Modern Challenges faced by banking sector of Pakistan Evidence from: the First Micro Finance Bank, JS Bank and BankIslami Pakistan

2020 ◽  
Author(s):  
Fariha Azalea
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Banking Industry ◽  
Financial Institution ◽  
Likert Scale ◽  
Qualitative Approach ◽  
Islamic Banks ◽  
Microfinance Institutions ◽  
Banking History ◽  
Innovative Industry

The purpose of this study is to identify the problems and issues related to banking industry of Pakistan. We have focused on three banks that are specialize in their own field. We adopted the qualitative approach and developed a questionnaire to measure the responses of respondents on a likert scale. The banking history goes way back to Babylonian era. But in Pakistan the very first Pakistani bank is State bank of Pakistan. Pakistan’s banking history is quite diversified. From privatization to nationalization and then again privatization. In Pakistan banking industry is one most growing and innovative industry. Banks plays an important role in an economy. Bank are the financial institution that are regulated and monitored by State bank of Pakistan and channelize the depositor money. This report has focused on issues faced by commercial banks, microfinance institutions and Islamic banks.

scholarly journals The Efficiency of Islamic Banks and Conventional Banks in Indonesia Using Data Envelopment Analysis Approach

2021 ◽  
Vol 58 (1) ◽  
pp. 375-381
Author(s):  
Retno Fitrianti, Sri Undai Nurbayani
Keyword(s):  
Data Envelopment Analysis ◽  
Commercial Bank ◽  
Commercial Banks ◽  
Banking Sector ◽  
Financial Institution ◽  
Data Envelopment ◽  
Islamic Banks ◽  
Sample Technique ◽  
Using Data ◽  
Conventional Banks

Banking sector mediation is related to efficiency in economic performance. As a financial institution, banks need to maintain their performance in order to operate optimally, one factor that must be considered is efficiency in performance. This research aimed to analyze the efficiency of Islamic Banks and Conventional Commercial Bank in Indonesia. Using a purposive sample technique for two Islamic banks and two commercial banks. Fixed assets, deposits, and other operating expenses as input variablesused, while credit as output variable.  Using Data Envelopment Analysis to calculate the efficiency of banking. The results show that all Sharia Commercial Bank samples reached efficiency level 1 was efficient. Besides, the sample of conventional commercial banks used in this study is not all efficient. This is due to one of the sample banks having an efficiency level below one, which is 0.644. It means that conventional bank groups are inefficient.

scholarly journals Customer Perception on Bank Service Quality: A Comparative Study between Conventional Commercial Banks and Islamic Commercial Banks in Bangladesh

2016 ◽  
Vol 5 (2) ◽  
pp. 109-124
Author(s):  
Sonia Rezina ◽  
Nur Ahmad ◽  
Farhana Mitu ◽  
Mohitul Ameen Ahmed Mustafi
Keyword(s):  
Service Quality ◽  
Cyber Security ◽  
Commercial Banks ◽  
Banking Sector ◽  
Banking Industry ◽  
Islamic Banks ◽  
Deep Insight ◽  
Policy Makers ◽  
Customer Perception ◽  
Conventional Banks

Customer perception refers to the process by which a customer selects, organizes, and interprets information inputs to create a meaningful picture of the service quality within an organization. In the fast growing banking industry like Bangladesh, every bank is looking forward towards faster growth through providing better service quality than others. However, there are certain challenges started rising in front of the booming banking sector which are needed to be addressed immediately; such as, managing compliance, mitigating fraud/ cyber security, managing hiring decisions etc. It is obvious that, those who will efficiently handle these challenges will certainly lead the market and gain higher customer contentment. The main purpose of this study is to compare the customer perception towards the service Quality offered by Conventional Commercial Banks and Islamic Shariah-based Commercial Banks in Bangladesh through using SERVQUAL instrument. 204 respondents have been randomly selected for the study among them 162 is from Conventional banks and 42 are from Islamic banks. The findings of the research should help the policy makers and regulators in banking industry to have a deep insight towards the different perception of customers and assist in taking effective measures to achieve organizational goal through improving their service Quality.

scholarly journals Comparative analysis of Saudi sharia compliant banks: A CAMEL framework

Accounting ◽  
2021 ◽  
pp. 1119-1130 ◽  
Author(s):  
Mohammad Naushad
Keyword(s):  
Saudi Arabia ◽  
Comparative Analysis ◽  
Commercial Banks ◽  
Banking Sector ◽  
Banking Industry ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Financial Health ◽  
Financial Soundness ◽  
The Stability

