Financial Stability of Islamic Banks in the MENA Countries during Financial Crisis and Political Uncertainty: An Emperical Investigation
- *Corresponding Author:
- Ameni Ghenimi
Economic Sciences and Management
of Tunisia, Campus Universities El Manar
BP 248 El Manar II, 2092, Tunis, Tunisia
Tel: 216 74 279 169
E-mail: [email protected]
Received Date: July 03, 2015 Accepted Date: July 13, 2015 Published Date: July 16, 2015
Citation: Ghenimi A, Oweis K, Mohamed AO (2015) Financial Stability of Islamic Banks in the MENA Countries during Financial Crisis and Political Uncertainty: An Emperical Investigation. J Account Mark 4:135. doi:10.4172/2168-9601.1000135
Copyright: © 2015 Ghenimi A, et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
The recent financial crisis has triggered a series of failures of many conventional banks and led to the rise of the interest in the Islamic banks. In this study, we seek to address the following question: What was the effect of the financial crisis and the political uncertainty on the financial stability of both Islamic and conventional banks? The conditional variance (volatility) of returns was used to measure financial stability. The various GARCH models were used to estimate volatility due to their ability to take into account the leverage effect; however they depend on the log likelihood results. The study covers a sample of 11 Islamic banks (IBs) and 17 conventional banks (CBs) for three major regions (the GCC, the Mediterranean and the MENA) for the period from (09/11/ 2005 to 09/12/2013). Our major findings are as follows. First, we document a significant increase in the volatility of conventional banks (CBs) during the period of the financial crisis whereas this crisis has had no significant effect on the volatility in Islamic banks (IBs). Second, the volatility of IBs has increased during the recent political turmoil and that of their conventional counterparts remain low in the Golf countries and the MENA region but more than in the Mediterranean region, this increase remained very moderate. In general, the findings are important for the understanding of the role of financial crisis and the Arab spring on the financial stability of IBs and CBs, suggesting that they are of great significance to investors.