THE IMPACT OF ISLAMIC AND CONVENTIONAL BANKING COMPETITION ON FINANCIAL STABILITY

http://dx.doi.org/10.31703/ger.2023(VIII-II).09      10.31703/ger.2023(VIII-II).09      Published : Jun 2
Authored by : Arif Saleem Cheema , Abdul Rashid , Faisal Rizwan

09 Pages : 115-128

References

  • Abedifar, P., Molyneux, P., & Tarazi, A. (2018). Non-interest income and bank lending. Journal of Banking and Finance, 87, 411– 426. https://doi.org/10.1016/j.jbankfin.2017.11.003
  • Adesina, K. S. (2021). How diversification affects bank performance: The role of human capital. Economic Modelling, 94, 303–319. https://doi.org/10.1016/j.econmod.2020.10.016
  • Alam, N., Hamid, B. A., & Tan, D. T. (2019). Does competition make banks riskier in dual banking system? Borsa Istanbul Review, 19, S34–S43. https://doi.org/10.1016/j.bir.2018.09.002
  • Arcand, J., & Fafchamps, M. (2012). Matching in community-based organizations. Journal of Development Economics, 98(2), 203–219. https://doi.org/10.1016/j.jdeveco.2011.07.002
  • Ariss, R. T. (2010). On the implications of market power in banking: Evidence from developing countries. Journal of Banking and Finance, 34(4), 765–775. https://doi.org/10.1016/j.jbankfin.2009.09.004
  • Beck, T., & Levine, R. L. (2004). Stock markets, banks, and growth: Panel evidence. Journal of Banking and Finance, 28(3), 423–442. https://doi.org/10.1016/s0378-4266(02)00408-9
  • Beck, T., De Jonghe, O., & Schepens, G. (2013). Bank competition and stability: Cross-country heterogeneity. Journal of Financial Intermediation, 22(2), 218–244. https://doi.org/10.1016/j.jfi.2012.07.001
  • Berger, A. N., Klapper, L., & Turk-Ariss, R. (2008). Bank Competition and Financial Stability. Journal of Financial Services Research, 35(2), 99–118. https://doi.org/10.1007/s10693-008-0050-7
  • Ćurak, M., Poposki, K., & Pepur, S. (2012). Profitability Determinants of the Macedonian Banking Sector in Changing Environment. Procedia - Social and Behavioral Sciences, 44, 406–416. https://doi.org/10.1016/j.sbspro.2012.05.045
  • Doan, A., Lin, K., & Doong, S. (2016). What drives bank efficiency? The interaction of bank income diversification and ownership. International Review of Economics & Finance, 55, 203–219. https://doi.org/10.1016/j.iref.2017.07.019
  • Fiordelisi, F., & Mare, D. S. (2014). Competition and financial stability in European cooperative banks. Journal of International Money and Finance, 45, 1– 16. https://doi.org/10.1016/j.jimonfin.2014.02.008
  • Goddard, J., McKillop, D., & Wilson, J. (2008). The diversification and financial performance of US credit unions. Journal of Banking and Finance, 32(9), 1836– 1849. https://doi.org/10.1016/j.jbankfin.2007.12.015
  • Heffernan, S., & Fu, M. (2008). The Determinants of Bank Performance in China. Social Science Research Network. https://doi.org/10.2139/ssrn.1247713
  • Jokipii, T., & Monnin, P. (2013). The impact of banking sector stability on the real economy. Journal of International Money and Finance, 32, 1–16. https://doi.org/10.1016/j.jimonfin.2012.02.008
  • Köhler, M. (2015). Which banks are more risky? The impact of business models on bank stability. Journal of Financial Stability, 16, 195–212. https://doi.org/10.1016/j.jfs.2014.02.005
  • Landskroner, Y., Ruthenberg, D., & Zaken, D. (2005). Diversification and Performance in Banking: The Israeli Case. Journal of Financial Services Research, 27(1), 27–49. https://doi.org/10.1007/s10693-005-6411-6
  • Le, T. C. (2017). The interrelationship between net interest margin and non- interest income: evidence from Vietnam. International Journal of Managerial Finance, 13(5), 521–540. https://doi.org/10.1108/ijmf-06-2017-0110
  • Lehar, A. (2005). Measuring systemic risk: A risk management approach. Journal of Banking and Finance, 29(10), 2577–2603. https://doi.org/10.1016/j.jbankfin.2004.09.007
