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Article
Publication date: 20 August 2024

Abdelaziz Chazi, Ali Mirzaei and Zaher Zantout

Proponents of Islamic banking believe that this banking model is relatively superior in times of financial crises. This study aims to examine whether Islamic banks were more…

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Abstract

Purpose

Proponents of Islamic banking believe that this banking model is relatively superior in times of financial crises. This study aims to examine whether Islamic banks were more resilient to the coronavirus 2019 (COVID-19) pandemic than their conventional peers, especially in terms of two of the most important banking risks, capital and liquidity risks.

Design/methodology/approach

The authors use a regression model to examine whether Islamic banks were more resilient to the recent health crisis, as compared to their conventional counterparts. The results are robust to alternative crisis time periods, the use of different model specifications and the inclusion of different control variables.

Findings

Unlike during the 2007–2008 global financial crisis (GFC), Islamic banks have not performed relatively well during the more recent crisis caused by the COVID-19 pandemic. The results show that Islamic banks experienced an increase in both capital and liquidity risks. The results also indicate a decrease in bank profitability, improved solvency and asset quality and a decrease in operational risk.

Originality/value

This study contributes to the literature on banking business model and resilience to economic crises. Contrary to some expectations and to their performance during the GFC of 2007–2008, Islamic banks were found to be more vulnerable during the COVID-19 pandemic than conventional banks.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 17 no. 5
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 6 November 2018

Abdelaziz Chazi, Alexandra Theodossiou and Zaher Zantout

The purpose of this paper is to develop and validate new robust measures of investors’ preference for the form of regular corporate payout. Then, the paper adds to the empirical…

597

Abstract

Purpose

The purpose of this paper is to develop and validate new robust measures of investors’ preference for the form of regular corporate payout. Then, the paper adds to the empirical evidence on catering theory by examining managers’ catering to such preference.

Design/methodology/approach

The authors use the matching method to control for firm characteristics. The authors apply two robustness tests to validate the measures. The authors use the rigorous multivariate analysis.

Findings

US investors’ preference for regular dividends vs regular stock repurchases, being different forms of corporate payout, varies over time. Managers cater to investors’ preference for payout form. The findings are consistent with the catering theory of Baker and Wurgler (2004a). The number of firms that pay cash dividends regularly continue to outnumber the ones that purchase their shares regularly.

Research limitations/implications

The study only uses US data. It does not cover other countries.

Practical implications

The measures can be used in several future research endeavors, such as examining investors’ payout-form preferences in other countries (see Booth and Zhou, 2017) and exploring their determinants, the corporate governance characteristics of firms that cater to investors’ preference vs firms that do not, etc.

Social implications

The study contributes to understanding investors’ preferences and corporate payout behavior which is prerequisite to efficient policy formulation.

Originality/value

The proxies for investors’ payout-form preference control for firm characteristics and are unrelated to investors’ time-varying risk preferences. Also, they are robust to measurement issues. Moreover, the study covers a period of 40 years.

Details

Managerial Finance, vol. 44 no. 12
Type: Research Article
ISSN: 0307-4358

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