Sami Ben Naceur's Books

Basel III and Bank-Lending: Evidence from the United States and Europe

By: Mr.Sami Ben Naceur,Jérémy Pépy,Caroline Roulet

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Basel III and Bank-Lending: Evidence from the United States and Europe

By: Mr.Sami Ben Naceur,Jérémy Pépy,Caroline Roulet

Using data on commercial banks in the United States and Europe, this paper analyses the impact of the new Basel III capital and liquidity regulation on bank-lending following the 2008 financial crisis. We find that U.S. banks reinforce their risk absorption capacities when expanding their credit activities. Capital ratios have significant, negative impacts on bank-retail-and-other-lending-growth for large European banks in the context of deleveraging and the “credit crunch” in Europe over the post-2008 financial crisis period. Additionally, liquidity indicators have positive but perverse effects on bank-lending-growth, which supports the need to consider heterogeneous banks’ characteristics and behaviors when implementing new regulatory policies.

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International Monetary Fund

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ISBN 10

1484328302

ISBN 13

9781484328309

The Impact of Capital and Foreign Exchange Flowson the Competitiveness of Developing Countries

By: Mr.Bassem Kamar,Damyana Bakardzhieva,Samy Ben Naceur,Mr.Sami Ben Naceur

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The Impact of Capital and Foreign Exchange Flowson the Competitiveness of Developing Countries

By: Mr.Bassem Kamar,Damyana Bakardzhieva,Samy Ben Naceur,Mr.Sami Ben Naceur

Attracting capital and foreign exchange flows is crucial for developing countries. Yet, these flows could lead to real exchange rate appreciation and may thus have detrimental effects on competitiveness, jeopardizing exports and growth. This paper investigates this dilemma by comparing the impact of six types of capital and foreign exchange flows on real exchange rate behavior in a sample of 57 developing countries covering Africa, Europe, Asia, Latin America, and the Middle East. The results reveal that portfolio investments, foreign borrowing, aid, and income lead to real exchange rate appreciation, while remittances have disparate effects across regions. Foreign direct investments have no effect on the real exchange rate, contributing to resolve the above dilemma.

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International Monetary Fund

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ISBN 10

1455201375

ISBN 13

9781455201372

Basel Compliance and Financial Stability

Evidence from Islamic Banks

By: Mohammad Bitar,Mr.Sami Ben Naceur,Rym Ayadi,Thomas Walker

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Basel Compliance and Financial Stability

Evidence from Islamic Banks

By: Mohammad Bitar,Mr.Sami Ben Naceur,Rym Ayadi,Thomas Walker

The paper provides robust evidence that compliance with Basel Core Principles (BCPs) has a strong positive effect on the Z-score of conventional banks, albeit less pronounced on the Zscore of Islamic banks. Using a sample of banks operating in 19 developing countries, the results appear to be driven by capital ratios, a component of Z-score for the two types of banks. Even though smaller on Islamic banks, individual chapters of BCPs also suggest a positive effect on the stability of conventional banks. The findings support the effective role of BCP standards in improving bank stability, whose important implications led to the Islamic Financial Services Board (IFSB) publication of new recommendations in 2015 to bring BCP standards in line with the Core Principles for Islamic Finance Regulation (CPIFRs) standards. Our findings suggest that because Islamic banks are benchmarked closely to BCPs, the implementation of CPFIRs should also positively affect their stability.

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International Monetary Fund

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ISBN 10

1484311507

ISBN 13

9781484311509

What Matters for Financial Development and Stability?

By: Raja Almarzoqi,Mr.Sami Ben Naceur,Akshay Kotak

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What Matters for Financial Development and Stability?

