Political risk and bank stability in the Middle East and North Africa region

Mohammad Al-Shboul, Aktham Maghyereh, Abul Hassan, Phillip Molyneux

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    20 Citations (Scopus)

    Abstract

    This paper examines the relationship between political risk and bank stability in the Middle East and North Africa (MENA) region. We find that political risk is adversely associated with bank stability, generally supporting the financial fragility hypothesis. The analysis suggests that political risk differentially influences the level of stability of conventional and Islamic banks. Political risk has a less detrimental effect on the riskiness of Islamic banks compared with conventional banks. Our analysis also suggests that Islamic banks in the Gulf Cooperative Council (GCC) sub-region are less exposed to political risk compared with those operating in the non-GCC countries (other countries in the MENA region outside of the GCC sub-region).

    Original languageEnglish
    Article number101291
    JournalPacific Basin Finance Journal
    Volume60
    DOIs
    Publication statusPublished - Apr 2020

    Keywords

    • Bank risk-taking
    • Bank stability
    • Financial crises
    • Islamic banks
    • Middle East and North Africa region
    • Political risk

    ASJC Scopus subject areas

    • Finance
    • Economics and Econometrics

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