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The study of credit risk has been of the utmost importance when it comes to measuring the soundness and stability of the banking system. Due to the growing importance of Islamic banking system, a fierce competition between Islamic and conventional banks have started to emerge which in turn is impacting credit riskiness of both banking system.

Using the system GMM technique on 283 conventional banks and 60 Islamic banks for the period of 2006–2017, this paper explores the important impact of size and competition on the credit risk in 15 dual banking economies.

The authors found that as bank competition increases credit risk seems to be reduced. On the size effect, the authors found that big Islamic banks are less risky than big conventional banks whereas small Islamic banks are riskier than small conventional banks. The results are robust for different panel data estimation models and sub-samples of different size groups. The findings of this paper provide important insights into the competition-credit risk nexus in the dual banking system.

The paper is specifically focused on credit risk in dual banking environment and tries to fill the gap in the literature by studying (1) do the Islamic and conventional banks exhibit a different level of credit risk; (2) does competition in the banking system impact the credit risk of Islamic and conventional banks and finally (3) do the big and small banks exhibit similar levels of credit risk.

This paper aims to investigate the impact of banking market competition on banks’ profitability and banks’ risk using a sample of six countries from the Middle East from 2006 to 2017.

This paper uses the system generalized method of moments estimator to tackle potential omitted variable bias, endogeneity and simultaneity issues.

After controlling for bank market and country-specific characteristics, this study reports strong and robust evidence that competition in the banking market is conducive to lower financial performance. This research further finds that intense banking competition leads to lower profitability and increased risk regardless of bank type. As the relationship is not different for Islamic banks, one can argue that activities of Islamic banks are based on the basic traditional banking operations and products, and banks need to diversify their business activities to reduce failure risk and preserve the banking sector’s stability.

This paper tries to bridge the gap by studying the impact of competition on bank performance in high-income dual banking Gulf Cooperation Council (GCC) economies. Earlier studies have either covered all the dual banking economies or the Middle East and North African region. The authors suggest that the GCC banking market is required to be studied separately because of its idiosyncrasies. Second, unlike earlier studies, the authors have not only examined the impact of competition on bank return but also on bank risk.

This study aims to empirically investigate the impact of oil prices, political instability and changes in stability on the bank diversification of the two types of banking systems in the Middle East and North African (MENA) countries.

The study uses bank diversification, stability measurement of probability of default and Zscore by adopting the generalised method of moment for the data between 2007 and 2021. The authors estimate short- and long-run dynamic panel analysis and a robustness test.

The findings reveal that Islamic banks are slightly lower in diversification and stability than conventional peers in the region. Diversification increases with a positive increase in GDP growth, law and order, political stability, bank size, asset quality, oil price, return on equity, profitability and change in banking asset-based stability. The authors found consistency in the two stability measurements in both short- and long-run situations.

Despite the change in banking stability and economic growth and oil prices improved diversification, banks in the region are not diversifying during the crisis period and political instability. Therefore, policymakers should improve mechanisms to monitor the crisis and political unrest to avoid the systemic risk that adversely affects the system through macro-financial linkages in the region.

This study uses change dual stability measurements and oil prices to predict MENA region bank diversification. The authors extended the banking literature by estimating the relationship between crisis periods, political and banking stability, oil prices and other institutional indicators of banking diversification. This study uncovers the effect of the global crisis period on banking diversification and the impact of banking stability changes and validates the models through robustness tests.

The purpose of the paper is to study the relevance of macroprudential policies (MPPs) in influencing bank lending in small open economies with dual banking systems.

In the analysis, the author employed the dynamic panel data methodology as compared to alternate techniques since it is able to address potential endogeneity challenges.

Using quarterly data from the period 2002–2020, the author finds that MPPs are highly effective in containing the growth of public credit, whereas its impact on private credit is much less effective. The disaggregated findings reveal that macroprudential measures are less effective in containing the growth of private credit by Islamic banks.

The majority of studies on MPPs are focused on emerging and advanced economies, limiting their policy appeal from the standpoint of small open economies. In this connection, this paper contributes to the literature on the relevance of such policies for a small open economy with a dual banking system and significant hydrocarbon exports. The paper's analysis therefore holds relevance for similar economies, both in the region and elsewhere, on the role and relevance of MPPs with emphasis on Islamic banks.

The purpose of this study is to develop an Islamic Banking Index representing the Islamic banking model and to investigate its impact on the performance of Islamic and conventional banks. This study also analyzes the impact of Islamic financial development on bank performance.

The authors collected the data from 23 countries for the period from 2010 to 2018 and developed a composite Islamic Banking Index. The authors applied the generalized method of moments on 3,542 bank-year observations for both Islamic and conventional banks to analyze the impact of the Islamic Banking Index on bank performance. The results of the study are robust to time-fixed effects, country-level time-varying factors and endogeneity issues.

The authors found that Islamic Banking Index positively contributes to the return on assets (ROAit) of Islamic banks only. This impact becomes highly significant in countries with comparatively higher Islamic financial development. This finding suggests that the Islamic financial development in a country provides a supportive operating environment to Islamic banks and increases their performance. The authors also found that Islamic Banking Index positively contributes to the return on equity (ROEit) of both types of banks.

The authors argue that moving away from interest-based products and focusing more on diversified portfolios can boost the performance of both types of banks without increasing their risk levels.

To the best of the authors’ knowledge, this is the first study that develops a composite Islamic Banking Index based on differentiating factors of the Islamic banking model and investigates the impact of Islamic Banking Index and Islamic financial development on bank performance.

