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The purpose of this study is to carry out an empirical investigation about how the level of market concentration or competitiveness of the banking system and institutional quality are associated with bank’s financial stability.

This study uses dynamic panel data techniques on the sample of 133 developing and emerging countries over the years 2002–2020.

The authors document several significant findings. First, there is evidence that bank stability is positively associated with the level of market concentration. The result is in line with the concentration–stability view that banks operating in a more concentrated market tend to be more stable than those in a less concentrated market. Second, the results confirm that the quality of the institutional environment plays a critical role in improving the stability of banks in developing and emerging countries. Third, the authors find that institutional development can moderate the effect of market concentration (or competitiveness of the banking system) on bank stability. Specifically, the results show that better institutional quality enhances the positive influence of bank concentration on the bank’s financial stability in developing and emerging countries. These results are robust to different specifications with the alternative measures of bank stability and market concentration.

This study provides further understanding regarding the effects of the level of market concentration or competitiveness of the banking system and institutional quality on bank stability in 133 developing and emerging countries over the years 2002–2020.

Islamic banks, despite being Shariah-compliant, have long been criticized for mimicking conventional banks in terms of their products and processes (Khan, 2010; Kuran, 1996). However, several Islamic banks do engage in philanthropy (zakat and charity) and risk-sharing financing (mudarabah and musharakah) instruments that better meet their raison d'etre, the fulfillment of Maqasid al-Shariah (Jatmiko et al., 2023). These contracts, however, are more susceptible to moral hazard and adverse selection problems than traditional debt-based finance (Azmat et al., 2015) and may impair Islamic bank stability. This paper explores the relationship between social finance and the stability of Islamic banks, and whether institutional quality moderates this relationship.

Using hand-collected annual data on social finance from 12 Islamic banks in four countries: Bangladesh, Bahrain, Indonesia and Malaysia, between 2006 and 2019, the authors employ the feasible generalized least squares and the panel-corrected standard errors methods for the analysis. The Stata version 16 software was used to analyze the data for the study.

The results indicate that mudarabah and musharakah financing raises the stability of Islamic banks. The authors also found that mudarabah and musharakah expose Islamic banks to more risk-taking behavior amidst the conditioning effect of institutional quality. On the other hand, charity induces the stability of Islamic banks, while zakat increases the risk-taking behavior of the banks. Further, when the quality of institutions was used as a moderator, both zakat and charity induced the stability of Islamic banks. The results were robust when liquidity risk was used and partially robust when portfolio risks were employed as measures of stability.

One concern regarding the application of Islamic social finance is that it might be a risky strategy for Islamic banks. In terms of research implications, the available evidence suggests that the use of Islamic social finance instruments is not detrimental to the stability of Islamic banks. Hence, regulators and policymakers should not penalize Islamic banks for using Islamic social finance instruments that help provide financial solutions to the underserved and unserved. In terms of research limitations, the study could not include other relevant Islamic social finance instruments such as waqf and qard al-hassan. Furthermore, data availability restricts the analysis to only 12 Islamic banks in fourcountries. As more Islamic banks in different countries venture into Islamic social finance, and the quantity and quality of information improve, future studies could explore the issue further.

The available evidence suggests that the use of Islamic social finance instruments does not worsen the stability of Islamic banks. Given the dominance of sale- and lease-based contracts in Islamic financing (Aggarwal and Yousef, 2000; Šeho et al., 2020), these findings should encourage other Islamic banks to provide financial solutions using other Shariah-compliant contracts including those based on risk-sharing and philanthropy. This would be a better reflection of the Islamic banks’ value proposition as it helps boost social activities that have a high impact on the activities of small businesses, contributing to the real economy and promoting well-being in society.

Previous studies mainly relied on mudarabah, mushakarah and zakat separately as they relate to the performance of Islamic banks. This study explores the impact of social finance which includes charity and zakat to examine their impact on Islamic banks’ stability. Further, the authors use institutional quality as a moderating variable in the relationship between Islamic social finance instruments and the stability of Islamic banks.

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-06-2022-0441

The purpose of this paper is to empirically examine the link between institutional ownership stability and dividend payout ratio.

First, the authors estimate the propensity of a firm to pay dividend. Next, the authors perform panel fixed-effect regressions of dividend payouts on institutional ownership stability variables. The authors also compare institutional ownership between dividend paying and non-dividend paying investee firms. The authors analyze the dividend preferences of different types of institutional owners. Finally, the authors examine the cross-sectional variation in the volatility of dividend payouts.