  • Loayza, N., & Ranciere, R. (2006). Financial Development, Financial Fragility, and Growth. Journal of Money, Credit and Banking, 38(4), 1051–1076. https://doi.org/10.1353/mcb.2006.0060
  • Martinez-Miera, D., & Repullo, R. (2010). Does Competition Reduce the Risk of Bank Failure? Review of Financial Studies, 23(10), 3638–3664. https://doi.org/10.1093/rfs/hhq057
  • Méon, P., & Weill, L. (2005). Does better governance foster efficiency? An aggregate frontier analysis. Economics of Governance, 6(1), 75–90. https://doi.org/10.1007/s10101-004-0080-z
  • Moudud-Ul-Huq, S., Biswas, T., Halim, A., Mateev, M., Yousaf, I., & Abedin, M. Z. (2021). The effects of bank competition, financial stability and ownership structure: evidence from the Middle East and North African (MENA) countries. International Journal of Islamic and Middle Eastern Finance and Management, 15(4), 717–738. https://doi.org/10.1108/imefm-05-2020-0214
  • Moussawi, C. E., & Mansour, R. (2021). Competition, cost efficiency and stability of banks in the MENA region. The Quarterly Review of Economics and Finance, 84, 143–170. https://doi.org/10.1016/j.qref.2021.12.005
  • Noman, A. H. M., Chan, S., & Isa, C. R. (2018). Does bank regulation matter in the relationship between competition and financial stability? Evidence from Southeast Asian countries. Pacific-basin Finance Journal, 48, 144–161. https://doi.org/10.1016/j.pacfin.2018.02.001
  • Pennathur, A. K., Subrahmanyam, V., & Vishwasrao, S. (2012). Income diversification and risk: Does ownership matter? An empirical examination of Indian banks. Journal of Banking and Finance, 36(8), 2203–2215. https://doi.org/10.1016/j.jbankfin.2012.03.021
  • Rahim, S. R. A., & Zakaria, R. H. (2013). Comparison of Stability between Islamic and Conventional Banks in Malaysia. Journal of Islamic Economics, Banking and Finance, 9(3), 131–149. https://doi.org/10.12816/0001618
  • Rakshit, B., & Bardhan, S. (2019). Does bank competition promote economic growth? Empirical evidence from selected South Asian countries. South Asian Journal of Business Studies, 8(2), 201–223. https://doi.org/10.1108/sajbs-07-2018-0079
  • Rashid, A., & Jabeen, S. (2016). Analysing performance determinants: Conventional versus Islamic banks in Pakistan. Borsa Istanbul Review, 16(2), 92-107.
  • Rashid, A., & Riaz, M. (2018). Are Islamic banks really different from conventional banks? An investigation using classification techniques. Journal of Islamic Business and Management, 8(1), 45-60.
  • Rashid, A., Yousaf, S., & Khaleequzzaman, M. (2017). Does Islamic banking really strengthen financial stability? Empirical evidence from Pakistan. International Journal of Islamic and Middle Eastern Finance and Management, 10(2), 130– 148. https://doi.org/10.1108/imefm-11-2015-0137
  • Schaeck, K., & Cihák, M. (2014). Competition, efficiency, and stability in banking. Financial management, 43(1), 215-241.
  • tiroh, K. J. (2004). Diversification in Banking: Is Noninterest Income the Answer? Journal of Money, Credit and Banking, 36(5), 853–882. https://doi.org/10.1353/mcb.2004.0076
  • Tabak, B. M., Fazio, D. M., & Cajueiro, D. O. (2012). The relationship between banking market competition and risk- taking: Do size and capitalization matter?. Journal of Banking & Finance, 36(12), 3366-3381
  • Tariq, W., Usman, M., Tariq, A., Rashid, R., Yin, J., Memon, M. A., & Ashfaq, M. (2021). Bank maturity, income diversification,and bank stability. Journal of Business Economics and Management, 22(6), 1492–1511. https://doi.org/10.3846/jbem.2021.15583
  • Vives, X. (2019). Competition and stability in modern banking: A post-crisis perspective. International Journal of Industrial Organization, 64, 55–69. https://doi.org/10.1016/j.ijindorg.2018.08 .011
  • Zouaoui, H., & Zoghlami, F. (2020). On the income diversification and bank market power nexus in the MENA countries: Evidence from a GMM panel-VAR approach. Research in International Business and Finance, 52, 101186. https://doi.org/10.1016/j.ribaf.2020.101186

