The impact of oil price movements on bank non-performing loans: Global evidence from oil-exporting countries

Al‐Khazali, Osamah; Mirzaei, Ali

doi:10.1016/j.ememar.2017.05.006

Cited by 59 publications

(45 citation statements)

References 39 publications

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“…Overall, while assessing the effect of oil and gas prices on bank performance, we find that the control variables in the form of bank-specific, financial structure, and the macro-economic variables included in our study also have an impact on bank performance. These findings with the control variables in our study are in line with the findings of earlier studies (e.g., Al-khazali & Mirzaei, 2017;Lee and Lee, 2019).…”

Section: Baseline Resultssupporting

confidence: 94%

“…They find oil prices have a significant impact on bank capitalization, management efficiency, earning power, and liquidity. Al-khazali and Mirzaei (2017) and Saif-Alyousfi et al (2018a) find that oil price movements have a significant effect on the level of non-performing loans of banks in oilexporting nations. Khandelwal et al (2016) investigate the relationship between world oil price fluctuations and financial developments in the GCC countries.…”

Section: Related Literaturementioning

confidence: 99%

“…However, the authors also argue that economic and political stability in a country can nullify these adverse effects. Al-khazali and Mirzaei (2017) argue that oil and gas price rises can adversely affect bank performance due to the rise in delinquencies and corporate failures and hence the rise in the level of non-performing loans in banks' books. Kilian (2008) argues that a decrease in the off-balance sheet business of banks due to the negative impact of oil and gas prices on macro-economic aggregates (investment and consumption) also affects bank performance.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

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

Saif‐Alyousfi

Saha

Md-Rus

et al. 2021

Journal of Commodity Markets

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Section: Baseline Resultssupporting

confidence: 94%

Section: Related Literaturementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

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

Saif‐Alyousfi

Saha

Md-Rus

et al. 2021

Journal of Commodity Markets

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“…Ikram, et al (78) mentioned that bank-specific factors like branch age, duration of loan, credit policy and others regulate NPL accumulation. Along with the internal factors, international aspects like global volatility, exchange rate, oil price movement, financial crisis amongst others were also found to have major effects on NPL level in a country's economy (2,(79)(80)(81)(82) . Therefore, it can be asserted that an economy can rack up NPL even if the nation has an efficient and well-functioning government.…”

Section: Model Specification and Variable Descriptionmentioning

confidence: 99%

An empirical analysis on the impact of non-performing loans on investment and economic growth and the role of political governance

SenGupta¹

2020

IJED

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Objective: To empirically analyze the link between nonperforming loans and investments along with the role of political governance. The estimation technique used is the fixed effects model including both the country and timMethods: e fixed effects. The dataset consists a panel of 103 countries with annual data over the period from 2000 to 2017. A unique composite political governance index has been prepared combining the six existing governance indicators via Principal Component Analysis (PCA). Findings: It is found that NPL has significant negative impact whereas, governance has significant positive impact on investments as per expectations. However, it is found that the negative impact of NPL on investment gets stronger in presence of good governance. This is a paradoxical result and further attempts has been made to rationalize the outcome. Applications: The study empirically proves the theory of negative impacts of NPL on investment in the economy. Furthermore, the role of political governance has been scrutinized. No prior works have been carried out on this topic. The paradoxical result in this study has opened up new areas for research. An extensive literature review has been provided along with a detailed discussion on the possible measures to tackle with the problems. JEL Classification: C3, E6, G0. Keywords: NPL; investment; political governance institutions; fixed effects model; composite political governance index

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“…So, financial soundness is more affected by oil price shocks compared to the impact of just an increase in oil price. As in general financial performance is linked to oil price fluctuations in oil-rich economies, such as in GCC countries (Al-Khazali & Mirzaei, 2017). It is therefore imperative that these countries, like the ones in GCC to be more diversified in terms of managing their economies rather than depending on just on oil sector revenues (Mehrara, 2008).…”

Section: Literature Reviewmentioning

confidence: 99%

Capital and Liquidity Risks and Financial Stability: Pre, During and Post Financial Crisis Between Islamic and Conventional Banks in GCC Countries, in the Light of Oil Prices Decline

Al-Wesabi¹,

Yusof²

2019

IJFR

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Purpose: The main purpose of this paper is to investigate the impact of capital ratio and liquidity risks and the effects of the Global Financial Crisis (GFC) periods on financial stability of conventional and Islamic banks before, during, and after GFC in the year of 2008 five GCC countries. To examine empirically the comparison between conventional and Islamic banks based on financial stability and soundness, as well as capitalization and liquidity in the light of the adverse effects of GFC and oil prices declining during the period of (2000-2017).Design/methodology/approach: By using time series data, this study employs Pedroni’s panel cointegration analysis to test the long run relationship between financial stability of conventional banks and Islamic banks as a dependent variable and independent variables including financial crisis under three periods; pre (2006-2007), during (2008-2009) and post (2010-2011) crisis. As well as employing Generalized Least Squares (GLS) to examine the effects between independent variables which are GDP, inflation, financial crisis periods, oil prices fluctuations risk, banking competition, financial sector development, liquidity risk and capital adequacy ratio and dependent variable which is financial stability of conventional and Islamic banks in GCC countries before (2000-2006) during (2006-2009) and after (2010-2017) crisis.Findings: The findings of this research suggest that there is a long run relationship between financial stability of conventional and Islamic banks and capital ratios, liquidity risk and other independent variables. As well as study’s findings support some previous studies and it generally concludes that Islamic banks were performed better during the crisis than conventional banks. Whereas Islamic banks were more stable during crisis as their business model helped to limit the adverse effects of crisis in 2008, they were also more capitalized and less exposure to liquidity risk. Nevertheless, decrease in Islamic banks’ liquidity led some Islamic banks in GCC countries to declare significant losses in 2009.Originality/value: The result of the study contributes towards understanding the determinants of financial stability of both Islamic banks and conventional banks during financial crisis periods. It is important for policy ramifications by the Central Banks in GCC in terms of treating both types of banks differently to mitigate against future financial crises.

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The impact of oil price movements on bank non-performing loans: Global evidence from oil-exporting countries

Cited by 59 publications

References 39 publications

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

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

An empirical analysis on the impact of non-performing loans on investment and economic growth and the role of political governance

Capital and Liquidity Risks and Financial Stability: Pre, During and Post Financial Crisis Between Islamic and Conventional Banks in GCC Countries, in the Light of Oil Prices Decline

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