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The Impact of Owner’s Identity on Banks’ Capital Adequacy and Liquidity Risk

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  • Andi Duqi
  • Hussein Al-Tamimi

Abstract

In this article, we test the potential impact of the owner’s identity on banks’ capital adequacy and liquidity risk as defined by the Basel III regulatory framework. Using a unique dataset on a sample of banks domiciled in the Middle East and North Africa region, we find that the ownership structure is an important driver of banks’ regulatory capital and liquidity risk. Private and foreign investors exhibit a stronger preference for higher levels of capital, whereas the impact of government ownership on banks’ risk remains inconclusive. Moreover, privately-owned banks evidenced lower levels of liquidity risk compared to the other groups during the last financial crisis because of tighter budget constraints and more compelling liquidity needs.

Suggested Citation

  • Andi Duqi & Hussein Al-Tamimi, 2018. "The Impact of Owner’s Identity on Banks’ Capital Adequacy and Liquidity Risk," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(2), pages 468-488, January.
    • Handle: RePEc:mes:emfitr:v:54:y:2018:i:2:p:468-488
    DOI: 10.1080/1540496X.2016.1262255
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    Cited by:

    1. Wang, Jiamei & Chen, Haibin & Zhang, Heng & Luo, Jianchao & Cheng, Mingwang & Zhang, Jiaping, 2022. "Property rights reform and capital adequacy ratios of rural credit cooperatives in China," Economic Modelling, Elsevier, vol. 106(C).
    2. Ghulam Mujtaba Kayani & Yasmeen Akhtar & Chen Yiguo & Tahir Yousaf & Syed Jawad Hussain Shahzad, 2021. "The Role of Regulatory Capital and Ownership Structure in Bank Liquidity Creation: Evidence From Emerging Asian Economies," SAGE Open, , vol. 11(2), pages 21582440211, April.

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