Exploring green banking performance of Islamic banks vs conventional banks in Bangladesh based on Maqasid Shariah framework

2019 ◽  
Vol 11 (3) ◽  
pp. 729-744 ◽  
Author(s):  
Taslima Julia ◽  
Salina Kassim
Keyword(s):  
Economic Growth ◽  
Secondary Data ◽  
World Health ◽  
Annual Reports ◽  
Islamic Banks ◽  
Content Type ◽  
Banking Policy ◽  
The World ◽  
Conventional Banks ◽  
Sustainable Economic Growth

Purpose Environmental degradation has been identified as one of the major impediments for development in Bangladesh. The World Health Organization has ranked Bangladesh fourth among the most polluted countries in the world. Faced with this challenge, the Government of Bangladesh introduced the Green Financing Policy and encouraged banks to participate in offering green financing as part of the efforts to promote environment-friendly economic activities for sustainable economic development. This study aims to examine the financial performance of selected commercial banks that offered green financing in Bangladesh in the period from 2012 to 2014. Design/methodology/approach In achieving this objective, the paper has divided the various sections of green banking policy under Maqasid Shariah framework of Imam Al-Ghazali, which is preserving faith, life, intellect, posterity and wealth. After that, green performance is compared between five conventional banks and five Islamic banks, according to the secondary data gathered from the annual reports and sustainability reports, as well as verified based on interviews. Finally, based on quantitative and qualitative thematic analysis approach, it is identified which banks meet most of the Shariah objectives along with performing sustainably. Findings The study finds that none of the banks fully meet the green/sustainable policy requirements; however, the Islamic banks are ahead in preserving faith, intellect and wealth circulation. Research limitations/implications This research is mostly based on secondary data; banks’ non-disclosure of green data was an impediment to run in-depth and fair comparisons. However, to check the reliability and validity of secondary data, two heads of sustainable banking department from conventional bank and two from Islamic bank have been interviewed. Practical implications Based on the findings, several recommendations are made on ways to expedite green financing, which can ultimately enhance contribution of Islamic banks toward the sustainable economic growth of the country while fulfilling Maqasid Shariah. Social implications Because the green banking policy aim is very much in line with Maqasid Shariah which is the aim of Islamic banks, Islamic banks can presumably contribute more to the sustainable economic growth of the country by aligning their entire operations with green policies. Originality/value To the best of the authors’ knowledge, this study is perhaps the earliest initiative to compare Islamic and conventional banks’ green performances in Bangladesh.

Incentives for conventional banks for the conversion into Islamic banks: evidence from Bangladesh

2020 ◽  
Vol 11 (2) ◽  
pp. 273-287
Author(s):  
Yasushi Suzuki ◽  
S.M. Sohrab Uddin ◽  
A.K.M. Ramizul Islam
Keyword(s):  
Secondary Data ◽  
Current Mode ◽  
Regulatory Framework ◽  
Annual Reports ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Reserve Requirement ◽  
Content Type ◽  
Islamic Countries ◽  
Conventional Banks

Purpose The skyrocketing rise of Islamic banking is noticeable in not only Islamic countries but also non-Islamic countries during the past few decades. Many conventional banks have started Islamic banking generally by maintaining separate branches/windows and occasionally by pursuing a complete conversion strategy. Following the global trend, two of the full-fledged Islamic banks adopted a conversion strategy consecutively in 2004 and 2008 in Bangladesh. The number of the conversion case is still limited. At this backdrop, this study aims to identify the incentives in the conversion strategy into Islamic banks. Design/methodology/approach Using the secondary data from the annual reports of the sample banks for both pre- and post-conversion periods, this study adopts the “case study” approach upon the comparison with the performance of conventional banks and other types of Islamic banks. Findings It is apparent that higher reserve requirement for conventional banks provides the incentive for the conversion into Islamic banks given with less reserve requirement. Under the protective regulatory framework, these converted Islamic banks may have enjoyed the rent for learning during the initial phase after the conversion, even though majority of the funds of these banks are collected from high-cost mudaraba time deposits. Basically, the credit strategy of the converted banks has been quite conservative, resulting in the concentrated portfolio selection on the asset-backed financing. However, the recent engagement of these banks in the Shari'ah-based participatory financing makes their performance a bit vulnerable. Research limitations/implications It is becoming difficult to justify a protective regulatory framework for incubating infant Islamic banks if the rent for learning given under the framework would not encourage them to challenge and absorb the risk and uncertainty associated with Shari’ah-based participatory financing. The current mode of profit–loss sharing (PLS) makes it difficult for the regulators to create an appropriate incentive for Islamic banks to challenge the equity-based financing. Originality/value The number of the conversion case is limited. Less has been done to investigate the reasons why the conventional banks opt for the conversion into Islamic banks, particularly in Bangladesh.

scholarly journals PENGARUH PEMBIAYAAN PERBANKAN BANK UMUM SYARIAH TERHADAP PDRB PROVINSI DI INDONESIA TAHUN 2010-2019

2021 ◽  
Vol 8 (1) ◽  
pp. 8
Author(s):  
Rifka Putri Ramadhanty ◽  
Ilmiawan Auwalin
Keyword(s):  
Economic Growth ◽  
Secondary Data ◽  
Regression Method ◽  
Panel Regression ◽  
Islamic Banks ◽  
Production Activity ◽  
Consumption Activity ◽  
Conventional Banks ◽  
Regional Product ◽  
Positive Effect

ABSTRAKPenelitian ini bertujuan untuk mengetahui pengaruh pembiayaan perbankan umum syariah terhadap PDRB provinsi di Indonesia pada tahun 2010-2019. Penelitian ini menggunakan pendekatan kuantitatif berjenis eksplanatori dan teknik yang digunakan adalah analisis regresi berganda dengan menggunakan regresi data panel. Data pada penelitian ini adalah berjenis data sekunder yang didapatkan melalui Badan Pusat Statistik Indonesia (BPS), Bank Indonesia (BI), dan Otoritas Jasa Keuangan (OJK). Data dalam penelitian mencakup data tingkat provinsi pada 33 provinsi di Indonesia. Hasil penelitian secara simultan menunjukkan bahwa pembiayaan bank umum syariah, kredit bank umum konvensional, inflasi, dan jumlah populasi secara statistik berpengaruh secara signifikan terhadap PDRB provinsi di Indonesia pada tahun 2010-2019. Sedangkan secara parsial, pembiayaan bank umum syariah secara statistik berpengaruh negatif namun tidak signifikan terhadap PDRB hal ini dikarenakan nominal pembiayaan yang dilakukan bank syariah masih kecil dan cenderung bersifat untuk kegiatan konsumsi sehingga kurang memberikan pengaruh yang optimal pada PDRB. Dapat disimpulkan peran dari bank syariah masih belum optimal pada PDRB. Variabel kredit bank umum kovensional secara statistik berpengaruh positif signifikan terhadap PDRB. Sedangkan variabel inflasi secara statistik berpengaruh negatif namun tidak signifikan terhadap PDRB dan luas wilayah secara statistik beperngaruh positif namun tidak signifikan. Kata Kunci: Pembiayaan bank umum syariah, Pertumbuhan Ekonomi, PDRB. ABSTRACTThis study aims to determine the effect of finance of finance of islamic banks and gross domestic regional product in Indonesia 2010-2019. This study used quantitative approach which is explanatory research with data panel regression method. Data used in this study as secondary data which collacted from Badan Pusat Statistik (BPS), Bank Indonesia (BI), and Otoritas Jasa Keuangan (OJK). This study uses data from 33 provinces. The result from this study are simultaneously, finance of islamic banks, credit of conventional banks, inflation, and population have a significant effect on GDRP. Partially, finance of islamic banks has a negetive effect on GDRB but it’s not sigficantly. It because less financing from Islamic bank is distributted for production activity than consumption activity. Other hand, less nominal of financing from Islamic than conventional bank. The credit of conventional banks has a positif and significant effect on GDRP. The inflation has a negative but not significant effect on GDRP, while population has positive effect but it’s not significant on GDRP. Keywords: Finance of Islamic Banks, Economic Growth, GDRP.

