Handbook of Analytical Studies in Islamic Finance and Economics by Nabil Maghrebi Tarık Akın Abbas Mirakhor Zamir Iqbal

Author:Nabil Maghrebi, Tarık Akın, Abbas Mirakhor, Zamir Iqbal
Language: eng
Format: epub
Publisher: De Gruyter
Published: 2020-07-18T18:14:44.411000+00:00

Our findings suggest that the contribution of Islamic banks to risk-sharing is at best, elusive. Even though the coefficient of Islamic bank assets is negative in all regressions, it is significant only for regression (1), (3) and (7) that have been computed using the risk-sharing parameter estimated by OLS. Turning to the control variables, we find some weak evidence that higher government expenditures to GDP and higher openness is associated with higher intertemporal risk-sharing.

The results in Table 13.5 confirm our previous findings for measures of loans rather than total assets of Islamic banks. Here, we substitute the total of Islamic bank assets with total of Islamic bank loans as the proxy for the strength of Islamic banks in the financial sector in the country they are operating. All of the eight coefficients of the Islamic bank loans over GDP have a negative sign. All of the coefficients based on IBIS database are insignificant, implying that the positive contribution from Islamic bank loans to risk-sharing is negligible. Although the coefficients of participatory bank loans based on Bankscope are of a higher magnitude, only one (column 8) is significant.

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