Intellectual capital (IC) plays a pivotal role in the high-tech and knowledge-based economic sectors. With the emergence of FinTech, which, with respect to the banking sector, is merging high-tech with the k-economy, there is an emerging need to highlight the importance and understand the dynamics of bank IC. With respect to Gulf Cooperation Council (GCC) economies, where FinTech has become de rigueur, banking is bifurcated into Islamic and banking sectors. Through comparative empirical analysis, the purpose of this paper is to examine IC efficiency in Islamic and conventional banks with a view to elucidating the impact of IC, in aggregate and decomposed into its components, on an operational, financial and market performance of Islamic banks juxtaposed with conventional banks.

Using data collected from 59 banks for five years (2012-2016) involving 295 observations, an independent variable derived from the modified value added IC (MVAIC) components are regressed against dependent bank performance indicator variables [Return on Assets (ROA), Return on Equity (ROE) and Tobin’s Q (TQ)]. Two types of control variables complete the regression analysis in this study: bank-specific and macroeconomic.

The findings elicited from the empirical results demonstrate that there is positive relationship between IC efficiency and financial performance (ROE) and market performance (TQ) in Islamic banks. In conventional banks, however, there is a positive relationship between IC and operational performance (ROE) and financial performance (ROE).

The model in this paper presents a valuable analytical framework for exploring IC efficiency as a driver of performance in dual-sector banking economies characterized by co-existence of Islamic and conventional financial institutions. In addition, this paper highlights bank management lacunae manifesting in terms of the weak nexus between: IC and asset efficiency (ROA) in Islamic banks and IC and market value (TQ) in conventional banks.

The financial system plays an essential role in facilitating the intermediation process for economic growth. Policymakers stress on achieving a well-developed and regulated financial system to achieve economic development and resiliency. Using data from the State of Qatar, this paper aims to examine the impact of financial development indicator on economic growth; the impact of financial development indicator on hydrocarbon and nonhydrocarbon sector; the impact of Islamic banking on hydrocarbon and nonhydrocarbon economic growth.

The research uses quarterly data from 2007 to 2019 and adopts autoregressive distributed lag cointegration techniques to test the long- and short-run dynamic relationship between various measures of financial development and economic growth.

The results present evidence of long-term cointegration between overall financial development indicator and economic growth. Furthermore, the authors document the existence of long-term relationship between financial development and nonhydrocarbon sector. However, there is a lack of evidence on the long-run relationship between financial development and the hydrocarbon sector. Notwithstanding, Islamic banking contributes to overall economic development, as well as to the nonhydrocarbon sector.

This paper offers policymakers with insights to evaluate measures to diversify the economy. It also assists decision-makers in promoting Islamic finance, particularly to the banking sector as a vital contributor to economic growth.

To the best of the author’s knowledge, this paper is the first to evaluate financial development and economic growth for the case of Qatar in light of recent developments in Islamic finance.

This paper aims to examine whether competition from Islamic banks add to the financial stability and profitability of financial sector and to assess the sources of such (in)stability.

Using Herfindahl–Hirschman Index as a measure of competition and Z-score as a measure of stability, the authors run panel GMM regressions to assess their association with data from 84 banks in Indonesia and Malaysia over a period from 2005 to 2018.

Increasing competition from Islamic banks in East Asian banking industry adds to the stability of the system while it does not affect profitability. This stability is derived from both asset and liability side.

While adding to the literature on banking and Islamic finance, this paper suggests to the policy makers that policies promoting Islamic banking will tend to assist in enhancing financial sector stability.

Growth in alternative financial instruments brings steadiness within the financial structure. Such growth and competition should be encouraged.

The paper exploits an interesting setting of dual-banking industry in two large Muslim-majority developing country for testing two competing theories: competition-fragility and competition-stability. Such a setting also allowed us to examine whether increasing stability of financial sector is driven by demand or supply.

This study aims to test whether the Islamic bank rate of returns are affected by the deposit rates of the interest-based bank in Turkey and whether they need to develop additional tools to manage it if they face an interest risk.

This study tests the causality between the Islamic bank rate of returns and the time deposit interest rates between 2002 and 2010 in Turkey by use of the Granger Causality method based on monthly data. The same analysis is repeated with respect to the terms before and after 2006.

It is concluded that for each term, the time deposit interest rates are the Granger cause of the Islamic bank rate of returns. This causality relation is more visible for the period after 2006.

The results shows that the Islamic banks are sensitive to the interest-based bank interest rates in Turkey. Therefore, this finding suggests that these banks need to remain cautious vis-à-vis the interest rate risk.

This paper provides a comprehensive review of the influential and intellectual aspects of the literature on the Gulf Cooperation Council (GCC) region's banking activities.

This study undertakes a bibliometric meta-analysis review of the GCC region banking literature, covering 199 articles published between 2004 and 2022, extracted from the Web of Science (WoS) database, followed by a content analysis of highly cited papers.

This paper identifies the influential aspects of the GCC region banking literature in terms of journals, articles, authors, universities and countries. The paper also identifies and discusses five major research clusters: (1) bank efficiency; (2) corporate governance (CG) and disclosure; (3) performance and risk-taking; (4) systemic risk, bank stability and risk spillovers and (5) intellectual capital (IC). Finally, it identifies gaps in the literature and highlights some important research issues that provide directions for future research.

This paper is limited to the articles indexed in the WoS database and written in English. Though the WoS database encompasses a wide range of multidisciplinary journals, there is a chance that some relevant articles are not included in the WoS database or written in another language.

This study provides regulators, practitioners and academics with valuable insight and an in-depth understanding of the banking system of the GCC region.

To the best of the authors' knowledge, this is the first review paper on GCC region banking literature. This study provides regulators, practitioners and academics with valuable insight and an in-depth understanding of the banking system of the GCC region.