Do oil and gas price shocks have an impact on bank performance?

Saif‐Alyousfi, Abdulazeez Y.H.; Saha, Asish; Md-Rus, Rohani; Mohd, Kamarun Nisham Taufil

doi:10.1016/j.jcomm.2020.100147

Cited by 27 publications

(31 citation statements)

References 32 publications

(75 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Of the macro-variables, GDP growth and inflation rate are found to be positive and significant, which means that bank OBS activities in GCC usually increase in times of economic prosperity and inflation. This result is consistent with the literature on the relationship between financial sector performance and inflation (Saif-Alyousfi et al , 2020a, b; Chen and Liao, 2011). The positive and significant effect of inflation rate on banks' OBS activities reflects the ability of the bank's management to modulate their OBS activities in tune with the inflationary expectations.…”

Section: Estimation Resultssupporting

confidence: 93%

“…Nonetheless, prior studies argue that banking behaviors are complex and dynamic. Saif-Alyousfi (2019, 2020) and Saif-Alyousfi et al (2020a, b) argue that when estimating bank performance, researchers encounter several challenges such as endogeneity, unobservable heterogeneity as well as persistence in OBS activities. Thus, to examine the impact of FDI flow and FDI stock on bank OBS activities over time, the model must also be dynamic.…”

Section: Estimation Resultsmentioning

confidence: 99%

“…Country-level data on macroeconomic factors and financial structure indicators comes from the World Development Indicators (WDI) released by the World Bank, country-level data regarding FDI flow and FDI stock from UNCTAD. The study follows Saif-Alyousfi (2019) and Saif-Alyousfi et al (2020a, b) who included the listed banks on GCC stock exchanges as these commercial banks provide information on all the main variables of interest here during the period of study. Moreover, these banks face similar regulatory constraints in the GCC stock markets and have more freedom in making business.…”

Section: Variables Data Methodology and Hypothesis-testing Strategymentioning

confidence: 99%

“…This paper uses the dynamic GMM estimator since bank OBS activities determinants may suffer from endogeneity bias, omitted variables as well as the high persistence of bank OBS activities. Saif-Alyousfi et al (2020a, b) suggest that one can solve these problems using GMM (see also Arellano and Bover, 1995). GMM also uses lagged values of independent and dependent variables in variance instruments.…”

Section: Variables Data Methodology and Hypothesis-testing Strategymentioning

confidence: 99%

See 3 more Smart Citations

Do FDI inflows affect the off-balance sheet activities of banks in GCC economies?

Saif‐Alyousfi¹

2020

CFRI

Self Cite

View full text Add to dashboard Cite

PurposeThis paper investigates and compares the impact of foreign direct investment (FDI) inflows (flow and stock) on bank off-balance sheet (OBS) activities in aggregate as well as at the level of conventional and Islamic banks in GCC countries. It also tests hypotheses of direct and indirect impacts of FDI flow and FDI stock on OBS activities.Design/methodology/approachThis paper uses both static and dynamic panel generalized methods of moments (GMM) estimation techniques to analyze the data of 70 GCC banks (45 conventional and 25 Islamic banks) over the period 1995–2017.FindingsEmpirical results indicate that FDI flow and FDI stock have a significant negative direct impact on OBS activities of GCC banks. The results lend support for the direct channel hypothesis for the effect of FDI on OBS activities and find no evidence in support of the indirect channel hypothesis. OBS activities from conventional banks appear to be more affected than those from Islamic banks.Practical implicationsThe results of this study are expected to trigger appropriate policy response from the central banks of the respective GCC countries as well as their governments.Originality/valueIt is widely recognized that FDI inflows are of great importance to the economic development of emerging and developing countries. However, their impact on bank OBS activities has so far not been subject to accurate empirical assessment. This paper aims to fill this gap by providing an in-depth quantitative analysis of the impact of FDI flow and FDI stock separately, on bank OBS activities for both conventional and Islamic banks in GCC countries. It distinguishes between direct and indirect channels through which FDI flow and FDI stock may affect OBS activities for banks as a whole and both conventional and Islamic banks separately. It also uses both static and dynamic panel GMM estimation techniques to analyze the data.

show abstract

Section: Estimation Resultssupporting

confidence: 93%

Section: Estimation Resultsmentioning

confidence: 99%

Section: Variables Data Methodology and Hypothesis-testing Strategymentioning

confidence: 99%

Section: Variables Data Methodology and Hypothesis-testing Strategymentioning

confidence: 99%

See 2 more Smart Citations

Do FDI inflows affect the off-balance sheet activities of banks in GCC economies?

Saif‐Alyousfi¹

2020

CFRI

Self Cite

View full text Add to dashboard Cite

show abstract

“…Previous studies on the determinants of bank profitability mainly focus on the United states or European area, with much less discussion and insight into the banking industry in Asian economies (see, e.g. Saif-Alyousfi et al , 2018a, b; 2020a, b; Saif-Alyousfi, 2019, 2020a, b; Lee and Hsieh, 2013; Soedarmono et al , 2013). The question now arises as to whether the United States or European results are valid for Asian countries.…”

Section: Introductionmentioning

confidence: 99%

Determinants of bank profitability: evidence from 47 Asian countries

Saif‐Alyousfi

2020

JES

Self Cite

View full text Add to dashboard Cite

PurposeThe paper examines the effect of bank-specific, financial structure and macroeconomic factors on the profitability of banks in Asian economies during 1995–2017.Design/methodology/approachIt uses the data of 2,446 banks across 47 Asian countries between 1995 and 2017 (41,582 year observations). The static and dynamic panel generalized methods of moments (GMM) estimation techniques are applied.FindingsThe results show that banks that are highly dependent on nontraditional activities have lower net interest revenue and net interest margin but higher return on assets, return on equity and profit before tax. Higher opportunity cost, capitalization, demand deposits and market risk result in a better bank profits. Furthermore, banks with higher loan exposure and growth have more profit. However, nonperforming loans have negative and significant impact on bank profitability. Asian banks do not suffer from diseconomies of scale and scope. The author also finds that banks located in countries with high gross domestic product, inflation rates and high rates of interest or in financially developed economies offer better profits. High credit to the private sector reduces the bank profitability. This study finds evidence to support the structure-conduct-performance (SCP) hypothesis. It also provides evidence that the impact of financial turmoil on the profitability of the Asian banking sector is negative and significant and has severely weakened the Asian banking system.Originality/valueAs Asia has become an important economic area and the Asian topic has not earned enough discussions, this paper is the first to examine Asian banks with the latest and a wider range of panel data that cover 2,446 banks at 47 Asian countries over the period 1995–2017. The present study is among the first to address the influence of financial turmoil on bank profitability in this region. It also studies new variables, such as demand deposits, opportunity cost and off-balance sheet activities, which have not been examined in relation to bank profitability. It also applies both static techniques and dynamic panel estimation techniques to analyze the data.

show abstract

The impact of new millennium crises on the power of Islamic banks in deposit markets

Alhalboni,

Baldwin

2024

Int. J Fin Econ

View full text Add to dashboard Cite

We investigate the impact of three crises on the power of Islamic banks in deposit markets: the Global Financial Crisis, 2007–2009 (GFC), the Arab Spring political crisis, 2011–2013, and the COVID‐19 health crisis, 2020–2022. Applying difference‐in‐difference (DID) and GMM techniques to panel data for 2004–2022, we find that the power of Islamic banks increased in countries most affected by the GFC, but only for oil‐exporters, as elevated oil prices inflated deposited liquidity. In contrast to the GFC, the market power of countries highly affected by the Arab Spring decreased as depositors withdrew en masse. For these countries, oil export status was irrelevant, and whilst government integrity is significant, it accounts for a small amount of heterogeneity in the country‐level cross‐section due to widely held public attitudes towards institutions during the crisis. For COVID‐19, the market power of Islamic banks initially increased at the outset of the pandemic due to a surge in precautionary deposits, but later decreased due to economic activity constraints. The stringency of lockdowns had little effect on market power in countries that suffered the highest COVID‐19 death rates. These and other findings specific to each crisis provide a rich array of private and public policy implications relevant to crises of different types for bank liquidity crisis management, financial conduct policies, and state‐backed lending stimulus packages.

show abstract

Do oil and gas price shocks have an impact on bank performance?

Cited by 27 publications

References 32 publications

Do FDI inflows affect the off-balance sheet activities of banks in GCC economies?

Do FDI inflows affect the off-balance sheet activities of banks in GCC economies?

Determinants of bank profitability: evidence from 47 Asian countries

The impact of new millennium crises on the power of Islamic banks in deposit markets

Contact Info

Product

Resources

About