Credit risk and bank opacity: a comparative study of conventional and Islamic banks

Abstract

In this paper, we examine the impact of banking opacity along other bank-specific and macroeconomic factors on credit risk using a regression analysis. We estimate our panel data model using the fixed and random effects method for 72 conventional and Islamic listed banks in the MENA region over the 2005-2015 period. We found that banking opacity has a direct positive effect on the credit risk of conventional banks. On the other hand, banking opacity has no significant impact on the credit risk of Islamic banks.