scholarly journals Tantangan Konversi Bank Konvensional Menjadi Bank Syariah di Aceh Berdasarkan Qanun Lembaga Keuangan Syariah No 11 Tahun 2018

2020 ◽  
Vol 3 (2) ◽  
pp. 229
Author(s):  
Rahmawati Rahmawati ◽  
Khairul Putriana
Keyword(s):  
Financial Institutions ◽  
Banking Industry ◽  
Financial Institution ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking Institutions ◽  
Conventional Banks ◽  
Conventional Bank

<p><em>The presence of the Islamic Financial Institution Qanun No 11 </em><em>in </em><em>2018 is a special right for Aceh and has brought a breath of fresh air to the development of the Islamic banking industry in Aceh, a number of conventional banks in Aceh are required to convert to Islamic banks, The purpose of this study is to explain the procedure for accelerating the conversion of unconventional banks to Islamic banks in Aceh and to explain the challenges of banking institutions with the obligation to convert financial institutions in Aceh. The obligation to convert a conventional bank into a sharia bank is clearly as stipulated in article 6 points e and d, although the process of converting a conventional bank to a sharia bank is not found directly in the qanun, but every bank that does the conversion must refer to BI regulations namely PBI No. 11 / 15 / PBI-2009, this is as explained in article 12 "before carrying out business activities, LKS must have a business license in accordance with the provisions of the legislation".</em></p><br /><p> </p>

scholarly journals Does the Principle of Running a Business in Conventional Vs Sharia Become Differentiator? Study on Banking Industry in Indonesia 2009 - 2014

2016 ◽  
Vol 8 (2) ◽  
pp. 116
Author(s):  
Ahmad Adriansyah ◽  
Fathoni Zoebaedi ◽  
Ramzi A. Zuhdi
Keyword(s):  
Early Development ◽  
Banking Industry ◽  
Development Stage ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Islamic Bank ◽  
Significant Difference ◽  
Research Questions ◽  
Conventional Banks ◽  
Conventional Bank

Comparing to conventional bank, Islamic banking industry in Indonesia relatively still in the early development stage. Islamic bank is different with conventional bank, and therefore there is a special regulation for Islamic bank. Research conducted in 22 countries (including Indonesia), shows that Islamic banking and has differences with conventional banking in term of business orientation, efficiency, asset kuality and stability. But other research 13 countries (not including Indonesia), show that Islamic banking’s performance is lower than conventional banking (Ariss, 2010). Islamic banking in Indonesia has a unique characteristic. Most of Islamic banking in Indonesia is converted from conventional bank, owned by conventional bank or originated from a conventional bank. Some resource of Islamic bank comes from conventional banking even some of them still using resource from their conventional bank as their parent. This result raises a question, whether in the context of Islamic banking in Indonesia, its performance is significantly different from conventional banks. To answer the research questions above, we do a t-test on ROA and ROE Islamic banks and conventional banks from 2009-2014. The results showed that there was no significant difference between the financial performances of Islamic banks with conventional banks, except for 2014. In 2014 Islamic bank’s ROE is lower than conventional banks. This research opens the opportunity to study the factors that could cause a difference in the performance of Islamic banks vs conventional banks.

scholarly journals Banking Governance: Whats Special About Islamic Banks?

2015 ◽  
Vol 31 (4) ◽  
pp. 1621 ◽  
Author(s):  
Faten Ben Bouheni ◽  
Chantal Ammi
Keyword(s):  
Financial Institutions ◽  
Financial Services ◽  
Islamic Law ◽  
Banking Industry ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Implicit Contracts ◽  
Conventional Banks ◽  
The U.S ◽  
The Eu

Recent turmoil and financial institutions failures in the U.S and in the EU have led to a renewed interest in corporate governance. Thus, the ultimate decisions taken to out of the crisis were to review the mechanisms of banking governance. The Islamic banking may use the same governance mechanisms as a conventional bank, in addition to the Shariah boards, the Shariah review unit, the Islamic International Rating Agency (IIRA) and, the Islamic Financial Services Board (IFSB) like main bodies of monitoring the Islamic Banking industry. In contrast to the conventional banks, the Islamic banks are based on the active participation of public policy institutions, regulatory and supervisory authorities, and Shariah authorities. These institutions collectively monitor the performance of the firm and its faithfulness and commitment to explicit as well as implicit contracts. Islamic banking designates banking activities, which are conforming to Islamic law (Shariah) and guided by Islamic economics. In particular, Islamic law prohibits usury and payment of interest (Riba), it also prohibits investing in businesses that are considered unlawful. And the competitiveness of many of Islamic products and the PLS principle attract Muslim and non-Muslim investors.

