BANK RESILIENCE AND POLITICAL INSTITUTIONS: DO BANKING BUSINESS MODELS MATTER?
This paper investigates the effect of political institutions on bank stability of dual banking countries. Applying the two-step GMM approach to a panel sample of Islamic and conventional banks from 2005 to 2020, we arrive at the following results. First, we observe that the quality of political in...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Bank Indonesia
2023-05-01
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| Series: | Journal of Islamic Monetary Economics and Finance |
| Subjects: | |
| Online Access: | https://jimf-bi.org/index.php/JIMF/article/view/1640 |
| _version_ | 1797794565934022656 |
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| author | Wajahat Azmi Mohsin Ali Muhammad Umar Islam |
| author_facet | Wajahat Azmi Mohsin Ali Muhammad Umar Islam |
| author_sort | Wajahat Azmi |
| collection | DOAJ |
| description | This paper investigates the effect of political institutions on bank stability of dual banking countries. Applying the two-step GMM approach to a panel sample of Islamic and conventional banks from 2005 to 2020, we arrive at the following results. First, we observe that the quality of political institutions leads to more stable banking system, which is in line with the view that quality political institutions improve the transparency, thereby reducing adverse selection and leading to overall improvement in the banking stability. Second, when we look at components of political institutions, we document the significance of the voice and accountability dimension in enhancing bank stability. Finally, as a side result, we find evidence that competition leads to stability for Islamic banks. These findings are robust to several robustness tests. The implications of our findings are provided in the paper. |
| first_indexed | 2024-03-13T03:03:44Z |
| format | Article |
| id | doaj.art-79d17e58d4f34b8c9e87736a88cd86bd |
| institution | Directory Open Access Journal |
| issn | 2460-6146 2460-6618 |
| language | English |
| last_indexed | 2024-03-13T03:03:44Z |
| publishDate | 2023-05-01 |
| publisher | Bank Indonesia |
| record_format | Article |
| series | Journal of Islamic Monetary Economics and Finance |
| spelling | doaj.art-79d17e58d4f34b8c9e87736a88cd86bd2023-06-27T08:48:07ZengBank IndonesiaJournal of Islamic Monetary Economics and Finance2460-61462460-66182023-05-019229531210.21098/jimf.v9i2.16401640BANK RESILIENCE AND POLITICAL INSTITUTIONS: DO BANKING BUSINESS MODELS MATTER?Wajahat Azmi0Mohsin Ali1Muhammad Umar Islam2Thiagarajar School of Management, IndiaSchool of Business, Monash University Malaysia, MalaysiaAsia Pacific University of Technology and Innovation, MalaysiaThis paper investigates the effect of political institutions on bank stability of dual banking countries. Applying the two-step GMM approach to a panel sample of Islamic and conventional banks from 2005 to 2020, we arrive at the following results. First, we observe that the quality of political institutions leads to more stable banking system, which is in line with the view that quality political institutions improve the transparency, thereby reducing adverse selection and leading to overall improvement in the banking stability. Second, when we look at components of political institutions, we document the significance of the voice and accountability dimension in enhancing bank stability. Finally, as a side result, we find evidence that competition leads to stability for Islamic banks. These findings are robust to several robustness tests. The implications of our findings are provided in the paper.https://jimf-bi.org/index.php/JIMF/article/view/1640political institutions, stability, islamic banks, dual banking. |
| spellingShingle | Wajahat Azmi Mohsin Ali Muhammad Umar Islam BANK RESILIENCE AND POLITICAL INSTITUTIONS: DO BANKING BUSINESS MODELS MATTER? Journal of Islamic Monetary Economics and Finance political institutions, stability, islamic banks, dual banking. |
| title | BANK RESILIENCE AND POLITICAL INSTITUTIONS: DO BANKING BUSINESS MODELS MATTER? |
| title_full | BANK RESILIENCE AND POLITICAL INSTITUTIONS: DO BANKING BUSINESS MODELS MATTER? |
| title_fullStr | BANK RESILIENCE AND POLITICAL INSTITUTIONS: DO BANKING BUSINESS MODELS MATTER? |
| title_full_unstemmed | BANK RESILIENCE AND POLITICAL INSTITUTIONS: DO BANKING BUSINESS MODELS MATTER? |
| title_short | BANK RESILIENCE AND POLITICAL INSTITUTIONS: DO BANKING BUSINESS MODELS MATTER? |
| title_sort | bank resilience and political institutions do banking business models matter |
| topic | political institutions, stability, islamic banks, dual banking. |
| url | https://jimf-bi.org/index.php/JIMF/article/view/1640 |
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