Abstract
This article discovers that whether there is a closer liaison
between Islamic banks and non-financial firms, or conventional banks
and non-financial firms, specifically in Muslim countries economies
where dual banking systems exist. Based on a sample, drawn from a
cross-section of OIC countries, the results of univariate analysis on
our full sample shows that mean values of conventional bank-firm
relationship variables are higher than the mean values of Islamic
bank-firm relationship variables, suggesting the competitive edge of
conventional banks over Islamic banks. However, the results of a
sub-sample where fraction of Islamic banks operating in a country is
larger than conventional banks provide evidence in favour of Islamic
banks. As per the recent report of IMF, Islamic banks are growing at
a considerable pace in Muslim countries, so it might be estimated
that they contain a stronger potential to surpass their conventional
counterparts while building and maintaining a closer nexus with the
non-financial firms operating in these countries
Shahbaz Khan , Nida Baig , Shahzad Hussain , Ajid Ur Rehman . (2020) Strength of Bank-Firm Nexus: Evidence from Islamic and Conventional Banks, Journal of Islamic Business and Management, Volume 10, Issue 1.
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