scholarly journals THE DIGITAL BANKING PROFITABILITY CHALLENGES: ARE THEY DIFFERENT BETWEEN CONVENTIONAL AND ISLAMIC BANKS?

2021 ◽  
Vol 18 (1) ◽  
pp. 55-74
Author(s):  
Patria Yunita ◽  
Keyword(s):  
Financial Services ◽  
Global Financial Crisis ◽  
Structural Break ◽  
Liquidity Risk ◽  
Binary Logistic Regression ◽  
Annual Reports ◽  
Islamic Banks ◽  
Portfolio Risk ◽  
Financial Conditions ◽  
Conventional And Islamic Banks

This study aims to analyze the digital banking industry in uncertain global financial conditions. This analysis used binary logistic regression models, to predict the Indonesia commercial digital banking profitability performances in new normal life based on the analysis of digital banking performances in the second wave of global financial crisis 2017. The probability of bank profitability improvement as dependent variable. The Liquidity Risk, Bank Size, Bank Portfolio Risk, and E-Money transactions as independent variables. Fintech and Bank Type are used as control variables. The analysis period is 2015-2019, based on the time when the rapid progress of digital banking technology was adopted in Indonesia. Data obtained from 57 commercial bank annual reports, statistics of Bank Indonesia and The Financial Services Authority. By the Logit Regression Model, it is concluded that Liquidity Risk, Fintech and Bank Type do not statistically significant, while the Bank’s Portfolio Risk, E-Money transactions and Bank Size statistically significant influencing The Digital Banking Profitability Improvements. From the structural break analysis conducted at the level of the digital banking profitability, there is a difference in the time of "shock" between conventional and Islamic banks. The conventional banks was experienced a structural break over global financial conditions two months before Islamic banks.

scholarly journals Liquidity Risk Management: A Comparative Study between Conventional and Islamic Banks in Bangladesh

2016 ◽  
Vol 10 (2) ◽  
pp. 18-35 ◽  
Author(s):  
Md Lutfor Rahman ◽  
SM Hasanul Banna
Keyword(s):  
Risk Management ◽  
Liquidity Risk ◽  
Equity Capital ◽  
Capital Adequacy ◽  
Annual Reports ◽  
Islamic Banks ◽  
Working Capital ◽  
Return On Assets ◽  
Conventional Banks ◽  
Conventional And Islamic Banks

Liquidity risk may arise from diverse operations of financial intermediaries, facilitators and supporters as they are fully liable to make available liquidity when required by the third party. Incase of Islamic Banks additional efforts are required for scaling liquidity management due to their unique characteristics and conformity with Shariah principles. The objective of this study is to look into the liquidity risk associated with the solvency of the financial institutions, with a purpose to evaluate liquidity risk management (LRM) through a comparative analysis between conventional and Islamic banks of Bangladesh. This paper investigates the significance of Size of the Firm, Net Working Capital, Return on Equity, Capital Adequacy and Return on Assets (ROA), on Liquidity Risk Management in conventional and Islamic banks in Bangladesh. The study has taken six mid-size banks- three conventional and three Islamic banks as samples. It is based on secondary data which are collected from the selected banks’ annual reports, covering a period of 2007-2011. Independent variables that have positive but insignificant relation are; size of the bank and net working capital to liquidity risk in Islamic banks and in case of conventional banks size of bank is negatively related with the liquidity risk. Only return on assets is positively affecting the liquidity risk at 10% level in case of conventional banks, but in Islamic banks the relationship is insignificant. The other variables are found to be insignificant in affecting the liquidity risk for both the conventional and Islamic banks in BangladeshJournal of Business and Technology (Dhaka) Vol.10(2) 2015; 18-35

scholarly journals Risk Analyses on Islamic Banks in Indonesia

2020 ◽  
Author(s):  
Dimas Bagus Wiranatakusuma ◽  
Imamuddin Yuliadi ◽  
Ikhwan Victhori
Keyword(s):  
Time Series ◽  
Financial Services ◽  
Time Series Data ◽  
Liquidity Risk ◽  
Series Data ◽  
Islamic Banks ◽  
Monthly Basis ◽  
Income Ratio ◽  
Financing Risk ◽  
Risk Vulnerability

