scholarly journals Is Islamic Banking in Turkey really interest-free?

2021 ◽  
Author(s):  
Harun Ercan ◽  
Ilhami Karahanoglu ◽  
György Walter
Keyword(s):  
Interest Rates ◽  
Financial Services ◽  
Banking System ◽  
Financial System ◽  
Profit Sharing ◽  
Islamic Finance ◽  
Islamic Banks ◽  
Banking Market ◽  
Two Factors ◽  
Highly Correlated

Abstract Islamic Finance receives more attention due to the growing need for financial services in countries with a Muslim population. However, the rules of Islam and its applications in daily life cause conflicts in today's conventional financial system. Since interest gains are prohibited in Islam according to the Quran, Islamic banks develop and use interest-free methods, unlike the conventional banking system. Islamic Finance introduced profit-sharing ratios to replace interest rates and to increase the participation of religious investors in the financial system. In this research, we compare interest rates with profit-sharing ratios in the Turkish banking market. We use wavelet and historical correlation analysis as a new methodology in evaluating the association between these two factors. Although it is presumed that Islamic banks operate as interest-free banks, our analysis confirms former studies and finds that profit-sharing ratios are highly correlated and coherent with interest rates in Turkey. We also find small differences among Islamic banks on how quickly profit-sharing ratios follow the market interest rate changes.

scholarly journals DETERMINANTS OF SHARIA BANKING MARKET SHARE GROWTH IN INDONESIA

2020 ◽  
Vol 1 (2) ◽  
pp. 87
Author(s):  
Nizar Hosfaikoni Hadi ◽  
Muh. Khairul Fatihin
Keyword(s):  
Interest Rates ◽  
Market Share ◽  
Financial Services ◽  
Research Data ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Profit Rate ◽  
Banking Market ◽  
Banking Markets ◽  
Default Rate

AbstractThe purpose of this paper is to investigate the variables that influence Islamic banking markets in Indonesia. The research data were obtained directly from the website of the Central Statistics Agency (BPS) and the financial services authority(OJK) from 2011-2018 which were taken on a quarterly basis. This study uses multiple regression analysis to analyze the factors that have an impact on the market share of Islamic banks in Indonesia. The variable that can affect Islamic banking marketshare in Indonesia is the liquidity ratio (FDR). While other variables such as the default rate (NPF), profit rate (ROA), economic growth (GDP) and conventional bank interest rates (INT) do not affect Islamic banking. The results suggest that Islamic banking regulates liquidity ratios (FDR) so that Islamic banking can effectively increase its market. This study complements previous research so that Islamic banking maintains a liquidity ratio in order to remain balanced.Keywords: marketshare, Islamic banking, FDR, GDP, ROA

scholarly journals Critical Review on Issues and Challenges of Malaysian Islamic financial system

2021 ◽  
Vol 56 (2) ◽  
pp. 552-567
Author(s):  
Issa Khan ◽  
Abdul Muneem ◽  
Fadillah Mansor ◽  
Mohd Abd Wahab Fatoni Bin Mohd Balwi ◽  
Md. Mahfujur Rahman
Keyword(s):  
Human Capital ◽  
Data Analysis ◽  
Financial System ◽  
Profit Sharing ◽  
Qualitative Approach ◽  
Islamic Finance ◽  
Islamic Banks ◽  
Financial Industry ◽  
Thematic Approach ◽  
Online Sources

This paper seeks to analyze the issues of the Islamic financial system and its challenges in Malaysia. This research adopts a qualitative approach based on data collected from articles, books, and online sources. A thematic approach has been utilized for data analysis. This study finds that Islamic banks impose both taʿwīḍ (compensation) and gharāmah (penalty) if the customer procrastinates or delays the payment of installments to the banks. That could lead to ribā (interest) in the contract. Therefore, the study suggests that the Islamic banks need to form a tabarruʿ (donation) fund. In addition, the study reveals that the Islamic banks are trending towards debt-based financing, which contradicts the maqāṣid al-sharīʿah. To fulfill the objective of the Sharīʿah, Islamic banks should apply more profit-sharing-based financing products. Another challenge in Islamic capital markets is baiʿ al-dayn (sale of debt) in Sukuk (Islamic bond), leading to ribā. Thus, the research proposes improving the transaction with a concept that does not lead to controversy. In family takaful, there are Sharīʿah issues related to the nominee and distribution of surplus. The study suggests that the nominee should work as an executor. Moreover, takaful companies can receive a portion of surplus based only on the muḍārabah model. Finally, this research identifies challenges in Islamic finance about human capital, misconceptions of Islamic finance, standardization, and harmonization, and proposes solutions accordingly. The research will assist the Islamic financial industry in finding ways to overcome the current issues and challenges.

