Finance-Growth Nexus and Dual-Banking Systems: Relative Importance of Islamic Banks
42 Pages Posted: 8 Jun 2015
Date Written: May 22, 2015
This paper investigates the relative importance of Islamic banks, alongside their conventional counterparts, impacting the banking and financial development and economic welfare. Using a sample of 22 Muslim countries, with dual-banking systems, during the 1999-2011, this paper reports some significant positive relationship between the market share of Islamic banks and the development of financial intermediation, financial deepening and economic welfare, particularly in low income or predominantly Muslim countries, and countries with comparatively higher uncertainty avoidance index. Additionally, the results reveal that, in general, a greater market share of Islamic banks is associated with higher efficiency of conventional banks.
Keywords: Banking System Structure, Financial Development, Finance-Growth Nexus, Islamic Banking
JEL Classification: G21
Suggested Citation: Suggested Citation