Additional Tier 1 Capital Instruments under Basel iii: A Sharīʿah Viewpoint

2016 ◽  
Vol 30 (2) ◽  
pp. 138-162
Author(s):  
Beebee Salma Sairally ◽  
Marjan Muhammad ◽  
Madaa Munjid Mustafa
Keyword(s):  
Financial Services ◽  
Reference Point ◽  
Abu Dhabi ◽  
Islamic Banking ◽  
Basel Iii ◽  
Islamic Banks ◽  
Regulatory Capital ◽  
Islamic Bank ◽  
Tier 1 ◽  
Banking Institutions

This research aims to compare the regulatory capital instruments for Islamic banking institutions (ibis)—in particular the qualifying Additional Tier 1 (AT1) capital instruments—as defined by Basel iii, Bank Negara Malaysia (bnm) and ifsb-15 (issued by the Islamic Financial Services Board). Principally, the research examines the Sharīʿah issues, especially related to subordination, arising in equity-based contracts when used for structuring AT1 capital instruments. In particular, it examines the muḍārabah ṣukūk issued by the Abu Dhabi Islamic Bank (adib) in 2012. The study finds that the most appropriate Sharīʿah contract that would be suitable for structuring AT1 capital instruments would be mushārakah. The present study is considered an original attempt in examining an under-researched topic relating to Basel iii and its Sharīʿah perspective. The study will be an important reference point to Islamic banks when structuring AT1 capital instruments.

scholarly journals DETERMINAN KINERJA KEUANGAN PERBANKAN SYARIAH PERIODE 2014-2018

2020 ◽  
Vol 2 (1) ◽  
pp. 21-36
Author(s):  
Kinanti Pradita Pangesti ◽  
Himawan Arif Sutanto
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Financial Services ◽  
Performance Index ◽  
Linear Regression Analysis ◽  
Value Added ◽  
Social Reporting ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Islamic Bank

The increasing trend in the halal industry is one of the growth factors of sharia banking, but the increase in sharia banking growth is also accompanied by an increase in financing issued by sharia banks that can affect the financial performance of sharia banks. The high risk of financing and the weak fulfillment of the quality of Islamic bank human resources resulted in the performance of Islamic banks always below conventional banks. This study aims to determine the effect of intellectual capital, non-performance financing, Islamic social reporting and Islamic performance index on the financial performance of Islamic banking. The data was taken purposively from Islamic banking companies registered with the Financial Services Authority (OJK) for the 2014-2018 period. Multiple linear regression analysis has been used to analyze the data in this study. The results showed that Non-Permofance Financing (NPF) had a negative effect on the financial performance of Islamic Banks. Whereas Intellectual Capital as measured by Value Added Intellectual Coefficient (VAIC), Islamic Social Reporting, and Islamicity Performance Index has no effect on Islamic bank finance. .

Maturity transformation risk factors in Islamic banking

2018 ◽  
Vol 44 (6) ◽  
pp. 787-808
Author(s):  
Haroon Mahmood ◽  
Christopher Gan ◽  
Cuong Nguyen
Keyword(s):  
Financial Services ◽  
Global Financial Crisis ◽  
Generalized Method Of Moments ◽  
Balance Sheet ◽  
Islamic Banking ◽  
Annual Data ◽  
Basel Iii ◽  
Islamic Banks ◽  
Data Set ◽  
Content Type

