Economic uncertainty and bank stability: Conventional vs. Islamic banking

dc.authoridTarazi, Amine/0000-0001-8385-2994
dc.authoridDemir, Ender/0000-0003-4034-269X
dc.authoridOzturk Danisman, Gamze/0000-0003-3684-6692
dc.authoridBilgin, Mehmet Huseyin/0000-0002-9897-9792
dc.authorwosidTarazi, Amine/GQP-4387-2022
dc.authorwosidBilgin, Mehmet Huseyin/K-6487-2017
dc.authorwosidDemir, Ender/J-8808-2017
dc.authorwosidOzturk Danisman, Gamze/P-1036-2019
dc.contributor.authorBilgin, Mehmet Huseyin
dc.contributor.authorDanisman, Gamze Ozturk
dc.contributor.authorDemir, Ender
dc.contributor.authorTarazi, Amine
dc.date.accessioned2023-10-19T15:11:43Z
dc.date.available2023-10-19T15:11:43Z
dc.date.issued2021
dc.department-temp[Bilgin, Mehmet Huseyin] Istanbul Medeniyet Univ, Fac Polit Sci, Istanbul, Turkey; [Danisman, Gamze Ozturk] Kadir Has Univ, Fac Econ Adm & Social Sci, Kadir Has Caddesi, TR-34083 Istanbul, Turkey; [Demir, Ender] Reykjavik Univ, Sch Social Sci, Dept Business Adm, Reykjavik, Iceland; [Tarazi, Amine] Univ Limoges, LAPE, 5 rue Felix Ebou, F-87031 Limoges, France; [Tarazi, Amine] Inst Univ France IUF, 1 rue Descartes, F-75231 Paris 5, Franceen_US
dc.description.abstractIn this paper, we explore whether economic uncertainty differently affects the default risk of Islamic and conventional banks. Using a sample of 568 banks from 20 countries between 2009 and 2018, we use the World Uncertainty Index (WUI) by Ahir et al. (2018) to conduct a study based on a comparable measure across countries. Our findings indicate that economic uncertainty increases the default risk of conventional banks but does not affect Islamic banks' default risk. To understand why, we explore the influence of religiosity, institutional factors, and bank-level heterogeneity. We observe that Islamic banks' default risk is not significantly affected by uncertainty in all types of countries, but such a difference with conventional banks mainly holds for banks with higher income diversification, larger size, and that are publicly traded. Moreover, our findings show that conventional banks suffer more from uncertainty in terms of stability in countries with higher religiosity and with a higher share of profit-loss sharing (PLS) contracts. Our results are robust to alternative estimation techniques to deal with endogeneity and to alternative variable measurements.en_US
dc.description.sponsorshipSpanish Ministry of Science and Innovation, Spain [PID2020-114797GB-I00]en_US
dc.description.sponsorshipWe are grateful to the editor Iftekhar Hasan, two anonymous ref-erees, participants at the 34th Eurasia Business and Economics Society (EBES) Conference (2021) , and 2020 World Finance Banking Sympo-sium in Riga, Latvia for valuable feedback and discussions. Ender Demir acknowledges the financial support of the Spanish Ministry of Science and Innovation (grant no: PID2020-114797GB-I00) , Spain.en_US
dc.identifier.citation45
dc.identifier.doi10.1016/j.jfs.2021.100911en_US
dc.identifier.issn1572-3089
dc.identifier.issn1878-0962
dc.identifier.scopus2-s2.0-85112614313en_US
dc.identifier.scopusqualityQ1
dc.identifier.urihttps://doi.org/10.1016/j.jfs.2021.100911
dc.identifier.urihttps://hdl.handle.net/20.500.12469/5188
dc.identifier.volume56en_US
dc.identifier.wosWOS:000704335500013en_US
dc.identifier.wosqualityQ1
dc.khas20231019-WoSen_US
dc.language.isoenen_US
dc.publisherElsevier Science Incen_US
dc.relation.ispartofJournal of Financial Stabilityen_US
dc.relation.publicationcategoryMakale - Uluslararası Hakemli Dergi - Kurum Öğretim Elemanıen_US
dc.rightsinfo:eu-repo/semantics/openAccessen_US
dc.subjectPolicy UncertaintyEn_Us
dc.subjectRiskEn_Us
dc.subjectCreditEn_Us
dc.subjectFinanceEn_Us
dc.subjectVolatilityEn_Us
dc.subjectAggregateEn_Us
dc.subjectLeverageEn_Us
dc.subjectMergersEn_Us
dc.subjectLawEn_Us
dc.subjectPolicy Uncertainty
dc.subjectRisk
dc.subjectCredit
dc.subjectFinance
dc.subjectVolatility
dc.subjectIslamic banksen_US
dc.subjectAggregate
dc.subjectConventional banksen_US
dc.subjectLeverage
dc.subjectEconomic uncertaintyen_US
dc.subjectMergers
dc.subjectBank stabilityen_US
dc.subjectLaw
dc.subjectWorld uncertaintyen_US
dc.titleEconomic uncertainty and bank stability: Conventional vs. Islamic bankingen_US
dc.typeArticleen_US
dspace.entity.typePublication

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