EconPapers    
Economics at your fingertips  
 

On the role of Islamic banks in the monetary policy transmission in Saudi Arabia

Amine Ben Amar ()

Eurasian Economic Review, 2022, vol. 12, issue 1, No 3, 55-94

Abstract: Abstract Even though a significant strand of the literature has examined the transmission mechanisms of monetary policy in a conventional framework, very little research has directly addressed the role of Islamic banks in this transmission. Using a TVP-VAR model with stochastic volatilities, this paper attempts to fill this gap in the literature by examining the monetary policy transmission in Saudi Arabia, as well as the role of Islamic banks in this transmission over a period of approximately 25 years. Although Islamic banking is, in theory, different from conventional banking, our results provide robust evidence of the dependence of Islamic banking activity on oil revenues, and suggest that, in practice, there are few differences between the Islamic banks’ modus operandi and the methods used by conventional banks. However, the results do not provide clear evidence that Islamic banks are more stabilizing than conventional banks, even though the sensitivity of the non-oil economic activity to Islamic bank financing seems to be relatively less volatile than its sensitivity to conventional bank credits.

Keywords: Oil-based economies; Dual financial systems; Islamic banks; Monetary policy transmission channels; Time-varying VAR; Stochastic volatility (search for similar items in EconPapers)
JEL-codes: C32 E52 O23 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://link.springer.com/10.1007/s40822-022-00200-0 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:eurase:v:12:y:2022:i:1:d:10.1007_s40822-022-00200-0

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40822

DOI: 10.1007/s40822-022-00200-0

Access Statistics for this article

Eurasian Economic Review is currently edited by Dorothea Schäfer

More articles in Eurasian Economic Review from Springer, Eurasia Business and Economics Society Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2022-09-30
Handle: RePEc:spr:eurase:v:12:y:2022:i:1:d:10.1007_s40822-022-00200-0