scholarly journals Harmonizing and constructing an integrated maqāṣid al-Sharīʿah index for measuring the performance of Islamic banks

2019 ◽  
Vol 11 (2) ◽  
pp. 282-302 ◽  
Author(s):  
Fahmi Ali Hudaefi ◽  
Kamaruzaman Noordin
Keyword(s):  
Islamic Law ◽  
Performance Measure ◽  
Annual Reports ◽  
Islamic Banks ◽  
Content Type ◽  
Mode Method ◽  
Conventional Banks ◽  
Fresh Insight ◽  
Practical Implications ◽  
Insight Into

Purpose This paper aims to develop a performance measure for Islamic banks (IBs) by harmonizing related studies. Furthermore, this work uses the developed yardstick to analyze the performance of a sample of 11 IBs from across different countries. Design/methodology/approach This paper uses the mix-mode method. The qualitative approach is engaged first to construct the IBs performance yardstick. Following this, the quantitative approach is applied through the use of the performance yardstick to measure the sample’s performance. Findings This study develops a maqāṣid-based performance yardstick adapted from previous works. The developed model in this study is called an integrated maqāṣid al-Sharīʿah--based performance measure (IMSPM). By using this performance measure, the present paper finds that the sample performed highest on the objective of nafs (self) over the three-year period. In addition, this study identifies the information which best indicates the sample’s performance during the analysis. Research limitations/implications This paper uses the sample’s annual reports. The analysis is thus limited to informational disclosure. Practical implications Islamic banking and financial institutions may use the IMSPM to communicate a measurable report on their promotion of the maqāṣid al-Sharīʿah (objectives of Islamic law). Social implications The evidence from 11 IBs is indicative of their efforts to realize maqāṣid al-Sharīʿah in the banking industry. This point may best challenge the practice of stigmatizing IBs for not being in line with the Sharīʿah (Islamic law) or of imitating conventional banks. Originality/value The novelty of this study lies in two points. First, this study harmonizes previous works to integrate financial and religious measures in a single yardstick. Second, by using the developed standard, this study offers a fresh insight into the global IBs’ performance, represented by 11 IBs worldwide.

scholarly journals Determining the Impact of Intangible Assets on Intellectual Capital and Competitive Advantage in Banking

2020 ◽  
Vol 9 (1) ◽  
pp. 105-144
Author(s):  
Ramla Sadiq ◽  
Safia Nosheen
Keyword(s):  
Competitive Advantage ◽  
Intellectual Capital ◽  
Banking Sector ◽  
Intangible Assets ◽  
Robustness Analysis ◽  
Secondary Data ◽  
Annual Reports ◽  
Islamic Banks ◽  
Conventional Banks ◽  
The Impact

This paper carries out the empirical tests in order to validate the hypothesis that resource intangibility, in the form of intangible assets, contributes towards the intellectual capital, and the competitive advantage in the banking sector. Furthermore, it also determines whether the intangibility of a banks' resources contribute towards the sustainability of the competitive advantage. Finally, it determines which aspects of the banking performance, the intangible assets actually contribute to. In this context, this research utilizes the secondary data, which is extracted from the annual reports of commercial banks that are listed on the primary stock exchanges of Pakistan. The sample that is taken into consideration is divided into two main categories in order to carry out the analysis. These categories include the classification into the Islamic banks and the conventional banks. The Islamic window operations have not been included in the analysis,as the details required for the variable calculations are not consistently available. Moreover, this bifurcation in the sample is also a unique aspect of this research,as the prior literature primarily focuses on the determinants of the intellectual capital in the banking sector. However though, there is no direct study regarding the differences in the resource intangibility in the Islamic banks and the conventional banks, and their subsequent impact on the intellectual capital and competitive advantage. The time frame for the analysis is taken from the year FY2008-FY2018 .Also,the findings of this study lead to striking implications for both the Islamic banking theory and the managerial practices in the banking sector of Pakistan. The resource intangibility is to be managed very differently across both categories. Where the intangible assets represent a significant contribution to both the intellectual capital and the competitive advantage for Islamic banks, the yal sore present a negligible impact on the intellectual capital,and the competitive advantage for conventional banks. This holds true for the conventional performance measures that are taken for the banking sector as well, as shown in the robustness analysis.

