Bank lending channel in a dual banking system: Why are Islamic banks so responsive?

Aysan, Ahmet Faruk; Disli, Mustafa; Öztürk, Hüseyin

doi:10.1111/twec.12507

Cited by 49 publications

(41 citation statements)

References 76 publications

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“…The results of these regressions suggest that the reaction of banks to changes in interest rates remains the same as the change base financing rate and is robust to a different type of econometric specifications. This finding broadly supports the findings that there is no significant different between bank financing behaviour with respect to interest rates (Chong and Liu, 2009;Cervik and Charap, 2011;Ergec and Arslan, 2013;Aysan et al, 2017). Furthermore, Kasri and Kassim (2009) confirm that conventional interest rate is one of the determinants for saving deposits in Indonesia.…”

Section: Resultssupporting

confidence: 84%

“…The study shows that Islamic banks' response toward interest rate hikes is immediate as compared to its conventional counterparts. This conclusion is supported by Aysan et al (2017) that Islamic bank depositors' sensitivity to policy rate changes is substantially larger than that of conventional bank depositors. On the other hand, Mushtaq (2017), using the panel ARDL approach on 23 Muslim countries, finds that there is no significant relationship between Islamic banking deposit and interest rate, leading to the fact that Islamic banks are resilient towards shocks.…”

Section: Impact Of Monetary Policymentioning

confidence: 79%

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The impact of monetary policy on Islamic bank financing: bank-level evidence from Malaysia

Zulkhibri

2018

JEFAS

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Purpose This paper aims to examine the distributional differences of Islamic bank financing responses to financing rate across bank-specific characteristics in dual banking system. The study also aims to provide understanding of how efficiently Islamic banks perform their roles as suppliers of capital for businesses and entrepreneurs. Design/methodology/approach The study uses panel regression methodology covering all Islamic banks in Malaysia. The study estimates the benchmark model for Islamic bank financing with respect to bank characteristics and monetary policy. Findings The evidence suggests that bank-specific characteristics are important in determining Islamic financing behaviour. The Islamic financing behaviour is consistent with conventional lending behaviour that the Islamic bank financing operates depending on the level of bank size, liquidity and capital. There is no significant difference between Islamic bank financing and conventional bank lending behaviour with respect to changes in monetary policy. Originality/value Many problems and challenges relating to Islamic financing instruments, financial markets and regulations must be addressed and resolved. In practice, it would be a good idea if Islamic banks move away from developing debt-based instruments and concentrate more efforts to develop profit and loss sharing instruments.

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Section: Resultssupporting

confidence: 84%

Section: Impact Of Monetary Policymentioning

confidence: 79%

The impact of monetary policy on Islamic bank financing: bank-level evidence from Malaysia

Zulkhibri

2018

JEFAS

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“…The findings of the study show that well-capitalized banks raise their provisions of loans, but non-forex banks still not react against monetary policy. Aysan, Disli, and Ozturk (Aysan et al 2017) focus on change in deposits and credit behavior in conventional and Islamic banks in reaction to monetary shocks. The findings support the presence of bank-lending channel in Turkey.…”

Section: Regulatory Capital Requirements and Bank Lendingmentioning

confidence: 99%

The Effects of Regulatory Capital Requirements and Ownership Structure on Bank Lending in Emerging Asian Markets

Akhtar

Kayani

Yousaf

2019

JRFM

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This study examines the impact of regulatory capital requirements and ownership structure on bank lending in Emerging Asian Markets. The findings of the study imply that banks with excess capital are less affected by capital constraints and enjoy opportunities to extend their credit portfolios. The monitory policy indicator has the expected negative and significant impact on bank lending. In case of well-capitalized banks, the interaction between the excess capital and monetary policy indicator has a significant positive relation with bank lending, which means that banks with excess capital have capability to raise uninsured financing and shield their loan portfolios as compared to less-capitalized banks that reduce their lending in the period of monetary tightening. In the case of bank ownership structure, banks with excess capital ratios and ownership concentration lead towards an increase in lending activity. The findings also show that well-capitalized banks with managerial ownership tend to reduce lending which validates agency theory of corporate governance.

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“…Profit both in the long and short term has an effect on the amount of mudharabah financing [9]. The more capital invested by shareholders in banks, so that the banks tend to be able to channel more mudharabah financing [10].…”

Section: Capital Relations With Mudharabah Financingmentioning

confidence: 99%

Mudharabah Financing Determination on Sharia Banking of Indonesia

Husein¹,

Daoed²,

Nazir³

et al. 2019

Proceedings of the Proceedings of the 1st International Conference on Finance Economics and Business, ICOFEB 2018, 12-13 Novemb

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The purpose of this study was to examine the determination of mudharabah financing in Islamic banking of Indonesia. The data used in this study were sourced from 11 Islamic Commercial Banks with a period of 2012-2016. Methods of data analysis using panel data regression and was simulated using eviews 10. After conducting the Chow test and Hausman test reveal that the random effect model was the appropriate model choose, due to partially the capital has no effect on mudharabah financing, while mudharabah savings and mudharabah deposits have a significant effect and positive for mudharabah financing. On the other hand mutually, the capital, mudharabah savings and mudharabah deposits have a significant and positive effect on mudharabah financing.

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Bank lending channel in a dual banking system: Why are Islamic banks so responsive?

Cited by 49 publications

References 76 publications

The impact of monetary policy on Islamic bank financing: bank-level evidence from Malaysia

The impact of monetary policy on Islamic bank financing: bank-level evidence from Malaysia

The Effects of Regulatory Capital Requirements and Ownership Structure on Bank Lending in Emerging Asian Markets

Mudharabah Financing Determination on Sharia Banking of Indonesia

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