Financial Development and Economic Growth: The Role of Foreign-Owned Banks in CESEE Countries

Bongini, Paola; Iwanicz-Drozdowska, Małgorzata; Smaga, Paweł; Witkowski, Bartosz

doi:10.3390/su9030335

Cited by 45 publications

(48 citation statements)

References 99 publications

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“…Also, financial sector development was significantly and positively related to IBs" stability. This result supports the result of Bongini et al (2017), and it is opposite from results of Growe et al (2014). While, financial crisis period, oil price volatility risk, and profitability of CBs have a negative impact, even though they have not a significant impact on financial stability of IBs.…”

Section: Resultssupporting

confidence: 59%

“…Another variable that represents banking industry efficiency is financial sector development. Thus it may impact bank performance, as it is measured by the ratio of bank credit to the private sector divided by Gross Domestic Product (GDP) (Bongini, Iwanicz-Drozdowska, Smaga, & Witkowski, 2017), the financial sector development in some less developed countries, may enhance bank efficiency and performance. However, results from other studies indicated otherwise.…”

Section: Literature Reviewmentioning

confidence: 99%

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Does Financial Instability of Conventional Banks Affect Financial Stability of Islamic Banks in GCC Countries?

Al-Wesabi¹,

Yusof²

2019

IJFR

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Purpose: The main purpose of this paper is to investigate the relationship between financial stability in Islamic banks and financial stability and soundness in conventional banks for five GCC countries.Design/methodology/approach: By using time series data, this study employs Pedroni’s panel cointegration to test the long-run relationship between financial stability of Islamic banks and financial stability of conventional banks in GCC countries during the period of (2000-2017). Besides, the study also employs Granger causality to test the causal link between stability of two types of banks (Islamic and Conventional). As well as employing Generalized Least Squares (GLS) to examine the effects between independent variables which are financial stability of conventional banks and their profitability, impact of period of financial crisis (2008/2009), oil prices fluctuations, banking concentration and financial sector development and financial stability of Islamic banks (as the dependent variable).Findings: The findings of this research suggest that there is a long-run, significant and positive relationship between the financial stability of conventional banks and its Islamic counterpart. At the same time, the financial stability of conventional banks is found to Granger caused the stability of Islamic banks.Originality/value: The results of the study contribute towards understanding the determinants of the financial stability of both Islamic banks and conventional banks and how they affect each other. This 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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Section: Resultssupporting

confidence: 59%

Section: Literature Reviewmentioning

confidence: 99%

Does Financial Instability of Conventional Banks Affect Financial Stability of Islamic Banks in GCC Countries?

Al-Wesabi¹,

Yusof²

2019

IJFR

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“…Then changed to be insignificant during the crisis period for the stability of both IBs and CBs but became negatively related to ZSC_CB. Results that positively related to financial stability supports result of Bongini et al (2017), and it is opposite from results of Growe et al (2014). While after crisis period, FSD is negatively related to stability of IBs and CBs, but it is significant at a 5% level of significance.…”

Section: Gls Estimationsmentioning

confidence: 56%

“…For instance, these studies allude that more significant development of financial sector could also create more competition, which may adversely impact the profitability of banks (Growe, DeBruine, Lee, & Maldonado, 2014). Financial sector development is measured by the ratio of bank credit to the private sector divided by GDP (Bongini, Iwanicz-Drozdowska, Smaga, & Witkowski, 2017).…”

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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“…Analysis of scientific literature has shown that the problem of influence of foreign capital on state's financial and economic security requires additional research. Many scientists and bankers try to identify advantages and disadvantages of foreign capital involvement in the country's bank system (Heyets, 2006;Kornyliuk, 2012;Bongini, 2017), show pros and cons of foreign banks' activity (Chub, 2009;Levin, 1996), as well as determine the efficiency of the functioning of the country's bank system when foreign investors are engaged (Kolodiziev & Shvets, 2008;Nezhurin & Podchesova, 2013;Bruno, 2012).…”

Section: Literature Reviewmentioning

confidence: 99%

Assessment of financial and economic security of Ukraine in conditions of foreign banking development

Vladychyn

Skomorovych

Lobozynska

2018

Banks and Bank Systems

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The article assesses the influence of foreign banks on the financial and economic security of Ukraine. A scientific and methodological approach to the determination of the influence of foreign banks on the financial and economic security of the state using the correlation and regression analysis as well as scenario approach is offered. Such approach reflects mutual links between the indicators of foreign banking and the main indicators of financial and economic security of Ukraine. On the basis of analysis of foreign banking development, the indicators of financial and economic security of Ukraine have been forecasted. Positive and negative consequences of such influence in conditions of cyclic and crisis development of the national economy and bank system have been substantiated.

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Financial Development and Economic Growth: The Role of Foreign-Owned Banks in CESEE Countries

Cited by 45 publications

References 99 publications

Does Financial Instability of Conventional Banks Affect Financial Stability of Islamic Banks in GCC Countries?

Does Financial Instability of Conventional Banks Affect Financial Stability of Islamic Banks in GCC Countries?

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

Assessment of financial and economic security of Ukraine in conditions of foreign banking development

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