Impact of Oil Price Shocks on Islamic and Conventional Bank Performance: Empirical Evidence from Saudi Arabia

Authors

  • Sarra Ben Slimane Bank Performance, Oil Price Shocks, Saudi Arabia, Conventional Banks, Islamic Banks, Autoregressive Distributed Lag Model
  • Majed Qabil Alsolamy Bank Performance, Oil Price Shocks, Saudi Arabia, Conventional Banks, Islamic Banks, Autoregressive Distributed Lag Model

DOI:

https://doi.org/10.32479/ijeep.16693

Keywords:

Bank Performance, Oil Price Shocks, Saudi Arabia, Conventional Banks, Islamic Banks, Autoregressive Distributed Lag Model

Abstract

This paper aims to investigate and compare the effect of oil price shocks on the bank performance at the aggregate level as well as the level of conventional and Islamic banks. The Autoregressive Distributed Lag (ARDL) methodology was adopted to analyze a panel of 10 Saudi banks, including 6 conventional and 4 Islamic banks, between 2006 Q1 and 2022 Q4. The results revealed that oil price shocks have a direct impact on banking performance. A rise (fall) in oil prices led to an increase (decrease) in bank performance through the channel of price-induced bank deposits. Additionally, oil price shocks have asymmetric effects, with positive oil shocks having a greater impact on bank performance than negative shocks. The findings highlighted that conventional banks tend to benefit more from oil price shocks, especially during oil price booms, as they experience higher positive impacts. However, during oil price busts, Islamic banks were more adversely impacted by oil shocks.

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Published

2024-09-07

How to Cite

Slimane, S. B., & Alsolamy, M. Q. (2024). Impact of Oil Price Shocks on Islamic and Conventional Bank Performance: Empirical Evidence from Saudi Arabia. International Journal of Energy Economics and Policy, 14(5), 629–642. https://doi.org/10.32479/ijeep.16693

Issue

Vol. 14 No. 5 (2024)

Section

Articles

License

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