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Determinants of Islamic bank profitability in the MENA region

Author

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  • Karim Ben Khediri
  • Hichem Ben-Khedhiri

Abstract

This paper examines the determinants of Islamic bank profitability in the MENA region, during the years 1999-2006. We estimate several specifications to study the impact of bank-specific and country-specific variables, including macro-economic conditions, market structure and institutional development, on bank profitability. The results provide evidence suggesting that capitalisation and management efficiency enhance bank profitability. The results also indicate that bank profitability is positively associated with, economic growth, inflation and bank concentration. We also show that Islamic bank profitability is higher in countries with better socio-economic conditions and better legal systems.

Suggested Citation

  • Karim Ben Khediri & Hichem Ben-Khedhiri, 2009. "Determinants of Islamic bank profitability in the MENA region," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 2(3/4), pages 409-426.
    • Handle: RePEc:ids:ijmefi:v:2:y:2009:i:3/4:p:409-426
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    Citations

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    Cited by:

    1. Bobbo Amadou & Hamed Salim Yazid, 2023. "Determinants of Islamic banking performance in OIC member countries," Working Papers 23/058, European Xtramile Centre of African Studies (EXCAS).
    2. Asma Mghaieth & Imen Khanchel El Mehdi, 2014. "The determinants of cost/profit efficiency of Islamic banks before, during and after the crisis of 2007," Working Papers 2014-107, Department of Research, Ipag Business School.
    3. João Jungo & Mara Madaleno & Anabela Botelho, 2024. "Financial Literacy, Financial Innovation, and Financial Inclusion as Mitigating Factors of the Adverse Effect of Corruption on Banking Stability Indicators," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 8842-8873, June.
    4. Caporale, Guglielmo Maria & Lodh, Suman & Nandy, Monomita, 2017. "The performance of banks in the MENA region during the global financial crisis," Research in International Business and Finance, Elsevier, vol. 42(C), pages 583-590.
    5. Rebić Mladen & Paunović Slađana & Popović Borka, 2022. "Measuring Concentration and Efficiency in Bosnia and Herzegovina Banking Sector using Dynamic Panel Model," South East European Journal of Economics and Business, Sciendo, vol. 17(1), pages 14-29, June.
    6. Anupam Mehta & Ganga Bhavani, 2017. "What Determines Banks’ Profitability? Evidence from Emerging Markets—the Case of the UAE Banking Sector," Accounting and Finance Research, Sciedu Press, vol. 6(1), pages 1-77, February.
    7. Farazi, Subika & Feyen, Erik & Rocha, Roberto, 2011. "Bank ownership and performance in the Middle East and North Africa region," Policy Research Working Paper Series 5620, The World Bank.
    8. Fazelina Sahul Hamid, 2017. "The Effect of Market Structure on Banks’ Profitability and Stability: Evidence from ASEAN-5 Countries," International Economic Journal, Taylor & Francis Journals, vol. 31(4), pages 578-598, October.
    9. Seyed Alireza Athari & Mahboubeh Bahreini, 2023. "The impact of external governance and regulatory settings on the profitability of Islamic banks: Evidence from Arab markets," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 2124-2147, April.
    10. Li Xian Liu & Milind Sathye, 2019. "Bank Interest Rate Margin, Portfolio Composition and Institutional Constraints," JRFM, MDPI, vol. 12(3), pages 1-21, July.
    11. Khediri, Karim Ben & Charfeddine, Lanouar & Youssef, Slah Ben, 2015. "Islamic versus conventional banks in the GCC countries: A comparative study using classification techniques," Research in International Business and Finance, Elsevier, vol. 33(C), pages 75-98.
    12. Saibal Ghosh, 2016. "Foreign banks in MENA countries: how important? How relevant?," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 32(1), pages 77-98, May.
    13. repec:ipg:wpaper:2014-505 is not listed on IDEAS
    14. Saida Daly & Mohamed Frikha, 2016. "Banks and economic growth in developing countries: What about Islamic banks?," Cogent Economics & Finance, Taylor & Francis Journals, vol. 4(1), pages 1168728-116, December.
    15. Omneya Abdelsalam & Sabur Mollah & Emili Tortosa-Ausina, 2018. "Political connection and bank in(efficiency)," Working Papers 2018-11, Swansea University, School of Management.
    16. Ali Mirzaei & Zeynab Mirzaei, 2011. "Bank-specific and Macroeconomic Determinants of Profitability in Middle Eastern Banking," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 16(2), pages 101-128, spring.

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