Finance-Growth Nexus and Dual-Banking Systems: Relative Importance of Islamic Banks

42 Pages Posted: 8 Jun 2015

See all articles by Pejman Abedifar

Pejman Abedifar

University of St Andrews - School of Management

Iftekhar Hasan

Fordham University ; Bank of Finland; University of Sydney

Amine Tarazi

University of Limoges - Faculty of Law and Economic Science

Date Written: May 22, 2015

Abstract

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

Abedifar, Pejman and Hasan, Iftekhar and Tarazi, Amine, Finance-Growth Nexus and Dual-Banking Systems: Relative Importance of Islamic Banks (May 22, 2015). Available at SSRN: https://ssrn.com/abstract=2614180 or http://dx.doi.org/10.2139/ssrn.2614180

Pejman Abedifar

University of St Andrews - School of Management ( email )

The Gateway, North Haugh
St Andrews, Fife KY16 9RJ
United Kingdom

Iftekhar Hasan (Contact Author)

Fordham University ( email )

45 COLUMBUS AVENUE
GBA-5TH FLOOR
NEW YORK, NY 10023
United States

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

University of Sydney ( email )

P.O. Box H58
Sydney, NSW 2006
Australia

Amine Tarazi

University of Limoges - Faculty of Law and Economic Science ( email )

5 rue Felix Eboue
Limoges, 87000
France

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