Pricing Beliefs: Empirical Evidence from the Implied Cost of Deposit Insurance for Islamic Banks

41 Pages Posted: 28 Jan 2016

See all articles by Jocelyn Grira

Jocelyn Grira

Qatar University

M. Kabir Hassan

University of New Orleans - College of Business Administration - Department of Economics and Finance

Issouf Soumaré

Laval University

Date Written: January 27, 2016

Abstract

Using a large international sample of 348,899 year-firm observations covering 352 Islamic banks and 30,572 conventional banks in 213 countries over the 1999-2013 period, we estimate the deposit insurance premiums of Islamic banks and conventional banks. We find that the premiums for publicly listed Islamic banks are 28% lower than those for publicly listed conventional banks. Moreover, we show that the premiums of privately held banks are significantly higher than those of publicly listed banks. Finally, we show that publicly listed Islamic banks did not record an increase in the level of deposit insurance premiums during the 2007-2009 financial crisis.

Keywords: Islamic Banks, Deposit Insurance, Risk-based Premium, Systemic Risk

JEL Classification: G21, E53, G28

Suggested Citation

Grira, Jocelyn and Hassan, M. Kabir and Soumaré, Issouf, Pricing Beliefs: Empirical Evidence from the Implied Cost of Deposit Insurance for Islamic Banks (January 27, 2016). Available at SSRN: https://ssrn.com/abstract=2723000 or http://dx.doi.org/10.2139/ssrn.2723000

Jocelyn Grira (Contact Author)

Qatar University ( email )

College of Business and Economics
P.O.Box 2713
Doha, Doha 2713
Qatar
+97444035087 (Phone)

M. Kabir Hassan

University of New Orleans - College of Business Administration - Department of Economics and Finance ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States

Issouf Soumaré

Laval University ( email )

Faculty of Business Administration
Department of Finance, Insurance and Real Estate
Quebec, Quebec G1V 0A6
Canada
1418 656 3423 (Phone)
1418 656 2624 (Fax)

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