This study aims to analyze the risks on Islamic banks in Indonesia by identifying which risk is significantly dominant in triggering other risks to happen. For that purpose, the study uses time series data on a monthly basis from 2010:M1 to 2018:M8. The data are obtained from the Financial Services Authority (OJK) Indonesia and analyzed using vector autoregression (VAR). Some variables are employed to proxy risk vulnerability including financing-to-deposit ratio (FDR) as a proxy of liquidity risk, nonperforming financing (NPF) as a proxy of financing risk, and cost-to-income ratio (BOPO) as a proxy of operational risk. The findings suggest that financing risk is the most dominant risk triggering vulnerability on Islamic banks in Indonesia.

Financial Risk of Conventional and Islamic Banks: Does Institutional Quality Matter?

2021 ◽  
Vol 12 (3) ◽  
pp. 510-524
Author(s):  
Normaizatul Akma Saidi Et.al
Keyword(s):  
Credit Risk ◽  
Financial Risk ◽  
Liquidity Risk ◽  
Islamic Banks ◽  
Government Effectiveness ◽  
Regulatory Quality ◽  
Level Data ◽  
Conventional Banks ◽  
The Relationship ◽  
Conventional And Islamic Banks

Banks play a significant role in financing the economy and take on risky financial activities based on information and trust as they specialized companies with their own specificities. This study was propelled to unravel the determinants that affect financial risk (liquidity risk and credit risk) for conventional and Islamic banks. The bank-level data of conventional and Islamic banks in the regions of Middle East, Southeast Asia, and South Asia between 2006 and 2014 were collected from the Bankscope, which is a commercial database produced by the Bureau van Dijk. Thus, for conventional banks the obtained results exhibited significantly positive relationship between regulatory quality towards liquidity risk. Then, the relationship between regulatory quality towards credit risk was negatively significant for conventional banks. Meanwhile, as for Islamic banks, the relationship between government effectiveness and regulatory quality towards financial risk was insignificant. Hence, the regulators or policymakers are able to identify specific mechanism to improve the risk management of these banks as well through this study.

scholarly journals Pengaruh Pembiayaan Musyarakah Terhadap Pendapatan Bank BRI Syariah Indonesia Periode 2014-2020

2021 ◽  
Vol 5 (2) ◽  
pp. 230-242
Author(s):  
Noorulviah Beredhawati Atmaja ◽  
Siti Amallia Tadim ◽  
R. Deden Adhianto
Keyword(s):  
Financial Services ◽  
Secondary Data ◽  
Profit Sharing ◽  
Annual Reports ◽  
Islamic Banks ◽  
Analysis Method ◽  
Simple Linear Regression ◽  
Statistical Program ◽  
Annual Time Series ◽  
Annual Time

Consumer financing is one of the focuses of BRI Syariah financing distribution because it has a low risk. This is because consumer financing is based on mortgages and multi-purpose financing. This study aims to determine the effect of Musyarakah Financing on Income. This research was conducted at Bank BRI Syariah Indonesia for the period 2014 to 2020. This method uses a descriptive quantitative approach. The development of Islamic banking is also marked by an increase in the distribution of financing. Financing is very important because this financing factor is the key to the development of Islamic banks in the future. Ideally, Islamic bank financing is dominated by musharaka contracts which are run with a profit-sharing system. The data used in this study is secondary data derived from annual reports that can be accessed through the Financial Services Authority website in the form of an annual time series from 2014-2020. This study applies a simple linear regression data analysis method. Based on the results of research using the SPSS Version 20 statistical program, Musyarakah Financing (X) has a positive and significant effect on Income (Y).

