Are Islamic financial institutions more resilient against the COVID-19 pandemic in the GCC countries?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Erhan Akkas ◽  
Hazem Al Samman
Keyword(s):  
Saudi Arabia ◽  
Phase Analysis ◽  
Financial Institutions ◽  
Random Effect Model ◽  
Second Phase ◽  
Content Type ◽  
Gcc Countries ◽  
Effect Model ◽  
Islamic Financial Institutions ◽  
The Impact

Purpose This paper aims to investigate and provide an objective appraisal of the impact of the COVID-19 outbreak on Islamic and conventional financial institutions and Islamic windows in the Gulf Cooperation Council (GCC) countries. Design/methodology/approach The panel data techniques are conducted country-wise in each financial institution type: random-effect model, fixed-effect model and Hausman test. Findings The results of the first phase analysis that extends from 1 January 2020 to 30 October 2020 show that Islamic financial institutions are less exposed to the repercussions of the COVID-19 outbreak than the conventional and Islamic window financial institutions in Bahrain, Oman, Qatar, Saudi Arabia and UAE. Moreover, the Islamic financial institutions in Saudi Arabia and Oman have not been affected by the COVID-19 outbreak. The second phase analysis for the COVID-19 outbreak that extends from 1 November 2020 to 17 March 2021 confirms the disappearance of the negative impact of COVID-19 on Islamic financial institutions in Bahrain and Oman. Practical implications The findings present that Islamic banks are not as resilient in the COVID-19 pandemic as in the 2008 financial crisis. It can be suggested that regulatory authorities, financial institutions and other key policymakers in the GCC countries should focus on implementing regulatory reforms related to human capital, innovative products, research and development to further develop individuals, societies and institutions within the framework of Islamic ontology to be more resilient in such crises. Originality/value This paper provides a different perspective from existing literature on the pandemics and financial institutions by comparing the stock prices in Islamic and conventional financial institutions and Islamic windows in GCC countries during the COVID-19 pandemic. Therefore, this paper should be considered as a contribution to filling a gap in the literature.

The impact of internal and external market orientation on the performance of non-conventional Islamic financial institutions

2018 ◽  
Vol 9 (1) ◽  
pp. 132-151 ◽  
Author(s):  
Mostaque Ahmed Zebal
Keyword(s):  
Market Orientation ◽  
Financial Institutions ◽  
Significant Relationship ◽  
Structural Equation ◽  
Discriminant Validity ◽  
Equation Modeling ◽  
External Market ◽  
Content Type ◽  
Islamic Financial Institutions ◽  
The Impact

Purpose The purpose of this study was to explore the impact of internal and external market orientations on monetary and non-monetary performances of non-conventional Islamic financial institutions. This study further aimed at proposing a conceptual framework, testing it and examining relationships among the variables. Design/methodology/approach Data for this study were collected from 132 branches of 11 non-conventional financial institutions in Bangladesh using a closed-ended questionnaire. The study considered a structural equation modeling approach for testing the proposed model. A two-step procedure was used for this purpose. First, a measurement model was analyzed through a confirmatory factor analysis; second, the structured model was evaluated to examine relationships between the constructs. Data used in this study confirmed the adequate reliability, convergent and discriminant validity. Findings The results of the study met the expectations and provided an evidence that both monetary and non-monetary business performances are functions of internal and external market orientations’ efforts. As the results are reported, all three components of internal market orientation, e.g. internal intelligence generation, dissemination and responsiveness, were found to be statistically significant and positively related to monetary and non-monetary performances, except internal intelligence responsiveness with employees’ team spirits. The study also revealed a significant relationship between all three external market orientation components, and business performance, except external intelligence responsiveness, was not found to have a significant relationship with team spirit and customer retention. The results, however, imply that the performance of non-conventional financial institutions is an integrated effort of both internal and external orientations rather than using a single approach. Originality/value Findings of this study support the theoretical arguments that non-conventional financial institutions can be successful in attaining all types of performances by initiating and adopting internal and external market-oriented activities. The study further argues the importance of the activities under each market orientation component and suggests non-conventional financial institutions to promote such an initiative if they are to be consistent in their performances.

scholarly journals CSR Disclosure, Corporate Governance and Firm Value: a study on GCC Islamic Banks

