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AuthorSmaoui, Houcem
AuthorMimouni, Karim
AuthorTemimi, Akram
Available date2023-02-20T08:42:49Z
Publication Date2019-07-26
Publication NameApplied Economics
Identifierhttp://dx.doi.org/10.1080/00036846.2019.1646406
CitationSmaoui, H., Mimouni, K., & Temimi, A. (2020). The impact of Sukuk on the insolvency risk of conventional and Islamic banks. Applied Economics, 52(8), 806-824.
ISSN0003-6846
URIhttps://www.scopus.com/inward/record.uri?partnerID=HzOxMe3b&scp=85078552760&origin=inward
URIhttp://hdl.handle.net/10576/40168
AbstractThis paper investigates the impact of Sukuk market development on bank insolvency risk using a sample comprising 72 Islamic banks (IBs) and 145 conventional banks (CBs) spanning 15 countries over the 2003–2014 period. We measure bank insolvency risk using the z-score. Using the system-GMM estimator, we find that Sukuk market development adversely affects the insolvency risk of IBs, while that of the CBs remains unchanged. Moreover, our results point to a negative and significant effect of the size on the insolvency risk of both CBs and IBs, thus confirming the well-documented Too-Big-To-Fail hypothesis. This effect is more pronounced for IBs indicating that large IBs exhibit higher insolvency risk than their conventional counterparts. Finally, we show that the 2008 global financial crisis has exacerbated the negative effect of Sukuk market development on bank insolvency risk, as expected.
Languageen
PublisherSpringer
Subjectinsolvency risk
Islamic banking
panel model
Sukuk
TitleThe impact of Sukuk on the insolvency risk of conventional and Islamic banks
TypeArticle
Pagination806-824
Issue Number8
Volume Number52
ESSN1466-4283
dc.accessType Open Access


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