ShariahSupervisory Board Report (SSBR) in Islamic banks

2018 ◽  
Vol 11 (2) ◽  
pp. 274-296 ◽  
Author(s):  
Abdul Rafay ◽  
Saqib Farid
Keyword(s):  
Impression Management ◽  
Supervisory Board ◽  
Investor Behavior ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Bank ◽  
Belief Adjustment ◽  
The Impact ◽  
First Time ◽  
Practical Implications

PurposeThe primary purpose of this study is to determine the impact of information ordering inShariahSupervisory Board Report (SSBR) on investors’ behavior and perception about the performance of Islamic bank in terms ofShariahcompliance and other conventional parameters.Design/methodology/approachThe study used the belief adjustment model to evaluate the desired effects of ordering positive and negative information (if any) in SSBR of an Islamic bank. This study extends the previous literature on information ordering as a pioneer experimental study in emerging economies.FindingsEvidence shows that investors and technical users of performance reports consider SSBR as significant for financial and investment decisions from the Islamic perspective. The results indicate that the primacy effect does exist and is statistically significant.Practical implicationsThe SSBR provides the management with an excellent opportunity to communicate and convince the investors aboutShariahcompliance features of an Islamic bank. Additionally, it also highlights the functional use of impression management to manipulate the investor’ behavior and perception.Originality/valueFor the first time, this study specifically investigates the effect of conscious information ordering in SSBR of Islamic banks on investors perceptions and behaviors.

Predicting behavioural intention toward Islamic bank: a multi-group analysis approach

2019 ◽  
Vol 10 (4) ◽  
pp. 1091-1103 ◽  
Author(s):  
Dwi Suhartanto
Keyword(s):  
Group Analysis ◽  
Partial Least Square ◽  
Least Square ◽  
Behavioural Intention ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Bank ◽  
Bank Managers ◽  
The Impact ◽  
Practical Implications

PurposeThis study aims to examine behavioural intention towards Islamic bank including three determinants: religiosity, trust and image across customers and non-customers.Design/methodology/approachThis study uses 400 samples, consisting of customers and non-customers of Islamic banks collected from Bandung, Indonesia. Partial least square was applied to evaluate the association between religiosity, trust, image and behavioural intention.FindingsThis study reveals a direct effect of religiosity on behavioural intention and indirect effect through trust and image for both customers and non-customers of Islamic banks. Although the impact of religiosity on trust, image and behavioural intention is significant in both the customer and non-customer sample, the effect of religiosity on the customer is higher compared to that of non-customer.Practical implicationsThis study provides an opportunity for Islamic bank managers to increase the behavioural intention among the customer, as well as non-customer. To increase behavioural intention amongst customers and non-customers, Islamic bank managers need to keep the bank operation compliant with theSharialaw, maintain a good image and gain trust from both customers and non-customers.Originality/valueThis study is the first attempt to evaluate the behavioural intention towards Islamic bank across customers and non-customers.

FATCA violation underlies latest US tax and securities fraud charges

2015 ◽  
Vol 16 (1) ◽  
pp. 74-76
Author(s):  
Miriam Fisher ◽  
Brian McManus
Keyword(s):  
Law Enforcement ◽  
Service Providers ◽  
Task Force ◽  
Tax Compliance ◽  
Financial Fraud ◽  
Securities Fraud ◽  
Content Type ◽  
The Impact ◽  
First Time ◽  
Practical Implications

Purpose – To explain the details and implications of a September 9, 2014 federal indictment, US v. Robert Bandfield, the first time a Foreign Account Tax Compliance Act (FATCA) violation has been charged as an “overt act” in furtherance of a tax conspiracy and securities fraud. Design/methodology/approach – Provides background, including the enactment of FATCA and the details of the indictment; describes an undercover investigation conducted by President Obama’s Financial Fraud Enforcement Task Force; and discusses the warnings this indictment sends to the global financial community. Findings – The indictment confirms the coordinated and aggressive tactics US law enforcement is now employing to investigate and prosecute offshore financial fraud. Practical implications – Banks and financial service providers need to be aware of the impact of enhanced US regulatory obligations and implement appropriate compliance measures. These institutions must also remain sensitive to risks presented by unscrupulous customers. Finally, they must be ready to manage appropriately information-gathering and investigatory inquiries originating with US authorities. Originality/value – Practical guidance from experienced tax controversy lawyers.

