Can Basel III Instruments Increase the Stability of the Banking Sectors? Empirical Study on Palestine Bank Sector

Abstract

This paper investigates the Palestine banks sector (PBS) after the recent financial crisis in 2008. This paper tries to answer the questions that; How weak economy Withstood the recent financial crisis? How the assets increase on PBS after the financial crisis and the last aggression on Gaza? This phenomena direct attention on bank risk. Thus this paper investigates the effect of bank capital, charter value, information system, “internal/external†control system and market discipline on bank risk on PBS. Therefore, we try to understand that to what extent does Basel III instruments increase the stability of the banking sectors? By using panel data from Palestine over the period 1996-2014. In addition, we use Partial Least Square (PLS) to analysis the sample which includes 172 questionnaires from listed banks. The result shows that there is no relationship among bank capital, charter value, information system and market discipline on bank risk. Our finding shows that the “Information system†is the most important predictor of Bank Risk, with support partly Basel III. Therefore, this study is important not just for Palestine but also to those that have concern of bank risk trying to find a solution to future default.