Bank credit in uncertain times: Islamic vs. conventional banks

Mehmet Bilgin, Gamze Ozturk Danisman, Ender Demir and Amine Tarazi

Finance Research Letters, 2021, vol. 39, issue C

Abstract: 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.

Keywords: Economic uncertainty; Credit; Islamic banks; Conventional banks (search for similar items in EconPapers)
JEL-codes: C23 D81 E50 G21 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (16)

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Working Paper: Bank credit in uncertain times: Islamic vs. conventional banks (2021)
Working Paper: Bank credit in uncertain times: Islamic vs. conventional banks (2020)
Working Paper: Bank credit in uncertain times: Islamic vs. conventional banks (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:39:y:2021:i:c:s154461232030194x

DOI: 10.1016/j.frl.2020.101563

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