{
  "title": "Are Islamic Banks More Resilient during Financial Panics?",
  "publication": "IMF Working Papers, February 26, 2015",
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  "summary": "Rapid growth of Islamic banking in developing countries is accompanied with claims about its relative resilience to financial crises as compared to conventional banking. However, little empirical evidence is available to support such claims.",
  "sections": [
    {
      "heading": "Summary and central findings",
      "content": "- Rapid growth of Islamic banking in developing countries is accompanied with claims about its relative resilience to financial crises as compared to conventional banking; little empirical evidence exists.\n- Using data from Pakistan, where Islamic and conventional banks co-exist, the study compares these banks during a financial panic.\n- Main empirical results:\n  - Islamic bank branches are \"less prone to deposit withdrawals during financial panics,\" both unconditionally and after controlling for bank characteristics.\n  - The Islamic branches of banks that have both Islamic and conventional operations tend to \"attract (rather than lose) deposits during panics,\" which suggests a role for religious branding.\n  - Islamic bank branches grant more loans during financial panics.\n  - Islamic bank lending decisions are \"less sensitive to changes in deposits.\""
    },
    {
      "heading": "Mechanisms and interpretation",
      "content": "- Religious branding is identified as a potential channel: branches with Islamic branding within mixed banks attract deposits in panics.\n- The observed behavior implies that \"greater financial inclusion of faith-based groups may enhance the stability of the banking system.\""
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Consider policies that support financial inclusion of faith-based groups as a means to enhance banking system stability.\n- Account for the different liquidity and lending behaviors of Islamic bank branches when designing crisis management, liquidity provision, and resolution frameworks."
    },
    {
      "heading": "Subject areas and keywords (as listed)",
      "content": "- Subject: Asset and liability management, Bank credit, Banking, Commercial banks, Financial crises, Financial institutions, Financial services, Islamic banking, Liquidity, Loans\n- Keywords: AIslamic operations, bank characteristic, bank health index, Bank Run, branch network, CAMEL-type bank fundamentals, Commercial banks, discipline bank management, Do bank fundamentals, Financial panic, Global, Islamic bank, Islamic Banking, Liquidity, Liquidity crisis, liquidity shock, Loans, parent bank fragility, WP\n\n---\n\n Content in this bundle\n\n- wp1541\n  - wp1541 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp1541 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/are-islamic-banks-more-resilient-during-financial-panics-42739"
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    "Authors: Moazzam Farooq, Sajjad Zaheer",
    "Published: February 26, 2015",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484380628.001",
    "Rapid growth of Islamic banking in developing countries is accompanied with claims about its relative resilience to financial crises as compared to conventional banking; little empirical evidence exists.",
    "Using data from Pakistan, where Islamic and conventional banks co-exist, the study compares these banks during a financial panic.",
    "Main empirical results:",
    "Religious branding is identified as a potential channel: branches with Islamic branding within mixed banks attract deposits in panics.",
    "The observed behavior implies that \"greater financial inclusion of faith-based groups may enhance the stability of the banking system.\"",
    "Consider policies that support financial inclusion of faith-based groups as a means to enhance banking system stability.",
    "Account for the different liquidity and lending behaviors of Islamic bank branches when designing crisis management, liquidity provision, and resolution frameworks.",
    "Subject: Asset and liability management, Bank credit, Banking, Commercial banks, Financial crises, Financial institutions, Financial services, Islamic banking, Liquidity, Loans",
    "Keywords: AIslamic operations, bank characteristic, bank health index, Bank Run, branch network, CAMEL-type bank fundamentals, Commercial banks, discipline bank management, Do bank fundamentals, Financial panic, Global, Islamic bank, Islamic Banking, Liquidity, Liquidity crisis, liquidity shock, Loans, parent bank fragility, WP",
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