Purpose Maturity transformation risk is one of the leading causes of the global financial crisis. While endorsing the new Basel III liquidity reforms, the Islamic Financial Services Board has suggested a modified NSFR ratio as a structural measure for the maturity transformation function of Islamic banks, allowing for their unique balance sheet structure. The purpose of this paper is to analyze various firm-specific and macroeconomic factors that may significantly affect the maturity transformation risk of these banks. Design/methodology/approach Using an annual data set of 55 full-fledged Islamic banks from 11 different countries over a period from 2006-2015, this study utilizes a two-step system generalized method of moments estimation technique on an unbalanced panel data. Findings The empirical results reveal bank size, capital, less-risky liquid assets, risky liquid assets, external funding dependence and market power as significant bank-specific factors in determining maturity transformation risk. However, the authors find no evidence for the effect of bank credit risk on maturity transformation risk in Islamic banking system. Originality/value This is the first study that focuses on the measurement of maturity transformation risk and its determinants in Islamic banks in a cross-country context, with regards to new liquidity regulatory requirements as proposed by Islamic Financial Services Board (IFSB) in conjunction with Basel III.

scholarly journals CONVERTION OF DSN-MUI’S FATWA ON ISLAMIC BANKING TO BE THE NATIONAL LAW: A Comparative Study in Muslim Countries

JURISDICTIE ◽  
2021 ◽  
Vol 11 (2) ◽  
pp. 262-285
Author(s):  
Angga Syahputra ◽  
Reni Ria Armayani
Keyword(s):  
Comparative Study ◽  
Financial Services ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Legal Research ◽  
Islamic Bank ◽  
Muslim Countries ◽  
Fundamental Law ◽  
Binding Power

Islamic banks in Indonesia have been significantly developing since 2008. This development has yet been supported by operational regulations. Islamic Banks operational mostly refers to fatwa of DSN-MUI. However, those fatwas must be converted to the regulations of Bank Indonesia or Financial Services Authority (OJK) to have binding power. This article aims at describing DSN-MUI’s fatwa position as the fundamental law of Islamic Banking implementation. Besides, this article compares the position of ulama’s fatwa in implementing Islamic Bank in several Muslim countries. The article is originated from Doctrinal Legal research with conceptual and comparative approaches. The result shows that DSN-MUI;s fatwa position in implementing Islamic Banks is not yet operational because it must be first converted into the regulations of Bank Indonesia or OJK. Different condition found in other Muslim countries, ulama’s fatwa becomes the main reference for implementing Islamic Banks. This is because the country places ulama’s fatwa higher than banking authoritative.Perbankan syariah di Indonesia terus mengalami kemajuan signifikan sejak tahun 2008. Perkembangan ini belum didukung dengan aturan-aturan yang bersifa operasional. Operasional perbankan syariah lebih banyak merujuk pada fatwa DSN-MUI. Namun, fatwa-fatwa tersebut harus dikonversi terlebih dahulu kepada peraturan bank Indonesia atau Peraturan Otoritas Jasa Keuangan agar memiliki daya ikat. Artikel ini bertujuan mendeskripsikan kedudukan fatwa DSN-MUI sebagai dasar hukum pelasanaan perbankan syariah. Selain itu, artikel ini membandingkan kedudukan fatwa ulama dalam pelaksanaan perbankan syariah di beberapa negara muslim. Artikel ini berasal dari penelitian hukum doctrinal dengan pendekatan konsep dan komparatif. Hasil kajian artikel ini menunjukkan bahwa kedudukan fatwa DSN-MUI dalam pelaksanaan perbankan syariah belum bersifat operasional. Karena Fatwa DSN-MUI harus dikonversi dalam bentuk Peraturan Bank Indonesia atau Peraturan Otoritas Jasa Keuangan. Kondisi berbeda ditemukan di negara-negara muslim, kedudukan fatwa ulama menjadi rujukan utama pelaksanaan perbankan syariah. Hal ini terjadi karena negara memposisikan fatwa ulama lebih tinggi dari otoritas perbankan.

