substantial impact on improving banking stability in the GCC member and non-member countries in the Middle East. The results of the macroeconomic factors indicate that protection measures are needed to mitigate the negative effect of inflation and GDP on banking stability, as the oil price shows a significant positive impact on banking stability in all subgroups except in Islamic banks in non-GCC countries

Item Type: Thesis (Doctoral)
Supervisor : Hidthii, Mohamad Helmi and Mat Nor, Alias
Item ID: 10425
Uncontrolled Keywords: banking stability, z-score, probability of default, generalized method of moment, Gulf Cooperation Council
Subjects: H Social Sciences > HG Finance
Divisions: School of Economics, Finance & Banking
Date Deposited: 29 Mar 2023 01:32
Last Modified: 29 Mar 2023 01:32
Department: School of Economics, Finance & Banking
Name: Hidthii, Mohamad Helmi and Mat Nor, Alias
URI: https://etd.uum.edu.my/id/eprint/10425

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