A vibrant banking sector remains instrumental to the stability of every economy. Islamic banks are now considered as iris spuria of the banking industry. Countries such as Saudi Arabia have been hailed as the Islamic banking basin. Nevertheless, how well is this sector growing and performing in Saudi Arabia itself? This motivates us to carry out this study. The current study's key objective was to measure Sharia-compliant banks' efficiency on the CAMEL Framework, a commonly accepted framework for banks' financial health. CAMEL is fundamentally an acronym for which the first letter from the five primary segments of a bank operation is jumbled, i.e. “|C|apital adequacy, |A|sset quality, |M|anagement quality, |E|arnings ability and |L|iquidity”. The system is popularly being used for determining the financial soundness and stability of banks. The current study employs this framework to judge the financial performance of four fully Sharia compliant banks or Islamic banks in Saudi Arabia. The publicly accessible audited data of these banks over ten years was taken for analysis. From the final results of the analysis, it is found that all the banks performed stupendously well on the CAMEL framework. AlRajhi Bank was rated number one of all four Sharia-compliant banks. However other three banks namely Alinma Bank, AlBilad Bank, and Aljazeera bank have also done well and overachieved all the criterion of CAMEL's ranking. However, the study proposes a comparison of Sharia-compliant banks with conventional commercial banks. Moreover, it recommended that more banks should engage in offerings of Sharia based products.

Measurement of Vulnerability of Financial Portfolio of Sharia Commercial Banks by Cardona Method

2017 ◽  
Vol 9 (2) ◽  
pp. 109
Author(s):  
Paulina Harun ◽  
Atman Poerwokoesoemo
Keyword(s):  
Commercial Banks ◽  
Quantitative Research ◽  
Banking Sector ◽  
Banking Industry ◽  
Policy Makers ◽  
Factors Affecting ◽  
Section Data ◽  
Initial Stage ◽  
The Face ◽  
Asset Portfolio

his study aims to: (1) to know and analyze the extent of volatility (vulnerability) of sharia banking industry in Indonesia in the face of competition (2) to know and analyze factors affecting vulnerability of sharia commercial banks; (3) to know and analyze the extent of sustainable development of sharia banking industry to Indonesia's economic development.The research conducted to measure the vulnerability (volatility) of proto folio of syariah bank using observation period 2015, and the data used is cross section data. The research design used in this research is quantitative research, using asset dimension (asset portfolio, liability portfolio, equity portfolio) and stressor (pressure, including: credit risk, market risk, and liquidity risk).The activity plan of this research is: in the initial stage of conducting theoretical study related to the vulnerability related to banking especially BUS; The next step is to determine the asset and stressor dimensions associated with the BUS; Further determine the indicators related to assets and stressors; The next step performs calculations to determine the index of each BUS as well as the dimensions that affect the vulnerabilities faced by each BUS.Target expected outcomes can be generated from this research is: for the object of research (BUS) provide a solution for BUS to deal with and overcome the vulnerabilities encountered and policies that must be done. For policy makers, the results of this study are expected to provide input in decision-making and other policies.Measurement of vulnerability to be performed related to banking operations in the face of competition and the continuity of BUS in Indonesia. The outcomes of this study are expected to be included in Bank Indonesia journals, the selection of this journal is based on studies conducted in the banking sector, especially BUS in Indonesia.

scholarly journals Cost efficiency of the Czech and Slovak banking sectors: an application of the data envelopment analysis

2016 ◽  
Author(s):  
Iveta Palecková
Keyword(s):  
Data Envelopment Analysis ◽  
Cost Efficiency ◽  
Commercial Banks ◽  
Banking Sector ◽  
Banking Industry ◽  
Returns To Scale ◽  
Data Envelopment ◽  
Cost Efficient ◽  
The Cost ◽  
Variable Returns To Scale

The aim of the paper is to estimate the cost efficiency of the Czech and Slovak commercial banks within the period 2010-2014. For empirical analysis the Data Envelopment Analysis input-oriented model with variable returns to scale is applied on the data of the commercial banks. The intermediation approach is adopted to define the inputs and outputs. The Czech commercial banks are more cost efficient than Slovak commercial banks. The development of average cost efficiency is similar in the Czech and Slovak banking industry. The most efficient Czech banks are Ceská sporitelna and Sberbank in the Czech banking sector, the most efficient Slovak bank is Privatbanka with 100% efficiency.