By: Raja Almarzoqi,Mr.Sami Ben Naceur,Akshay Kotak

This study aims to identify policies that influence the development of financial institutions as measured across three dimensions: depth, efficiency, and stability. Applying the concept of the financial possibility frontier, developed by Beck & Feyen (2013) and formalized by Barajas et al (2013a), we determine key policy variables affecting the gap between actual levels of development and benchmarks predicted by structural variables. Our dynamic panel estimation shows that inflation, trade openness, institutional quality, and banking crises significantly affect financial development. Our analysis also helps identify potential complementarities and trade-offs for policy makers, based on the effect of the policy variables across the different dimensions of financial development.

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International Monetary Fund

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ISBN 10

1513501178

ISBN 13

9781513501178

Does FinTech Increase Bank Risk Taking?

By: Mr. Selim A Elekdag,Drilona Emrullahu,Sami Ben Naceur

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Does FinTech Increase Bank Risk Taking?

By: Mr. Selim A Elekdag,Drilona Emrullahu,Sami Ben Naceur

Motivated by its rapid growth, this paper investigates how FinTech activities influence risk taking by financial intermediaries (FIs). In this context, this paper revisits an ongoing debate on the impact of competition on financial stability: on one side, it is argued that greater competition encourages greater risk taking (competition-fragility hypothesis), while the other side of the debate asserts that more competition can increase financial stability (competition-stability hypothesis). Using a curated databased covering over 10,000 FIs and global FinTech activities, we find a robust relationship whereby greater FinTech presence is associated with heightened risk taking by FIs, offering support for the competition-fragility hypothesis. However, the inclusion of bank-, industry-, and country-specific characteristics can alter this relationship. Importantly, there is suggestive evidence indicating that in certain cases, greater FinTech presence may be associated with less FI risk taking amid stronger domestic institutions. Notwithstanding the relevance for policy, this paper presents a novel framework that may help reconcile some of the conflicting results in the literature which have found supportive evidence for each of the two competing hypotheses.

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International Monetary Fund

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ISBN 13

9798400265167

Bank Capital and the Cost of Equity

By: Mohamed Belkhir,Mr.Sami Ben Naceur,Mr.Ralph Chami,Anis Semet

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Bank Capital and the Cost of Equity

By: Mohamed Belkhir,Mr.Sami Ben Naceur,Mr.Ralph Chami,Anis Semet

Using a sample of publicly listed banks from 62 countries over the 1991-2017 period, we investigate the impact of capital on banks’ cost of equity. Consistent with the theoretical prediction that more equity in the capital mix leads to a fall in firms’ costs of equity, we find that better capitalized banks enjoy lower equity costs. Our baseline estimations indicate that a 1 percentage point increase in a bank’s equity-to-assets ratio lowers its cost of equity by about 18 basis points. Our results also suggest that the form of capital that investors value the most is sheer equity capital; other forms of capital, such as Tier 2 regulatory capital, are less (or not at all) valued by investors. Additionally, our main finding that capital has a negative effect on banks’ cost of equity holds in both developed and developing countries. The results of this paper provide the missing evidence in the debate on the effects of higher capital requirements on banks’ funding costs.

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International Monetary Fund

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ISBN 10

1513519808

ISBN 13

9781513519807

Financial Development, Inequality and Poverty

Some International Evidence

By: Mr.Sami Ben Naceur,RuiXin Zhang

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Financial Development, Inequality and Poverty

Some International Evidence

By: Mr.Sami Ben Naceur,RuiXin Zhang

This paper provides evidence on the link between financial development and income distribution. Several dimensions of financial development are considered: financial access, efficiency, stability, and liberalization. Each aspect is represented by two indicators: one related to financial institutions, and the other to financial markets. Using a sample of 143 countries from 1961 to 2011, the paper finds that four of the five dimensions of financial development can significantly reduce income inequality and poverty, except financial liberalization, which tends to exacerbate them. Also, banking sector development tends to provide a more significant impact on changing income distribution than stock market development. Together, these findings are consistent with the view that macroeconomic stability and reforms that strengthen creditor rights, contract enforcement, and financial institution regulation are needed to ensure that financial development and liberalization fully support the reduction of poverty and income equality.