scholarly journals The effect of audit committee quality on the conventional and Islamic banks' financial performance between subprime and Corona crises

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Achraf Haddad ◽  
Anis El Ammari ◽  
Abdelfattah Bouri
Keyword(s):  
Financial Performance ◽  
Audit Committee ◽  
Evaluation Method ◽  
Positive Impact ◽  
Annual Reports ◽  
Subprime Crisis ◽  
Islamic Banks ◽  
Content Type ◽  
Conventional Banks ◽  
Conventional And Islamic Banks

PurposeThis study aims to test empirically the differences between Islamic and conventional banks in terms of impacts of the audit committees' quality on financial performance between Subprime and Corona crises.Design/methodology/approachThe variables are articulated in four hypotheses tested by the GLS analysis. The data were collected via DATASTREAM and from banks' annual reports. The collected data covered four continents: America, Asia, Africa and Europe. The financial performance measures and audit committee's determinants of the conventional and Islamic banks concerned 112 banks of each type after the Subprime crisis and before the Corona crisis (2010–2019).FindingsResults showed that the audit committee reduced the profitability of two bank types. Moreover, it harmed the conventional banks' efficiency, but reported an unclear effect within Islamic banks. Even so, the authors noticed that the audit committee had a positive impact for the conventional banks' liquidity, while the same effect was apparently ambiguous on the Islamic banks' liquidity. For solvency, the audit committee positively influenced conventional banks, while it affected that of Islamic banks.Research limitations/implicationsEmpirically, the authors’ results can serve as a reference for decision-makers allowing to clarify the data on the financial competitiveness of two bank types to facilitate the planning of strategic performance programs based on the audit committee quality. Theoretically, researchers found that the differences between the results are due to the audit committee quality of each bank type or to the financial performance evaluation method. However, there are further factors that are related to the research peculiarities, the methodology, the data and the interpretation.Originality/valueBased on the comparative literature review between conventional and Islamic banks, this study is the first conditional and comparative research between the audit committee quality and the financial performance of conventional and Islamic banks in a specific period (after Subprime and before Corona crises).

Nexus between risk sharing vs non-risk sharing financing and economic growth of Bangladesh

2018 ◽  
Vol 44 (6) ◽  
pp. 739-758 ◽  
Author(s):  
Mohammad Ashraful Ferdous Chowdhury ◽  
Chowdhury Shahed Akbar ◽  
Mohammad Shoyeb
Keyword(s):  
Economic Growth ◽  
Risk Sharing ◽  
Design Methodology ◽  
Annual Report ◽  
Annual Reports ◽  
Islamic Banks ◽  
Policy Makers ◽  
Content Type ◽  
Risk Transfer ◽  
Ardl Approach

