Does Islamic banking reduce the risks of COVID-19 for SMEs? Novel evidence for SME financing in the pandemic period for an emerging market

[ X ]

Tarih

2023

Dergi Başlığı

Dergi ISSN

Cilt Başlığı

Yayıncı

Elsevier

Erişim Hakkı

info:eu-repo/semantics/closedAccess

Özet

This paper aims to examine the effect of COVID-19 on SME bank lending in the Islamic banking sector to small and medium-sized enterprises (SMEs) in an emerging market: Turkey. Under-standing whether SME bank lending in the Islamic banking sector is procyclical or not is very important to reduce the impact of COVID-19 on SMEs. Interrupted time series analysis (ITSA), the Markov switching regression model, and vector autoregressive (VAR) methodologies are employed using novel weekly data for the pandemic period. The present study finds that the Islamic banking sector for SME financing has behaved countercyclically during COVID-19 in the Turkish economy. The paper thus sheds new light on the relationship between Islamic bank lending for SME financing and the COVID-19 shock in an important emerging market. The findings can provide insights into how Islamic banks mitigate the effect of COVID-19 on SMEs in an emerging market context. The present paper clearly shows differences between Islamic bank lending toward SMEs and deposit bank lending toward SMEs in the pandemic era. The willingness of Islamic banks to supply loans to SMEs during the pandemic plays a vital role in reducing SME firm failure in the Turkish economy.

Açıklama

Anahtar Kelimeler

Islam, Islamic banking, COVID-19, Bank lending, SME financing, Emerging markets

Kaynak

International Journal of Disaster Risk Reduction

WoS Q Değeri

Q1

Scopus Q Değeri

Q1

Cilt

91

Sayı

Künye