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ISBN 10

1498359280

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9781498359283

Is FinTech Eating the Bank's Lunch?

By: Sami Ben Naceur,Bertrand Candelon,Mr. Selim A Elekdag,Drilona Emrullahu

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Is FinTech Eating the Bank's Lunch?

By: Sami Ben Naceur,Bertrand Candelon,Mr. Selim A Elekdag,Drilona Emrullahu

This paper examines how the growing presence of FinTech firms affects the performance of traditional financial institutions. The findings point to a negative impact on profitability, primarily due to a reduction in interest income and a rise in operational costs. Although established financial institutions have tried to diversify their revenue streams, these efforts have proven inadequate to offset the losses associated with increased competition from FinTech firms. Our study also reveals that various FinTech business models, such as Peer-to-Peer (P2P) lending and Balance Sheet lending, have varying effects on financial institutions. Cooperative banks experience more significant profit deterioration under both models, whereas (larger) commercial banks appear to benefit from partnerships with P2P platforms, as evidenced by an increase in non-interest income. Furthermore, the findings suggest that FinTech presence has a disproportionately larger adverse effect on banks in countries with more competitive, profitable, and developed financial systems. Interestingly, however, traditional financial institutions in countries with stronger regulatory frameworks appear to benefit from the expanding influence of FinTech firms.

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ISBN 13

9798400258107

Macroprudential Policies, Economic Growth, and Banking Crises

By: Mohamed Belkhir,Mr.Sami Ben Naceur,Bertrand Candelon,Jean-Charles Wijnandts

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Macroprudential Policies, Economic Growth, and Banking Crises

By: Mohamed Belkhir,Mr.Sami Ben Naceur,Bertrand Candelon,Jean-Charles Wijnandts

Using a sample that covers more than 100 countries over the 2000-2017 period, we assess the impact of macroprudential policies on financial stability. In particular, we examine whether the activation of macroprudential policies is conducive to a lower incidence of systemic banking crises. Our empirical setup is designed to account for the potential direct and indirect effects that macroprudential policies can have on banking crises. We find that while macro-prudential policies exert a direct stabilizing effect, they also have an indirect destabilizing effect, which works through the depressing of economic growth. A Generalized Impulse Response Function analysis of a dynamic system composed of the probability of a banking crisis and economic growth reveals, however, that macroprudential policies have a positive net effect on financial stability (lower likelihood of systemic banking crises).

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ISBN 10

1513536982

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9781513536989

How to De-Dollarize Financial Systems in the Caucasus and Central Asia?

By: Mr.Sami Ben Naceur,Amr Hosny,Gregory Hadjian

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How to De-Dollarize Financial Systems in the Caucasus and Central Asia?

By: Mr.Sami Ben Naceur,Amr Hosny,Gregory Hadjian

Dollarization rates in the Caucasus and Central Asia (CCA) region are among the highest in the world, with adverse consequences for macroeconomic stability, monetary policy transmission, and financial sector development. Using dynamic panel data models, we find that foreign exchange deposits and loans in the CCA are mainly driven by volatile inflation and exchange rates, low financial depth, and asymmetric exchange rate policies biased toward depreciation. Although there is no unique formula for success, empirical studies and cross-country experiences suggest that credible monetary and exchange rate frameworks, low and stable inflation, and deep domestic financial markets are essential ingredients of any de-dollarization strategy. In implementation, policymakers need to consider proper sequencing of policies, effective communication as well as risks from potential financial disintermediation and instability, and/or capital flight.