The $19,000 Question: How Will the Economic Consequences of the Coronavirus Pandemic Affect the Financial System?

2020 ◽  
Vol 1 (1) ◽  
Author(s):  
Howard Davies
Keyword(s):  
Interest Rates ◽  
Financial Services ◽  
Large Scale ◽  
Banking System ◽  
Financial System ◽  
Central Banks ◽  
Economic Consequences ◽  
The European Union ◽  
Negative Interest Rates ◽  
Capital Ratios

The deep recession expected as a result of the COVID-19 pandemic will leave both governments and private-sector companies with a greatly increased debt burden. That will have severe consequences for the financial system. Banks will suffer large-scale defaults on business and personal lending. To work off the debt overhang, interest rates may be held down by central banks for a long period. Inflation may rise, which would deflate the real value of debt, but inflationary pressures are currently weak. Financial repression will add to the pressures on banks and other financial institutions. Major banks enter the crisis period with high capital ratios, but expected losses on loan portfolios will put some under strain. Less strongly capitalized new entrants may suffer disproportionately. Other likely changes are more rapid growth in digital financial services and a decline in cash usage. Central banks will probably issue their own digital currencies, which will make maintaining negative interest rates more achievable. At the same time, the international financial system will be put under strain by global tensions generated by the crisis. In this complex environment, it will be crucial for governments, central banks, and the banking system to collaborate closely and for the European Union to bolster the eurozone with long-planned but long-delayed reforms, in particular to promote a capital markets union that could relieve pressure on banks’ balance sheets.

scholarly journals Basel III's New Precautionary Measures are Adapted to the Regulatory and Regulatory Requirements of Islamic Banks and Banks to Reduce Risk

2017 ◽  
Vol 1 (2) ◽  
pp. 609-649
Author(s):  
Abd Allghani Ali Mansour AlSibai
Keyword(s):  
Financial Services ◽  
Banking System ◽  
Financial System ◽  
Islamic Banks ◽  
Financial Industry ◽  
Important Player ◽  
Precautionary Measures ◽  
The Stability ◽  
And Control ◽  
The Impact

The Islamic financial services industry has grown significantly over the last two decades to the point that it is today an important player in the international financial system. The absence of regulation, regulation and control of these financial services, especially after the shocks caused by the recent financial crises, has become a great risk, and this is because of the nature of deposits in the Islamic financial system and ways of financing. For this reason, it became imperative to know whether traditional standards or so-called protective precautionary regimes could protect and ensure the stability of international financial systems. As Islamic banks have become the largest share of the Islamic financial industry, it is necessary to study how Islamic banks operate to what extent they can apply new prudential standards. The main objective of this research study falls within one of the most important steps to develop and modernize the Islamic banking system to become more competitive in an environment that requires transparency and requires integration and integration with international financial markets. In order to raise the level of its activities and away from investment risks or reduce them .. Which requires to achieve this goal to study the effects and the possibility of applying new standards of precautionary Islamic banks, in particular: "the impact of Basel III."

