Institutional Environment and Bank Capital Ratios

71 Pages Posted: 24 Feb 2017 Last revised: 1 Oct 2018

See all articles by Tammuz Alraheb

Tammuz Alraheb

Université de Limoges, LAPE

Christina Nicolas

University of Limoges - Laboratoire d'Analyse et de Prospectives Économiques (LAPE); Haute Ecole de Gestion de Geneve (HEG)

Amine Tarazi

University of Limoges - Faculty of Law and Economic Science

Date Written: September 20, 2018

Abstract

We investigate the influence of the institutional environment on bank capital ratios. Using a sample of 149 banks operating in the Middle East and North Africa region for the period 2004 to 2014, we find that, when stock markets have little presence, institutional variables significantly affect risk-weighted regulatory capital ratios but not leverage ratios. Conversely, when stock markets are more developed, only leverage ratios are influenced by institutional factors. Our results also indicate that institutional variables affect non-weighted equity-to-asset ratios of banks that are listed on a stock exchange. Our findings contribute to the bank capital structure literature and have important policy implications for developing countries.

Keywords: Bank Capital Structure, Institutions, Bank regulation

JEL Classification: G21, G28, G32

Suggested Citation

Alraheb, Tammuz and Nicolas, Christina and Tarazi, Amine, Institutional Environment and Bank Capital Ratios (September 20, 2018). Available at SSRN: https://ssrn.com/abstract=2922528 or http://dx.doi.org/10.2139/ssrn.2922528

Tammuz Alraheb

Université de Limoges, LAPE ( email )

5 rue Félix Eboué BP3127
LIMOGES, 87031
France

Christina Nicolas (Contact Author)

University of Limoges - Laboratoire d'Analyse et de Prospectives Économiques (LAPE) ( email )

5 rue Félix Eboué
BP 3127
Limoges Cedex 1, 87031
France

Haute Ecole de Gestion de Geneve (HEG) ( email )

Rue de la Tambourine 17
Carouge, 1227
Switzerland

Amine Tarazi

University of Limoges - Faculty of Law and Economic Science ( email )

5 rue Felix Eboue
Limoges, 87000
France

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