6533b82dfe1ef96bd1291d2a

RESEARCH PRODUCT

Trade, financial openness and dual banking economies: Evidence from GCC Region

Andrea PaltrinieriSalman BahooSalman BahooM. Kabir HassanAshraf Khan

subject

040101 forestryEconomics and Econometrics050208 financeLiberalizationVDP::Social science: 200::Economics: 210Z-score05 social sciencesIslam04 agricultural and veterinary sciencesIslamic financeDual (category theory)Settore SECS-P/11 - ECONOMIA DEGLI INTERMEDIARI FINANZIARITrade opennessFinancial opennessEconomyLoan0502 economics and businessOpenness to experienceFinancial openness0401 agriculture forestry and fisheriesProfitability indexBusinessIslamic banksDistance-to-defaultFinance

description

Abstract The recent wave of liberalization in Gulf Cooperation Council (GCC) countries has opened up a debate on the role of Islamic finance in the financial development of an economy. Using a comprehensive dataset of 43 Islamic and 49 conventional banks for the period 2007–2015, in this paper, we investigate the impact of trade and financial openness on financial development in the GCC region. We find that trade and financial openness have a positive effect on the profitability of both banking systems, while the interaction term of openness is negative for the profitability of Islamic banks. Moreover, trade and financial openness affect Islamic banks differently than conventional banks. Notably, we unveil that trade and financial openness decrease the loan volume of Islamic banks but increase their stability.

yearjournalcountryeditionlanguage
2021-12-01Journal of Multinational Financial Management
https://doi.org/10.1016/j.mulfin.2021.100693