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IMPACT OF NON-INTERMEDIATION ACTIVITIES OF BANKS ON ECONOMIC GROWTH AND VOLATILITY: AN EVIDENCE FROM OIC

MOHSIN ALI

https://orcid.org/0000-0002-7407-6513

School of Accounting and Finance, Faculty of Business and Law, Taylor’s University, Malaysia

E-mail Address: mohsin.ali@taylors.edu.my

Corresponding author.

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MANSOR H. IBRAHIM

International Centre for Education in Islamic, Finance (INCEIF), Lorong Universiti A, Malaysia

E-mail Address: mansorhi@inceif.org

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, and

MOHAMED ESKANDAR SHAH

International Centre for Education in Islamic, Finance (INCEIF), Lorong Universiti A, Malaysia

E-mail Address: eskandar@inceif.org

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https://doi.org/10.1142/S0217590820420023Cited by:23 (Source: Crossref)

This article is part of the issue:

Special Issue on Islamic Economics and Finance
Guest Editor: M. Kabir Hassan, University of New Orleans, New Orleans, USA

Abstract

This paper investigates the impact of non-intermediation activities of banks on economic growth and volatility of OIC. For the purpose, we utilize LSDVC estimation approach using the sample of Organization of Islamic Countries (OIC) member countries for the period of 2001–2013. We find non-intermediation income to be insignificant for both economic growth and volatility of OIC member countries in general though it reduces volatility of Gulf Cooperation Council (GCC) economies. Intermediation activities are found to be insignificantly related with the growth of OIC member countries, but on the other hand, they are found to reduce volatility in OIC member countries. Our results are robust across different specifications and estimators.

Keywords:

JEL: G21, G28, O41

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