Citation:

Turki Rashed Alshammari. "COVID-19 Pandemic and Bank Deposits in GCC Economies" International Research Journal of Economics and Management Studies, Vol. 4, No. 3, pp. 186-197, 2025.

Abstract:

This study examines the impact of the COVID-19 pandemic on bank depositors in the six Gulf Cooperation Council (GCC) economies over the period from 2000 to 2023. Utilizing a comprehensive panel dataset covering Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates, the research employs the pooled ordinary least squares estimator to explore the intricate relationship between the pandemic and bank depositors. The findings reveal a positive and statistically significant correlation between COVID-19 and an increase in both the "number of deposit accounts" and the "number of depositors." This suggests that, within the GCC context, the pandemic has led to a rise in deposit activity, challenging prevailing assumptions. The positive association could be attributed to increased financial cautiousness, a flight to safety amid economic uncertainties, and enhanced confidence in the stability of the banking system during turbulent times. The study identifies policy implications, emphasizing the need for targeted financial education, transparent communication strategies, and adaptive measures to mitigate economic challenges. Additionally, it proposes avenues for future research, including sector-specific impacts, the role of digitalization, cross-cultural perspectives, and the interplay of psychological and environmental, social, and governance factors influencing depositor behavior during crises. Overall, this study contributes valuable insights for policymakers, financial institutions, and researchers navigating the complexities of financial landscapes during global crises within the GCC region and beyond.

References:

