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Macroeconomic shocks and Islamic bank behavior in Turkey

In: Handbook of Empirical Research on Islam and Economic Life

Author

Listed:
  • Ahmet Faruk Aysan
  • Mustafa Disli
  • Adam Ng
  • Huseyin Ozturk

Abstract

Events such as the ‘credit crunch’, ‘bank run’, ‘financial contagion’, ‘flight to quality’ and ‘systemic risks’ have widely transpired in recent times. One important dimension permeating these events is the dynamic link between macroeconomic shocks and banks’ behaviour. Economic crises experienced by five East Asian countries in the late 1990s were accompanied by financial sector problems. The Great Recession of the late 2000s also corresponded to heightened solvency risks affecting over-leveraged banks and financial institutions in many developed countries. In a world of imperfect information, adverse macroeconomic shocks could weaken firms’ balance sheets, diminish bank capital and trigger financial disintermediation. Positive shocks, on the contrary, could increase firms’ net worth and prompt additional bank lending. Understanding the nature of this interaction offers regulators, supervisors, firms and households valuable insights into the process of policymaking, financial intermediation and responding to boom and bust cycles in the economy.

Suggested Citation

  • Ahmet Faruk Aysan & Mustafa Disli & Adam Ng & Huseyin Ozturk, 2017. "Macroeconomic shocks and Islamic bank behavior in Turkey," Chapters,in: Handbook of Empirical Research on Islam and Economic Life, chapter 16, pages 375-394 Edward Elgar Publishing.
  • Handle: RePEc:elg:eechap:16049_16
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    Keywords

    Asian Studies; Economics and Finance;

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