Market structure-performance hypothesis in Kenyan banking industry

2015 ◽  
Vol 10 (4) ◽  
pp. 697-710 ◽  
Author(s):  
Solomon W. Giorgis Sahile ◽  
Daniel Kipkirong Tarus ◽  
Thomas Kimeli Cheruiyot
Keyword(s):  
Market Structure ◽  
Market Efficiency ◽  
Market Share ◽  
Commercial Banks ◽  
Banking Sector ◽  
Banking Industry ◽  
Developing Economies ◽  
Market Concentration ◽  
Bank Performance ◽  
Content Type

Purpose – The purpose of this paper is to test market structure-performance hypothesis in banking industry in Kenya. Specifically, the structure-conduct-performance (SCP) and market efficiency hypotheses were examined to determine how market concentration and efficiency affect bank performance in Kenya. Design/methodology/approach – The study used secondary data of 44 commercial banks operating from 2000 to 2009. Three proxies to measure bank performance were used while market concentration and market share were used as proxies for market structure. Market concentration was measured using two concentration measures; the concentration ratio of the four largest banks (CR4) and Herfindahl-Hirschman Index, while market share was used as a proxy for efficiency. The study made use of generalized least square regression method. Findings – The empirical results confirm that market efficiency hypothesis is a predictor of firm performance in the banking sector in Kenya and rejects the traditional SCP hypothesis. Thus, the results support the view that efficient banks maximize profitability. Practical implications – The study provides insights into the role of efficiency in enhancing profitability in commercial banks in Kenya. It has managerial implication that profitable banks ought to be efficient and dispels the notion of collusive behavior as a precursor for profitability. Originality/value – The paper fills an important gap in the extant literature by proving insights into what determines bank profitability in banking sector in Kenya. Although this area is rich in research, little work has been conducted in the developing economies and in particular no study in the knowledge has addressed this critical issue in Kenya.

scholarly journals Capital Buffer, Risk, Profitability, Size, and Macroeconomics: Empirical Study on Islamic Banks

2021 ◽  
Vol 13 (1) ◽  
Author(s):  
Dina Fitrisia Septiarini ◽  
Ulis Fajar Choirotun Hisan ◽  
Matsahri Matsahri ◽  
Dian Filianti
Keyword(s):  
Commercial Banks ◽  
Financial Institution ◽  
Secondary Data ◽  
Company Size ◽  
Islamic Banks ◽  
Purposive Sampling ◽  
Macroeconomic Conditions ◽  
Positive Effects ◽  
Negative Effect ◽  
Islamic Economic

Abstract. The development of Islamic economics has led to the growth of Islamic banking, as a financial institution based on sharia principles. This research aims to analyze the relationship of risk, profitability, company size, and macroeconomics with capital buffer of Shariah Commercial Banks Indonesia during the period of 2015-2019. The study used a quantitative approach of the regression panel data with stata13 statistical tools. This study used secondary data with a population of 14 sharia commercial banks and a sample of 12 Islamic commercial banks using purposive sampling method. BOPO, NM, ROA, and KURS (exchange rate) were found to have significant positive effects on CB. SIZE has a significant negative effect, while NPF has positive  insignificant effect on CB. Islamic banks, regulators, and governments may consider risks, profitability, company size, and macroeconomic conditions in determining the size of capital buffers and maintaining the adequacy of capital owned by Islamic Banking.Keyword: Capital Buffer, Islamic Economic Systems, Shariah Banks. Abstrak. Ekonomi Islam menjadi paradigma baru yang komprehensif. Bank syariah dalam sistem ekonomi Islam merupakan lembaga keuangan dengan prinsip syariah. Penelitian ini bertujuan untuk menganalisis hubungan risiko, profitabilitas, ukuran perusahaan, dan makroekonomi dengan penyangga modal (CB) Bank umum syariah (BUS) di Indonesia pada tahun 2015-2019. Pendekatan penelitian menggunakan pendekatan data panel kuantitatif regresi dengan alat statistik stata13. Penelitian ini menggunakan data sekunder dengan populasi 14 Bank Islam dan sampel 12 bank umum syariah berdasarkan metode purposive sampling. BOPO, NM, ROA, dan KURS (nilai tukar) ditemukan memiliki pengaruh positif yang signifikan terhadap CB. SIZE memiliki hubungan negatif signifikan, sedangkan NPF positif tidak signifikan. Bank syariah, regulator, dan pemerintah dapat mempertimbangkan risiko, profitabilitas, ukuran perusahaan, dan kondisi makroekonomi dalam menentukan ukuran penyangga modal dan menjaga kecukupan modal yang dimiliki oleh Perbankan Syariah.Kata Kunci: Penyangga Modal, Sistem Ekonomi Syariah, Bank Syariah

scholarly journals Risk management in conventional and Islamic banks in Palestine: A comparative analysis

2021 ◽  
Vol 16 (2) ◽  
pp. 182-189
Author(s):  
Othman Sawafta
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Banking Sector ◽  
Probability Distributions ◽  
Research Question ◽  
Islamic Banks ◽  
Management Skills ◽  
Operational Systems ◽  
Customer Services

The aim of the study is to compare credit risk between commercial and Islamic banks in Palestine. The study uses five commercial banks and two Islamic banks, so the Merton model is used to test the hypothesis regarding the research question. Also, cumulative logistic probability distributions are used to derive the probability of default from distance to default. The findings show that commercial banks encompass less credit risk than Islamic banks. Thus, the study recommends that financial institutions in Palestine master management skills and operational systems to cope with the financial environment. They need to increase research and training programs in risk management. Besides, there is a need to reduce lending to public sector (government). There is also a need for a focus on mergers, especially for smaller banks, to increase their capital, so that there are banking units that can compete in providing better customer services and contributing to the stability of the banking sector. AcknowledgmentThe author is thankful to Palestine Technical University – Kadoorie for funding this research.