KONDISI EKONOMI SYARIAH DI INDONESIA PASCA MERGERNYA BANK SYARIAH BUMN

2021 ◽  
Vol 5 (1) ◽  
pp. 90-106
Author(s):  
Angga Syahputra
Keyword(s):  
Market Share ◽  
Financial Services ◽  
Qualitative Method ◽  
Economic Conditions ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Muslim Population ◽  
Banking Market ◽  
The World ◽  
Financial Transactions

Indonesia has the largest Muslim population in the world. With this amount, of course, it should be a capital for economic strength. However, as of November 2020, data released by the Financial Services Authority put the Islamic banking market share at 6.33%. Efforts to merge the three state-owned Sharia banks into Indonesian Sharia Banks are expected to increase the penetration of the sharia economy in Indonesia, which is still far behind when compared to conventional domestic economic movements and Islamic financial transactions in other countries. This research will describe the extent of the sharia economic conditions in Indonesia after the merger of state-owned sharia banks into BSI. This study uses a qualitative method with a type of literature review research which is obtained from various authentic sources such as books, articles, journals and trusted websites. There was a 2.7% increase in the market share of Islamic banks after the merger. This increase when compared to the existing potential and the market is still very small. However, it is hoped that this impact will continue to increase over time, especially as capital support for various financial sectors and the halal industry in the country.

Islamic Finance in India

2016 ◽  
pp. 263-285
Author(s):  
Wasiullah Shaik Mohammed ◽  
Abdur Raqeeb H ◽  
Khalid Waheed
Keyword(s):  
Financial Services ◽  
Financial System ◽  
International Markets ◽  
Retail Banking ◽  
Islamic Finance ◽  
Annual Growth Rate ◽  
Global Level ◽  
Finance Industry ◽  
Financial Regulations ◽  
Capital Financing

In order to provide financial services effectively to almost 1.21 billion people, India has adopted a comprehensive financial system governed under a number of financial regulations. These regulations, through regular amendments, are kept updated and inclusive of modern financial concepts that emerge in national and international markets. Islamic finance is one of such modern concepts emerged at global level. Growing with an annual growth rate of 15-20 percent the Islamic finance industry is holding total assets, value estimated to be more than USD 1.6 trillion. Hence, the authors, in this paper tried to study the feasibility of providing Islamic financial services in India, especially in the areas of Retail banking, Microfinance, Venture Capital financing. The objective of this paper is to identify the major regulatory challenges facing Islamic finance and to propose the possible solutions so as to make this emerging industry an internal part of the Indian financial system.

Governance and Financial Reporting of Islamic Banks

2020 ◽  
pp. 245-262
Author(s):  
Ambareen Beebeejaun
Keyword(s):  
Financial Reporting ◽  
Financial Services ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Associate Member ◽  
Reporting Requirements ◽  
Fast Pace ◽  
The Government ◽  
Set Up

While Islamic finance continues to evolve at a fast pace across the globe, the government of Mauritius is undertaking various initiatives to encourage and facilitate the conduct of Islamic banking activities in the country. Examples are the admission of the Bank of Mauritius as an associate member of the Islamic Financial Services Board in 2007, the enactment of the guidelines for Islamic banking in 2008, and the hosting of the 11th Islamic Financial Services Board Summit in 2014. Consequently, through these endeavors, several stakeholders offering Islamic finance products are expressing interest to set up their business infrastructures in Mauritius. Hence, this chapter discusses the main governance and financial reporting requirements of the offeror of Islamic banking products such that potential investors are acquainted with the legal and compliance needs of an Islamic bank operating in Mauritius.

The relationships between time deposit rates, real rates, inflation and risk premium

2020 ◽  
Vol 11 (5) ◽  
pp. 1033-1053
Author(s):  
Siew-Peng Lee ◽  
Mansor Isa ◽  
Noor Azryani Auzairy
Keyword(s):  
Interest Rates ◽  
Risk Premium ◽  
Banking System ◽  
Islamic Banks ◽  
Content Type ◽  
The Real ◽  
Explanatory Variables ◽  
Time Deposit ◽  
Causality Tests ◽  
Conventional And Islamic Banks

