The effects of liquidity risk and credit risk on bank stability: Evidence from the MENA region
The global financial crisis has induced a series of failures of most conventional banks. This study investigates the main sources of banking fragility. We use a sample of 49 banks operating in the MENA region over the period 2006â2013 to analyze the relationship between credit risk and liquidity ris...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Elsevier
2017-12-01
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| Series: | Borsa Istanbul Review |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S2214845016301636 |
| _version_ | 1811227988661895168 |
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| author | Ameni Ghenimi Hasna Chaibi Mohamed Ali Brahim Omri |
| author_facet | Ameni Ghenimi Hasna Chaibi Mohamed Ali Brahim Omri |
| author_sort | Ameni Ghenimi |
| collection | DOAJ |
| description | The global financial crisis has induced a series of failures of most conventional banks. This study investigates the main sources of banking fragility. We use a sample of 49 banks operating in the MENA region over the period 2006â2013 to analyze the relationship between credit risk and liquidity risk and its impact on bank stability. Our results show that credit risk and liquidity risk do not have an economically meaningful reciprocal contemporaneous or time-lagged relationship. However, both risks separately influence bank stability and their interaction contributes to bank instability. These findings provide bank managers with more understanding of bank risk and serve as an underpinning for recent regulatory efforts aimed at strengthening the joint risk management of liquidity and credit risks. Keywords: Credit risk, Liquidity risk, Bank stability, MENA region, JEL Classification: F3, G21, O16, 053 |
| first_indexed | 2024-04-12T09:50:57Z |
| format | Article |
| id | doaj.art-76228605ee2a453392208e7f12ca6b80 |
| institution | Directory Open Access Journal |
| issn | 2214-8450 |
| language | English |
| last_indexed | 2024-04-12T09:50:57Z |
| publishDate | 2017-12-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Borsa Istanbul Review |
| spelling | doaj.art-76228605ee2a453392208e7f12ca6b802022-12-22T03:37:49ZengElsevierBorsa Istanbul Review2214-84502017-12-01174238248The effects of liquidity risk and credit risk on bank stability: Evidence from the MENA regionAmeni Ghenimi0Hasna Chaibi1Mohamed Ali Brahim Omri2University of Tunis El Manar, GEF2A Lab, Tunisia; Corresponding author.University of Tunis El Manar, GEF2A Lab, TunisiaNorthern Border University, College of Business Administration, Saudi Arabia; University of Tunis El Manar, GEF2A Lab, TunisiaThe global financial crisis has induced a series of failures of most conventional banks. This study investigates the main sources of banking fragility. We use a sample of 49 banks operating in the MENA region over the period 2006â2013 to analyze the relationship between credit risk and liquidity risk and its impact on bank stability. Our results show that credit risk and liquidity risk do not have an economically meaningful reciprocal contemporaneous or time-lagged relationship. However, both risks separately influence bank stability and their interaction contributes to bank instability. These findings provide bank managers with more understanding of bank risk and serve as an underpinning for recent regulatory efforts aimed at strengthening the joint risk management of liquidity and credit risks. Keywords: Credit risk, Liquidity risk, Bank stability, MENA region, JEL Classification: F3, G21, O16, 053http://www.sciencedirect.com/science/article/pii/S2214845016301636 |
| spellingShingle | Ameni Ghenimi Hasna Chaibi Mohamed Ali Brahim Omri The effects of liquidity risk and credit risk on bank stability: Evidence from the MENA region Borsa Istanbul Review |
| title | The effects of liquidity risk and credit risk on bank stability: Evidence from the MENA region |
| title_full | The effects of liquidity risk and credit risk on bank stability: Evidence from the MENA region |
| title_fullStr | The effects of liquidity risk and credit risk on bank stability: Evidence from the MENA region |
| title_full_unstemmed | The effects of liquidity risk and credit risk on bank stability: Evidence from the MENA region |
| title_short | The effects of liquidity risk and credit risk on bank stability: Evidence from the MENA region |
| title_sort | effects of liquidity risk and credit risk on bank stability evidence from the mena region |
| url | http://www.sciencedirect.com/science/article/pii/S2214845016301636 |
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