Bank lending behavior and business cycle in dual banking system : evidence from Indonesia

Joint Authors

Sakti, Muhammad Rizqi Prima
Zulkhibri, Muhammad

Source

Islamic Research and Training Institute

Issue

Vol. 2018, Issue 2-6 (31 Dec. 2018), pp.1-18, 18 p.

Publisher

Islamic Development Bank (IDB) Islamic Research and Training Institute (IRTI)

Publication Date

2018-12-31

Country of Publication

Saudi Arabia

No. of Pages

18

Main Subjects

Financial and Accounting Sciences

Abstract EN

This study examines bank-lending channel over the business cycle for Indonesian dual banking system by ascertaining to what extent Islamic banks have a role in the credit smoothing.

In this context, we utilize Indonesian dual banking system unbalanced panel data for the period 2001-2015.

By employing two-step dynamic GMM estimators, the study shows that the bank lending behaviour are procyclical.

However, when we categorize the lending behaviour into conventional and Islamic banks, the cyclicality of bank lending affects only conventional banks.

As for the Islamic banks, the business cycle does not affect their financing decision.

Specifically, large Islamic banks are more counter-cyclical in their financing behavior than small and medium size Islamic banks.

Robustness tests using different measures of loans and model specifications confirm the results that Islamic bank is more stable and less procyclical in the case of Indonesian banking system.

American Psychological Association (APA)

Zulkhibri, Muhammad& Sakti, Muhammad Rizqi Prima. 2018. Bank lending behavior and business cycle in dual banking system : evidence from Indonesia. Islamic Research and Training Institute،Vol. 2018, no. 2-6, pp.1-18.
https://search.emarefa.net/detail/BIM-832843

Modern Language Association (MLA)

Zulkhibri, Muhammad& Sakti, Muhammad Rizqi Prima. Bank lending behavior and business cycle in dual banking system : evidence from Indonesia. Islamic Research and Training Institute No. 2-6 (2018), pp.1-18.
https://search.emarefa.net/detail/BIM-832843

American Medical Association (AMA)

Zulkhibri, Muhammad& Sakti, Muhammad Rizqi Prima. Bank lending behavior and business cycle in dual banking system : evidence from Indonesia. Islamic Research and Training Institute. 2018. Vol. 2018, no. 2-6, pp.1-18.
https://search.emarefa.net/detail/BIM-832843

Data Type

Journal Articles

Language

English

Notes

General Note.

Record ID

BIM-832843