Bank Credit in Uncertain Times: Islamic Vs. Conventional Banks
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Date
2020
Authors
Bilgin, Mehmet Hüseyin
Danışman, Gamze Öztürk
Demir, Ender
Tarazi, Amine
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Elsevier Ltd
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Abstract
This paper explores whether the impact of economic uncertainty on credit growth differs for Islamic vs. conventional banks. Using a sample of 416 banks (58 Islamic and 358 conventional) in 12 countries, the findings indicate that an increase in economic uncertainty significantly decreases the credit growth of conventional banks but does not have any significant impact on Islamic banks’ credit growth. Our results are robust to alternative specifications and addressing endogeneity concerns using GMM estimators. We further observe that our findings are stronger for the following countries: (1) countries with explicit deposit insurance protection system for Islamic banks, (2) lower foreign dominance, and (3) countries with a higher share of deposits and assets in Islamic banks.
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Keywords
Conventional banks, Credit, Economic uncertainty, Islamic banks
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Citation
29
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Q1
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Volume
2020