Institutional environment and bank capital ratios

الملخص EN

We investigate the influence of the institutional environment on bank capital levels.

Using a sample of 183 banks operating in the MENA region for the period 2004 to 2014, we find that low corruption levels, high political stability, as well as high economic and financial freedom are associated with higher capital adequacy levels.

The effect of institutional factors on bank capital ratios is also more pronounced for conventional versus Islamic banks, for listed banks and for nongovernment owned banks.