References

  • Abedifar, P., Molyneux, P., & Tarazi, A. (2018). Non-interest income and bank lending. Journal of Banking and Finance, 87, 411– 426. https://doi.org/10.1016/j.jbankfin.2017.11.003
  • Adesina, K. S. (2021). How diversification affects bank performance: The role of human capital. Economic Modelling, 94, 303–319. https://doi.org/10.1016/j.econmod.2020.10.016
  • Alam, N., Hamid, B. A., & Tan, D. T. (2019). Does competition make banks riskier in dual banking system? Borsa Istanbul Review, 19, S34–S43. https://doi.org/10.1016/j.bir.2018.09.002
  • Arcand, J., & Fafchamps, M. (2012). Matching in community-based organizations. Journal of Development Economics, 98(2), 203–219. https://doi.org/10.1016/j.jdeveco.2011.07.002
  • Ariss, R. T. (2010). On the implications of market power in banking: Evidence from developing countries. Journal of Banking and Finance, 34(4), 765–775. https://doi.org/10.1016/j.jbankfin.2009.09.004
  • Beck, T., & Levine, R. L. (2004). Stock markets, banks, and growth: Panel evidence. Journal of Banking and Finance, 28(3), 423–442. https://doi.org/10.1016/s0378-4266(02)00408-9
  • Beck, T., De Jonghe, O., & Schepens, G. (2013). Bank competition and stability: Cross-country heterogeneity. Journal of Financial Intermediation, 22(2), 218–244. https://doi.org/10.1016/j.jfi.2012.07.001
  • Berger, A. N., Klapper, L., & Turk-Ariss, R. (2008). Bank Competition and Financial Stability. Journal of Financial Services Research, 35(2), 99–118. https://doi.org/10.1007/s10693-008-0050-7
  • Ćurak, M., Poposki, K., & Pepur, S. (2012). Profitability Determinants of the Macedonian Banking Sector in Changing Environment. Procedia - Social and Behavioral Sciences, 44, 406–416. https://doi.org/10.1016/j.sbspro.2012.05.045
  • Doan, A., Lin, K., & Doong, S. (2016). What drives bank efficiency? The interaction of bank income diversification and ownership. International Review of Economics & Finance, 55, 203–219. https://doi.org/10.1016/j.iref.2017.07.019
  • Fiordelisi, F., & Mare, D. S. (2014). Competition and financial stability in European cooperative banks. Journal of International Money and Finance, 45, 1– 16. https://doi.org/10.1016/j.jimonfin.2014.02.008
  • Goddard, J., McKillop, D., & Wilson, J. (2008). The diversification and financial performance of US credit unions. Journal of Banking and Finance, 32(9), 1836– 1849. https://doi.org/10.1016/j.jbankfin.2007.12.015
  • Heffernan, S., & Fu, M. (2008). The Determinants of Bank Performance in China. Social Science Research Network. https://doi.org/10.2139/ssrn.1247713
  • Jokipii, T., & Monnin, P. (2013). The impact of banking sector stability on the real economy. Journal of International Money and Finance, 32, 1–16. https://doi.org/10.1016/j.jimonfin.2012.02.008
  • Köhler, M. (2015). Which banks are more risky? The impact of business models on bank stability. Journal of Financial Stability, 16, 195–212. https://doi.org/10.1016/j.jfs.2014.02.005
  • Landskroner, Y., Ruthenberg, D., & Zaken, D. (2005). Diversification and Performance in Banking: The Israeli Case. Journal of Financial Services Research, 27(1), 27–49. https://doi.org/10.1007/s10693-005-6411-6
  • Le, T. C. (2017). The interrelationship between net interest margin and non- interest income: evidence from Vietnam. International Journal of Managerial Finance, 13(5), 521–540. https://doi.org/10.1108/ijmf-06-2017-0110
  • Lehar, A. (2005). Measuring systemic risk: A risk management approach. Journal of Banking and Finance, 29(10), 2577–2603. https://doi.org/10.1016/j.jbankfin.2004.09.007
  • Loayza, N., & Ranciere, R. (2006). Financial Development, Financial Fragility, and Growth. Journal of Money, Credit and Banking, 38(4), 1051–1076. https://doi.org/10.1353/mcb.2006.0060
  • Martinez-Miera, D., & Repullo, R. (2010). Does Competition Reduce the Risk of Bank Failure? Review of Financial Studies, 23(10), 3638–3664. https://doi.org/10.1093/rfs/hhq057
  • Méon, P., & Weill, L. (2005). Does better governance foster efficiency? An aggregate frontier analysis. Economics of Governance, 6(1), 75–90. https://doi.org/10.1007/s10101-004-0080-z
  • Moudud-Ul-Huq, S., Biswas, T., Halim, A., Mateev, M., Yousaf, I., & Abedin, M. Z. (2021). The effects of bank competition, financial stability and ownership structure: evidence from the Middle East and North African (MENA) countries. International Journal of Islamic and Middle Eastern Finance and Management, 15(4), 717–738. https://doi.org/10.1108/imefm-05-2020-0214
  • Moussawi, C. E., & Mansour, R. (2021). Competition, cost efficiency and stability of banks in the MENA region. The Quarterly Review of Economics and Finance, 84, 143–170. https://doi.org/10.1016/j.qref.2021.12.005
  • Noman, A. H. M., Chan, S., & Isa, C. R. (2018). Does bank regulation matter in the relationship between competition and financial stability? Evidence from Southeast Asian countries. Pacific-basin Finance Journal, 48, 144–161. https://doi.org/10.1016/j.pacfin.2018.02.001
  • Pennathur, A. K., Subrahmanyam, V., & Vishwasrao, S. (2012). Income diversification and risk: Does ownership matter? An empirical examination of Indian banks. Journal of Banking and Finance, 36(8), 2203–2215. https://doi.org/10.1016/j.jbankfin.2012.03.021
  • Rahim, S. R. A., & Zakaria, R. H. (2013). Comparison of Stability between Islamic and Conventional Banks in Malaysia. Journal of Islamic Economics, Banking and Finance, 9(3), 131–149. https://doi.org/10.12816/0001618
  • Rakshit, B., & Bardhan, S. (2019). Does bank competition promote economic growth? Empirical evidence from selected South Asian countries. South Asian Journal of Business Studies, 8(2), 201–223. https://doi.org/10.1108/sajbs-07-2018-0079
  • Rashid, A., & Jabeen, S. (2016). Analysing performance determinants: Conventional versus Islamic banks in Pakistan. Borsa Istanbul Review, 16(2), 92-107.
  • Rashid, A., & Riaz, M. (2018). Are Islamic banks really different from conventional banks? An investigation using classification techniques. Journal of Islamic Business and Management, 8(1), 45-60.
  • Rashid, A., Yousaf, S., & Khaleequzzaman, M. (2017). Does Islamic banking really strengthen financial stability? Empirical evidence from Pakistan. International Journal of Islamic and Middle Eastern Finance and Management, 10(2), 130– 148. https://doi.org/10.1108/imefm-11-2015-0137
  • Schaeck, K., & Cihák, M. (2014). Competition, efficiency, and stability in banking. Financial management, 43(1), 215-241.
  • tiroh, K. J. (2004). Diversification in Banking: Is Noninterest Income the Answer? Journal of Money, Credit and Banking, 36(5), 853–882. https://doi.org/10.1353/mcb.2004.0076
  • Tabak, B. M., Fazio, D. M., & Cajueiro, D. O. (2012). The relationship between banking market competition and risk- taking: Do size and capitalization matter?. Journal of Banking & Finance, 36(12), 3366-3381
  • Tariq, W., Usman, M., Tariq, A., Rashid, R., Yin, J., Memon, M. A., & Ashfaq, M. (2021). Bank maturity, income diversification,and bank stability. Journal of Business Economics and Management, 22(6), 1492–1511. https://doi.org/10.3846/jbem.2021.15583
  • Vives, X. (2019). Competition and stability in modern banking: A post-crisis perspective. International Journal of Industrial Organization, 64, 55–69. https://doi.org/10.1016/j.ijindorg.2018.08 .011
  • Zouaoui, H., & Zoghlami, F. (2020). On the income diversification and bank market power nexus in the MENA countries: Evidence from a GMM panel-VAR approach. Research in International Business and Finance, 52, 101186. https://doi.org/10.1016/j.ribaf.2020.101186