scholarly journals Exploring Compliance of AAOIFI Shariah Standard on Ijarah Financing: Analysis on the Practices of Islamic Banks in Malaysia

2020 ◽  
Vol 13 (2) ◽  
pp. 29
Author(s):  
Shujaat Saleem ◽  
Fadillah Mansor
Keyword(s):  
Content Analysis ◽  
Financial Institutions ◽  
Banking Industry ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Structured Interviews ◽  
Islamic Financial Institutions ◽  
Contemporary Practice

This paper aims to explore whether the practices of Ijarah financing by Islamic banks in Malaysia are in line with the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Shariah Standard No: (9) on Ijarah financing. Semi- structured interviews based on open-ended questionnaires were conducted, recorded verbatim, and transcribed for content analysis. Our study revealed flaws in the contemporary practice of Ijarah financing and indicated that it was slightly out of line with the AAOIFI Shariah standard. The study will not only help the Islamic banking industry of Malaysia to reduce, if not eliminate the gap between the practices of Bank Negara Malaysia (BNM) and AAOIFI Shariah standards pertaining to Ijarah financing but also create novel literature due to the fact that, no study has been undertaken to date, which analyzes the practices of Ijarah financing by Malaysian Islamic banks in the light of the AAOIFI Shariah standards.

scholarly journals Sharī‘ah Analysis of Acquisition of House Financing Portfolio

2019 ◽  
Vol 2 (2) ◽  
pp. 83-93
Author(s):  
Muhammad Asghar Shahzad ◽  
Syed Kashif Saeed ◽  
Asim Ehsan
Keyword(s):  
Product Development ◽  
Policy Implications ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Complete Understanding ◽  
Banking Institutions ◽  
Conventional Banks ◽  
Research Students ◽  
Development Department ◽  
Important Milestone

Purpose - The Objective of this study is to provide a comprehensive scenario of the Acquisition of House Financing transaction taken place between Bank Islami and Citi Bank during 2010 in the light of Sharī’ah guidelines. The purpose of this whole complex transaction was to acquire Citi Banks house financing portfolio. The successful completion of such a transaction is an important milestone for Islamic Banking. The complete understanding of such transactions is of prime importance for Islamic banking academia.  Findings - The study concludes that the transaction based on Hawalah (assignment of debt) and Wakalah Lil Qabz (recovery agency) is very complex and intelligently designed to conduct these transactions.  Policy Implications - This study will enable the policymakers, Sharī’ah Advisors, and bankers to explore new avenues for investment in Islamic Banking Institutions. This study will also enable academicians and research students to conduct research for product development in related areas with conventional banks. The complete understanding of such transactions is of prime importance for the product development department of Islamic Banks. 

scholarly journals Ijtihad in Islamic Finance: A Methodology Approach

2020 ◽  
pp. 64-78
Author(s):  
Amir Shaharuddin
Keyword(s):  
Banking Industry ◽  
Methodological Approach ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Muslim Community ◽  
Financial Products ◽  
Banking Institutions ◽  
New Challenges ◽  
Muslim Scholars

Islamic classical contracts have been revitalized in creating various financial products in Islamic banking institutions. However, their application in the current banking industry is not without argument. It is viewed that the classical contracts are not practiced as propounded in the classical fiqh doctrines. The article discusses the issue by proposing a different methodological approach for Shariah advisors in guiding Islamic banks. Shariah advisors in Islamic banking institutions are encouraged to unbind themselves from nominated Islamic classical contracts (uqud al-musamma’). They need to unveil new contracts that suit with modern practices and authentically able to solve problems and limitations faced by Islamic banks. Based on examination of twelve main classical texts of the four Sunni schools, it is found that Islamic classical commercial contracts evolved over times especially in the Hanafis, Shafi’is and Hanbalis schools. Past Muslim scholars expanded the classical contracts in response to new challenges and problems encountered by Muslim community in their commercial dealings. The evolution of Islamic commercial contracts can be further enhanced by adhering to the principles of transparency, honesty, mutual consent and humanitarian goals.

