Resilience and performance of Islamic and conventional banks amid oil price uncertainty

Tauhidul Islam Tanin, Mohammed Sharaf Mohsen Shaiban, Akram Shavkatovich Hasanov and Robert Brooks

Energy Economics, 2025, vol. 148, issue C

Abstract: The influence of religiosity on stock price performance continues to be a subject of debate, particularly in dual banking systems, where Islamic banks (IBs) operate alongside conventional banks (CBs). This study uses an extensive dataset and applies a recursive window-based asymmetric VAR-GARCH-in-mean-BEKK model to examine the impact of oil price uncertainty (OPU) on IBs and CBs' stock returns in net oil-exporting (Egypt, Indonesia, Kuwait, Nigeria, Oman, Qatar, Saudi Arabia, and the UAE) and oil-importing (Bangladesh, Jordan, Pakistan, and Turkey) countries. Although the findings provide partial insights into IB resilience, they are inconclusive enough to holistically confirm the superiority of either IBs or CBs. This study contributes to the existing literature and emphasizes the need for further investigation of these dynamics. Understanding the effect of OPU on bank profitability is essential for long-term investors, policymakers, and those involved in regulatory reforms focused on promoting economic growth, profitability, and risk management within a dual banking system.

Keywords: Islamic and conventional banks; Religiosity and stock returns; Oil price uncertainty; Oil-exporting and -importing countries; VAR-GARCH-in-mean-BEKK (search for similar items in EconPapers)
JEL-codes: C58 E44 F33 G23 Q43 Z12 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:148:y:2025:i:c:s0140988325004645

DOI: 10.1016/j.eneco.2025.108637

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