Cite this article

APA

    APA : Cheema, A. S., Rashid, A., & Rizwan, F. (2023). The Impact of Islamic and Conventional Banking Competition on Financial Stability. Global Economics Review, VIII(II), 115-128. https://doi.org/10.31703/ger.2023(VIII-II).09

CHICAGO

    CHICAGO : Cheema, Arif Saleem, Abdul Rashid, and Faisal Rizwan. 2023. "The Impact of Islamic and Conventional Banking Competition on Financial Stability." Global Economics Review, VIII (II): 115-128 doi: 10.31703/ger.2023(VIII-II).09

HARVARD

    HARVARD : CHEEMA, A. S., RASHID, A. & RIZWAN, F. 2023. The Impact of Islamic and Conventional Banking Competition on Financial Stability. Global Economics Review, VIII, 115-128.

MHRA

    MHRA : Cheema, Arif Saleem, Abdul Rashid, and Faisal Rizwan. 2023. "The Impact of Islamic and Conventional Banking Competition on Financial Stability." Global Economics Review, VIII: 115-128

MLA

    MLA : Cheema, Arif Saleem, Abdul Rashid, and Faisal Rizwan. "The Impact of Islamic and Conventional Banking Competition on Financial Stability." Global Economics Review, VIII.II (2023): 115-128 Print.

OXFORD

    OXFORD : Cheema, Arif Saleem, Rashid, Abdul, and Rizwan, Faisal (2023), "The Impact of Islamic and Conventional Banking Competition on Financial Stability", Global Economics Review, VIII (II), 115-128

TURABIAN

    TURABIAN : Cheema, Arif Saleem, Abdul Rashid, and Faisal Rizwan. "The Impact of Islamic and Conventional Banking Competition on Financial Stability." Global Economics Review VIII, no. II (2023): 115-128. https://doi.org/10.31703/ger.2023(VIII-II).09