Purpose The purpose of this paper is to examine the linkage between Islamic financing principles and economic growth (EG) by taking into consideration two Islamic Financing Principles: Risk Sharing and non-risk sharing separately. Design/methodology/approach The data for this study are obtained from the annual reports of all Islamic banks from Bangladesh using Bank scope database and annual report for the period 1984-2014. The research uses an Autoregressive Distributive Lags (ARDL) approach. For robustness, this study also employs a continuous wavelet transform approach. Findings The empirical findings reveal that the risk sharing instruments are positively related to the EG of the country. On the other hand, non-risk sharing instruments are negatively related to the EG of the country. Research limitations/implications The dominant use of non-risk sharing-based financing has undermined the greater possibility of Islamic banking to contribute more to the EG of the country. Banks and other financial institutions need to pay greater attention to systemic risk created by risk transfer and apply risk sharing methods of financing more vigorously to achieve greater equity, efficient allocation of resources, stability and growth of the financial system and welfare of the society as a whole. Originality/value This study has advanced the knowledge by examining the issue of Islamic financing principles and EG. This is probably one of the first attempts to find the linkage between Islamic financing principles and EG by taking into consideration two portfolios: risk sharing and non-risk sharing separately and provide significant insights for policy makers, market players and academicians.

Corporate governance and IFSB standard-4: evidence from Islamic banks in Bangladesh

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Md. Harun Ur Rashid ◽  
Ruma Khanam ◽  
Md. Hafij Ullah
Keyword(s):  
Corporate Governance ◽  
Content Analysis ◽  
Financial Services ◽  
Secondary Data ◽  
Positive Influence ◽  
Least Square ◽  
Annual Reports ◽  
Islamic Banks ◽  
Content Type ◽  
The Impact

Purpose This paper aims to examine the compliance status of Islamic banks in Bangladesh with Shari’ah-based accounting standards named Islamic Financial Services Board (IFSB) standard-4 and its association with corporate governance. Design/methodology/approach The six years of secondary data, including the annual reports of 2013–2018, were collected from the websites of all the seven listed Islamic banks, i.e. 100% of the population available during the period of study. The study used a content analysis approach for systematically categorizing and analysing the contents disclosed in the annual report. A total compliance score based on 133 reporting items of IFSB standard-4 were considered for content analysis. Furthermore, this study applied the ordinary least square to investigate the impact of corporate governance on IFSB standard-4. Findings This study found that the level of compliance with the IFSB standard by the Islamic banks in Bangladesh is poor, as the overall compliance status is 44.83%. Further, this study observed a significant and positive influence of the Shari’ah supervisory committee, the board size, accounting experts on the board, foreign ownership and institutional ownership on the level of compliance with IFSB standard-4. On the other hand, this study found a negative effect of directors’ ownership on the level of compliance with IFSB standard-4. Practical implications This study provides the management of Islamic banks an insight into developing their governance characteristics to comply with Islamic accounting and reporting standards. Moreover, this study expects to facilitate the management of Islamic banks in designing their accounting and reporting outlines to enhance the level of compliance with the IFSB standards. Originality/value This pioneering study on IFSB standards opens an avenue to the researchers exploring the accounting and reporting status of Islamic banks considering the requirements of the IFSB standards.

scholarly journals Shariah compliance of green banking policy in Bangladesh

Humanomics ◽  
2016 ◽  
Vol 32 (4) ◽  
pp. 390-404 ◽  
Author(s):  
Taslima Julia ◽  
Maya Puspa Rahman ◽  
Salina Kassim
Keyword(s):  
Environmental Sustainability ◽  
Conservation Of Resources ◽  
Islamic Banks ◽  
Content Type ◽  
Green Policy ◽  
Banking Policy ◽  
Holy Quran ◽  
The Holy Quran ◽  
Transparency And Disclosure ◽  
Sustainable Economic Growth

