Bank Credit in Uncertain Times: Islamic vs. Conventional Banks
Copyright policy )Bank Credit in Uncertain Times: Islamic vs. Conventional Banks
This paper explores whether the impact of economic uncertainty on credit growth differs for Islamic vs. conventional banks. Using a sample of 416 banks (58 Islamic and 358 conventional) in 12 countries, the findings indicate that an increase in economic uncertainty significantly decreases the credit growth of conventional banks but does not have any significant impact on Islamic banks' credit growth. Our results are robust to alternative specifications and addressing endogeneity concerns using GMM estimators. We further observe that our findings are stronger for the following countries: (1) countries with explicit deposit insurance protection system for Islamic banks, (2) lower foreign dominance, and (3) countries with a higher share of deposits and assets in Islamic banks.
- Institut Universitaire de France France
- Kadir Has University Turkey
- UNIVERSITE DE LIMOGES France
- Istanbul Medeniyet University Turkey
- University of Limoges France
Economic Uncertainty, JEL: C - Mathematical and Quantitative Methods/C.C2 - Single Equation Models • Single Variables/C.C2.C23 - Panel Data Models • Spatio-temporal Models, Credit, Conventional banks, Central Banking, Conventional Banks, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, JEL: D - Microeconomics/D.D8 - Information, and Uncertainty/D.D8.D81 - Criteria for Decision-Making under Risk and Uncertainty, Economic uncertainty, and the Supply of Money and Credit/E.E5.E50 - General, JEL: G - Financial Economics/G.G2 - Financial Institutions and Services/G.G2.G21 - Banks • Depository Institutions • Micro Finance Institutions • Mortgages, Knowledge, JEL: E - Macroeconomics and Monetary Economics/E.E5 - Monetary Policy, Islamic banks, Islamic Banks, [SHS.ECO] Humanities and Social Sciences/Economics and Finance
Economic Uncertainty, JEL: C - Mathematical and Quantitative Methods/C.C2 - Single Equation Models • Single Variables/C.C2.C23 - Panel Data Models • Spatio-temporal Models, Credit, Conventional banks, Central Banking, Conventional Banks, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, JEL: D - Microeconomics/D.D8 - Information, and Uncertainty/D.D8.D81 - Criteria for Decision-Making under Risk and Uncertainty, Economic uncertainty, and the Supply of Money and Credit/E.E5.E50 - General, JEL: G - Financial Economics/G.G2 - Financial Institutions and Services/G.G2.G21 - Banks • Depository Institutions • Micro Finance Institutions • Mortgages, Knowledge, JEL: E - Macroeconomics and Monetary Economics/E.E5 - Monetary Policy, Islamic banks, Islamic Banks, [SHS.ECO] Humanities and Social Sciences/Economics and Finance
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