Islamic banks and the transmission of monetary policy: empirical evidence with moderating variables[Les banques islamiques et la transmission de la politique monétaire : évidence empirique avec des variables modératrices]

The rise of Islamic banks in different countries worldwide can potentially complicate the implementation of monetary policy and affect its effectiveness. The purpose of our work is to address the question of the nature of the response of Islamic banking financing to the interest rate of monetary policy. Beyond this question, we are also interested in the factors that can shape the response of Islamic banking financing to conventional monetary policy. For the period between 2013 and 2022, across a panel of 12 countries, the results of the GMM approach first revealed the absence of an Islamic banking financing channel. They also showed that conventional monetary policy loses its effect on Islamic banks in dual banking systems where these banks have systemic importance. The development of Islamic finance, in turn, contributes to shielding Islamic financing from the effects of monetary policy.