2020 ◽  
Vol 28 (4) ◽  
pp. 607-638
Author(s):  
Mohd Shukor Harun ◽  
Khaled Hussainey ◽  
Khairul Ayuni Mohd Kharuddin ◽  
Omar Al Farooque
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Financial Institutions ◽  
Firm Value ◽  
Islamic Banks ◽  
Content Type ◽  
Gcc Countries ◽  
Islamic Financial Institutions ◽  
Corporate Social

Purpose This study aims to explore the corporate social responsibility disclosure (CSRD) practices of the Islamic banks in the Gulf Cooperation Council (GCC) countries during the period 2010-2014 and examines the determinants of CSRD and its effects on firm value. Design/methodology/approach Based on the Accounting and Auditing Organization for Islamic Financial Institutions Governance Standard No. 7 guidelines and using content analysis, the paper develops a comprehensive CSRD index for GCC Islamic banks. The study applies ordinary least squares regression analysis for hypothesis testing and for finding determinants of respective dependent variables. Findings The results show a very low level of CSRD among the sample Islamic banks in GCC countries. When using corporate governance characteristics to examine the determinants of CSRD, this study provides evidence of a significant positive association between board size and CSRD practice in Islamic banks and a significant negative relationship of chief executive officer (CEO) duality with CSRD, as per expectation. For the economic consequences of CSRD, the study documents an inverse performance effect of CSRD while board size, board composition and CEO duality indicate significant positive effects on firm value. Research limitations/implications The relatively small sample size of GCC Islamic banks may limit the application of the findings to other Islamic financial institutions such as Takaful and the Islamic unit trust company. Practical implications The findings of this study initiate the global debate on the need for corporate governance reform in Islamic banks by providing insights on the role played by corporate governance mechanisms in encouraging and enhancing CSRD practices among Islamic banks. The findings also have important implications for investors, managers, regulatory bodies, policymakers and Islamic banks in the GCC countries. Social implications The results of the study do not support the idea that Islamic banks operating on Islamic principles can meet their social responsibilities through promoting corporate social responsibility (CSR) activities and by differentiating themselves from non-Islamic banks. Originality/value This is the first study to examine the determinants of CSRD in GCC Islamic banks using comprehensive CSRD and corporate governance variables and, therefore, adds value to the existing CSR literature in banking.

Digital trade facilitation and bilateral trade in selected Asian countries

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Normaz Wana Ismail
Keyword(s):  
Digital Divide ◽  
Random Effect Model ◽  
Two Dimensions ◽  
Asian Countries ◽  
Trade Facilitation ◽  
Content Type ◽  
Digital Infrastructure ◽  
Effect Model ◽  
The Impact ◽  
Trade Partners

Purpose Digital technology is gaining attention among many scholars as a way to facilitate trade. This study aims to investigate three important digital dimensions (DD), namely, digital infrastructure, digital usage and digital security on trade using selected Asian countries and 20 selected trade partners. Digital infrastructure focussed on the availability and accessibility of digital infrastructure in exporting and importing countries. The second dimension, digital usage, highlights the importance of household usage of mobile phones, broadband data and the internet. Finally, the third dimension focusses on digital security as many online transactions occur across the globe. Design/methodology/approach The study uses the gravity model to investigate the impact of DD as tools to facilitate trade in selected Asian countries with selected trading partners between 2003 and 2017. The Hausman test is used to determine whether to use the random effect model or fixed effect model. However, for robustness, the Hausman and Taylor estimation is used to allow the time-invariant model to be included and at the same time to remove correlations between the error terms. Findings The result of this study confirmed that having digital infrastructure is not sufficient for trade facilitation, but it must be supported with an intensity of use by businesses and consumers and be accompanied by strong internet security for trade. The study also revealed that a narrowing digital divide in terms internet users and security will be a benefit to both trade partners in a transaction through better and efficient trade facilitation. Originality/value The study contributes to the literature in three ways. First, the classification of DD is used to identify which dimensions need to be addressed for policymakers. Most studies focussed on the first two dimensions without including security dimensions. Second, the authors estimate digital trade facilitation variables for both exporters and importers to ensure unbiased results between two trade partners. Finally, this study introduces new variables in the analysis of the digital user gap and the digital security gap as indicators for the digital divide.

