This study aims to test the contagion effect of the Arab Spring revolution in the GCC countries on discrimination between Islamic and conventional banks in terms of cost efficiency, and to test how prudential factors can influence this comparison. We used the stochastic frontier of Battese and Coelli (1995) to measure the cost efficiency of both Islamic and conventional banks in the GCC countries during 2006_ 2015 (before the Arab revolution 2006-2010 and after the Arab revolution 2011-2015). Second, we used a logit model to discriminate between Islamic and conventional banks in terms of cost efficiency combined with credit risk, regulatory capital and interest margin. Third, we finally test the convergence and divergence between Islamic and Conventional banks by measuring the probability of having Islamic/conventional activities for both banks. We have shown that there is no absolute difference in terms of cost efficiency between Islamic and conventional banks. This difference can be observed through the credit risk taking but not through the interest rate margin. In addition, Islamic banks have taken advantage from the event of the Arab Spring revolution, compared to conventional ones, by being more efficient through risk mitigating due to their participatory financial product. Unlike previous research, we have used a cost efficiency measurement following Battese and Coelli’s (1995) model and we have incorporated it in a logit model, in the context of crisis. Cost efficiency is combined with a set of prudential factors to determine their effect on the convergence/divergence between Islamic and conventional bank.

This paper discusses the effects of both sustainable development and an Islamic system on the transmission of oil shocks into inflation. Sustainable development in this context includes wealth distribution equity, public governance effectiveness and alternative energy creation for the promotion of economic growth. These factors have been revised by Askari and Mirakhor under an Islamic approach using a set of Islamic indices to reflect a social, economic, political and ecological system that is in compliance with the Sharia principles. Using the ARDL model, we tested whether these Islamic mechanisms could have played the role of sustainable development in the fight against the transmission of oil shocks into inflation in MENA countries during the period 2000–2018. The results show that the Islamic system can play the role of sustainable development better than the traditional one, through fostering social equity, fighting against corruption, promoting humanity in employability and facilitating growth of the real economy. These Islamic values slow down the inflationary phenomenon caused by oil shocks.

This paper tests the ability of the regulatory capital requirement to cover credit losses at default, as carried out by the economic (optimal) capital requirement in Tunisian banks. The common factor in borrowers that leads to a credit default is systematic risk. However, the sensitivity to these factors differs between borrowers. To this end, we derived two kinds of sensitivity to systematic risk: the first is recognised by the Basel Committee; the second is derived from an economic approach. Hence, we can observe the impact of sensitivity to systematic risk on capital requirements. Empirically, we studied a sample of 100 individual borrowers from a Tunisian deposit bank that had credit in January 2020. We estimated the default probability for each borrower and then simulated their systematic risk sensitivity using the Monte Carlo approach, and compared them with the regulatory risk sensitivity. Then, we tested their effects on the economic and regulatory capital requirements. The results indicate that regulatory capital overestimates economic capital. This is due to the overestimation of borrowers’ contagion in terms of default risk, as shown by the superiority of their regulatory sensitivity systematic risk compared to the simulated risk. This leads banks to devote more capital than is really necessary to reach the regulatory standard. Hence, there was an increase in capital costs and the possibility of an arbitrage opportunity.

Problem/Relevance: This paper deals with such market disciplinary factors as shareholder ownership, audit committee composition and Basel III prudential regulation affecting accounting manipulation measured by abnormal accruals in Tunisian banks in the event of managerial deviation from regulatory requirements Research Objective/Questions : The aim of this study is to estimate the abnormal accruals that measure the accounting manipulation, and to test the effect of disciplinary and regulatory factors accordingly to The spring Arab revolution, on accounting Manipulation. Methodology: We propose to construct abnormal accruals as an endogenous variable, using the classic Kothari model (2005), in order to explain them by means of the “difference-in-difference” estimation approach (DID), understand the significance of the evolution of the manipulation, and explain these accruals using internal and external disciplinary factors. On the other hand, we use the credit risk portfolio manipulation theory advocated by Nessim (2003) and Repullo (2007), to understand the concept of actual venture capital of Tunisian banks after the Arab Revolution. Major Findings : The results show that the situation of Tunisian banks has dramatically worsened since the Tunisian Revolution. The DID approach showed an exacerbation of abnormal accruals and a manipulation transfer from net income smoothing to credit portfolio value smoothing in order to reach a healthy financial situation. This aggravation is linked to the market discipline deterioration, the shareholders, the external auditors and the supervisory board. Implications : Before the Revolution, accounting manipulation was mainly caused by banking undercapitalization that led managers to offer more risky credit in a diluted ownership market and in an informational asymmetry situation characterized by the absence of the audit committee. After the Revolution, accounting manipulation resulted from an overcapitalization situation, which led managers to grant more risky credit. To circumvent the shareholders’ supervisory power, managers manipulated credit portfolio values, offering a low level of credit risk, and circulating false beliefs for shareholders and depositors. This was done when prudential supervision was weak, leading to an information asymmetry and long-term conflict of interest between external auditors and managers through abnormal remuneration and a long relationship.

This paper examines the effects of Islamic economic and social systems within a democratic environment on the causal relationships among uncertainty, informal economy, corruption, and economic growth. For this purpose, we considered a set of Middle East/North Africa MENA countries considered to be in economic difficulty and undergoing the democratic transition process (Tunisia, Algeria, Egypt, Libya, Yemen, and Iraq) for the period of 2000–2018. Our contribution is to use the social index that measures the degree of Islamicity in each country in terms of economic and political matters. We examine the effects of Islamicity and democracy on uncertainty, informal economy, corruption, and economic growth using a vector autoregression (VAR) model. Our empirical findings show that, if a theoretical Islamic system is applied in practice, it must be accompanied by a democratic regime to effectively mitigate uncertainty, informal economy, and corruption and contribute to economic growth. Democracy is a necessary component for achieving an optimal level of Islamicity.

Purpose This study investigates the potential greenwashing phenomena associated with green sukuk issuances across MENA and ASEAN countries. It explores whether green sukuk genuinely reflect environmentally responsible financing or are misused to attract investors through misleading green claims, drawing on stakeholder theory, signalling theory, and agency theory. Methods The analysis examines the bidirectional relationship between environmental and energy indicators (pollution, carbon emissions, non-renewable energy use, renewable energy adoption) and the issuance volume and coupon rates of green sukuk. Sampling The study covers green sukuk issuances across MENA and ASEAN countries over the period 1990–2022. Findings The results reveal widespread greenwashing practices in most countries studied, where issuers exploit environmental signals while diverting funds to non-ecological projects and offering high coupon rates to offset agency risks and information asymmetry. This undermines the legitimacy of green sukuk from both Islamic finance and environmental perspectives. In contrast, Turkey stands out by demonstrating a credible commitment to environmental responsibility, with green sukuk linked to lower pollution, reduced emissions, and increased renewable energy use, thereby validating stakeholder theory and strengthening issuer legitimacy. Policy implications The findings call for stricter standards, enhanced certification requirements, and greater transparency in green sukuk markets to ensure alignment with genuine environmental objectives and to safeguard investor trust.