Depositor discipline, financial crisis and macroprudential policies: Evidence from MENA banks
Journal of Islamic Accounting and Business Research
ISSN: 1759-0817
Article publication date: 28 January 2020
Issue publication date: 12 August 2020
Abstract
Purpose
Using bank-level data on MENA countries during 2000-2016, this study aims to examine the role and relevance of macroprudential policies in affecting depositor discipline.
Design/methodology/approach
The author uses the dynamic panel data methodology as compared to alternate techniques, owing to the ability of this technique to effectively address the endogeneity problem of some of the independent variables.
Findings
The findings suggest that market discipline for MENA banks occurs primarily through deposit rates. During the crisis, depositors typically focus on a catch-all measure of bank performance. Second, macroprudential policies play a role in influencing market discipline. Third, the behavior of depositors in exercising market discipline is more pronounced in countries with high Islamic banking share and works mainly through the price channel.
Originality/value
To the best of author’s knowledge, this is one of the early studies for MENA countries to examine this issue in a systematic manner. By focusing on an extended sample of MENA country banks covering an extensive period that subsumes the global financial crisis, author’s analysis is able to shed light on the relevance of macroprudential policies in affecting depositor discipline.
Keywords
Citation
Ghosh, S. (2020), "Depositor discipline, financial crisis and macroprudential policies: Evidence from MENA banks", Journal of Islamic Accounting and Business Research, Vol. 11 No. 8, pp. 1531-1553. https://doi.org/10.1108/JIABR-09-2018-0146
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited