Of Religion and Redemption: Evidence from Default on Islamic Loans

Baele, Lieven; Farooq, M.; Ongena, Steven

doi:10.2139/ssrn.1740452

Cited by 41 publications

(17 citation statements)

References 21 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Thus taking loans with dishonest intent does not conform to most religious norms and would not be in accord with the dominant value of firms in a religious environment. For example, Baela, Farooq, and Ongena (2014) show that Islamic religious norms reduce the default rate of Islamic loans. In addition, some religions emphasize contractual responsibility.…”

Section: A C C E P T E D Mmentioning

confidence: 99%

Religiosity and the cost of debt

Chen

Huang

Lobo

et al. 2016

Journal of Banking & Finance

103

View full text Add to dashboard Cite

Section: A C C E P T E D Mmentioning

confidence: 99%

Religiosity and the cost of debt

Chen

Huang

Lobo

et al. 2016

Journal of Banking & Finance

103

View full text Add to dashboard Cite

“…Beck Demirgüç-Kunt and Merrouche (2013) provide evidence that Islamic banks have lower non-performing loans compared to conventional banks. Baele et al (2014) investigate whether religion beliefs affect the loan default rates in Pakistan. They find that the default rate on Islamic loans is less than half the default rate on conventional loans.…”

Section: Literature Reviewmentioning

confidence: 99%

The impact of corruption on the soundness of Islamic banks

Bougatef

2015

Borsa Istanbul Review

View full text Add to dashboard Cite

Islamic banking is developing rapidly around the world and is increasingly recognized as a viable alternative mode of financing especially these last years when capitalism has shown its limits and weaknesses. However, this astronomical growth of banking and Islamic finance was associated with a high level of corruption that plagues many Muslim countries. This ailment of corruption can deter Islamic banking to be a better effective and meaningful pathway for poverty reduction and economic development. The purpose of this paper is to investigate the impact of corruption on the soundness of Islamic banks (IBs). Using a panel of 69 IBs over the period 2008-2010, we provide robust evidence that the corruption level aggravates the problem of impaired financing. JEL Classification G21 Z12 C33 AbstractIslamic banking is developing rapidly around the world and is increasingly recognized as a viable alternative mode of financing especially these last years when capitalism has shown its limits and weaknesses. However, this astronomical growth of banking and Islamic finance was associated with a high level of corruption that plagues many Muslim countries. This ailment of corruption can deter Islamic banking to be a better effective and meaningful pathway for poverty reduction and economic development. The purpose of this paper is to investigate the impact of corruption on the soundness of Islamic banks (IBs). Using a panel of 69 IBs over the period 2008-2010, we provide robust evidence that the corruption level aggravates the problem of impaired financing. JEL Classification

show abstract

“…Banks in Pakistan verify the credit history of a loan applicant with CIB if the application exceeds PKR 500,000. The CIB dataset has already been studied in different contexts by Mian (2005, 2008), Mian (2006), Zia (2008), and Baele et al (2014). 14 The CIB reports the identity code for each loan contract.…”

Section: Datamentioning

confidence: 99%

Transmission of a global financial crisis shock to an emerging economy

2018

View full text Add to dashboard Cite

Using a unique dataset consisting of all corporate loans in Pakistan, we study the impact of the global financial crisis (GFC) on the lending ability of its banking sector. We also take into account various bank and loan types along with extensive margins, firm size effects, and impact of information asymmetry. Our findings show that the Pakistani banking sector was indeed affected by the GFC as high exposure banks, who borrow relatively more internationally, reduce lending to local firms and this impact is larger for small firms. We also find differences in the lending ability of various bank types and loan types. By using direct information asymmetry measure, we find that banks reduced lending after the global financial crisis shock. However, the information gathered from the previous relationship of the borrower with relatively low exposure banks can overcome the negative financial shock and increase lending after the shock. These findings are very relevant in the context of the spillover effects of the GFC and have important policy implications for emerging markets.

show abstract

Of Religion and Redemption: Evidence from Default on Islamic Loans

Cited by 41 publications

References 21 publications

Religiosity and the cost of debt

Religiosity and the cost of debt

The impact of corruption on the soundness of Islamic banks

Transmission of a global financial crisis shock to an emerging economy

Contact Info

Product

Resources

About