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Assessing the Effect of Change in Oil Prices, Macroeconomics on the Banking Sector Stability in Oil-Producing Countries

Author

Listed:
  • Ahmed Rufai Mohammad
  • Mohamad Helmi Bin Hidthiir
  • Alias Bin Mat Nor

Abstract

The paper investigates the effect of oil price change and other cyclical factors on the stability difference of conventional and Islamic banks. The study espouses to two separate stability measurement in order to differentiate the effect of change in oil price on bank stability. The results of the paper provide evidence that oil price change affects the stability of conventional banks better when measured with accounting approach, while the change of oil price affects the banking stability when measured with market-based stability measures. Moreover, the result reveals a positive relationship between banking stability of Islamic banks and GDP coexists with a negative relationship on the conventional banks. It reveals that banking stability is affected by inflation negatively. The findings of this paper have significant policy implication for banking stability in Middle East and other oil-producing emerging countries.

Suggested Citation

  • Ahmed Rufai Mohammad & Mohamad Helmi Bin Hidthiir & Alias Bin Mat Nor, 2019. "Assessing the Effect of Change in Oil Prices, Macroeconomics on the Banking Sector Stability in Oil-Producing Countries," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 5(4), pages 88-93, December.
    • Handle: RePEc:khe:scajes:v:5:y:2019:i:4:p:88-93
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    References listed on IDEAS

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    More about this item

    Keywords

    Autoregression; commonwealth; inflation persistence; West African Commonwealth Countries;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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