THE IMPACT OF MARKET RISK DETERMINANTS, BANKING CRISIS AND EXISTENCE OF ISLAMIC BANKING ON DOMESTIC CREDIT BY BANKS IN UNITED KINGDOM, MALAYSIA, EGYPT, KUWAIT, QATAR, BAHRAIN AND INDONESIA

HAMDAN YUAFI, HAMDAN YUAFI (2016) THE IMPACT OF MARKET RISK DETERMINANTS, BANKING CRISIS AND EXISTENCE OF ISLAMIC BANKING ON DOMESTIC CREDIT BY BANKS IN UNITED KINGDOM, MALAYSIA, EGYPT, KUWAIT, QATAR, BAHRAIN AND INDONESIA. Other thesis, IAIN SALATIGA.

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Abstract

ABSTRACT Yuafi, Hamdan. 2016. The Impact of Market Risk Determinants, Banking Crisis and Existence of Islamic Banking on Domestic Credit By Banks In United Kingdom, Malaysia, Egypt, Kuwait, Qatar, Bahrain and Indonesia. Undergraduate Thesis, Faculty of Islamic Economics and Business Department Islamic Banking State Institute of Islamic Studies (IAIN) Salatiga. Supervisor: Dr. Anton Bawono, M.Si This paper empirically investigates the determinants of domestic credit across a wide range of 7 countries; these are United Kingdom, Malaysia, Egypt, Kuwait, Qatar, Bahrain and Indonesia, over the period 1990–2014. We use dynamic panel data estimation techniques to examine effects of exchange rate, inflation, lending interest rate, banking crisis and existence of wholesale Islamic banking on domestic credit to private sector by banks. We check the panel model, and the best model to describe determinants of domestic credit to private sector is fixed effect model. We obtain several notable empirical results. First, the empirical results indicate that lending interest rate, banking crisis negatively and insignificantly contribute to domestic credit to private sector by banks. While the exchange rate and existence of Islamic bank positively and insignificantly contribute to domestic credit to private sector by banks. Inflation negatively and significantly contributes to domestic credit to private sector by banks. Second, the dummy variables, banking crisis and existence of wholesale Islamic banking show insignificant effect on domestic credit to private sector by banks, it means that banking crisis and existence of wholesale Islamic banking gives insignificant difference on domestic credit to private sector than otherwise. Third, by doing autoregressive model, we find that today’s domestic credit to private sector by banks is depended on domestic credit to private sector by banks a year ago. Keywords: Islamic banking, market risk, banking crisis, domestic credit

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