The Impact of the Pandemic on the Financial Markets: The Resilience of GCC Islamic Banks During the COVID-19 Crisis

Ahmet Faruk Aysan and Farah Ahmed Hersi

Chapter 8 in Banking Resilience:New Insights on Corporate Governance, Sustainability and Digital Innovation, 2024, pp 265-299 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This chapter examines the impact of the recent global healthcare crisis on the resilience of the Islamic and conventional banks from the six GCC countries. We compare the financial ratios of the banks derived from the 3Q2020 financial statements of 51 publicly listed regional banks. The data numbers are annualized to cover banking activities in the region during the pandemic year. Analytical results suggest that GCC Islamic banks performed better than their conventional peers. GCC Islamic banks were strongly capitalized before the pandemic, except for Al Izz bank in Oman. Al Izz bank was also later merged with Oman Arab Bank. The fact that Islamic banks do not engage with derivatives also helped GCC Islamic banks remain robust during the crisis. Therefore, one would recommend that Islamic banks, along with the disruptive financial technology of the day (FinTech), can help the post-COVID-19 economic world to stabilize.

Keywords: Corporate Governance, Board Characteristics, Board Structure, Banking Institutions, Historical Literature Review, Financial Crisis, Bank Risk, CEO, Corporate Social Responsibility, CSR, Bank Efficiency, Board Governance, Board Size, Board Independence, Gender Diversity, Blau Index, Risk-adjusted Bank Performance, Tobin's Q, Return-on-Risk-Adjusted-Capital, Sharpe Ratio, Sortino Ratio, Board Diversity, Bank Risk, Bank Performance, Cost Efficiency, Bank Stability, Cultural Openness, Women Directors, Foreign Directors, Directors Educational Level, Islamic Banks, Board Diversity, Gender Diversity, Gender Quota, Emerging Economy, Bank Outcomes, Attendance, Board Effectiveness, Private Banks, Public Sector Banks, India, Corporate Social Responsibility, ESG, Sustainable Finance, Responsible Investing, Socially Responsible Banks, Risk Management, Stakeholder Engagement, Financial Stability, Sustainability, Firm Value, Climate Finance, Policy Uncertainty, Financial Stability, Climate Risk, Bibliometric Analysis, Financial Markets, Financial Assets, Asset Pricing, Capital Flows, Sustainability, Accruals, Earnings Management, Accounting Value, National Culture , Cultural Dimensions , Collective Intelligence , Secrecy, Intelligence Quotient, International Accounting, Covid-19, Pandemic, Impact, Risk, GCC Banks, GCC Islamic Banks, Conventional Banks, Profitability, Capitalization, Resilience, Asset-based Indicators, Bank, China, Density, Diversification, FinTech, Focus, Income-Based Indicators, Kernel, Quantile Regression, Big Data, Economic Capital, Emerging Markets, FinTech, GARCH-M (1; 1), GCC Financial Markets, Liquidity Risk, Reinforcement Machine Learning, Risk Management, Portfolio Management, Liquidity-Adjusted Value at Risk, Risk Metrics, Risk Spillover Effects, Internet Finance, GARCH Models, VaR Models, CoVaR Models, Securities Firms, COVID-19, Systemic Risks, China, Regulatory Reporting, Systemic Risk, Financial Stability, SupTech, RegTech, Financial Reporting, Algorithmic Data Standards, Blockchain, Financial Crisis, BCBS 239, Banks, Gulf Cooperation Council (GCC), Political Connections, Trade-Off Theory, Pecking Order Theory, Capital Structure, Risk, Profitability, Speed Of Adjustment, Generalized Method of Moments (GMM), Flash Crash, High Frequency Traders, Regulatory Framework, Algorithms, Algorithmic Trading (AT), Financial Market, Capital Market, (search for similar items in EconPapers)
JEL-codes: G21 G3 G34 (search for similar items in EconPapers)
Date: 2024
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