The Economic Efficiency of Traditional and Islamic Banking (a Comparative Analysis of the Turkish, Azerbaijani, and Iranian Banking Sectors)
DOI:
https://doi.org/10.18778/1508-2008.24.08Keywords:
financial institutions, access to financial institutions, the depth of financial institutions, the effectiveness of financial institutions, the stability of financial institutionsAbstract
The article attempts to develop a methodology for a comparative assessment of the economic efficiency of banks, including traditional and Islamic banking models. The assessment shows that the stability of financial institutions in Azerbaijan is lower compared to banks where Islamic banking is used. The assessment also shows that there is a strong dependence of the GDP growth rate on the sub-indices of the effectiveness of financial institutions in Azerbaijan, Turkey, and Iran. The methodology of linear regression and a composite index of the economic efficiency of banks are applied. The assessment shows that the influence of the stability of the financial system on economic growth in Azerbaijan, Iran, and Turkey is different. The economic growth rate and the ratio of bank loans to bank deposits in Azerbaijan and Turkey are positively related, but negatively in Iran.
Downloads
References
Al-Malkawi, H.A.N., Marashdeh, H.A., Abdullah, N. (2012), Financial development and economic growth in the UAE: Empirical assessment using ARDL approach to co-integration, “International Journal of Economics and Finance”, 4 (5), pp. 105–115, https://doi.org/10.5539/ijef.v4n5p105
Google Scholar
DOI: https://doi.org/10.5539/ijef.v4n5p105
Ang, J., McKibbin, W. (2007), Financial liberalization, financial sector development and growth: Evidence from Malaysia, “Journal of Development Economics”, 84 (1), pp. 215–233, https://doi.org/10.1016/j.jdeveco.2006.11.006
Google Scholar
DOI: https://doi.org/10.1016/j.jdeveco.2006.11.006
Bayar Y. (2014), Financial Development and Economic Growth in Emerging Asian Countries, “Asian Social Science”, Vol. 10, No. 9, https://doi.org/10.5539/ass.v10n9p8
Google Scholar
DOI: https://doi.org/10.5539/ass.v10n9p8
Borlea, S.N., Mare, C., Achim, M.V., & Puscas, A. (2016), Direction of Causality Between Financial Development and Economic Growth. Evidence for Developing Countries, “Studia Universitatis “Vasile Goldis” Arad – Economics Series”, 26 (2), pp. 1–22, https://doi.org/10.1515/sues-2016-0006
Google Scholar
DOI: https://doi.org/10.1515/sues-2016-0006
Cámara, N. (2017), Measuring financial inclusion: a multidimensional index, Bank of Morocco – CEMLA – IFC Satellite Seminar at the ISI World Statistics Congress on “Financial Inclusion” Marrakech, Morocco, 14 July 2017, https://www.bis.org/ifc/publ/ifcb47p.pdf (accessed: 27.10.2019).
Google Scholar
De Gregorio, J., Guidotti, P. (1995), Financial development and economic growth, “World Development”, 23 (3), pp. 433–448, https://doi.org/10.1016/0305-750X(94)00132-I
Google Scholar
DOI: https://doi.org/10.1016/0305-750X(94)00132-I
Estrada, G.B., Park, D., Ramayandi, A. (2010), Financial Development and Economic Growth in Developing Asia, Asian Development Bank Economics Working Paper No. 233, http://dx.doi.org/10.2139/ssrn.1751833
Google Scholar
DOI: https://doi.org/10.2139/ssrn.1751833
GFDR, (2018), World Bank. Global Financial Development Report, https://datacatalog.worldbank.org/dataset/global-financial-development (accessed: 30.10.2019).
Google Scholar
Gulaliyev, M.G., Ashurbayli‑Huseynova, N.P., Gubadova, A.A., Ahmedov, B.N., Mammadova, G.M., Jafarova, R.T. (2019), Stability of the banking sector: deriving stability indicators and stress‑testing, “Polish Journal of Management Studies”, 19 (2), pp. 182–195.
Google Scholar
DOI: https://doi.org/10.17512/pjms.2019.19.2.15
Hassan, K., Yu, J., Sanchez, B. (2011), Financial development and economic growth: New evidence from panel data, “The Quarterly Review of Economics and Finance”, 51, pp. 88–104, https://doi.org/10.1016/j.qref.2010.09.001
Google Scholar
DOI: https://doi.org/10.1016/j.qref.2010.09.001
Hye, Q.M.A. (2011), Financial development index and economic growth: empirical evidence from India, “The Journal of Risk Finance”, 12 (2), pp. 98–111, https://doi.org/10.1108/15265941111112820
Google Scholar
DOI: https://doi.org/10.1108/15265941111112820
Khan, M. Senhadji, A. (2000), Financial Development and Economic Growth: An Overview, IMF Working Papers, 00 (209), https://www.imf.org/external/pubs/ft/wp/2000/wp00209.pdf (accessed: 30.10.2019).
Google Scholar
DOI: https://doi.org/10.5089/9781451874747.001
King, R., Levine, R. (1993), Finance and growth: Schumpeter might be right, “The Quarterly Journal of Economics”, 108 (3), pp. 717–737, https://doi.org/10.2307/2118406
Google Scholar
DOI: https://doi.org/10.2307/2118406
Levine, R., Loayza, N., Beck, T. (2000), Financial intermediation and growth: Causality and causes, “Journal of Monetary Economics”, 46 (1), pp. 31–77, https://doi.org/10.1016/S0304-3932(00)00017-9
Google Scholar
DOI: https://doi.org/10.1016/S0304-3932(00)00017-9
Liang, Q., Teng, J. (2006), Financial development and economic growth: Evidence from China, “China Economic Review”, 17 (4), pp. 395–411, https://doi.org/10.1016/j.chieco.2005.09.003
Google Scholar
DOI: https://doi.org/10.1016/j.chieco.2005.09.003
Samargandi, N., Fidrmuc, J., Ghosh, S. (2015), Is the relationship between financial development and economic growth monotonic? Evidence from a sample of middle-income countries, “World Development”, 68, pp. 66–81, https://doi.org/10.1016/j.worlddev.2014.11.010
Google Scholar
DOI: https://doi.org/10.1016/j.worlddev.2014.11.010
Schumpeter, J. (1912), The Theory of Economic Development, Harvard University Press, Cambridge.
Google Scholar
Svirydzenka, K. (2016), Introducing a New Broad‑based Index of Financial Development, IMF Working Paper Strategy, Policy, and Review Department, https://www.imf.org/external/pubs/ft/wp/2016/wp1605.pdf (accessed: 30.10.2019).
Google Scholar
World Bank (2018), GDP growth (annual %), https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG (accessed: 30.11.2019).
Google Scholar
Downloads
Published
How to Cite
Issue
Section
License
![Creative Commons License](http://i.creativecommons.org/l/by-nc-nd/4.0/88x31.png)
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.