The Effect of Institutional Quality on Bank Lending in the Gulf Cooperation Council Countries

Azmat Gani and Al-Muharrami Saeed ()
Additional contact information
Al-Muharrami Saeed: Department of Economics and Finance, College of Economics and Political Science, P.O. Box 20. Al Khod 123, Muscat, Oman

Review of Middle East Economics and Finance, 2016, vol. 12, issue 1, 55-63

Abstract: This paper examines the effect of institutional quality on lending by banks in Gulf Cooperation Council (GCC) group of countries. The methodology included the estimation of a reduced form regression equation utilizing cross country data for a range of variables capturing institutional quality. The empirical findings provide evidence that conventional institutional quality measured by: the time taken to enforce a contract, regulatory quality, the rule of law and government effectiveness; are inversely correlated with the lending by the banks, among other factors. Interestingly, our findings revealed that Sharia financing legislation to be positive and statistically significantly correlated with bank lending. Our main policy implication is that strengthening the domestic conventional institutional quality in the GCC countries is vital in order to facilitate effective lending by banks.

Keywords: GCC countries; banks; Sharia; lending; institutions (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://doi.org/10.1515/rmeef-2015-0032 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:rmeecf:v:12:y:2016:i:1:p:55-63:n:1

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/rmeef/html

DOI: 10.1515/rmeef-2015-0032

Access Statistics for this article

Review of Middle East Economics and Finance is currently edited by Ghassan Dibeh

More articles in Review of Middle East Economics and Finance from De Gruyter
Bibliographic data for series maintained by Peter Golla ().