scholarly journals Spin-off and market share in the Indonesian Islamic banking industry: a difference in difference analysis

2017 ◽  
Vol 12 (4) ◽  
pp. 540-551 ◽  
Author(s):  
M. Nur Rianto Al Arif
Keyword(s):  
Market Share ◽  
Banking Industry ◽  
Control Group ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Difference In Difference ◽  
Difference Analysis ◽  
Business Units ◽  
Conventional Banks ◽  
The Impact

Abstract According to The Act No. 21 of 2008 concerning Islamic Banking in Indonesia, the conventional banks are obligated to spun-off their Islamic business units after achieving a certain set of requirements. The spin-off requirements are: (i) reach 50% market share asset of its parents; or (ii) 15 years after the implementation of the Islamic Banking Act. This study emphasizes the impact of Islamic banks' spin-off on market share. The method used in this study is a difference in difference analysis. This technique is a quasi-experiment separate into two groups, such as the treatment groups (four spin-offs' banks) and control group (two fullfledged Islamic banks). This study used quarterly data from 2005 until 2016. The results show that, first, there is a difference in the Islamic banks' market share between pre- and post-spinoff. Second, there is a difference in the market share of spin-offs' banks between pre- and postspin- off. Third, there are there external factors that can affect the Islamic banks' market share, i.e., inflation rate, interest rate, and economic growth rate. The paper is a useful source of information that may provide relevant guidelines in helping the future development of spin-off activity in Islamic banking industry. The finding could be helpful for policymakers to create a supporting strategy to accelerate the development of Islamic banking industry. This result also could be of use for Islamic banking industries in other countries.

scholarly journals The Margin of Murabaha Financing System of Islamic Banks and Their Effects on Retirees Customer Decisions

Al-Ulum ◽  
2020 ◽  
Vol 20 (1) ◽  
pp. 63-89
Author(s):  
Muhdar HM Muhdar HM
Keyword(s):  
Decision Making ◽  
Financial Institutions ◽  
Quantitative Method ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Financing System ◽  
Policy Makers ◽  
Multi Stage ◽  
Conventional Banks

The phenomenon of retirement customers' decision to take over debts from conventional financial institutions to Islamic finance continues to increase, indicating a change in customer paradigm, predicted due to several factors including financing margin factors. This article explains the extent to which financing margins affect the decision of retired customers to take over from conventional banks to Islamic banking. This study uses a quantitative method with an analysis unit of 161 retired clients who have filled the questionnaire with multi-stage sampling. The results of the study show that murabaha financing margins have a positive and significant effect on the decision making of retired customers in the taking over of financing. This means that good financing margins have great potential to bring retired customers from conventional banks. Thus, this result has implications for marketers and policy makers that retired customers decide based on potential financing products.

scholarly journals Bank performance and board of directors attributes by Islamic banks

2015 ◽  
Vol 8 (3) ◽  
pp. 291-309 ◽  
Author(s):  
Abdullah Awadh Bukair ◽  
Azhar Abdul Rahman
Keyword(s):  
Sample Size ◽  
Board Of Directors ◽  
Banking Industry ◽  
Future Research ◽  
Bank Performance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Negative Effect ◽  
Conventional Banks