Tier 2 Capital Instruments under Basel III: A Sharīʿah Viewpoint

2018 ◽  
Vol 32 (3) ◽  
pp. 205-241
Author(s):  
Madaa Munjid Mustafa ◽  
Beebee Salma Sairally ◽  
Marjan Muhammad
Keyword(s):  
Secondary Data ◽  
Islamic Banking ◽  
Basel Iii ◽  
Tier 2 ◽  
Regulatory Capital ◽  
Regulatory Requirements ◽  
Library Research ◽  
Islamic Jurisprudence ◽  
Banking Institutions

Abstract Basel III has redefined the criteria for regulatory capital instruments. Accordingly, Islamic banking institutions (IBIs) have to consider the issuance of instruments that would meet both the objectives of Basel III and Sharīʿah requirements. This research particularly aims to compare the regulatory requirements for issuing Tier-2 (T2) capital instruments as defined by Basel III, Bank Negara Malaysia (BNM) and IFSB-15. In this regard, the research examines the Sharīʿah issues related to subordination and conversion arising in exchange-based contracts (such as murābaḥah and iǧārah ṣukūk) and equity-based contracts (such as muḍārabah and wakālah ṣukūk). The study relies on library research to collect secondary data in the form of classical works of Islamic jurisprudence, analyses such work and links it with the present day regulatory requirements. The study finds that there are Sharīʿah concerns over the use of exchange-based contracts. However, the use of convertible muḍārabah and wakālah ṣukūk could be justified.

ALTERNATIF PERHITUNGAN RETURN SHAHIBUL MAL PADA SKEMA MUDHARABAH BANK SYARIAH

2020 ◽  
Vol 3 (2) ◽  
Author(s):  
Refky Fielnanda
Keyword(s):  
Rapid Development ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Theoretical Level ◽  
Method Of Calculation ◽  
Islamic Bank ◽  
Representative Office ◽  
Operational Practices ◽  
Computerized System ◽  
Practical Level

Abstract: The rapid development of the number of islamic banks should be balanced with the availability of infrastructure to carry out daily operational practices. The operational tools include hardware as like as representative office, computerized system, reliable human resources and software as like as method, culture and financial and islamic banking knowledge. In terms of development of Islamic finance is the paper "Alternative Calculation of Return Shahibul Mal on Mudharabah Scheme on Bank Syariah" was written. During this calculation of return shahibul mal has not been standardized in a formula, thus causing two serious effects. First, in the theoretical level, the formula has not yet created a difficulty. Secondly, in practical level, the formula is not impressive enough to recalculate the complexity of return calculations obtained by shahibul mall, causing laziness of the community using the services of islamic bank. This paper using mathematical and arithmetic equations with the help of modeling made by the author to refine and improve the method of calculation that has been available. The purpose of this paper is to create a standard formula that facilitates the calculation of return earned by a shahibul mal in a mudaraba scheme in a islamic bank.  

EFEKTIVITAS PEMASARAN BANK SYARIAH MENGGUNAKAN MEDIA SOSIAL INSTAGRAM DI INDONESIA” (Studi Kasus pada PT. BNI Syariah)

Paradigma ◽  
2020 ◽  
Vol 17 (1) ◽  
pp. 1-15
Author(s):  
Indriyani ◽  
Rizal Fahlevi
Keyword(s):  
Social Media ◽  
Rapid Development ◽  
Communication Media ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Islamic Bank ◽  
Marketing Effectiveness

The purpose of this study is to see the level of marketing effectiveness carried out by Bank BNI Syariah using social media Instagram. The rapid development of Instagram in Indonesia has made Bank Negara Indonesia Syariah actively use this social media as a forum for promotion on Instagram under the account name @ bni.syariah. So it is recorded that as of January 2019 the @ bni.syariah account has the most followers or followers of 37.8 thousand. Then followed by the account @banksyariahmandiri 36.4 thousand followers, @brisyariah 32.5 thousand followers, @ bank.muamalat 25.7 thousands followers, @bankbjbsyariah 8,095 followers, @bankmegasyariah 5,619 followers, @hababankaceh 5,399 followers, @bank_syariahbukopin 2,736 followers, and @ panindubaisyariah.bank 263 followers. Instagram is effectively used as a marketing medium for Islamic banks, especially for BNI Syariah, which is effectively used as a media for promotion and communication media with BNI Syariah customers. With the existence of Instagram as a marketing medium for Islamic banks, in this case BNI Syariah is very helpful in introducing Islamic bank products and helping to increase BNI Syariah revenue itself. Although, currently Instagram social media is only used as a promotional media or the first media for BNI Syariah to introduce Islamic banking products and is also used as a medium of communication with active BNI Syariah customers. So that any complaints or problems, especially related to service, customers can immediately submit complaints to BNI Syariah via Instagram, and problems can be resolved according to the customer's needs.