Shariah board, web-based information and branding of Islamic financial institutions

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ishfaq Ahmed ◽  
Ahmad Usman ◽  
Waqas Farooq ◽  
Muhammad Usman
Keyword(s):  
Financial Institutions ◽  
Internet Banking ◽  
Qualitative Inquiry ◽  
Board Members ◽  
Islamic Banks ◽  
Structured Interviews ◽  
Web Based ◽  
Content Type ◽  
Islamic Financial Institutions ◽  
The Impact

Purpose With the advent of technology and internet banking, the role and value of bank’s websites have increased. Additionally, the Islamic banking boom has also increased the role of Shariah-based banking in the market. But neither web-based information nor Shariah board members have been investigated for their possible effects on the branding of Islamic banks. Against this backdrop, this study aims to explore web-based information and Shariah board as a source of branding of Islamic financial institutions (IFIs). Design/methodology/approach An interpretivism-based thematic inquiry is carried out through semi-structured interviews of 22 customers of Islamic banks. Findings The findings of the study highlighted the fact that customers’ perceived web-based information is in line with the Shariah objectives but showed low level of trust on that information. They assumed that the practices are not consistent with this information. Moreover, the Shariah board members were considered as brand ambassadors, and customers valued board members more than the Shariah board and Islamic bank itself. Findings further highlight the more knowledge customers have about the Shariah board members (experience, qualification, achievements, etc.) the greater is the impact on the branding of the IFIs. Originality/value This study offers a novel perspective by considering the value of web-based information and Shariah board on branding of Islamic banks. As there is no such study available in literature, up to the best of researchers' knowledge, the qualitative inquiry may suffice the study objectives and research questions.

scholarly journals The performance of Shari’a supervisory boards within Islamic financial institutions in the Gulf cooperation council countries

2010 ◽  
Vol 8 (1) ◽  
pp. 247-266 ◽  
Author(s):  
Samy Nathan Garas
Keyword(s):  
Financial Institutions ◽  
Boards Of Directors ◽  
Negative Impact ◽  
Positive Impact ◽  
Gulf Cooperation Council ◽  
Internal Variables ◽  
Gcc Countries ◽  
Islamic Financial Institutions ◽  
Supervisory Boards ◽  
The Impact

This study evaluates the role and performance of Shari’a Supervisory Boards (SSB) within Islamic Financial Institutions (IFIs) of the Gulf Cooperation Council (GCC) countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates). Although the SSB has a significant impact on an IFI’s performance, there has been little empirical research on the SSB performance. This study is unique in measuring empirically the relation between five variables and SSB performance. Data has been collected through a questionnaire from 76 Shari’a Supervisory Boards, 73 Boards of Directors, and 59 shareholders of IFIs in the GCC countries during 2009. The researchers found three variables that have a positive impact on the performance of SSBs: the number of SSB meetings, the qualifications of SSB members, and the evaluation of each member. Furthermore, the work of the Shari’a control department was found to have a negative impact on SSB performance. There was no statistically relationship between SSB performance and SSB position within the IFI organization structure. This study fills a literature gap in corporate governance by evaluating the impact of a religious board upon the performance of financial institutions. The study provides a theoretical framework for measuring SSB performance using internal variables. This study offers insights to GCC regulators, central banks, and other IFI stakeholders concerning SSB performance. In addition, it provides guidance to SSB members in improving their performance and strengthening their relations with other governance organs.

scholarly journals The impact of Arab Revolution on the security of the Arabian Gulf

2019 ◽  
Vol 5 (2) ◽  
pp. 136-148
Author(s):  
Saleh Zaid Al-Otaibi
Keyword(s):  
Saudi Arabia ◽  
Civil War ◽  
Arabian Gulf ◽  
Regional Security ◽  
Sultanate Of Oman ◽  
Content Type ◽  
Gcc Countries ◽  
Offensive Realism ◽  
Arab Gulf ◽  
The Impact