scholarly journals Profit Islamic Bank from Mudharabah and Musharakah Finance with Islamic Social Responsibility Disclosure

2021 ◽  
Vol 10 (3) ◽  
pp. 84-91
Author(s):  
Yusuf Faisal ◽  
Nirdukita Ratnawati ◽  
Egi Gumala Sari
Keyword(s):  
Social Responsibility ◽  
Financial Services ◽  
Commercial Banks ◽  
Annual Reports ◽  
Islamic Banks ◽  
Test Results ◽  
Islamic Bank ◽  
Net Profit ◽  
Negative Effect ◽  
Rate Of Profit

This research was conducted to determine the effect of mudharabah and musharakah financing on net profit of Islamic commercial banks in Indonesia. This study uses the annual financial statements of Islamic commercial banks obtained from the Financial Services Authority and annual reports on the website of Islamic commercial banks for the period 2010-2019. The test results found that mudharabah financing had a significant effect on the net profit of Islamic banks, this also strengthened Islamic social responsibility of Islamic commercial banks. But unlike mudharabah financing, musharakah financing actually has a negative effect on the net profit of Islamic commercial banks, which means that the higher the Islamic bank distributes musharakah financing, the rate of profit will decrease which results in the weakening of Islamic social responsibility disclosure. It is recommended that Islamic banks exercise greater caution when selecting consumers for mudharabah financing, as this type of financing carries a higher risk but also a higher profit share if the financing is successful. This research has a limitation in that it focuses exclusively on Islamic commercial banks in Indonesia, although additional research might be conducted by sampling Sharia Business Unit and Sharia Rural Bank.

Voluntary corporate governance disclosure and bank performance: evidence from an emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Haitham Nobanee ◽  
Nejla Ould Daoud Ellili
Keyword(s):  
Corporate Governance ◽  
Voluntary Disclosure ◽  
Dynamic Panel Data ◽  
Annual Reports ◽  
Bank Performance ◽  
Islamic Banks ◽  
Dynamic Panel ◽  
Content Type ◽  
Governance Disclosure ◽  
Conventional And Islamic Banks

Purpose This study aims to explore the extent of voluntary corporate governance disclosure in the annual reports of banks in the UAE, operating in an emerging economy in the Gulf Cooperation Council region. It also examines the effect of this non-financial disclosure on bank performance by differentiating conventional and Islamic banks. Design/methodology/approach This study applies content analysis to explore the extent of voluntary corporate governance disclosure using data collected from the annual reports of all the banks traded on the UAE financial markets from 2003 through 2020. It further examines the potential effect of voluntary disclosure on bank performance using dynamic panel data regressions. Findings The results indicate a low level of voluntary corporate governance disclosure in the annual reports for most disclosure indices. However, conventional and Islamic banks do not differ significantly. Additionally, the results of the robust dynamic panel data from the two-step generalized method of moments system estimation confirm that voluntary corporate governance disclosure does not affect bank performance significantly. Practical implications The findings of this study would benefit the central bank and lawmakers in the UAE in developing a framework for appropriate voluntary disclosure and enhancing the corporate governance framework to improve the quality of annual reports. Originality/value This study contributes to the literature on the extent of corporate governance disclosure, as well as its association with bank performance in an emerging economy by differentiating between conventional and Islamic banks.

Banking stability in the MENA region during the global financial crisis and the European sovereign debt debacle

2017 ◽  
Vol 18 (4) ◽  
pp. 381-397 ◽  
Author(s):  
Naama Trad ◽  
Houssem Rachdi ◽  
Abdelaziz Hakimi ◽  
Khaled Guesmi
Keyword(s):  
Global Financial Crisis ◽  
Islamic Banks ◽  
Mena Region ◽  
Data Set ◽  
Content Type ◽  
Negative Effect ◽  
Macroeconomic Effect ◽  
Conventional Banks ◽  
The Global Financial Crisis ◽  
Conventional And Islamic Banks