Arah Kebijakan Pengawasan terhadap Perbankan Syariah dalam Sistem Perbankan Nasional di Indonesia

2020 ◽  
Vol 3 (1) ◽  
pp. 41-52
Author(s):  
Andrew Shandy Utama
Keyword(s):  
Central Bank ◽  
Financial Services ◽  
Banking System ◽  
Islamic Banking ◽  
Legal Research ◽  
Islamic Bank ◽  
Independent Direction ◽  
National Banking System

This research aims to explain the direction of policy regarding supervision of Islamic banking in the banking system in Indonesia. The method used in this research is normative legal research using the statutory approach. The results of this research explain that the policy regarding supervision of Islamic banking in the national banking system in Indonesia is headed toward an independent direction. In Law Number 7 of 1992 and Law Number 10 of 1998, it is stated that supervision of Islamic banking is done by Bank Indonesia as the central bank. Based on Law Number 21 of 2008, supervision of Islamic banking is strengthened by not only being supervised by Bank Indonesia, but also by the National Sharia Council of the Majelis Ulama Indonesia by placing Sharia Supervisory Councils in each Islamic bank. After the ratification of Law Number 21 of 2011, supervision of Islamic banking moved from Bank Indonesia to an independent institution called the Financial Services Authority.

Relationship Analysis of Islamic Banking between Malaysia and Pakistan

2018 ◽  
Vol 5 (4) ◽  
pp. 1-6
Author(s):  
Khurram Faisal Jamal
Keyword(s):  
Large Range ◽  
Primary Objective ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Relationship Analysis ◽  
Banking Institutions ◽  
Qualitative Technique ◽  
Performance Problem ◽  
Very High ◽  
Product Preference

Islamic banking is basically a system of financial intermediation, its primary objective is to avoid receipt and payment of interest. Islam does not only prohibit dealing with interest but also with liquor, pork, gambling, pornography and any other thing which are considered haram according to Shariah. The objectives of the research is to study and describe the Islamic financing techniques used by Islamic banking institutions in Malaysia and Pakistan. For this research seven variables Promotion, Product, Preference, Knowledge, Performance, Problem and Infrastructure was taken. Qualitative technique was used to answer the research objective. The findings of research indicate that lack of awareness of Islamic banking is very high in Pakistan as compared to Malaysia. A few promotions were used by Islamic banks in Pakistan while in Malaysia customers are knowledgeable about Islamic banking because banks promote them aggressively. There is a need of government and education sector support to promote Islamic banking in both countries. The study also found that Islamic banks in Malaysia have large range of products as compared to Pakistan. The practitioners from both countries are agreed at this point that BBA, Ijarah and Murabaha are more profitable and less risky than Musharaka and Mudaraba. The Islamic banking products are almost used for same purposes in both countries while some differences are also exists.  Keywords: Islamic Finance, Comparative Study, Malaysia, Pakistan

Determinants of Islamic Bank Profitability: Evidence from Indonesia

2020 ◽  
Vol 5 (1) ◽  
pp. 1-13
Author(s):  
Puji Sucia Sukmaningrum ◽  
Kashan Pirzada ◽  
Sylva Alif Rusmita ◽  
Fatin Fadhilah Hasib ◽  
Tika Widiastuti ◽  
...  
Keyword(s):  
Interest Rate ◽  
Quality Management ◽  
Banking Industry ◽  
External Factors ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Return On Assets ◽  
Internal Factors ◽  
Bank Profitability ◽  
Islamic Bank