Purpose This paper aims to critically evaluate whether the policies of green banking set by Bangladesh Bank are Shariah compliant; according to the main sources of the Shariah – Quran and Sunnah. Design/methodology/approach Green policy and guidelines have been divided into different categories such as environment protection, conservation of resources, risk management, educating people about green financing, transparency and disclosure and investing in green projects according to the common measures as stated in three different phases of the policy and guidelines. Subsequently, these major aspects of the green policy and guidelines are linked to the main references of the Shariah, i.e. the holy Quran and Sunnah of Prophet [peace be upon him (pbuh)]. Findings Various verses of the holy Quran and teachings of Prophet (pbuh) related to the major categories of Green policy and guidelines are being presented to show the compliance with Shariah. Practical implications The Green policy and guidelines are very much in-line with Shariah. Though all types of banks in Bangladesh are bound to implement the green banking policy, however, Shariah compliance of green banking policy will be encouraging for all Islamic Banks of Bangladesh for their further and profounder involvement in it. Social implications As green policies are found to be Shariah complaint, the Islamic banks are expected to contribute more to the sustainable economic growth of the country by successfully implementing the green financing policies compare to their conventional counterpart. Originality/value Verses of holy Quran and authentic Hadiths related to environmental sustainability concept show that Islam is a green religion as well as green banking policy is Islamic.

Assessing social sustainability in the gig economy

2021 ◽  
Author(s):  
Muralidharan Loganathan
Keyword(s):  
Economic Growth ◽  
Social Protection ◽  
Social Sustainability ◽  
Decent Work ◽  
Sustainable Development Goal ◽  
Development Goal ◽  
Country Level ◽  
Gig Economy ◽  
The World ◽  
Sustainable Economic Growth

Sustainable Development Goal 8 to “Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all” necessitates country level measures across the world. We take forward a comparative analysis of India’s SDG 8 indicator list with both the UN and ILO measurements. We note inadequate measurements on social-protection and rights for non-standard forms of employment including gig work, that are intermediated by ICT platforms. From our analysis we identify some levers to broaden the current indicator measurements to include these non-standard workers as well, to improve social sustainability.

Variations in economic growth across states in Malaysia: an exploratory analysis

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yusniliyana Yusof ◽  
Kaliappa Kalirajan
Keyword(s):  
Economic Growth ◽  
Socioeconomic Development ◽  
Secondary Data ◽  
State Level ◽  
Bootstrap Sampling ◽  
Content Type ◽  
Estimation Techniques ◽  
Development Index ◽  
Three Stage Least Squares ◽  
Development Gap

PurposeThe study contributes to the aim of regional development policy in reducing regional disparities, by examining the spatial balance in socioeconomic development across the states of Malaysia based on composite development index (CDI). Besides, the study has attempted to understand the issues in the development gaps across Malaysian states by evaluating the factors that explain the variation in economic growthDesign/methodology/approachThis study uses three-stage least squares (3SLS) and bootstrap sampling and estimation techniques to examine the factors that explain the variations in the growth of development across the states in Malaysia. The analysis involves 13 states in Malaysia (Johor, Melaka, Negeri Sembilan, Pulau Pinang, Perak, Perlis, Selangor, Kedah, Kelantan, Pahang, Terengganu, Sabah and Sarawak) from 2005 to 2015.FindingsThe pattern in the spatial socioeconomic imbalance demonstrates a decreasing trend. However, the development index reveals that the performance of less developed states remained behind that of the developed states. The significant factors in explaining the variation in growth across the Malaysian states are relating to agriculture, manufacturing, human capital, population growth, Chinese ethnicity, institutional factors and natural resources.Research limitations/implicationsThe authors focused on Malaysian states over the period between 2005 and 2015. The authors encountered some limitations in obtaining relevant data such as international factors and technological change that might also explain the variation in economic growth as the data on these variables are not reported at the state level. Moreover, the data on GSDP by sector was only available from the year 2005. Second, the study is based on secondary data. Future studies might examine the factors that contribute to the development gap across Malaysian states through interviews or questionnaires and compare the findings with the existing results. Despite its limitations, this study contributes to the existing literature that emphasizes on spatial balance of socioeconomic in a developing country, focusing on Malaysian states.Practical implicationsThese findings provide guidance for policymakers by understanding key potential areas to reduce the disparity in economic growth across Malaysian states by understanding their impact on the growth.Originality/valueThis study employs different method of 3SLS and bootstrap sampling and estimation techniques in examining the factors that explain the variations in the growth of development across the states in Malaysia.

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