Sharia’h practice at Islamic banks in Pakistan

2018 ◽  
Vol 9 (3) ◽  
pp. 274-289
Author(s):  
Muhammad Tariq Majeed ◽  
Abida Zainab
Keyword(s):  
Risk Sharing ◽  
Banking Sector ◽  
Islamic Law ◽  
Banking Industry ◽  
Supervisory Board ◽  
Primary Data ◽  
Equation Modeling ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type

PurposeIslamic banks provide an alternative financial system based on Sharia’h (Islamic law). However, critics argue that operation at Islamic banks is violating Sharia’h particularly in terms of provision of interest free services, risk sharing and legal contract. The purpose of this paper is to empirically evaluate the Sharia’h practice at Islamic banks in Pakistan by considering some basic principles of Sharia’h. Design/methodology/approachPrimary data are collected from 63 branches of Islamic banks in Pakistan. Questionnaire is used as an instrument. The study uses structural equation modeling that includes confirmatory factor analysis and regression analysis. Data are codified and analyzed using SPSS and Amos. FindingsThis study finds that Islamic banks are providing interest free services, ensuring that transactions and contracts offered by Islamic banks are legal and offering conflict-free environment to customers. In contrast, estimated results expose that Islamic banks are not sharing risk and Sharia’h supervisory board is not performing its role perfectly. Similarly, it is found that organization and distribution of zakat and qard-ul-hassan are weak at Islamic banks. Research limitations/implicationsData are collected from Islamabad federal capital of Pakistan that hold just 5 per cent share of Islamic banking industry. This small share may not provide true picture of Islamic banking sector. Practical implicationsTo ensure risk sharing, Islamic banking industry must consider the development of new modes of financing and innovation of more products based on Sharia’h. State Bank of Pakistan should ensure separate regulatory framework that enable Islamic banks to provide qard-ul-hassan, organize and allocate zakat. Originality/valueThis paper discusses the perception of bankers, who are actually the executors, about Shariah’s practices at Islamic banks in Pakistan. There are not many discussions on this topic that could be found, and hence this could be considered as a significant contribution by this paper to the existing literature of Islamic finance.

scholarly journals ANALISIS PENGARUH CAR, NPL, LDR, DAN BOPO TERHADAP PROFITABILITAS (ROE) PADA BANK UMUM SYARIAH (Studi Kasus Pada Bank Umum Syariah di BEI 2008 – 2012)

2016 ◽  
Vol 3 (2) ◽  
pp. 129
Author(s):  
Rida Hermina ◽  
Edy Suprianto
Keyword(s):  
Banking Sector ◽  
Financial Institution ◽  
Stock Exchange ◽  
Coefficient Of Determination ◽  
Main Function ◽  
Islamic Banks ◽  
Test Analysis ◽  
Factors Affecting ◽  
Normality Test ◽  
Analysis Technique

The banking sector is one of the important sectors in the Indonesian economy , because banking is one of the depository financial institution that espouses the main function to raise funds from the public and mobilize communities by channeling funds back to the community in the form of utilization of funds or investment activities. Advantages of banking can be influenced by many factors, including the presence and absence of lending capita, while some factors that inhibit banking profit is the presence of bad loans and poor management performance.From the background is exactly the author tries to analyze the effect of CAR, NPL, LDR, and BOPO to profitability (ROE) in Islamic banks, because the existence of Islamic banking in Indonesia is increasing. The current study was conducted quantitative kind, it is there is a causal relationship, to test the profitability ( ROE ) as a measure of thedependent variable with the independent variables are CAR, NPL, LDR, and BOPO. There are 6 samples contained Islamic banks are routinely reported on the Stock Exchange ‘s financial statements for 5 consecutive years since 2008 to 2012 it is Bank Muamalat , Bank Syariah Mandiri, Bank BNI Syariah, Bank Mega Syariah, Bank BRI Syariah and Bank Syariah Bukopin. The test with SPSS, the normality test analysis technique, the classical assumption test , multiple linear regression, partial test ( t test ), and test the coefficient of determination (adjusted R2 ). This study shows that the results of the independent factors affecting the profitability ( ROE ) is the ratio of BOPO, which is the level of performance due to the existence of his company management BOPO considered capable and efficient inincreasing bank profits. While the CAR (capital), LDR (loan), and NPL (non-performing loans) has no effect because the ratio of the numbers of the three smaller proven and covered by another larger factor .

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