Is Islamic Banking More Procyclical? Cross-Country Evidence

Weill, Laurent; Zins, Alexandra

doi:10.1057/s41294-020-00143-y

Cited by 4 publications

(9 citation statements)

References 24 publications

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“…Furthermore, Zaid et al (2020) found that the behaviour of financing carried out by Islamic banks in Pakistan is considered to be more pro-cyclical than conventional banks. The same results are evidenced by research conducted by Soedarmono et al (2017), Aysan andOzturk (2018), Weil andZins (2021).…”

Section: Introduction Backgroundsupporting

confidence: 82%

Assessing the Islamic Bank Financing During Economic Recession: The Role of Stimulus Regulation POJK Number 11/POJK.03/2020

Riani

Wulandari

2022

JAM

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This study examines the role of the POJK stimulus policy No. 11/POJK.03/2020 on the decision of financing in Indonesia Islamic banking. Furthermore, the study aims to be able to assess the financing behavior of Islamic banks. Accordingly, we design a quantitative approach with panel data analysis method. With case studies on 12 Islamic Commercial Banks with a time period from quarter 1-2017 to quarter 4-2020. We found that the total financing of Islamic banks experience significant changes after the period of economic recession that hit Indonesia. Then, the study found that the role of stimulus regulation has a positive and significant effect on the distribution of total bank financing. This shows that the stimulus regulation through financing relaxation or financing restructuring does not prevent banks from continuing to channel financing to the public. This study also found that Islamic banks do not behave pro-cyclicality behavior towards the business cycle.

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Section: Introduction Backgroundsupporting

confidence: 82%

Assessing the Islamic Bank Financing During Economic Recession: The Role of Stimulus Regulation POJK Number 11/POJK.03/2020

Riani

Wulandari

2022

JAM

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“…Our study reviews the research of Weill and Zins (2021) where the high portion of debt-like financing indicates that debt-like financing is not much different from conventional banks. Sharia banks, as business entities, strive to provide profit to stakeholders and minimize any form of risk.…”

Section: Introductionmentioning

confidence: 86%

“…Ascarya et al, (2016), explain that conventional banking loans are procyclical to the economic movements, but sharia financing is expected to move countercyclical. In other research, Weill and Zins (2021) find that economic growth dropped, and financing distribution remained encouraged to help the economic slowdown. Sharia banking financing (GFIN) products are divided into debt-like financing (Murabaha and Ijarah) and equity financing (Mudharabah and Musyarakah).…”

Section: Introductionmentioning

confidence: 92%

“…As a result of these demands, Sharia banking measures were limited and tended to follow the economic movements (procyclical); when the economy weakened, sharia financing channeling activities also declined. To answer the research question, Weill and Zins (2021) used the dynamic panel data estimation method of credit growth. This model considers heterogeneity between banks and dynamics in credit growth variables.…”

Section: Introductionmentioning

confidence: 99%

“…Our study addresses several issues more than Weill and Zins (2021). This advantage becomes the Research Gap, where our research considers heterogeneity between banks, the endogeneity relationship between variables, dynamics, exogen, and the concept of shock and response.…”

Section: Introductionmentioning

confidence: 99%

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Panel VAR for Analyzing Business Cycle Influence on the Distribution of Sharia Banking Financing in Indonesian Sharia Banking

Ekananda

Syahrivar

2023

mem

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This paper is structured to explain the effect of the business cycle on the distribution of Islamic banking financing in Indonesia. Furthermore, this research examined the differences between account receivables financing and profit-sharing financing, as well as different forms of Islamic banking. In this case, Islamic banking financing, account receivables financing, and profit-sharing financing will have the same responses or changes in the face of the business cycle in Indonesia. This research is focused and limited to the response of Islamic banking financing to the business cycle in Indonesia. Second, this research used quarterly data from 2007 to 2020 obtained from financial data of each sharia commercial bank and sharia business unit published through the Financial Services Authority (OJK) and Bank of Indonesia; meanwhile, the macro-level data was taken from data from the Central Agency publication Indonesian Statistics. Third, the estimation method used is the Panel VAR to accommodate the heterogeneity between firms. The results show that capital and liquidity respond positively to changes in banking financing, account receivables financing, and profit-sharing financing. The results also show that performing loans and profitability will decrease if there is a shock to the three types of financing.

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Bank Credit Growth and Trust: Does Institutional Quality Matter? Evidence from the Association of Southeast Asian Nations

Albaity

Mallek

Noman

et al. 2022

Asian Development Review

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This study investigated whether the quality of governance, trustworthiness, and confidence impacts bank credit growth. In addition, we examined credit growth cyclicality in 10 members of the Association of Southeast Asian Nations. By employing data concerning 282 banks between 2012 and 2019, this study found that trustworthiness boosted bank credit growth. Overall, the increased quality of governance was found to increase credit growth, except for the specific indicators of voice and accountability and political stability, which were found not to influence bank credit growth. Moreover, similar to prior findings in related fields, the empirical results of this study confirmed the complementary effect of informal and formal institutions on bank credit growth. Lastly, results indicated that banks were pro-cyclical regarding credit growth. Overall, the results of this study highlighted the role of the supervisory powers of governments in boosting credit expansion, mainly during economic upturns.

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Is Islamic Banking More Procyclical? Cross-Country Evidence

Cited by 4 publications

References 24 publications

Assessing the Islamic Bank Financing During Economic Recession: The Role of Stimulus Regulation POJK Number 11/POJK.03/2020

Assessing the Islamic Bank Financing During Economic Recession: The Role of Stimulus Regulation POJK Number 11/POJK.03/2020

Panel VAR for Analyzing Business Cycle Influence on the Distribution of Sharia Banking Financing in Indonesian Sharia Banking

Bank Credit Growth and Trust: Does Institutional Quality Matter? Evidence from the Association of Southeast Asian Nations

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