Influence of institutional factors on banking

Abstract

This article examines the impact of such institutional factors as religion, corruption, political stability and the right to the volume of loans and religious diversity issued on the volume of bank loans. We researched the Panel Data of 29 countries, 11 of them are Muslim and 18 to non-muslim countries, where the share of other religions exceeds the share of Islam, for the period from 2001 to 2015. We got a log-linear model of fixed and random Effect. The novelty of our work is to identify that the presence of the Islamic population in the country reduces the positive effect on the volume of loans issued from the level of law. We also identified the impact of Islam on the effect of increasing the volume of loans issued from the introduction of international regulatory standards Basel II, but this effect is insignificant. We also found the lack of significance of the factor of corruption. Understanding the nature of the influence of various institutions allows creating a more qualitative regulatory framework that takes into account the role of institutional factors in regulating the banking market.