Pricing beliefs: Empirical evidence from the implied cost of deposit insurance for Islamic banks

Jocelyn Grira, M. Kabir Hassan, Issouf Soumaré

    Research output: Contribution to journalArticlepeer-review

    40 Citations (Scopus)

    Abstract

    Using a large international sample of 348,899 year-firm observations covering 352 Islamic banks and 30,572 conventional banks in 213 countries over the 1999-2013 period, we estimate the deposit insurance premiums of Islamic banks and conventional banks. We find that the premiums for publicly listed Islamic banks are 28% lower than those for publicly listed conventional banks. Moreover, we show that the premiums of privately held banks are significantly higher than those of publicly listed banks. Finally, we show that publicly listed Islamic banks did not record an increase in the level of deposit insurance premiums during the 2007-2009 financial crisis.

    Original languageEnglish
    Pages (from-to)152-168
    Number of pages17
    JournalEconomic Modelling
    Volume55
    DOIs
    Publication statusPublished - Jun 1 2016

    Keywords

    • Deposit insurance
    • Islamic banks
    • Risk-based premium
    • Systemic risk

    ASJC Scopus subject areas

    • Economics and Econometrics

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