Assessing the Effect of Change in Oil Prices, Macroeconomics on the Banking Sector Stability in Oil-Producing Countries

Ahmed Rufai Mohammad (), Mohamad Helmi Bin Hidthiir () and Alias Bin Mat Nor ()

Academic Journal of Economic Studies, 2019, vol. 5, issue 4, 88-93

Abstract: The paper investigates the effect of oil price change and other cyclical factors on the stability difference of conventional and Islamic banks. The study espouses to two separate stability measurement in order to differentiate the effect of change in oil price on bank stability. The results of the paper provide evidence that oil price change affects the stability of conventional banks better when measured with accounting approach, while the change of oil price affects the banking stability when measured with market-based stability measures. Moreover, the result reveals a positive relationship between banking stability of Islamic banks and GDP coexists with a negative relationship on the conventional banks. It reveals that banking stability is affected by inflation negatively. The findings of this paper have significant policy implication for banking stability in Middle East and other oil-producing emerging countries.

Keywords: Autoregression; commonwealth; inflation persistence; West African Commonwealth Countries (search for similar items in EconPapers)
JEL-codes: G21 G33 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:khe:scajes:v:5:y:2019:i:4:p:88-93

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