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ISBN 10

1513507273

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9781513507279

Taming Financial Development to Reduce Crises

By: Mr.Sami Ben Naceur,Bertrand Candelon,Quentin Lajaunie

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Taming Financial Development to Reduce Crises

By: Mr.Sami Ben Naceur,Bertrand Candelon,Quentin Lajaunie

This paper assesses whether and how financial development triggers the occurrence of banking crises. It builds on a database that includes financial development as well as financial access, depth and efficiency for almost 100 countries. Through estimation of a dynamic logit panel model, it appears that financial development, from an institutional dimension and to a lesser extent from a market dimension, triggers financial instability within a one- to two-year horizon. Additionally, whereas financial access is destabilizing for advanced countries, it is stabilizing for emerging and low income ones. Both results have important implications for macroprudential policies and financial regulations.

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ISBN 10

1498312012

ISBN 13

9781498312011

Basel Capital Requirements and Credit Crunch in the MENA Region

By: Mr.Sami Ben Naceur,Ms.Magda E. Kandil

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Basel Capital Requirements and Credit Crunch in the MENA Region

By: Mr.Sami Ben Naceur,Ms.Magda E. Kandil

The 1988 Basel I Accord set the common requirements of bank capital to promote the soundness and stability of the international banking system. The agreement required banks to hold capital in proportion to their perceived credit risks, and this requirement may have caused a “credit crunch,” a significant reduction in the supply of credit. We investigate the direct link between the implementation of the Basel I Accord and lending activities, using a data set spanning annual observations covering 1989–2004 for banks in Egypt, Jordan, Lebanon, Morocco, and Tunisia. The results provide clear support for a significant increase in credit growth following the implementation of capital regulations, in general. Despite higher capital adequacy ratios, banks expanded credit and asset growth. Credit growth appears to be driven by demand fluctuations attributed to real growth, cost of borrowing, and exchange rate risk. Overall, the effects of macroeconomic variables, in contrast to capital adequacy, appear to be more dominant in determining credit growth, regardless of the capital adequacy ratio, and regardless of variation across banks by nationality, ownership, and listing.

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ISBN 10

1475586272

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9781475586275

Macroprudential Policy and Bank Systemic Risk: Does Inflation Targeting Matter?

By: Mohamed Belkhir,Sami Ben Naceur,Bertrand Candelon,Woon Gyu Choi,Farah Mugrabi

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Macroprudential Policy and Bank Systemic Risk: Does Inflation Targeting Matter?

By: Mohamed Belkhir,Sami Ben Naceur,Bertrand Candelon,Woon Gyu Choi,Farah Mugrabi

This paper investigates macroprudential policy effects on bank systemic risk and the role of inflation targeting in such effects. Using bank-level data for 45 countries comprising various monetary and exchange rate regimes, our regime-dependent dynamic panel regression results point to complementarities between monetary and macroprudential policies. We find that the tightening of most macroprudential tools—including DSTI and LTV limits, and capital requirements—reduces bank systemic risk further under inflation targeting. Our findings lend credence to the view that inflation targeting strengthens macroprudential policy roles in mitigating financial stability risks.

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ISBN 13

9798400245008

How Does Bank Competition Affect Solvency, Liquidity and Credit Risk? Evidence from the MENA Countries

By: Raja Almarzoqi,Mr.Sami Ben Naceur,Alessandro Scopelliti

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How Does Bank Competition Affect Solvency, Liquidity and Credit Risk? Evidence from the MENA Countries

By: Raja Almarzoqi,Mr.Sami Ben Naceur,Alessandro Scopelliti

The paper analyzes the relationship between bank competition and stability, with a specific focus on the Middle East and North Africa. Price competition has a positive effect on bank liquidity, as it induces self-discipline incentives on banks for the choice of bank funding sources and for the holding of liquid assets. On the other hand, price competition may have a potentially negative impact on bank solvency and on the credit quality of the loan portfolio. More competitive banks may be less solvent if the potential increase in the equity base—due to capital adjustments—is not large enough to compensate for the reduction in bank profitability. Also, banks subject to stronger competitive pressures may have a higher rate of nonperforming loans, if the increase in the risk-taking incentives from the lender’s side overcomes the decrease in the credit risk from the borrower’s side. In both cases, country-specific policies for market entry conditions—and for bank regulation and supervision—may significantly affect the sign and the size of the relationship. The paper suggests policy reforms designed to improve market contestability and to increase the quality and independence of prudential supervision.