Purpose This study aims to analyze the impact of Arab Revolution on the Arabian Gulf security by applying on Yemeni Revolution. This can be achieved by analyzing the threat of Arab Spring Revolutions to the national security of the Gulf Cooperation Council (GCC) countries after the breakout of demonstrations and protests in some of the member states. In addition to its analysis of threat of the Regional Security of the Gulf as a result of Yemeni Revolution and Civil War and Iranian intervention to support Houthis within light of regional anarchy and security competition according to the Neorealism and how the GCC Countries face such threats. Design/methodology/approach The study depended on the historical methodology to track the developments of some events related to the Gulf Security and crisis in Yemen. Moreover, it used the analytical approach to analyze the impact of Arab Revolutions and Yemeni Civil War on the Arab Gulf Security. In addition, it depended on the realistic approach to explain the security state at the national and regional level of the Arab Gulf countries within light of regional anarchy, security competition and Iranian support to Houthis “Non-State Actors” (Kenneth Waltz), as well as the offensive realism (John Mearsheimer). Findings The Arab Revolutions had an effect on the national security of GCC countries according to the Neorealism due to the breakout of demonstrations and protests in Saudi Arabia, Kuwait and Sultanate of Oman which reached to the degree of threatening the existence of the state as in Bahrain. The Gulf Regional Security is influenced by Revolution and Civil War in Yemen as a result of that Iranian support to Houthis within light of security competition between Iran and Saudi Arabia, leading to the threat of the Arabian Gulf Security as Yemen is the southern gate to the GCC Countries and having joint borders with Saudi Arabia and Sultanate of Oman. Moreover, the GCC countries dealt with that threat individually, such as, performing internal reforms, or collectively through using military force, such as Bahrain and Yemen (Offensive Realism). Originality/value This study is an introduction to explain the Arab Spring Revolutions, conflict in Yemen and its threat to the Arab Gulf Security according to the Neorealism based on that the GCC countries sought to keep its existence and sovereignty in confrontation to the demonstrations and internal protests and to keep the regional security in confrontation to the threats of neighboring countries such as the Civil War in Yemen and the Iranian Support to Houthis in light of the regional anarchy.

Shariah, presentation and content dimensions of Web 2.0 applications and the firm value of Islamic financial institutions in the GCC countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdalmuttaleb Musleh Alsartawi ◽  
Sameh Reyad ◽  
Araby Madbouly
Keyword(s):  
Web 2.0 ◽  
Financial Institutions ◽  
Firm Value ◽  
Positive Impact ◽  
Three Dimensions ◽  
Annual Reports ◽  
Stock Exchanges ◽  
Content Type ◽  
Gcc Countries ◽  
Islamic Financial Institutions

Purpose This study aims to examine the relationship between the three dimensions of Web 2.0 disclosure (Shariah, content and presentation) and the firm value of listed Islamic financial institutions (IFIs) in the Gulf Cooperation Council (GCC) stock exchanges. Design/methodology/approach A checklist of 118 items was used to measure the level of Web 2.0 disclosure for the IFIs that are listed on the GCC stock exchanges. Data were gathered from the websites of the IFI samples, where researchers looked for annual reports, RSS, widgets, web-casting and the layout and design of the websites. Findings Based on the results, the level of the Shariah dimension by GCC IFIs was 74.93%, the level of the content dimension was 76.33%, the level of the presentation dimension was 78.03% and the level of the overall Web 2.0 disclosure was 75.73%, and a positive and significant relationship between the content dimension and Tobin’s Q. Practical implications In addition to other reforms, this study recommends IFIs to improve their regulations, risk management and standardization. Originality/value This study offers a new contribution as it adds a new perspective to the online financial disclosure literature, which is the Shariah dimension. Furthermore, this study provides empirical evidence for interested parties in the Islamic banking industry such as users and regulators in the GCC countries concerning the importance and usage of Web 2.0 applications for disclosure and its positive impact on adding a premium to IFIs.

Do disclosure and transparency affect bank’s financial performance?

2019 ◽  
Vol 19 (6) ◽  
pp. 1344-1361
Author(s):  
Isaiah Oino
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Financial Performance ◽  
Financial Institutions ◽  
Content Type ◽  
Loan Portfolios ◽  
Cent Level ◽  
Transparency And Disclosure ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of transparency and disclosure on the financial performance of financial institutions. The emphasis is on assessing transparency and disclosure; auditing and compliance; risk management as indicators of corporate governance; and understanding how these parameters affect bank profitability, liquidity and the quality of loan portfolios. Design/methodology/approach A sample of 20 financial institutions was selected, with ten respondents from each, yielding a total sample size of 200. Principal component analysis (PCA), with inbuilt ability to check for composite reliability, was used to obtain composite indices for the corporate governance indicators as well as the indicators of financial performance, based on a set of questions framed for each institution. Findings The analysis demonstrates that greater disclosure and transparency, improved auditing and compliance and better risk management positively affect the financial performance of financial institutions. In terms of significance, the results show that as the level of disclosure and transparency in managerial affairs increases, the performance of financial institutions – as measured in terms of the quality of loan portfolios, liquidity and profitability – increases by 0.3046, with the effect being statistically significant at the 1 per cent level. Furthermore, as the level of auditing and the degree of compliance with banking regulations increases, the financial performance of banks improves by 0.3309. Research limitations/implications This paper did not consider time series because corporate governance does not change periodically. Practical implications This paper demonstrates the importance of disclosure and transparency in managerial affairs because the performance of financial institutions, as measured in terms of loan portfolios, liquidity and profitability, increases by 0.4 when transparency and disclosure improve, with this effect being statistically significant at the 1 per cent level. Originality/value The use of primary data in assessing the impact of corporate governance on financial performance, instead of secondary data, is the primary novelty of this study. Moreover, PCA is used to assess the weight of the various parameters.

