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Private credit in dual banking countries: Does bank ownership type matter?
Author(s) -
Noordin Nazrul Hazizi,
Mohd Rasid Mohamed Eskandar Shah,
Ibrahim Mansor H.
Publication year - 2022
Publication title -
thunderbird international business review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.553
H-Index - 37
eISSN - 1520-6874
pISSN - 1096-4762
DOI - 10.1002/tie.22299
Subject(s) - financial system , business , state ownership , islam , dual (grammatical number) , foreign ownership , financial crisis , emerging markets , government (linguistics) , islamic banking , finance , economics , foreign direct investment , art , philosophy , linguistics , theology , literature , macroeconomics
This study investigates how the effects of government and foreign bank ownership on private credit vary in the cases of Islamic and conventional banks using data extended from Claessens and van Horen (2014) of 29 dual banking countries from 1995 to 2017. In support of the political view of financial development, we find that the presence of state‐owned Islamic banks seem to be slightly less harmful to private credit flows than their conventional peers, particularly in the period after the global financial crisis. We also document evidence showing that countries with a larger foreign Islamic bank presence tend to have deeper credit markets postcrisis. However, such advantages may often be outweighed by the costs associated with increased penetration by foreign conventional banks.