The impact of new millennium crises on the power of Islamic banks in deposit markets

Baldwin, K. ORCID: 0000-0003-0606-5553 and Alhalboni, M., 2024. The impact of new millennium crises on the power of Islamic banks in deposit markets. International Journal of Finance and Economics. ISSN 1076-9307 (Forthcoming)

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Abstract

We investigate the impact of three crises on the power of Islamic banks in deposit markets: the Global Financial Crisis, 2007-9 (GFC), the Arab Spring political crisis, 2011-13, and the Covid-19 health crisis, 2020-2022. Applying difference-in-difference and GMM techniques to panel data for 2004-2022, we find that the power of Islamic banks increased in countries most affected by the GFC, but only for oil-exporters, as elevated oil prices inflated deposited liquidity. In contrast to the GFC, the market power of countries highly affected by the Arab Spring decreased as depositors withdrew en masse. For these countries, oil export status was irrelevant, and whilst government integrity is significant, it accounts for a small amount of heterogeneity in the country-level cross-section due to widely held public attitudes towards institutions during the crisis. For Covid-19, the market power of Islamic banks initially increased at the outset of the pandemic due to a surge in precautionary deposits, but later decreased due to economic activity constraints. The stringency of lockdowns had little effect on market power in countries that suffered the highest Covid-19 death rates. These and other findings specific to each crisis provide a rich array of private and public policy implications relevant to crises of different types for bank liquidity crisis management, financial conduct policies, and state-backed lending stimulus packages.

Item Type:	Journal article
Publication Title:	International Journal of Finance and Economics
Creators:	Baldwin, K. and Alhalboni, M.
Publisher:	Wiley
Date:	3 August 2024
ISSN:	1076-9307
Identifiers:	Number Type 2187225 Other
Rights:	This is the peer reviewed version of the following article: [FULL CITE], which has been published in final form at [Link to final article using the DOI]. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited.
Divisions:	Schools > Nottingham Business School
Record created by:	Melissa Cornwell
Date Added:	06 Aug 2024 08:57
Last Modified:	06 Aug 2024 08:57
URI:	https://irep.ntu.ac.uk/id/eprint/51926

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