[1] Acharya, V. V., & Steffen, S. (2020). The risk of being a fallen angel and the corporate dash for cash in the midst of COVID. The Review of Corporate Finance Studies, 9(3), 430-471.
[2] Aizenman, J., Jinjarak, Y., & Spiegel, M. M. (2023). Fiscal capacity and commercial bank lending under COVID-19. Journal of the Japanese and International Economies, 68, 101261.
[3] Aliani, K., Al-kayed, L., & Boujlil, R. (2022). COVID-19 effect on Islamic vs. conventional banks' stock prices: Case of GCC countries. The Journal of Economic Asymmetries, 26, e00263.
[4] Amiri, H., Aminizadeh, M., Rezapour, M., Tavan, A., & Aminizadeh, M. (2023). The impact of Covid 19 pandemic on life satisfaction and health of Iranian bank employees. Heliyon, 9(9).
[5] Anani, M., & Owusu, F. (2023). Regulatory capital and bank risk-resilience amid the Covid-19 pandemic: How are the Basel reforms faring?. Finance Research Letters, 52, 103591.
[6] Baker, S. R., Bloom, N., Davis, S. J., Kost, K., Sammon, M., & Viratyosin, T. (2020). The unprecedented stock market reaction to COVID-19. The review of asset pricing studies, 10(4), 742-758.
[7] Baker, S. R., Farrokhnia, R. A., Meyer, S., Pagel, M., & Yannelis, C. (2020). How does household spending respond to an epidemic? Consumption during the 2020 COVID-19 pandemic. The Review of Asset Pricing Studies, 10(4), 834-862.
[8] Bartik, A. W., Bertrand, M., Cullen, Z. B., Glaeser, E. L., Luca, M., & Stanton, C. T. (2020). How are small businesses adjusting to COVID-19? Early evidence from a survey (No. w26989). National Bureau of Economic Research.
[9] Beck, T., & Keil, J. (2021). Are banks catching corona? Effects of COVID on lending in the US.
[10] Boubakri, N., Mirzaei, A., & Saad, M. (2023). Bank lending during the COVID-19 pandemic: A comparison of Islamic and conventional banks. Journal of International Financial Markets, Institutions and Money, 84, 101743.
[11] Degryse, H., & Huylebroek, C. (2023). Fiscal support and banks' loan loss provisions during the COVID-19 crisis. Journal of Financial Stability, 101150.
[12] Dursun-de Neef, H. Ö., & Schandlbauer, A. (2021). COVID-19 and lending responses of European banks. Journal of Banking & Finance, 133, 106236.
[13] Dursun-de Neef, H. Ö., & Schandlbauer, A. (2022). COVID-19, bank deposits, and lending. Journal of Empirical Finance, 68, 20-33.
[14] Fang J, Collins A, Yao S (2021) On the global COVID‑19 pandemic and China’s FDI. J Asian Econ 74:101300
[15] Fu Y, Alleyne A, Mu Y (2021) Does lockdown bring shutdown? impact of the covid‑19 pandemic on foreign direct investment. Emerg Mark Financ Trade. https:// doi. org/ 10. 1080/ 15404 96X. 2020. 18651 50
[16] Gao, H., Li, J., & Wen, H. (2023). Bank funding costs during the COVID-19 pandemic: Evidence from China. Pacific-Basin Finance Journal, 79, 102006.
[17] Giofré M (2021) COVID‑19 stringency measures and foreign investment: an early assessment. North Am J Econ Finance 58:101536. https:// doi. org/ 10. 1016/j. najef. 2021. 101536
[18] Gulati, R., Charles, V., Hassan, M. K., & Kumar, S. (2023). COVID-19 crisis and the efficiency of Indian banks: Have they weathered the storm?. Socio-Economic Planning Sciences, 88, 101661.
[19] Guo, W. C., & Tseng, P. L. (2023). COVID-19, bank risk, and capital regulation: The aggregate shock and social distancing. The Quarterly Review of Economics and Finance, 92, 155-173.
[20] Hayakawa, K., & Mukunoki, H. (2021). The impact of COVID-19 on international trade: Evidence from the first shock. Journal of the Japanese and International Economies, 60, 101135.
[21] Ho LT, Gan C (2021) Foreign direct investment and world pandemic uncertainty index: do health pandemics matter? J Risk Financ Manag 14(107):1–15. https:// doi. org/ 10. 3390/ jrfm1 40301 07
[22] Kotcharin, S., Maneenop, S., & Jaroenjitrkam, A. (2023). The impact of government policy responses on airline stock return during the COVID-19 crisis. Research in Transportation Economics, 99, 101298.
[23] Levine, R., Lin, C., Tai, M., & Xie, W. (2021). How did depositors respond to COVID-19?. The Review of Financial Studies, 34(11), 5438-5473.
[24] Li, L., Strahan, P. E., & Zhang, S. (2020). Banks as lenders of first resort: Evidence from the COVID-19 crisis. The Review of Corporate Finance Studies, 9(3), 472-500.
[25] Mena, C., Karatzas, A., & Hansen, C. (2022). International trade resilience and the Covid-19 pandemic. Journal of Business Research, 138, 77-91.
[26] Nawoi L, Nijangan H (2021) The effect of COVID‑19 outbreak on foreign direct investment: Do sovereign wealth funds matter? Transl Corp Rev. https:// doi. org/ 10. 1080/ 19186 444. 2021. 19643 13
[27] Nitsch, V. (2022). Covid-19 and international trade: Evidence from New Zealand. Economics Letters, 217, 110627.
[28] Park, C. Y., & Shin, K. (2021). COVID-19, nonperforming loans, and cross-border bank lending. Journal of Banking & Finance, 133, 106233.
[29] Saif-Alyousfi, A. Y. (2024a). Bank depositors in Arab economies amidst the COVID-19 pandemic. In Forum for Economic and Financial Studies (Vol. 2, No. 1).
[30] Saif-Alyousfi, A. Y. (2024b). COVID-19 and SMEs deposits with commercial banks: evidence from African economies. Financial Economics Letters, 2(3), 37-50.
[31] Saif-Alyousfi, A. Y. (2021). FDI inflows and bank deposits: evidence from 18 MENA economies. Competitiveness Review: An International Business Journal, 32(6), 880-914.
[32] Saif-Alyousfi, A. Y. (2022). Determinants of bank profitability: evidence from 47 Asian countries. Journal of Economic Studies, 49(1), 44-60.
[33] Saif-Alyousfi, A. Y. (2022). The impact of COVID-19 and the stringency of government policy responses on stock market returns worldwide. Journal of Chinese Economic and Foreign Trade Studies, 15(1), 87-105.
[34] Saif-Alyousfi, A. Y. (2023). Impact of FDI inflows on bank loans in Gulf Cooperation Council economies: an empirical insight. International Journal of Emerging Markets, 18(2), 505-524.
[35] Saif-Alyousfi, A. Y., & Saha, A. (2021). Do tourism receipts affect bank profitability? Analytical evidence from 85 tourism economies. Research in International Business and Finance, 58, 101437.
[36] Saif-Alyousfi, A. Y., & Saha, A. (2021b). Determinants of banks' risk-taking behavior, stability and profitability: Evidence from GCC countries. International Journal of Islamic and Middle Eastern Finance and Management, 14(5), 874-907.
[37] Saif-Alyousfi, A. Y., & Saha, A. (2021c). The impact of COVID-19 and non-pharmaceutical interventions on energy returns worldwide. Sustainable Cities and Society, 70, 102943.
[38] Saif-Alyousfi, A. Y., Saha, A., & Alshammari, T. R. (2023). Bank diversification and ESG activities: A global perspective. Economic Systems, 101094.
[39] Saif-Alyousfi, A. Y., Saha, A., & Md-Rus, R. (2020). The impact of bank competition and concentration on bank risk-taking behavior and stability: Evidence from GCC countries. The North American Journal of Economics and Finance, 51, 100867.
[40] Saif-Alyousfi, A. Y., Saha, A., Md-Rus, R., & Taufil-Mohd, K. N. (2021a). Do oil and gas price shocks have an impact on bank performance?. Journal of Commodity Markets, 22, 100147.
[41] Schularick, M., Steffen, S., & Tröger, T. H. (2020). Bank capital and the European recovery from the COVID-19 crisis.
[42] Silva, T. C., de Souza, S. R. S., Guerra, S. M., & Tabak, B. M. (2023). COVID-19 and bank branch lending: The moderating effect of digitalization. Journal of Banking & Finance, 152, 106869.
[43] Susamto, A. A., Octavio, D. Q., Risfandy, T., & Wardani, D. T. K. (2023). Public ownership and local bank lending at the time of the Covid-19 pandemic: Evidence from Indonesia. Pacific-Basin Finance Journal, 102072.
[44] Tran, D. V., Bui, D. G., Nguyen, C., & Hoang, H. V. (2023). Bank liquidity hoarding during the COVID-19 pandemic. Finance Research Letters, 55, 104021.
[45] Ҫolak, G., & Öztekin, Ö. (2021). The impact of COVID-19 pandemic on bank lending around the world. Journal of Banking & Finance, 133, 106207.

Keywords:

Depositors; Banks; COVID-19 Pandemic; GCC Economies.