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The Influence of Basel III on Islamic Bank Risk

Journal of Islamic Monetary Economics and Finance · Vol. 9 No. 1 (2023) · hlm. 167–198

DOI
10.21098/jimf.v9i1.1590
ISSN
2460-6618, 2460-6146
Terbit
2023-02-28
Penerbit
Bank Indonesia
Bahasa
eng

Abstrak

This paper investigates the impact of bank regulatory capital on Islamic bank risk using bank-level data from 29 countries covering the period from 2004 to 2020. Applying the generalized method of moments technique on dynamic panels, we discover that on average Islamic bank regulatory capital ratios exceed the level required by Basel III. The findings provide evidence in support of the moral hazard hypothesis; that is, there is a negative relationship between capital and risk. They indicate that Islamic banks are better protected against risk when they fulfill Basel III and IFSB regulatory capital requirements. According to our findings, authorities that aim to improve the financial stability of the banking industry should reinforce their policies and oblige banks to adhere to regulatory capital requirements during crises such as Covid-19. Finally, we observe that different risk indicators have diverse correlations with regulatory capital, and that the findings are robust across a variety of estimation methodologies.

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6 penulis · 9 tautan kepenulisan bersama

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  • International Islamic University Malaysia
  • Organisasi berbeda
  • Organisasi sama
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Rekan penulisOrganisasiArtikel bersama
Salina KassimInternational Islamic University Malaysia1
Norzitah Abdul KarimInternational Islamic University Malaysia1
Syed Musa Syed Jaafar AlhabshiInternational Islamic University Malaysia1

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Sumber metadata: OAI-PMH (metadata jurnal) http://www.jimf-bi.org/index.php/JIMF/oai, pertama di-harvest 9 Nov 2026, terakhir terlihat 9 Nov 2026.
Metadata asli (oai_dc) 
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	<dc:title xml:lang="en">The Influence of Basel III on Islamic Bank Risk</dc:title>
	<dc:creator xml:lang="en">Ding, Xiaoling</dc:creator>
	<dc:creator xml:lang="en">Haron, Razali</dc:creator>
	<dc:creator xml:lang="en">Hasan, Aznan</dc:creator>
	<dc:subject xml:lang="en">Basel III regulatory capital, Islamic banking, Crisis and risk, System GMM.</dc:subject>
	<dc:description xml:lang="en">This paper investigates the impact of bank regulatory capital on Islamic bank risk using bank-level data from 29 countries covering the period from 2004 to 2020. Applying the generalized method of moments technique on dynamic panels, we discover that on average Islamic bank regulatory capital ratios exceed the level required by Basel III. &amp;nbsp;The findings provide evidence in support of the moral hazard hypothesis; that is, there is a negative relationship between capital and risk. They indicate that Islamic banks are better protected against risk when they fulfill Basel III and IFSB regulatory capital requirements. According to our findings, authorities that aim to improve the financial stability of the banking industry should reinforce their policies and oblige banks to adhere to regulatory capital requirements during crises such as Covid-19. Finally, we observe that different risk indicators have diverse correlations with regulatory capital, and that the findings are robust across a variety of estimation methodologies.</dc:description>
	<dc:publisher xml:lang="en">Bank Indonesia</dc:publisher>
	<dc:date>2023-02-28</dc:date>
	<dc:type>info:eu-repo/semantics/article</dc:type>
	<dc:type>info:eu-repo/semantics/publishedVersion</dc:type>
	<dc:type xml:lang="en">Peer-reviewed Article</dc:type>
	<dc:format>application/pdf</dc:format>
	<dc:identifier>https://jimf-bi.org/JIMF/article/view/1590</dc:identifier>
	<dc:identifier>10.21098/jimf.v9i1.1590</dc:identifier>
	<dc:source xml:lang="en">Journal of Islamic Monetary Economics and Finance; Vol. 9 No. 1 (2023); 167-198</dc:source>
	<dc:source>2460-6618</dc:source>
	<dc:source>2460-6146</dc:source>
	<dc:source>10.21098/jimf.v9i1</dc:source>
	<dc:language>eng</dc:language>
	<dc:relation>https://jimf-bi.org/JIMF/article/view/1590/933</dc:relation>
	<dc:rights xml:lang="en">Copyright (c) 2023 Journal of Islamic Monetary Economics and Finance</dc:rights>
</oai_dc:dc>