Resilience of Islamic and Conventional Banks in The GCC During ‎Systemic Crises: Evidence from A Dynamic Panel GMM Framework

  • Authors

    • Somaiyah Alalmai Finance Department, Faculty of Economics and Administration, King Abdulaziz University, Jeddah, Saudi Arabia
    https://doi.org/10.14419/9cfj1256

    Received date: September 28, 2025

    Accepted date: October 7, 2025

    Published date: October 15, 2025

  • Dynamic Panel Model; GCC; Inflation Threshold; Resilience; Tobin’s Q‎.

  • Abstract

    The current study investigates the Islamic and conventional banks’ resilience in the GCC across four systemic crises, the GFC, Arab Spring, oil ‎price crash, and COVID-19, through a dynamic panel GMM framework that incorporates an inflation threshold. The findings confirm that ‎resilience is a multidimensional and crisis-specific concept. Market valuations (Tobin’s Q) deteriorated sharply during the GFC and COVID-19, ‎while the Arab Spring and oil price crash elicited more adaptive responses. In contrast, credit risk (NPL/TA) rose significantly during the Arab ‎Spring, with weaker direct effects from other crises. The role of inflation is pivotal: when inflation exceeded 3%, Islamic banks exhibited greater ‎vulnerability during oil shocks but enhanced resilience during the Arab Spring and the COVID-19 pandemic, reflecting differences in policy ‎responses, structural features, and funding models. Across indicators, a duality emerges, Islamic banks often outperformed in market valuation ‎terms but showed heightened sensitivity in asset quality under adverse inflation dynamics. Country-level effects further highlight heterogeneity, ‎with Oman appearing more resilient, while Saudi Arabia and the UAE faced stronger valuation pressures. The study demonstrates that resilience ‎in dual-banking systems is heterogeneous, inflation-sensitive, and shaped by both market- and balance-sheet dimensions, underscoring the need ‎for inflation-aware macroprudential policies, countercyclical buffers, and targeted credit monitoring to safeguard GCC financial stability‎.

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    Alalmai, S. (2025). Resilience of Islamic and Conventional Banks in The GCC During ‎Systemic Crises: Evidence from A Dynamic Panel GMM Framework. International Journal of Accounting and Economics Studies, 12(6), 603-614. https://doi.org/10.14419/9cfj1256