Lending cyclicality in dual banking countries: The influence of bank ownership

This study examines ownership’s influence on banks’ lending cyclicality over the business cycles in dual banking countries. It investigates the lending cyclicality of banks in dual-banking economies by using a panel data set of 606 banks, including both Islamic and conventional banks, from 2001-2019 in 17 dual-banking countries. Applying the System Generalised Method of Moments (GMM) estimator, when a distinction was made between conventional and Islamic banks’ financing behaviour, Islamic banks display countercyclical lending behaviour. In examining the influence of public and private ownership on the lending cyclicality of banks, overall public banks were found to be countercyclical. The findings of this study offer important insights for researchers, policymakers, and stakeholders in the global financial industry.