Fair value and banking contagion

2016 ◽  
Vol 7 (3) ◽  
pp. 215-236 ◽  
Author(s):  
Leila Gharbi ◽  
Halioui Khamoussi
Keyword(s):  
Data Model ◽  
Banking Sector ◽  
Fair Value ◽  
Islamic Banks ◽  
Fair Value Accounting ◽  
Content Type ◽  
Gcc Countries ◽  
Conventional Banks ◽  
Value Changes ◽  
The Impact

Purpose This paper aims to explore empirically the impact of fair value accounting on banking contagion in a comparative context between Islamic banks and conventional banks. Design/methodology/approach The analysis of the impact of fair value changes on banking contagion is carried out through a panel data model. This study covers 20 Islamic banks and 40 conventional banks operating in the Gulf Cooperation Council (GCC) countries during nine years from 2003 to 2011. Findings Empirical evidence shows that there is a significant change in dynamic volatility in GCC banking sector because of financial crisis 2008. However, results fail to confirm the hypothesis that fair value accounting is significantly associated with an increase of banking contagion for both Islamic and conventional banks operating in GCC countries. Originality/value The outcome of this study provides some insights for academicians, accountants as well as regulators in terms of enhancing the effectiveness of accounting practices.

Is internal and external mechanism of governance enriching the performance of the banking sector of Pakistan?

2017 ◽  
Vol 17 (4) ◽  
pp. 629-642 ◽  
Author(s):  
Sundas Sohail ◽  
Farhat Rasul ◽  
Ummara Fatima
Keyword(s):  
Corporate Governance ◽  
Banking Sector ◽  
Good Governance ◽  
Random Effect ◽  
Random Effect Model ◽  
General Meeting ◽  
Governance Structure ◽  
Board Structure ◽  
Content Type ◽  
The Impact

Purpose The purpose of this study is to explore how governance mechanisms (internal and external) enhance the performance of the return on asset (ROA), return on equity (ROE), earning per share (EPS) and dividend payout ratios (DP) of the banks of Pakistan. The study incorporates not only the internal factors of governance (board size, out-ratio, annual general meeting, managerial ownership, institutional ownership, block holder stock ownership and financial transparency) but also the external factors (legal infrastructure and protection of minority shareholders, and the market for corporate control). Design/methodology/approach The sample size of the study consists of 30 banks (public, private and specialized) listed at the Pakistan Stock Exchange (PSE) for the period 2008-2014. The panel data techniques (fixed or random effect model) have been used for the empirical analysis after verification by Hausman (1978) test. Findings The results revealed that not only do the internal mechanisms of governance enhance the performance of the banking sector of Pakistan but external governance also plays a substantial role in enriching the performance. The findings conclude that for a good governance structure, both internal and external mechanisms are equally important, to accelerate the performance of the banking sector. Research limitations/implications Internal and external mechanisms of corporate governance can also be checked by adding some more variables (ownership i.e. foreign, female and family as internal and auditor as external), but they are not added in this work due to data unavailability. Practical implications The study contributes to the literature and could be useful for the policy makers who need to force banks to mandate codes of governance through which they can create an efficient board structure and augment the performance. The investments from different forms of ownership can be accelerated if they follow the codes properly. Social implications The study facilitates the bankers in incorporating sound codes of corporate governance to enhance the performance of the banks. Originality/value This work is unique as no one has explored the impact of external mechanism of governance on the performance of the banking sector of Pakistan.

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