Keep walking? Geographical proximity, religion, and relationship banking

Abstract

University, and the 1 st KFUPM Islamic Banking and Finance Research Conference (Riyadh), the 7 th Development Economics Workshop (Tilburg), the Conference on "The Future of Islamic Banking and Economics in Search of the New Normal"(Istanbul), the 4 th Islamic Banking and Finance Conference (Lancaster), and the 3 rd METU Finance Workshop (Ankara) for helpful comments. The "Keep Walking" advertising campaign for Johnnie Walker, a brand of Scotch whisky owned by Diageo, was created by Bartle Bogle Hegarty in 1999. Please note that the order of authors is alphabetical, as per custom in economics/finance, but that all authors have contributed equally to the project. Ongena gratefully acknowledges financial support from ERC ADG 2016-GA 740272 lending.

The regulation of prosocial lending: Are loan ceilings effective?

“…Their lending technologies combine soft screening with hard quantitative information such as financial ratios, payment histories, and other accounting information, preferably certified by third parties (Berger & Udell, 2006), for banks operating in competitive markets have little incentive to serve new, risky borrowers (Alesina et al, 2013). In addition, physical or cultural distances between lender and borrower may explain why microbusinesses and low-income individuals are underserved by banks (Beck et al, 2019;Mian, 2006). (Cornée et al, 2012).…”

Islamic bank financing: finding the spatial effect and influencing factors from an archipelagic Indonesia

“…Geographical superiority increases the competitiveness of Islamic banks over conventional banks (Beck et al, 2019). But for the sake of bank efficiency improving, system should influence more to regulation, market structure and economics growth (Soewarno and Ali, 2016).…”

“…But for the sake of bank efficiency improving, system should influence more to regulation, market structure and economics growth (Soewarno and Ali, 2016). Beck et al (2019) which states that the attractiveness of customers to work with Islamic banking services is not based on the distance or proximity between the location of the bank and the customer's place, but it is caused by the level of customer religiosity. Some customers consider Islamic bank products tend to have lower risk and stable financial structures then the conventional ones, customers preferably takes benefits from services, even though distance took a part to separate bank and customer (Abedifar et al, 2013).…”

“…Zamer (2018) aims to explore more for Islamic banking to offer reasonable counter for the challenges, interest is replaced with other tool based on partnership and social cooperation. Beck et al (2019) mentioned that the attractiveness of customers to take benefit from Islamic banking services is not based on the closeness geographical location, it is more refer to the level of customer religiosity.…”

Bank-firm equity-based relationships and firm’s performance: evidence from Islamic and conventional banks of OIC countries

“…Previous evidence has compared the efficiency (Beck et al, 2013;Parsa, 2020;Yahya et al, 2012), performance (Abdul-Majid et al, 2017;Johnes et al, 2014), market structure, and competitive power (Ariss, 2010;Hakim & Chkir, 2014); risk management techniques (Hanim Tafri et al, 2011) but rarely discuss these two banking orientation from the perspective of relationship banking (Khan et al, 2020;Ongena & Şendeniz-Yüncü, 2011). However, it is definitely possible that non-financial firms takes part or full of its financial decisions on religious grounds (Beck et al, 2019;Hilary & Hui, 2009), which can be reflected further in their corporate performance. For example, Chen et al (2016) mentioned that a higher degree of religiosity is associated with more cash holdings.…”