Purpose – The purpose of this paper is to examine the relationship between board structure (consisting of board size, board composition, CEO role duality and chairman composition), investment account holders (IAHs) and social contribution and the bank performance in one of the fastest-growing industries, Islamic banking. Design/methodology/approach – A generalized least square (GLS) regression model was used to investigate such relationship applying data from a sample of 40 Islamic banks operating in Gulf Cooperation Council (GCC) countries over the period of 2008 until 2011. Findings – The results show that both size and composition of the board have a negative effect on bank performance. On the other hand, the separation of CEO and chairman roles and the IAHs have no effect, while the chairman independence has a positive impact. As for the control variables, bank size positively influences bank performance whereas leverage has a negative effect. Zakah and gross domestic product produce no significant effect on bank performance. Research limitations/implications – Even though the model has explained the significant part of the variation in performance, there are other factors considered as noise in the model which are unexplained due to the lack of data. As such, other mechanisms of corporate governance (CG) comprising attributes of the remuneration and nominating committees and ownership structure may be used in future research. The sample size is also limited; thus, in future research, the sample size could be increased by including Islamic banks operating in all Middle East countries. Practical implications – The results suggest that to yield a better bank performance, Islamic banks should enhance the effectiveness of CG through the board of directors (BODs), whereby any decisions made by the BODs would lead to greater investors’ confidence in the market. The results suggest that policymakers should impose new mechanisms that could impact the effectiveness and compliance of BODs on the code of CG and guidelines of micro-finance, in general, and among Islamic banks, in particular. The community also has the right to know up to what extent are the Islamic banks are in compliance with Shariah principles and rules and the impact of their transactions on the society’s welfare. Originality/value – BODs’ failures are the primary reason for the recent financial collapses, and Islamic banks are not spared from these events. Even though many studies have examined the influence of BODs effectiveness on the performance of conventional banking industry over time, studies on the Islamic financial institutions are quite scarce. In addition, the results obtained by the studies on conventional banks may not be applicable to Islamic banks. This is because the BODs of Islamic banks discharge their responsibilities and duties along with the existence of the Shariah supervisory board (a multi-layer structure), which is quite different from the CG structure in conventional banks that is dependent on the BODs (a single-layer). Therefore, this research attempts to fill the gap in the literature by addressing this issue in the Islamic banking industry by using a stakeholder theory based on Islamic perspective which has not been used yet in previous studies.

Competition and market structure of the Malaysian Islamic banking industry

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohd Faizal Basri
Keyword(s):  
Market Structure ◽  
Monopolistic Competition ◽  
Banking Industry ◽  
Financial System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Under Performing ◽  
Conventional Banks ◽  
The Impact

Purpose This paper aims to investigate the impact of competition in the Malaysian Islamic banking industry and the market structure of the industry by focusing on the particular impact created by the entrance of fully fledged foreign Islamic banks plus the introduction of Islamic subsidiaries of existing conventional banks in the country (domestic and foreign ownership). Design/methodology/approach Using a sample of 16 Islamic banks in the country that operated between 2008 and 2015, this paper measures the competition among the Islamic banks using the Panzar-Rosse Model and by looking at the market structure of the industry using the k-bank concentration ratio and the Herfindahl-Hirschman Index. Findings The study found that between 2008 and 2015, the Malaysian Islamic banking industry operated in monopolistic competition conditions with a moderately concentrated market structure. The introduction of foreign Islamic banks caused the market structure to become more competitive and less concentrated by comparing the results that include foreign Islamic banks against the results generated with a subsample of domestic Islamic banks only. Bank Negara Malaysia’s (BNM’s) financial reform and the liberalisation of the financial system were proven to induce competition making the financial system more resilient, competitive and dynamic. The Islamic banks have recorded consistently increased annual performance with the under-performing Islamic banks catching up on the top performers. Originality/value Very few research studies have focused on the market structure and competition of the Islamic banking industry in Malaysia, especially using recent financial data; this study will contribute to filling the existing gap.

scholarly journals The Comparative Analysis of the Islamic and Conventional Bank System in Turkey

2016 ◽  
Author(s):  
Vivien Pavelka ◽  
Gyöngyi Bánkuti ◽  
Jozsef Varga
Keyword(s):  
Comparative Analysis ◽  
Financial Crisis ◽  
Annual Reports ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Leverage Ratio ◽  
Conventional Banks ◽  
Set Up ◽  
Bank System ◽  
Conventional Bank

The aim of our study is the comparative analysis of the Islamic and conventional bank systems in Turkey focusing on the years of the last financial crisis. The financial crisis of 2008 shocked the world and impeached the confidence in the conventional bank systems. It drew the attention to the alternative financial forms like Islamic banking. The best known specialty of the Islamic bank system is the prohibition of interests and speculative transactions. The question is: are Islamic banks more crisis-resistant than the conventional banks? Are they really more stable? We would like to get answers for these questions through analyzing the four Islamic banks and four conventional banks with the same size in Turkey. We set up three hypothesizes: 1. The profitability of the Islamic banks was higher during the crisis than the profitability of the conventional banks. 2. The liquidity of the Islamic banks was higher during the crisis than the liquidity of the conventional banks. 3. The leverage ratio of the Islamic banks was higher during the crisis than the leverage ratio of the conventional banks. The time horizon of the research is from 2007 to 2013 and we get the data from the annual reports of the banks.

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