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1513505831

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9781513505831

What Drives the Performance of Selected MENA Banks? A Meta-Frontier Analysis

By: Hichem Ben-Khedhiri,Barbara Casu,Mr.Sami Ben Naceur

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What Drives the Performance of Selected MENA Banks? A Meta-Frontier Analysis

By: Hichem Ben-Khedhiri,Barbara Casu,Mr.Sami Ben Naceur

This study examines the effect of financial-sector reform on bank performance in selected Middle Eastern and North African (MENA) countries in the period 1994 -2008. We evaluate bank efficiency in Egypt, Jordan, Morocco, Lebanon and Tunisia by means of Data Envelopment Analysis (DEA) and we employ a meta-frontier approach to calculate efficiency scores in a cross-country setting. We then employ a second-stage regression to investigate the impact of institutional, financial, and bank specific variables on bank efficiency. Overall, the analysis shows that, despite similarities in the process of financial reforms undertaken in the five MENA countries, the observed efficiency levels of banks vary substantially across markets, with Morocco consistently outperforming the rest of the region.Differences in technology seem to be crucial in explaining efficiency differences. To foster banking sector performance, policies should be aimed at giving banks incentives to improve their risk management and portfolio management techniques. Improvements in the legal system and in the regulatory and supervisory bodies would also help to reduce inefficiency.

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1455217921

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9781455217922

Oil Prices and GCC Stock Markets: New Evidence from Smooth Transition Models

By: Nidhaleddine Ben Cheikh,Mr.Sami Ben Naceur,Mr.Oussama Kanaan,Christophe Rault

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Oil Prices and GCC Stock Markets: New Evidence from Smooth Transition Models

By: Nidhaleddine Ben Cheikh,Mr.Sami Ben Naceur,Mr.Oussama Kanaan,Christophe Rault

Our paper examines the effect of oil price changes on Gulf Cooperation Council (GCC) stock markets using nonlinear smooth transition regression (STR) models. Contrary to conventional wisdom, our empirical results reveal that GCC stock markets do not have similar sensitivities to oil price changes. We document the presence of stock market returns’ asymmetric reactions in some GCC countries, but not for others. In Kuwait’s case, negative oil price changes exert larger impacts on stock returns than positive oil price changes. When considering the asymmetry with respect to the magnitude of oil price variation, we find that Oman’s and Qatar’s stock markets are more sensitive to large oil price changes than to small ones. Our results highlight the importance of economic stabilization and reform policies that can potentially reduce the sensitivity of stock returns to oil price changes, especially with regard to the existence of asymmetric behavior.

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International Monetary Fund

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ISBN 10

1484353625

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9781484353622

Determinants of Bank Interest Margins in the Caucasus and Central Asia

By: Raja Almarzoqi,Mr.Sami Ben Naceur

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Determinants of Bank Interest Margins in the Caucasus and Central Asia

By: Raja Almarzoqi,Mr.Sami Ben Naceur

In this paper, we use a bank-level panel dataset to investigate the determinants of bank interest margins in the Caucasus and Central Asia (CCA) over the period 1998–2013. We apply the dealership model of Ho and Saunders (1981) and its extensions to assess the extent to which high spreads of banks in the CCA can be related to bank-specific variables, to competition, and to macroeconomic factors. We find that interest spreads are affected by operating cost, credit risk, liquidity risk, bank size, bank diversification, banking sector competition, and macroeconomic policies; but the impact depends on the country.

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International Monetary Fund

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ISBN 10

1475569785

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9781475569780

Does Basel Compliance Matter for Bank Performance?

By: Rym Ayadi,Mr.Sami Ben Naceur,Barbara Casu,Barry Quinn

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Does Basel Compliance Matter for Bank Performance?

