Modelling demand and supply of Islamic banking deposits

Noman Arshed and Rukhsana Kalim

International Journal of Finance & Economics, 2021, vol. 26, issue 2, 2813-2831

Abstract: The purpose of the study is to assess the market of Islamic banking deposits. As banking intermediation ensures efficient allocation of excess capital, but stable availability of deposit resource helps banks to manage long‐term capital structure portfolio. Unlike conventional banks, Islamic banks also have to meet the Shari'ah requirements. This study works under the domain of Islamic economics and intends to explore the demand and supply model of deposits of Islamic banks using data from financial statements, World Development Indicators and Thomson Reuters. The results using panel feasible generalized least squares model with two‐way fixed effect showed that deposits are supply‐elastic and demand‐elastic with respect to returns to deposits. While other factors like inflation, money market rate and knowledge significantly affect supply of deposit and banking profitability and Islamic financial development significantly affect demand for deposits. This study concludes that the global Islamic banking deposit market is stable and converging hence, banks must ensure their relationship with price while devising a strategy to attract deposits.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1002/ijfe.1936

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:wly:ijfiec:v:26:y:2021:i:2:p:2813-2831

Ordering information: This journal article can be ordered from
http://jws-edcv.wile ... PRINT_ISSN=1076-9307

Access Statistics for this article

International Journal of Finance & Economics is currently edited by Mark P. Taylor, Keith Cuthbertson and Michael P. Dooley

More articles in International Journal of Finance & Economics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().