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This paper deals with the question of knowing if countries whose activity of financing is mainly bank based face crises more expensive than those where the bond markets are broader and more developed. The results of the empirical tests on a panel of emerging countries suggest that bank based financial systems are associated with crises slightly more expensive, whereas the relationship between the bond markets and the crises’ costs is fragile. Moreover, financial systems where bond markets play an important role are associated with a higher growth of the production, and this, independently of the presence or not of crises. The consideration of the combined effect of financial liberalization and institutional framework on the bond markets development shows the importance of the direction of the financial liberalization. We join in this case one of the most significant aspects of the “sequencing” theorized by McKinnon (1973). Finally, an effective prudential regulation tends to reduce significantly the probability of occurrence of banking crises.

This paper applied the panel VAR approach and the Impulse Response Functions to investigate the differences in the monetary transmission processes of Islamic and conventional banks using disaggregated bank-level data for Saudi Arabia over the period 2008Q1–2020Q4. Our findings show that: i) Islamic banks play a significant role in transmitting monetary policy decisions to the real economy through the balance sheet channel; ii) Islamic banks' deposits are more responsive to oil price shocks than Islamic financing; iii) the reaction of Islamic banks to monetary policy and price shocks is relatively weaker than that of conventional banks, suggesting the existence of rigidities, such as excess liquidity, inertia in changing return rates, and the lack of funding and investment sources, and iv) the relatively significant responses of Islamic banks to various shocks make it easier for the Saudi central bank to achieve macroeconomic goals through monetary policy actions in a dual-banking system. [ABSTRACT FROM AUTHOR]

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