Oil Prices and Bank Profitability: Evidence From Major Oil-Exporting Countries in the Middle East and North Africa
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Summary:
This paper analyzes the relationship between oil price shocks and bank profitability. Using data on 145 banks in 11 oil-exporting MENA countries for 1994-2008, we test hypotheses of direct and indirect effects of oil price shocks on bank profitability. Our results indicate that oil price shocks have indirect effect on bank profitability, channeled through country-specific macroeconomic and institutional variables, while the direct effect is insignificant. Investment banks appear to be the most affected ones compared to Islamic and commercial banks. Our findings highlight systemic implications of oil price shocks on bank performance and underscore their importance for macroprudential regulation purposes in MENA countries.
Series:
Working Paper No. 2009/220
Subject:
Bank soundness Banking Credit risk Financial regulation and supervision Financial sector policy and analysis Financial services Inflation Islamic banking Oil prices Prices
English
Publication Date:
October 1, 2009
ISBN/ISSN:
9781451873672/1018-5941
Stock No:
WPIEA2009220
Pages:
23
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