Evaluation the Impact of Capital Adequacy on the Return on Equity of Islamic Banks in Gulf Cooperation Council

摘要

The purpose of this study examines the effect of the capital adequacy on the return on equity for the largest 16 Islamic banks in gulf cooperation council in terms of market value, using panel data analysis during the Period (2010-2014) and the effect the size, inflation, and GDP as a control variables, Also to explain how Islamic banks comply with international solvency standards (Basel), and the extent to which those standards with special nature of the Islamic banks and their impact on earnings of these banks. The study data collected from published annual reports for banks The capital adequacy is the main tool to measure the bank's ability to meet its obligation and liabilities It is a one of the risk exposure scales of banks, such as credit risk, market risk, and operational risk. Islamic banks have special standards issued by the accounting and auditing organization for Islamic financial institutions (AAOIFI) and the council of Islamic financial services board (IFSB). The study found that there is a significant relationship between capital adequacy and return on equity in the absence and in the presence of control variables and the relationship was negative, size has a statistically significant positive effect on the return on equity, inflation has a statistically significant negative effect on the return on equity, GDP has a statistically significant positive effect on the return on equity.