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Nonperforming loans in the GCC banking sectors : does the Islamic finance matter?

Alandejani, M. and Asutay, M. (2017) 'Nonperforming loans in the GCC banking sectors : does the Islamic finance matter?', Research in international business and finance., 42 . pp. 832-854.

Abstract

This paper investigates the bank-level and country-level factors determining nonperforming loans (NPL) in the commercial banking industry of Gulf Cooperation Council (GCC) countries. Specifically; it examines the impact of the sectoral distribution financing growth and Islamic finance methods growth on NPL. To do so, we apply generalized method of moments (GMM) techniques, over the 2005–2011 period. Our findings indicate that the sectoral distribution of Islamic financing has an adverse impact on NPL, which suggest that the sectoral financing growth of Islamic banks increases the credit risk exposure more than conventional banks. The findings of the Islamic finance methods growth show that the impact of fixed-income debt contracts could increase NPL more than profit-and-loss-sharing contracts.

Item Type:Article
Full text:(AM) Accepted Manuscript
First Live Deposit - 05 September 2017
Available under License - Creative Commons Attribution Non-commercial No Derivatives.
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Status:Peer-reviewed
Publisher Web site:https://doi.org/10.1016/j.ribaf.2017.07.020
Publisher statement:© 2017 This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
Record Created:05 Sep 2017 11:13
Last Modified:13 Jan 2019 00:59

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