The consumers’ commitment and materialism on Islamic banking: the role of religiosity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Junaidi Junaidi ◽  
Ready Wicaksono ◽  
Hamka Hamka
Keyword(s):  
Structural Equation ◽  
Survey Study ◽  
Equation Modeling ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Positive Effects ◽  
Islamic Bank ◽  
Muslim People ◽  
The Impact

Purpose This paper aims to investigate whether and how religiosity (e.g. extrinsic and intrinsic) influences the mediator variables (consumers’ commitment and materialism) in the Islamic bank consumers context. It also examines how the mediators should be influence consumers’ preferences. Design/methodology/approach In total, 658 Muslim people and Islamic bank consumers were recruited for a survey study and structural equation modeling was used to test the research hypotheses. Findings The empirical results indicate that religiosity (e.g. extrinsic and intrinsic) has significant and positive effects on consumers’ commitment and materialism, whereas intrinsic religiosity has no significant effect on consumers’ commitment which subsequently influences consumers’ preference. Furthermore, mediator variables (e.g. consumers’ commitment and consumers’ materialism) have partial mediators between religiosity and consumers’ preferences. Research limitations/implications The current study was limited to Indonesian Muslim people; there is a future need to study consumers’ attitudes and engagement in religious products and services (e.g. Islamic brands). It is can help practitioners, regulators and researchers to observe the dynamic behavior to elaborate on the impact of religion and Islamic products on consumers’ preference. Practical implications The bank managers and regulators should enhance the information of products and services Islamic banks and the difference principle between conventional banks. Moreover, enlighten the consumers about the principle operation of Islamic banks from the perspective of marketing and religiosity. Originality/value This study contributes to consumers’ behavior literature and, specifically, for the decision-making process through developing and testing a model of religious determinants toward Islamic bank products, as well as offers new insights into the determinants of religion and consumers’ decision process toward Islamic banking.

Education strategy misfit, board effectiveness and Indonesian Islamic bank performance

2020 ◽  
Vol 11 (3) ◽  
pp. 929-944
Author(s):  
Rahma Wijayanti ◽  
Vera Diyanty ◽  
Sugiyarti Fatma Laela
Keyword(s):  
Financial Performance ◽  
Negative Impact ◽  
Supervisory Board ◽  
Least Square ◽  
Bank Performance ◽  
Board Effectiveness ◽  
Content Type ◽  
Islamic Bank ◽  
Education Strategy ◽  
The Impact

Purpose This study aims to provide empirical evidence on the contingency factors that affect the implementation of education strategies and the impact of education strategy misfit on the performance and effectiveness of the board’s moderating role on the misfit level and performance of Islamic banks. Design/methodology/approach This research is a quantitative study with pooled ordinary least square panel data during the years 2007-2014 from all Indonesian Islamic commercial banks. Islamic bank performances are measured by the level of profitability and sharia financial performance. Board effectiveness is analysed by measuring the effectiveness of both the board of commissioners (BoC) and the sharia supervisory board (SSB). Findings This study proves that organisational competent qualities and chief executive officer tenure are the contingency factors that affect the implementation of the education strategy. This study’s results indicate that the effectiveness of both the BoC and SSB has a positive impact on the bank’s profitability and sharia financial performance. The results also show that misfit has a negative effect on sharia financial performance and that board effectiveness is proved to reduce the negative impact of a misfit on sharia financial performance. However, there is no strong evidence that board effectiveness reduces the negative impact of a misfit on profitability. Originality/value This study emphasises the importance of enhancing the competence and innovation of organisations in the implementation of education strategy and the need for synergy and increased capabilities among board members to achieve well-established Islamic bank performance.

Can Shariah board characteristics influence risk-taking behavior of Islamic banks?

2019 ◽  
Vol 12 (4) ◽  
pp. 469-488 ◽  
Author(s):  
Amal AlAbbad ◽  
M. Kabir Hassan ◽  
Irum Saba
Keyword(s):  
Risk Taking ◽  
Supervisory Board ◽  
Annual Reports ◽  
Islamic Banks ◽  
Content Type ◽  
Asset Return ◽  
Board Characteristics ◽  
The Relationship ◽  
Risk Taking Behaviors ◽  
Practical Implications

Purpose The purpose of this paper is to study whether the characteristics of the Shariah Supervisory Board (SSB) can influence the risk-taking behaviors of Islamic banks. Design/methodology/approach The data on governance were collected from 70 Islamic banks’ annual reports across 18 countries for the period from 2000 to 2011 to investigate the relationship between SSB’s characteristics including size, busyness and foreign board and the Islamic banks’ risk activities. Findings The size of SSB and the proportion of busy board in SSB positively and significantly influence Islamic banks’ asset return and insolvency risks. Foreign members are more effective in monitoring banks’ Shariah compliance. Further analysis provides some evidence that most of the findings on the associations between the SSB structure and bank risk are derived from countries in the Gulf Cooperation Council where Shariah governance is ruled internally at the bank level. Practical implications There is a need for better Shariah board characteristics in place that complement with other governance mechanisms to well comprehend the main purpose of Islamic banks. Originality/value SSB board busyness and foreign characteristics appear to influence the risk-taking behaviors of Islamic banks.

