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Oil Prices and Bank Profitability: Evidence From Major Oil-Exporting Countries in the Middle East and North Africa
Author: Mr. Heiko Hesse and Mr. Tigran Poghosyan
Series:
IMF Working Papers
Volume/Issue:
Volume 2009: Issue 220
Language:
English
Publication Date:
01 Oct 2009
DOI:
https://doi.org/10.5089/9781451873672.001
ISBN:
9781451873672
ISSN:
1018-5941
Pages:
23
Keywords:
WP; bank; price; oil price shock; profitability; bank profitability; oil price shocks; system GMM; bank inefficiency; bank owner; world oil price; bank specialization; terms of bank assets; bank behavior; macroeconomic factor; bank performance; bank type; shock variable; bank size; cyclical bank lending; Oil prices; Bank soundness; Credit risk; Islamic banking; Inflation; Global; Middle East; North Africa; East Africa
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund