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AuthorErnaningsih, Indria
AuthorSmaoui, Houcem
AuthorBen Salah, Ines
Available date2024-05-16T09:15:12Z
Publication Date2024-06-30
Publication NameInternational Review of Economics & Finance
Identifierhttp://dx.doi.org/10.1016/j.iref.2024.03.078
CitationErnaningsih, I., Smaoui, H., & Salah, I. B. (2024). Competition, regulation, and systemic risk in dual banking systems. International Review of Economics & Finance, 93, 1087-1103.
ISSN1059-0560
URIhttps://www.sciencedirect.com/science/article/pii/S1059056024002430
URIhttp://hdl.handle.net/10576/55061
AbstractThis study investigates the impact of competition and banking regulation on the systemic risk of Islamic Banks (IBs) and Conventional Banks (CBs). Utilizing a random effects panel model with robust errors and an unbalanced panel data set encompassing 80 IBs and 204 CBs from 17 emerging market countries spanning 2000 to 2019, we show that the lack of competition increases systemic risk exposure, which may stem from the interconnection channels and the individual bank risk contributions. Interestingly, this effect is not significantly different between IBs and CBs. Our results also reveal a non-linear relationship between competition and systemic risk. Specifically, greater competition leads to increased systemic stability, but beyond a certain threshold, higher competition exacerbates banks' systemic risk. Additionally, we find that larger banks are more vulnerable to systemic risk, and the lack of competition worsens this vulnerability. We also show that banks with greater market power after the GFC are more exposed to systemic risk.
Languageen
PublisherElsevier Inc.
SubjectBank competition
Systemic risk
Islamic banking
Bank regulation
TitleCompetition, regulation, and systemic risk in dual banking systems
TypeArticle
Pagination1087-1103
Volume Number93
Open Access user License http://creativecommons.org/licenses/by/4.0/
ESSN1873-8036
dc.accessType Full Text


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