The authors find that stable and large institutional owners favor dividend paying companies. There also exists a positive association between ownership persistence and dividend payout. Conversely, firms that change their dividend payout frequently are associated with larger deviations in institutional ownership. Additionally, the presence of pressure-sensitive institutional investors (i.e. investors that also hold business ties with the investee firm) is significantly linked to dividend payout policy. Conversely, pressure-insensitive investors use alternative forms of monitoring instead of requiring investee firms to pay dividends, which serve to reduce agency conflicts.

This paper considers the preferences of long-term stable institutional investors in their selection of dividend paying firms.

This study aims to examine the nexus between CAMELS, risk-sharing financial performance and Islamic banks' stability. It also attempts to assess the conditioning effects of institutional quality in the relationship between risk-sharing contracts and the stability of Islamic banks.

The quantitative research design was employed using secondary data from 20 Islamic banks in six countries over the period 2007–2019. The study utilized the feasible generalized least squares method for the analysis.

The results indicate that not all CAMELS variables support the stability of Islamic banks. The musharakah contract induced stability of the banks, whereas mudarabah financing reduced it. The interaction between risk-sharing finance and the quality of institutions suggested that the mudarabah contract via institutional quality raises the stability of Islamic banks. On the other hand, the quality of institutions encourages the banks to offer more musharakah, but it leads to an increase in their risk-taking. We show the impact of changes in risk-sharing variables on stability amplified by institutional quality. The results were robust when alternative measures of stability were used.

Various stakeholders in banking activities could learn from the results of this study. Islamic banks could improve their positions in terms of screening for risk-sharing financing. They could also leverage more on musharakah, as it promotes stability and could generate more returns for the banks. The mudarabah financing can be improved if there is a proper evaluation of entrepreneurs. Policymakers would learn more about the importance of institutional quality, as it provides a friendly environment for both mudarabah and musharakah businesses to thrive. This could increase the participation of Islamic banks in the real economy.

Previous studies concentrated on the effects of CAMELS on the profitability of Islamic banks. This study shows that CAMELS alone might not necessarily capture the financial performance of Islamic banks. Therefore, the risk-sharing financing variables are included alongside CAMELS to determine their effects on stability. Second, unlike the past research, this study used the quality of institutions to moderate the nexus between risk-sharing financing and the stability of Islamic banks.

The purpose of this paper is to investigate the determinants of banking stability in Africa.

The authors present four measures of banking stability embedding banks’ loan loss coverage ratio, insolvency risk, asset quality ratio, and level of financial development, thereby allowing analysis of banking stability determinants from four complementary perspectives: protection for downside credit losses, distress arising from insolvency risk, non-performing loans, and financial development. The authors use the regression methodology to estimate the impact of financial structure, institutional, bank-level factors on bank stability.

The findings indicate that banking efficiency, foreign bank presence, banking concentration, size of banking sector, government effectiveness, political stability, regulatory quality, investor protection, corruption control and unemployment levels are significant determinant of banking stability in Africa and the significance of each determinant depends on the banking stability proxy employed and depends on the period of analysis: pre-crisis, during-crisis or post-crisis.

Banking supervisors in African countries should consider the role of financial structure and institutional quality for banking stability in the African region.

This study is the first to examine banking stability determinants in Africa that takes into account institutional quality and financial structure.

The study aims to demonstrate how different arrangements and characteristics of institutions can generate or mitigate uncertainty thereby facilitating or hampering the possibilities of entrepreneurial action.

This is a conceptual paper that advances the theoretical understanding of the relationship between entrepreneurial uncertainty and the different institutional levels, their characteristics and their interplay.

Entrepreneurial uncertainty also comes from the institutional environment and this has direct impact on the propensity to take action. The characteristics of the different institutional levels, in specific, their quality, stability, alignment and the burden imposed by L2 impact in the emergence of entrepreneurial uncertainty.

This is a conceptual paper that makes a number of theoretical suggestions which need to be further analyzed by empirical work.

The findings suggest that different institutional levels need to be dealt with differently by research studies and institutional agents, including policy makers. Among others, the findings also suggest that stability is key to entrepreneurship and that the benefits of high quality regulation can be undermined by its excessive burden, reducing entrepreneurial action and harming development.

Institutional actors should provide stability and allow for the improvement of the environment overall. Specifically, policy makers should aim at good quality regulation that is valid across the board, that provides stability and gives room for improvement of the institutions. Policy makers should refrain from trying to foster specific industries; they should instead provide a leveled playing field without trying to direct the entrepreneurial efforts towards an industry or geographic region and without being overly demeaning.

This research breaks new ground. It unites ideas from entrepreneurship and institutions suggesting a novel, much more nuanced approach to their interplay. The results can be used by scholars in the fields of entrepreneurship, institutions and economic development. They also have the potential to help to educate policy makers in their quest to improve the context for entrepreneurs.

This study examines how institutional quality influences variability in financial development among economies in Sub-Saharan Africa (SSA).

