Do oil and gas price shocks have an impact on bank performance?

Abdulazeez Y.H. Saif-Alyousfi, Asish Saha, Rohani Md-Rus and Kamarun Nisham Taufil-Mohd

Journal of Commodity Markets, 2021, vol. 22, issue C

Abstract: The paper examines the impact of oil and gas price shocks on bank performance in the major oil and gas exporting GCC countries, using data for the period 2000–2017. Results indicate that oil and gas price rises have a direct bearing on bank performance through the channel of price-induced bank deposits and related lending to business activities. The negative impact on bank performance due to a drop in oil and gas prices is greater than the positive effect of a rise in prices. Findings suggest that oil and gas price volatility has an asymmetric effect on conventional and Islamic banks. Conventional banks reap more benefit from the increased cash flow created by oil and gas prices, compared to Islamic banks. While Islamic banks are generally vulnerable to adverse oil and gas price shocks, conventional banks tend to benefit more from positive oil and gas price shocks. The association between oil and gas price shocks and bank performance in GCC has been distorted by the global financial crisis, the Arab Spring, and the ongoing Yemen War, which have lowered performance. The findings of the study have significant policy implications for the central banks as well as the governments in the oil and gas-exporting countries.

Keywords: Oil and gas price shocks; Global financial crisis; Arab spring; Yemen War; Bank performance; Oil-exporting countries (search for similar items in EconPapers)
JEL-codes: C23 G20 G21 L2 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S2405851320300246
Full text for ScienceDirect subscribers only

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:eee:jocoma:v:22:y:2021:i:c:s2405851320300246

DOI: 10.1016/j.jcomm.2020.100147

Access Statistics for this article

Journal of Commodity Markets is currently edited by Marcel Prokopczuk, Betty Simkins and Sjur Westgaard

More articles in Journal of Commodity Markets from Elsevier
Bibliographic data for series maintained by Catherine Liu ().