By: Rym Ayadi,Mr.Sami Ben Naceur,Barbara Casu,Barry Quinn

The global financial crisis underscored the importance of regulation and supervision to a well-functioning banking system that efficiently channels financial resources into investment. In this paper, we contribute to the ongoing policy debate by assessing whether compliance with international regulatory standards and protocols enchances bank operating efficiency. We focus specifically on the adoption of international capital standards and the Basel Core Principles for Effective Bank Supervision (BCP). The relationship between bank efficiency and regulatory compliance is investigated using the (Simar and Wilson 2007) double bootstrapping approach on an international sample of publicly listed banks. Our results indicate that overall BCP compliance, or indeed compliance with any of its individual chapters, has no association with bank efficiency.

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ISBN 10

147558038X

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9781475580389

Can Islamic Banking Increase Financial Inclusion?

By: Mr.Sami Ben Naceur,Mr.Adolfo Barajas,Mr.Alexander Massara

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Can Islamic Banking Increase Financial Inclusion?

By: Mr.Sami Ben Naceur,Mr.Adolfo Barajas,Mr.Alexander Massara

The paper analyses existing country-level information on the relationship between the development of Islamic banking and financial inclusion. In Muslim countries—members of the Organization for Islamic Cooperation (OIC)—various indicators of financial inclusion tend to be lower, and the share of excluded individuals citing religious reasons for not using bank accounts is noticeably greater than in other countries; Islamic banking would therefore seem to be an effective avenue for financial inclusion. We found, however, that although physical access to financial services has grown more rapidly in the OIC countries, the use of these services has not increased as quickly. Moreover, regression analyis shows evidence of a positive link to credit to households and to firms for financing investment, but this empirical link remains tentative and relatively weak. The paper explores reasons that this might be the case and suggests several recommendations to enhance the ability of Islamic banking to promote financial inclusion.

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International Monetary Fund

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ISBN 10

1498372252

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9781498372251

Financial Development and Source of Growth

New Evidence

By: Mr.Sami Ben Naceur,Mr.Robert Blotevogel,Mr.Mark Fischer,Haiyan Shi

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Financial Development and Source of Growth

New Evidence

By: Mr.Sami Ben Naceur,Mr.Robert Blotevogel,Mr.Mark Fischer,Haiyan Shi

This paper examines how financial development affects the sources of growth—productivity and investment—using a sample of 145 countries for the period 1960-2011. We employ a range of econometric approaches, focusing on the CCA and MENA countries. The analysis looks beyond financial depth to capture the access, efficiency, stability, and openness dimensions of financial development. Yet even in this broad interpretation, financial development does not appear to be a magic bullet for economic growth. We cannot confirm earlier findings of an unambiguously positive relationship between financial development, investment, and productivity. The relationship is more complex. The influence of the different dimensions of financial development on the sources of growth varies across income levels and regions.

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148430263X

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9781484302637

Do Remittances Enhance Financial Inclusion in LMICs and in Fragile States?

By: Mr.Sami Ben Naceur,Mr.Ralph Chami,Mohamed Trabelsi

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Do Remittances Enhance Financial Inclusion in LMICs and in Fragile States?

By: Mr.Sami Ben Naceur,Mr.Ralph Chami,Mohamed Trabelsi

This paper explores the relationship between remittances and financial inclusion for a sample of 187 countries over the period 2004-2015, using cross-country as well as dynamic panel GMM regressions. At low levels of remittances-to-GDP, these flows act as a substitute to formal financial channels, thereby reducing financial inclusion. In contrast, when remittance-to-GDP ratio is high, above 13% on average, they tend to complement formal access and usage channels, thus enhancing financial inclusion. This “U shaped” relationship highlights the role of remittance flows in financing household consumption at low levels, while raising formal household bank savings and allowing for more intermediation, at high levels of remittance-to-GDP.

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