Purpose This paper aims to focus on the main determinants of the performance and stability-banking sector in the Middle East and North Africa (MENA) region during the global financial crisis. Using a data set of 13 countries with both of 77 Islamic and 101 conventional banks during the period 2006-2013, empirical results show that specific variables allow explaining the change in the level of performance and stability for conventional and Islamic banks. However, the effect of some banks’ characteristics is not the same for the two bank groups. For the macroeconomic effect, it is observed that inflation exerts a negative effect on the bank performance except for conventional banks when it increases the profitability. Design/methodology/approach Using a data set of 13 countries with both of 77 Islamic and 101 conventional banks (CvB) during the period 2006-2013 and performing the generalized method of moments (GMM) method, the findings provide comprehensive evidence for the bank systems studied which are of interest also to policy makers and practitioners. Findings The main finding is that after the international financial crises of 2008, many worldwide banks have been experiencing crises in contrast to Islamic banks (IsB) which remain Gen more stable and more profitable. Foreign banks had a higher degree of exposure to risk, given their higher number of subsidiaries in the developed economies. As for the determinants of profitability, the bank-specific variables allow to explain the change in the level of performance and stability for conventional and Islamic banks. However, the effect of some banks characteristics is not the same for the two bank groups. For the macroeconomic effect, it is observed that inflation exerts a negative effect on the bank performance except for CvB when it increases the profitability measured by the return on assets (ROA). It is also found that the growth rate acts positively when the dependent variable is the ROA and negatively when the performance is measured by return on equity. Originality/value The inflation rate exerts a negative effect only on the ROA. This study differs from previous contributions in that it is tested the hypothesis of determinants of bank profitability and stability for both conventional and Islamic banks in the MENA region. It is of great interest to both policymakers and investors, with respect to regional development policies and dedicated portfolio investment strategies in each emerging region respectively. The authors adopted several ratios from the empirical literature on bank profitability and stability. Using a data set of 13 countries with both of 77 Islamic and 101 CvB during the period 2006-2013 and performing the GMM method, the findings have significant contributions to the literature by comprehensively clarifying and critically analyzing the current state of profitability and stability for both banks.

scholarly journals STRESS TESTING OF LIQUIDITY AT A SAMPLE OF SYRIAN PRIVATE BANKS

2019 ◽  
Vol 14 (2) ◽  
pp. 128-131
Author(s):  
Каисси Ал ◽  
Kaissi Al
Keyword(s):  
Stress Testing ◽  
Banking Sector ◽  
Liquidity Risk ◽  
Islamic Banks ◽  
Economic Changes ◽  
Sudden Drop ◽  
Private Banks ◽  
Negative Effect ◽  
Using Data ◽  
Conventional And Islamic Banks

Sustainability tests are considered as a tool for measuring risk, especially with regard to the assessment of possible events in the banking sector as a result of changes in the general economic situation or the occurrence of certain events in the bank. The aim of this study is to test the ability of two Syrian private banks to bear liquidity risk using data for 2018 in accordance with the coefficients set by the Central Bank of Syria. The results of the study showed the ability of banks to resist liquidity risk in case of sudden withdrawal of funds from current deposits and the availability of sufficient funds to meet it. The sudden drop in current deposits in private Syrian banks does not reduce their ability to pay their financial obligations. Both banks successfully passed testing, achieved a positive net inflow, and the liquidity ratio after the test indicates a low liquidity risk. In other words, Syrian private banks are able to cope with liquidity risks. Private banks, whether ordinary or Islamic, are largely dependent on customer deposits, so any sudden negative changes that occur with these deposits have a negative effect on the liquidity of banks. The Syrian banking sector does not suffer from liquidity risk, has high liquidity ratios and is able to cope with economic changes. When adopting banking laws and regulations, Syrian regulators and authorities should take into account the differences between conventional and Islamic banks in terms of liquidity risks.

Sign in / Sign up

Export Citation Format

Share Document