Bank risk-taking in the MENA region: A comparison between Islamic banks and conventional banks

Abstract

Purpose

The purpose of this paper is to investigate determinants of risk-taking in Islamic banks and conventional banks located in the MENA region.

Design/methodology/approach

The empirical study covers a sample of 15 conventional and 15 Islamic banks for the period 2002-2009. The authors estimate models using both generalized least square random effect and generalized method of moments system approaches.

Findings

The results of the empirical analysis show that the determinants’ risk-taking significance varies between Islamic and conventional banks.

Originality/value

The main aim is to develop a comprehensive model that integrates macroeconomic determinants, industry-specific determinants, and bank-specific determinants. This paper performs a comparison of the risk-taking between two different banking systems in the MENA region.

Citation

Selma Mokni, R.B., Rajhi, M.T. and Rachdi, H. (2016), "Bank risk-taking in the MENA region: A comparison between Islamic banks and conventional banks", International Journal of Social Economics, Vol. 43 No. 12, pp. 1367-1385. https://doi.org/10.1108/IJSE-03-2015-0050