Economics and Admin Sceince

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Browsing Economics and Admin Sceince by Author "Ajyad Mojeed Ahmad Bahlaq"

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    DETERMINANTS OF BANK NET INTEREST MARGIN: EVIDENCE FROM MENA COUNTRIES
    (2023-03-26) Ajyad Mojeed Ahmad Bahlaq
    The net interest margin in the dual banking system is not well documented. While previous studies tested the determinants of each bank type (Islamic and conventional banks) separately or using a dummy representing the Islamic bank. The study is concerned with the differences between Islamic and conventional banks. The study examines the factors driving net interest margins in the Middle East and North Africa using Islamic banksas a moderating variable. Also, uncover the effect of interest rate risk, its interaction with credit risk, and institutional variables that are first to investigate in the region. This study uses panel of 511 banks in twenty countries for the period (2006 - 2018). Net interest margin is the dependent variable while the size of operation, risk aversion, credit risk, liquidity risk, specialization in lending, inflation, gross domestic product, interest rate risk, the interaction between interest risk and credit risk, control of corruption, rule of law, and regulatory quality are the independent variables while Islamic banks is the moderating variable. For analyzing the data pooled models, fixed effect models, random effect models, and generalized method of moments were used. This study conclude the negative effect of the size of operation, credit risk, the interaction between interest risk and credit risk, liquidity risk, regulatory quality, and rule of law on the net interest margin while a positive effect of inflation, gross domestic product, interest rate risk, specialization in lending, and Islamic bank. In addition, it is concluded that liquidity risk affect the net interest margin of Islamic bank more than conventional banks. It is recommended banks that focus on diversifying their operations and encourage Islamic banks to adopt new risk management instruments, in addition to enhancement of the governance frameworks such as contract enforcement. Keywords: Dual banking; Islamic bank; MENA region; Net interest margin.