Empirical estimations verifying various relationships are performed using the limited information maximum likelihood (LIML) estimation technique.

The results suggest that institutional quality enhances the pace of financial development among economies in the sub-region all things being equal. In a further micro-level analysis where components of institutional quality index are examined separately, the study’s results suggest that effective governance, regulatory quality, rule of law and accountability tend to have a significant positive impact on financial sector development.

Findings of the study suggest that policies geared towards improving governance and regulatory institutions can augment development of the financial sector among economies in SSA; governments and policymakers are therefore encouraged to resource noted institutions to play effective roles for the development of the financial sector.

Compared to related studies, this study reorients existing paradigm, which emphasizes the role of governance and institutional variables in the economic growth discourse. The authors’ empirical inquiry rather focuses on how governance and institutional structures influence regional financial development dynamics. Specifically, this study differs from most macro-level studies found in literature because it examines the impact of hitherto unexamined governance and institutional variables on financial development among economies in SSA.

Sub-Saharan African (SSA) region has been battling illegal outflow of capital over the years, with little success recorded so far. Without adequate attention, unemployment, infrastructure deficiencies and inefficient capital might be worse in the future. The purpose of this study is to investigate if institutional quality mitigates the effect of capital flight (CF) on economic growth.

The panel data from 26 SSA countries spanning 1998 to 2018 are used. The analysis of this study was carried out through a two-step generalized method of moments technique. The principal component index is used to group the institutional quality/governance indicators into three categories: political governance, economic governance and institutional governance.

The study found that CF is harmful to the economic growth of the SSA region. The study also found that, among the indicators of institutional quality, only the rule of law and control of corruption stimulate economic growth. Contrary to expectation, the finding indicates that institutional quality does mitigate the effect of CF on economic growth in the SSA region.

This study provides an insight into the relevance of institutional quality in mitigating CF in sub-Saharan African region.

Once introduced and conceptualized as a factor that causes erosion and decay of social institutions and subsequent deinstitutionalization, the notion of entropy is at odds with predictions of institutional isomorphism and seems to directly contradict the tendency toward ever-increasing institutionalization. The purpose of this paper is to offer a resolution of this theoretical inconsistency by revisiting the meaning of entropy and reconceptualizing institutionalization from an information-theoretic point of view.

It is a theoretical paper that offers an information perspective on institutionalization.

A mistaken understanding of the nature and role of entropy in the institutional theory is caused by conceptualizing it as a force that counteracts institutional tendencies and acts in opposite direction. Once institutionalization and homogeneity are seen as a product of natural tendencies in the organizational field, the role of entropy becomes clear. Entropy manifests itself at the level of information processing and corresponds with increasing uncertainty and the decrease of the value of information. Institutionalization thus can be seen as a special case of an increase in entropy and a decrease of knowledge. Institutionalization is a state of maximum entropy.

It is explained why institutionalization and institutional persistence are what to be expected in the long run and why information entropy contributes to this tendency. Contrary to the tenets of the institutional work perspective, no intentional efforts of individuals and collective actors are needed to maintain institutions. In this respect, the paper contributes to the view of institutional theory as a theory of self-organization.

The purpose of this study is to understand the efforts of key social actors in influencing the reform of Iranian public universities budgeting system, from incremental to performance-based budgeting (PBB), the tensions that arose as competing efforts of institutional change were undertaken, and ultimately the impact of these efforts on the extent to which the Iranian government transitioned to a system of PBB in public universities.

Data comprises of semi-structured interviews with managers and experts involved in the budget setting process and an analysis of budgetary policy documents, reports and archival material such as legislation. An institutional work lens is employed to interpret the findings.

While actors advocating the change were engaged in institutional work directed at disrupting the old budgetary rules by disassociating the rules moral foundations and creating new budgetary rules (through new legislation), universities undertook subtle resistance by engaging in extended evaluation of the new proposed PBB rules thereby maintaining the old budgetary rules. The reforms undertaken to introduce PBB in Iranian universities achieved minimal success whereby incremental budgeting continued to constitute by far a larger percentage of the budget allocation formula for university budgets. This finding illustrates change and continuity in university budgetary systems resulting from institutional work of actors competing to control the basis of resource allocation under the proposed PBB system by proposing contradicting models.

The findings highlight the importance of understanding the interplay of institutional work undertaken by competing social actors as they seek to advance their goals in shaping budgetary reforms in the public-sector. Such an understanding may inform policy makers who intend to introduce major reforms in public-sector budgeting approaches.

Unlike prior studies that largely focused on how organization-level budgeting practices responded to changes in public budgeting rules (i.e. at the site of implementation of the rules), this paper highlights how strategies of change and resistance are played out at the site of setting budgetary norms.