Islamic bank rent

2014 ◽  
Vol 7 (2) ◽  
pp. 170-181 ◽  
Author(s):  
Yasushi Suzuki ◽  
S.M. Sohrab Uddin
Keyword(s):  
Empirical Evidence ◽  
Banking Sector ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Bank ◽  
Franchise Value ◽  
Conventional Banks ◽  
First Time ◽  
Rent Theory

Purpose – This paper aims to draw on the bank rent approach to evaluate the existing pattern of financing of Islamic banks and to propose a fairly new conceptualization of Islamic bank rent. Design/methodology/approach – The bank rent theory is adopted to generate the theoretical underpinnings of the issue. After that, empirical evidence from the banking sector of Bangladesh is used to support the arguments. Findings – Repeated transactions under murabaha are observed in the Islamic banking sector of Bangladesh. The asset-based financing gives the Bangladeshi Islamic banks relatively higher Islamic bank rent opportunity for protecting their “franchise value” as Shari’ah-compliant lenders, while responding to the periodic volatility in transaction costs of profit-and-loss sharing. Research limitations/implications – The bank rent approach suggests that the murabaha syndrome can be ironically justifiable. On the other hand, the current profit-and-loss sharing risk provides an idea of the difficulty in assuming the participatory financing with higher credit risk in practice. Islamic scholars and the regulatory authority need to design an appropriate financial architecture which can create different levels of rent opportunities for Islamic banks to avail the benefit from the variety of Islamic financing as declared by Islamic Shari’ah. Originality/value – This paper introduces a fairly new concept of “Islamic bank rent” to make sense of the murabaha syndrome. This approach also contributes to clarifying the unique risk and cost to be compensated with the spreads that Islamic banks are expected to earn. To draw empirical evidence, as far as it could be ascertained, the data of both Islamic banks and conventional banks with Islamic banking windows/branches are used for the first time.

Pro-Environmental Purchasing Behaviour during the economic crisis

2014 ◽  
Vol 32 (2) ◽  
pp. 160-173 ◽  
Author(s):  
Irene Tilikidou ◽  
Antonia Delistavrou
Keyword(s):  
Economic Crisis ◽  
Geographical Area ◽  
Future Research ◽  
Consumer Engagement ◽  
Content Type ◽  
Purchasing Behaviour ◽  
Social Desirability Effect ◽  
The Impact ◽  
First Time ◽  
Practical Implications

Purpose – Examination of Pro-Environmental Purchasing Behaviour (PPB) and its potential components. Investigation of the number and the size of relevant consumer segments. Determining the factors able to describe the segment of frequent pro-environmental purchasers. This paper aims to discuss these issues. Design/methodology/approach – Investigation of PPB as a total multi-item variable. Disclosure of the PPB components. Examination of the Purchase component and disclosure of its clusters. Focus on the cluster of frequent purchasers. Estimation of the demographic, attitudinal and psychographic variables able to describe and predict these consumers. Findings – Two components of PPB were found, namely Conservation (high consumer engagement in this) and Purchase (low consumer engagement in this). Inside the Purchase component of PPB three clusters were found, indicating, respectively, low, average and relatively high consumers’ involvement. Consumers in Cluster 3 (frequent pro-environmental purchasers) are fewer than in the past. They were found to be negatively influenced by environmental unconcern attitudes and Materialism, while they were positively affected by locus of control over politics and Universalism. Research limitations/implications – No demographic profile of frequent purchasers. Geographical area limited (a potential) generalisation of results. Social desirability effect. Future research with reference to evolutions in pro-environmental post-purchasing or non-purchasing behaviours during the years of economic crisis. Practical implications – Fewer consumers would buy ecological products if these were not comparable enough with the conventional products in terms of price and efficacy. Originality/value – First effort to explore the impact of the economic crisis on PPB in Greece. Encompassed new categories of ecological products. Revealed two components inside PPB (Purchase and Conservation) as well as number and size of consumer segments inside the Purchase component. Formulation of a partial profile of the frequent pro-environmental purchasers. Impact of Universalism on PPB was for the first time examined.

