Factors affecting banks' credit behavior in dual banking countries

This study aims to measure the interaction of the lending behavior of banks operating in Turkey and similar selected countries, which include Islamic and conventional banks, which are called participation banking in our country's literature, with bank-specific and macroeconomic indicators. It is possible to state that the loans provided by these banks, which are the main source of fund supply, especially in developing countries, are one of the basic dynamics of financial mobility. The sample of the study consists of 16 selected countries, including Turkey, where both Islamic and conventional banks operate together in the banking sector. In the literature, the operation of both Islamic and conventional banks together is defined as the "Dual Banking" system. Annual frequency data of a total of 307 banks, 226 commercial and 81 Islamic, between 2009 and 2022 were used in the study. In order to measure the impact of bank-specific and macroeconomic dynamics on the loans provided by Islamic and conventional banks, Unbalanced Panel data analysis was performed using the fixed effects (SE) estimator proposed by Driscoll-Kraay. In the study, the level of lending, the ratio of deposits to loans and the ratio of non-performing loans, which is a variable that shows the risk attitude of the banking system, are used as dependent variables symbolizing the bank's credit behavior. The independent variables of the study are bank-specific variables, macroeconomic variables and COVID-19, whose global impact is still felt.