Objective – Islamic Banks have a distinct advantage that is not only conduct a commercial operation, but to also conduct social operations. Therefore, Islamic Banks plays an important role in developing the Indonesian economy. The aim of this study is to investigate the impact of internal and external factors that affect the profitability of Islamic Banks in Indonesia. Methodology/Technique – The methodology of this research is multiple regression. The object of this research is the Islamic banking industry in Indonesia. Internal factors include size, liquidity, asset quality, management, and efficiency ratio. External factors include interest rate and inflation. Return on Assets is used to measure profitability. The monthly data is collected from the financial reports of Islamic Banks between 2011 to 2016. Findings – The findings show that size, liquidity, assets quality, management ratio, interest rate and inflation lead to a greater Return on Assets (profitability) in Islamic Banks in Indonesia. Efficiency however does not have a significant effect on profitability of Islamic Banks in Indonesia. Novelty – Based on the results of this research, it can be concluded that the Islamic banking industry can use those variables to improve the profitability of Islamic banks in the future. In addition, there are two variables that affect the profitability of Islamic banking industry. For the Islamic banking industry should anticipate the movement of inflation and interest to improve the profitability of Islamic banks. Type of Paper: Empirical paper. Keywords: Islamic Banks; Profitability; Internal Factors; External Factors; Indonesia. Reference to this paper should be made as follows: Sukmaningrum, P.S; Pirzada, K; Rusmita, S.A; Hasib, F.F; Widiastuti, T; Hendratmi, A. 2020. Determinants of Islamic Bank Profitability: Evidence from Indonesia, J. Fin. Bank. Review, 5 (1): pp. 01 – 13 https://doi.org/10.35609/jfbr.2020.5.1(1) JEL Classification: G21, G24.

Islamic Banking and Finance in Theory and Practice

2005 ◽  
Vol 22 (2) ◽  
pp. 69-86 ◽  
Author(s):  
Abdus Samad ◽  
Norman D. Gardner ◽  
Bradley J. Cook
Keyword(s):  
Financial System ◽  
Primary Objective ◽  
Theory And Practice ◽  
Islamic Banking ◽  
Relative Importance ◽  
Islamic Banks ◽  
Equity Financing ◽  
Banking And Finance ◽  
Financial Products ◽  
Islamic Bank

This paper’s primary objective is to identify the relative importance of various Islamic financial products, in theory and in practice, by examining the financing records of the Bank Islam Malaysia (Berhad) and the Bahrain Islamic Bank. Currently, seven available Islamic financing products are considered viable alternatives to interest-based conventional contracts: mudarabah (trust financing), musharakah (equity financing), ijarah (lease financing), murabahah (trade financing), qard al-hassan (welfare loan), bay` bi al-thaman al-ajil (deferred payment financing), and istisna` (progressive payments). Among these financial products, mudarabah and musharakah are the most distinct. Their unique characteristics (at least in theory) make Islamic banks and Islamic financing viable alternatives to the conventional interest-based financial system. The question before us is to determine the extent of mudarabah and musharakah in Islamic financing in practice. The data are as follows: the average mudarabah is 5% of total financing, and the average musharakah is less than 3%. The combined average of mudarabah and musharakah for the two Islamic banks is less than 4% of the total finance and advances. The average qard al- hassan is about 4%, while istisna` does not yet exist in practice. Murabahah is the most popular and dominates all other modes of Islamic financing. The average use of murabahah is over 54%. When the bay` bi al-thaman al-ajil is added to the murabahah, the percentage of total financing is shown to be 2.68%. This paper also explores some possible reasons why these two Islamic banks appear to prefer murabahah to mudarabah and musharakah.

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