The Effect of Oil Production on Bank Deposits in North Dakota’s Bakken Formation

Lee, Taylor K.; Dennis, Steven A.; Simlai, Prodosh

doi:10.1108/s0196-382120150000031001

Cited by 2 publications

(7 citation statements)

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“…Therefore, investigating the effects of oil and gas price shocks on the NPLs in major oil and gas-exporting countries will provide us with a better understanding of the drivers of NPLs in those countries. Until now, only Poghosyan and Hesse (2009) and Lee et al (2015) have examined the impact of oil price on the bank performance. Poghosyan and Hesse (2009) examine the impact of oil price 531 Impact of oil and gas price shocks on the NPLs shocks on ROA of banks in MENA economies using the generalized method of moments (GMM) model.…”

Section: Introductionmentioning

confidence: 99%

“…Poghosyan and Hesse (2009) examine the impact of oil price 531 Impact of oil and gas price shocks on the NPLs shocks on ROA of banks in MENA economies using the generalized method of moments (GMM) model. Lee et al (2015) examine the impact of oil production on bank deposit in the North Dakota over the period of 1995-2009. Idris and Nayan (2016) have only analyzed the joint effects of oil price changes with only macroeconomic variables (GDP, inflation, lending interest rate, and Unemployment rate) on the NPLs for the aggregate level of the banking sector in OPEC for 2000-2014 using the OLS model.…”

Section: Introductionmentioning

confidence: 99%

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Impact of oil and gas price shocks on the non-performing loans of banks in an oil and gas-rich economy

Saif‐Alyousfi

Saha

Md-Rus

2018

IJBM

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Purpose -The purpose of this paper is to examine and compare the impact of oil and gas prices shocks on the non-performing loans (NPLs) of banks at the aggregate as well as at the level of commercial and Islamic banks in Qatar over the period 2000-2016. Design/methodology/approach -Using the West Texas Intermediate Database, BankScope Database, World Bank's World Development Indicators Database, and International Monetary Fund Database, the authors use a one-step system generalized method of moments dynamic model to examine and compare the association between oil and gas prices shocks with NPLs in Qatari banks. The authors also test the hypotheses of direct and indirect impacts of oil price shocks and gas price shocks on bank NPLs. Findings -The results indicate that oil price shocks and gas price shocks do not have directly affect NPLs of Qatari banks at the aggregate level, while they have indirect effects that are channeled through the country-specific macroeconomic and institutional factors. The authors find that oil and gas prices shocks affect NPLs of Qatari Islamic banks directly through extended oil and gas-related cash flows, while their impact on the NPLs of Qatari commercial banks is indirect. In other words, Islamic banks in Qatar greatly benefits from increased cash flow caused by the rise in the oil and gas prices, which make their NPLs, much lower than that in commercial banks. Better capital cushion, better managerial efficiency, better risk management, and liquidity management systems should be used by the Islamic banks in Qatar to expand their customer base. The authors also find that positive fiscal stance of the government reduces the NPLs in both commercial and Islamic banks. Practical implications -The results of this study necessitate policy measures that can counter the effects of changes in oil and gas prices on the growth of bank NPLs. Originality/value -It is widely recognized that oil and gas prices and the level of production are of great importance to the economic development of oil and gas-exporting countries. So far, however, no econometric study has been reported in the literature which analyses and compares the impact of oil and gas prices shocks on the NPLs of commercial and Islamic banks and also at the aggregate level in any of the oil economies. Thus, this study provides the first empirical evidence on distinct direct and indirect channels through which oil and gas prices shocks may affect bank NPLs.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Impact of oil and gas price shocks on the non-performing loans of banks in an oil and gas-rich economy

Saif‐Alyousfi

Saha

Md-Rus

2018

IJBM

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“…Al-muharrami and Murthy, 2017;Saif-Alyousf et al, 2017a, b;Mirzaei and Moore, 2016;Ashraf et al, 2016;Mokni and Rajh, 2016;Abraham, 2013;Naceur and Omran, 2011;Al-Hassan et al, 2010;Al-Ajmi et al, 2009;Ghannadian and Goswami, 2004;Rosly and Bakar, 2003;Metawa and Almossawi, 1998). Until now, only Poghosyan and Hesse (2009), Kaffash (2014) and Lee et al (2015) have examined the impact of oil price on bank performance. Poghosyan and Hesse (2009) examine the impact of oil price changes on ROA of banks in MENA economies using GMM model.…”

Section: Introductionmentioning

confidence: 99%

“…Kaffash (2014) investigate the effect of oil price changes on bank efficiency using DEA in oil-exporting countries. However, Lee et al (2015) examine the impact of oil production on bank deposit in the North Dakota over the period of 1995-2009. However, none of them has analyzed the relationship between oil and gas prices changes with bank deposits as is done in our paper.…”

Section: Introductionmentioning

confidence: 99%

“…Nayan (2016, 2017) examine the impact of oil price volatility on non-performing loans in OPEC economies over the period 1996-2015 and find that oil price changes have a significant and adverse effect on non-performing loans. Finally, Lee et al (2015) analyze the relationship between oil production and bank deposits in North Dakota. The authors find that oil production is positively associated with bank deposits.…”

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Impact of oil and gas prices shocks on banks’ deposits in an oil and gas-rich economy

Saif‐Alyousfi

Saha

Md-Rus

2018

IJOEM

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Purpose The purpose of this paper is to investigate and compare the impact of oil and gas prices changes on bank deposits at the aggregate as well as at the level of commercial and Islamic banks in Qatar over the period 2000–2016. Design/methodology/approach Using the BankScope Database as well as bank-level balance sheet and financial statements data, the authors use one-step system GMM dynamic model to examine and compare the association between oil and gas prices changes with bank deposits in Qatar. The authors also test hypotheses of direct and indirect impacts of oil and gas prices changes on bank deposits. Findings The results indicate that oil and gas prices changes have a direct impact on deposits of banks at the aggregate level in Qatar. However, the authors find that oil and gas price changes significantly affect deposits of Qatari commercial banks directly prompting enhanced lending by banks and the consequent business activities in the economy, while their impact on the deposits of Qatari Islamic banks is indirect, i.e. the impact is permeated through the macroeconomic and institutional characteristics of the country that are reinforced by the growing expectations and commercial sentiment of the country. The authors find that significant association between oil price changes and deposit growth during the global financial crisis 2008 has been distorted. However, the authors find that there was a sharp rise in the deposits of Islamic banks during the period of global financial crisis. Practical implications The results of this study necessitate policy measures that can counter the effects of changes in oil and gas prices on the effectiveness of bank deposits. Originality/value It is widely recognized that oil and gas prices and the level of production are of great importance to the economic development of oil and gas exporting countries. So far, however, no econometric study has been reported in the literature which analyses and compares the impact of oil and gas prices changes on bank deposits of commercial and Islamic banks and also at the aggregate level in any of the oil-exporting economies. Thus, this study provides the first empirical evidence on distinct direct and indirect channels through which oil and gas prices changes may affect bank deposits.

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The Effect of Oil Production on Bank Deposits in North Dakota’s Bakken Formation

Cited by 2 publications

References 10 publications

Impact of oil and gas price shocks on the non-performing loans of banks in an oil and gas-rich economy

Impact of oil and gas price shocks on the non-performing loans of banks in an oil and gas-rich economy

Impact of oil and gas prices shocks on banks’ deposits in an oil and gas-rich economy

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