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A Survival Analysis of Islamic and Conventional Banks

Pappas, Vasileios, Ongena, Steven, Izzeldin, Marwan, Fuertes, Ana-Maria (2016) A Survival Analysis of Islamic and Conventional Banks. Journal of Financial Services Research, 51 (2). pp. 221-256. ISSN 0920-8550. E-ISSN 1573-0735. (doi:10.1007/s10693-016-0239-0) (KAR id:66101)

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Official URL
http://dx.doi.org/10.1007/s10693-016-0239-0

Abstract

Are Islamic banks inherently more stable than conventional banks? We address this question by applying a survival analysis based on the Cox proportional hazard model to a comprehensive sample of 421 banks in 20 Middle and Far Eastern countries from 1995 to 2010. By comparing the failure risk for both bank types, we find that Islamic banks have a significantly lower risk of failure than that of their conventional peers. This lower risk is based both unconditionally and conditionally on bank-specific (microeconomic) variables as well as macroeconomic and market structure variables. Our findings indicate that the design and implementation of early warning systems for bank failure should recognize the distinct risk profiles of the two bank types.

Item Type: Article
DOI/Identification number: 10.1007/s10693-016-0239-0
Uncontrolled keywords: Failure risk; Financial intermediation; Islamic banks; Survival analysis
Subjects: H Social Sciences > HG Finance
Divisions: Divisions > Kent Business School - Division > Kent Business School (do not use)
Depositing User: Vasileios Pappas
Date Deposited: 22 Feb 2018 09:28 UTC
Last Modified: 16 Feb 2021 13:53 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/66101 (The current URI for this page, for reference purposes)
Pappas, Vasileios: https://orcid.org/0000-0003-1885-4832
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