Abstract
This paper explores liquidity effects following the merger and acquisition between Al Salam Bank Bahrain and a conventional bank post the financial crises. We find evidence of a sus- tained increase in the liquidity of the stocks as a result of the change from conventional to Islamic banking. The empirical findings are consistent with the information cost/liquidity hypothesis, which states that investors demand a lower premium for holding stocks with relatively more available information. Our results suggest that Islamic banking stimulates trading and growth of the financial sector following financial turmoil.
| Original language | English |
|---|---|
| Pages (from-to) | 132-138 |
| Number of pages | 7 |
| Journal | Journal of International Financial Markets, Institutions & Money |
| Volume | 42 |
| DOIs | |
| Publication status | Published - 11 Mar 2016 |
Keywords
- Islamic banking
- Liquidity
- Financial crises
- Mergers and acquisitions