| By: |
Zakaria Savon (University Mohamed V - Souissi) |
| Abstract: |
The financial crisis of 2007-2008 compelled economists to reevaluate the
impacts and trajectories of monetary policy. It highlighted the new challenges
central banks face, particularly in integrating financial stability into the
monetary policy-making process. Financial stability is closely connected to
monetary policy. The financial sector plays a vital role as a channel for
monetary policy to affect the real economy. Numerous studies have investigated
the impact of monetary policy on the stability of conventional banking
institutions. Nonetheless, a substantial study vacuum persists concerning the
impact of monetary policy on the stability of Islamic financial institutions.
Our research aims to investigate this matter. The study analyzed a sample of
34 financial institutions across 11 countries with dual banking systems,
spanning the years 2013-2022. It utilized a random effects estimator and a
system GMM estimator. The findings demonstrate a substantial and negative
impact of the monetary policy rate on the stability of Islamic banks. The
study's conclusions have significant consequences, especially for
infrastructure and monetary policy. The advancement of the Islamic money
market signifies a crucial development in the strength and expansion of
Islamic financial organizations. Furthermore, monetary policymakers must
evaluate the effects of interest rate-oriented monetary policy on the
stability of Islamic banks. |
| Keywords: |
Stability, Z-score, GMM, Islamic Banks, Monetary Policy |
| Date: |
2025–10–13 |
| URL: |
https://d.repec.org/n?u=RePEc:hal:journl:hal-05321401 |