The Impact of Oil Prices on the Banking System in the GCC

ByPadamja Khandelwal, Ken Miyajima, Andre O Santos

August 5, 2016

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper examines the links between global oil price movements and macroeconomic and financial developments in the GCC. Using a range of multivariate panel approaches, including a panel vector autoregression approach, it finds strong empirical evidence of feedback loops between oil price movements, bank balance sheets, and asset prices. Empirical evidence also suggests that bank capital and provisioning have behaved countercyclically through the cycle.

Subject: Banking, Capital adequacy requirements, Credit, Financial cycles, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, Money, Nonperforming loans, Oil prices, Prices

Keywords: asset price appreciation, bank asset quality, Capital adequacy requirements, Credit, Financial cycles, GCC bank, Global, Macro-financial linkages, nonperforming loans, NPL ratio, oil price, Oil prices, panel vector autoregression, price growth, WP

Pages:
23
Volume:
2016
DOI:
https://doi.org/10.5089/9781475523393.001
Issue:
161
Series:
Working Paper No. 2016/161
Stock No:
WPIEA2016161
ISBN:
9781475523393
ISSN:
1018-5941

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