Competition in dual markets: Implications for banking system stability - Université de Limoges Accéder directement au contenu
Pré-Publication, Document De Travail Année : 2018

Competition in dual markets: Implications for banking system stability

Résumé

This paper examines the impact of market competition on the stability of Islamic and conventional banks in countries where these banks operate alongside one another. To investigate this issue, we use a sample of 100 Islamic and 390 conventional banks from 19 countries. Our baseline result shows that competition in a dual market erodes banks' stability. The heightened competitive pressure in a dual market encourages banks to engage in excessive risk-taking that can jeopardize their stability. However, the effect of competition is missing for Islamic banks, suggesting their superiority in having religious clients. Although our overall results support the 'competition-fragility' hypothesis, we find that competition can be beneficial for banks, especially at a low to medium competition level. Last, we also find that the adverse impact of competition can be reduced by having high capitalization, especially in the case of a conventional bank. Some policy implications are discussed in the paper.
Fichier principal
Vignette du fichier
Competition in dual markets - [full manuscript].pdf (501.46 Ko) Télécharger le fichier
Origine : Fichiers produits par l'(les) auteur(s)
Loading...

Dates et versions

hal-01757982 , version 1 (04-04-2018)

Identifiants

  • HAL Id : hal-01757982 , version 1

Citer

Tastaftiyan Risfandy, Amine Tarazi, Irwan Trinugroho. Competition in dual markets: Implications for banking system stability. 2018. ⟨hal-01757982⟩

Collections

UNILIM LAPE IR-SHS
147 Consultations
747 Téléchargements

Partager

Gmail Facebook X LinkedIn More