Banks’ Capital Structure Determinants: A Comparative Analysis Between Islamic and Conventional Banks Based on Corporate and Regulatory Approaches

The research aims to empirically investigate the banks’ capital structure determinants by considering 386 listed and unlisted banks categorized into 74 Islamic banks, 256 conventional banks, and 56 hybrid banks from 20 countries for 2008–2016 based on corporate and regulatory approaches. The main findings are interesting. From a corporate approach, we find differences between IBs, CBs, and HBs regarding the determinants of their capital structure which offer an empirical confirmation of the reduced information asymmetry in an Islamic finance context. From a regulatory approach, the findings show similarities regarding the negative impact of deposit insurance schemes on the regulatory capital for all types of banks. When focusing on IBs, we evidence that banks subject to Sharia-compliant deposit insurance schemes hold lower capital than those subject to conventional deposit insurance schemes.