Purpose The purpose of this paper is to investigate the influence of the real interest rates, inflation and risk premium on the time deposit rates of banks in the dual banking system in Malaysia. Design/methodology/approach The data consists of 1-, 6- and 12-month average time deposit rates of conventional and Islamic banks over the period of January 2000 to June 2017. The cointegration methodologies are used to explore links between the time deposit rates, real rates, inflation and risk premium. The causality tests to test causality linkages between pairs of variables are also applied. The generalised forecast error variance decomposition based on the error correction model is conducted to analyse the impact of variables variation on the deposit rates. Findings The results show the presence of two cointegration vectors in the deposit rates, real rates, inflation and risk premium, for both conventional and Islamic bank rates. Causality tests reveal that deposit rates are caused by inflation and risk premium in a one-way causality. The results of variance decomposition highlight the importance of inflation and risk premium in explaining the variations in the bank deposit rates. For the conventional bank, inflation shocks play the most important role in explaining the movements of the deposit rates. In Islamic banks, the major determinant’s largest influence is the risk premium. Between the two bank rates, Islamic bank rates receive more influence from the explanatory variables in the long-run compared to conventional bank rates. The real rates have no noticeable effect on the variance of time deposit rates for both banks. Originality/value This study presents new evidence on the relationship between time deposit rates and the three explanatory variables, which are the real interest rates, inflation and risk premium, for both conventional and Islamic banks in Malaysia. The dual banking system allows exploring the similarities and differences between conventional and Islamic banks in Malaysia in terms of the linkages between the variables.

Transformation of the Ecuadorian financial system: regulation and response

2015 ◽  
Vol 23 (1) ◽  
pp. 84-102 ◽  
Author(s):  
Luisa Ana Unda ◽  
Julie Margret
Keyword(s):  
Interest Rates ◽  
Development Strategy ◽  
Initial Conditions ◽  
Political Process ◽  
Banking System ◽  
Financial System ◽  
Reform Process ◽  
Motivating Factors ◽  
Content Type ◽  
The Government

Purpose – The aim of this study is to analyse the transformation of the Ecuadorian financial system using the regulatory dialectic approach (Kane, 1977). This research examines the initial conditions and motivating factors of the reform process, as well as the interplay between government and bankers during the period 2007-2012. Design/methodology/approach – Kane’s regulatory dialectic suggests that regulation of financial institutions is a series of cyclical interactions between opposing political and economic forces. Three main stages are identified: thesis (measures and regulatory actions), antithesis (avoidance/lobby against those reforms) and synthesis (adaptive reregulation resulting from the interaction between interest groups). Findings – Since 2007, the government focused on regulating interest rates, developing a liquidity fund for banking emergencies, increasing taxation and restricting international capital flows. These government initiatives took place against a background of conflicting interests. Private bankers opposed the majority regarding them as burdensome new rules, rather than enlightened reforms. Publicly, these reforms as intended by the government were seemingly supported. Finally through the political process, they were approved. To date, these reforms have strengthened the financial system, produced encouraging social policy results and placed the financial sector to serve the government’s development strategy. Originality/value – Using Kane’s notion of regulatory dialectic, we explain the process of financial reform in Ecuador as part of a cyclical interaction between opposing forces. Drawing on this framework enabled insight into the nature of government intervention. Hence, we show how that intervention affected the growth, development and structure of the banking system.

scholarly journals The Analysis of the Turkish Islamic Banking System Between 2005 and 2014

2016 ◽  
Author(s):  
Lívia Tálos ◽  
Gyöngyi Bánkuti ◽  
Jozsef Varga
Keyword(s):  
High Risk ◽  
Economic Crisis ◽  
Islamic Law ◽  
Banking System ◽  
Rating System ◽  
Annual Reports ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Conventional Banks

Islamic banking is a banking system that is based on the principles of sharia or Islamic law. The principles of Islamic finance forbid interest - this is commonly known as riba - charity (zakat), forbid high risk (gharar), forbid some transactions like gambling, and are based on PLS (Profit-Loss Share). The most important concept is that both charging and receiving interest are strictly forbidden; money may not generate profits. Islamic banks have largely survived the global economic crisis intact and they offer a safer operation than conventional banks. CAMEL analysis is a supervisory rating system to classify a bank's overall condition according to Capital (C), Assets (A), Management (M), Earnings (E) and Liquidity (L). In the analysis a variety of indicators were calculated based on data from the annual reports. The results of the four banks were averaged separately, then classified (1 = good, 2 = adequate, 3 = satisfactory, 4 = acceptable, 5 = unacceptable) according to the desired criteria, the changes over the years and the relative values of the four banks.

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