Ownership structure and financial performance in Islamic banks

2014 ◽  
Vol 7 (2) ◽  
pp. 146-160 ◽  
Author(s):  
Sarra Ben Slama Zouari ◽  
Neila Boulila Taktak
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Empirical Evidence ◽  
Ownership Structure ◽  
Policy Implications ◽  
Bank Performance ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Bank ◽  
The Impact

Purpose – This study aims to investigate empirically the relationship between ownership structure (concentration and mix) and Islamic bank performance, with a special attention to the identity of the block investor (foreign, family, institutional and state). Design/methodology/approach – Regression analyses are conducted to test the impact of the identity of the first shareholders and the degree of concentration on Islamic bank performance, using a panel data sample of 53 Islamic banks scattered over > 15 countries from 2005 to 2009. Findings – Results suggest that ownership is concentrated at 49 per cent, and for 41 banks from the full sample, the ultimate owner is institutional. State investors come in second place, followed by family ultimate shareholders. Using return on assets and return on equity as performance measures, empirical evidence highlights the absence of correlation between ownership concentration and Islamic bank performance. It also reveals that the combined effort of family and state investors is beneficial to bank performance. Results also indicate that banks with institutional and foreign shareholders do not perform better. Empirical findings suggest that the financial crisis impacts negatively Islamic bank performance. Research limitations/implications – The use of dummy variables to measure the nature of the largest owner represents the main limitation of this study. This is due to the lack of information, as the percentage of the largest capital held referring to owner category was available only for some banks. Practical implications – This research has given a brighter insight into corporate governance and bank performance in selected Islamic banking institutions. Findings provided useful information to bank managers, investors and policy makers. Financial performance can be improved by identifying practices associated with ownership structure. So, it will have policy implications for Islamic banks as to how to improve their performance. Finally, different types of bank ownership have had different concerns about implementing corporate governance practices among Islamic banks. Originality/value – This work is the first of its kind for Islamic banks. It extends previous research by examining whether ownership structure (concentration and mix) affects performance. It also fills the gap in the literature by providing empirical evidence on a large sample involving data from 15 countries. Finally, manual data collection on ownership structure constitutes a large part of the research for this paper.

scholarly journals ISLAMIC REGULATIONS AND ISLAMIC BANKS MARGINS: AN EMPIRICAL INVESTIGATION INTO ASEAN COUNTRIES

2021 ◽  
Vol 7 (1) ◽  
Author(s):  
Fatin Nur Hidayah Taib Khan ◽  
Nurhafiza Abdul Kader Malim ◽  
Tajul Ariffin Masron
Keyword(s):  
Supervisory Board ◽  
Regulatory Framework ◽  
Policy Implications ◽  
Islamic Banks ◽  
Islamic Bank ◽  
Bank Managers ◽  
Asean Countries ◽  
The Cost ◽  
The Impact ◽  
Effect Method

This paper examines the impact of Islamic regulations on Islamic bank margins in ASEAN countries, utilising the fixed-effect method. The sample consists of 27 Islamic banks in Malaysia, Indonesia, Singapore and Thailand covering the period 2009 to 2017. The results suggest that Islamic regulations, such as the Islamic regulatory framework and Shari’ah supervisory board, are negatively associated with Islamic bank margins. These results have important policy implications for regulators, indicating that they should impose a separate regulatory framework for Islamic banks and bank managers to increase the number of Shari’ah scholars on the Shari’ah board in lowering Islamic bank margins. Overall, the findings suggest that Islamic banks should adopt regulations that should follow Shari’ah requirements, as they help to lower the cost of financial intermediation. As for the other control variables, only the Lerner index has a positive and significant impact on ASEAN Islamic bank's margin. Therefore, appropriate policies are necessary to foster competition in Islamic banks.

Moral hazard and risk-taking incentives in Islamic banks, does franchise value matter!

2017 ◽  
Vol 10 (1) ◽  
pp. 42-59 ◽  
Author(s):  
Mehdi Mili ◽  
Sami Abid
Keyword(s):  
Moral Hazard ◽  
Risk Taking ◽  
Bank Risk ◽  
Islamic Banks ◽  
Total Risk ◽  
Empirical Examination ◽  
Content Type ◽  
Islamic Bank ◽  
Franchise Value ◽  
The Impact

Purpose This paper aims to examine risk-taking in Islamic banks by exploring moral hazard and owner/manager agency problems simultaneously. Design/methodology/approach The authors propose to estimate a model of bank risk-taking that includes both franchise value and ownership structure as explanatory factors of bank risk. Findings The results show that franchise value is an important determinant of Islamic bank risk-taking. Banks with high franchise values are less likely to take risks than banks with low franchise value. In contrast, outside block holders have, at best, limited influences on bank risk-taking. Originality/value This paper conducts the first empirical examination of the relationship between managerial risk preferences and Islamic banks ownership. The authors examine simultaneously the effect of franchise value and owner/manager problem on Islamic bank risk taking behavior. They consider separately the impact on total risk, systematic risk and bank specific risk.

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