scholarly journals THE REGIME SWITCHING OF CYCLE INSTABILITY OF ISLAMIC BANKING AND THE ECONOMY: EVIDENCE FROM INDONESIA, MALAYSIA, AND PAKISTAN

2021 ◽  
Vol 7 (2) ◽  
pp. 233-262
Author(s):  
Irfan Nurfalah ◽  
Aam Slamet Rusydiana
Keyword(s):  
Regime Switching ◽  
Markov Switching ◽  
Banking System ◽  
Research Data ◽  
Public Confidence ◽  
Islamic Banking ◽  
Z Score ◽  
Proxy Variable ◽  
The Public ◽  
Banking Stability

This study aims to examine the cyclical instability of Islamic banking in Indonesia, Malaysia, and Pakistan. A stable Islamic banking system can give the public confidence to conduct transactions and thus grow the economy. The proxy variable for stability used is the z-score, with 156 periods of research data from January 2007 to December 2019. The Markov Switching Vector Autoregression (MS-VAR) method was employed. The results show that Islamic banking stability in Indonesia based on the z-score is more stable than others. Nevertheless, in terms of the regression of all the variables, regime shifting, and the duration of the crisis, overall Malaysian Islamic banking displays the best performance. The instability of the Indonesian model is mostly affected by inflation, whereas Malaysia and Pakistan are affected by the financing to deposit ratio and the fluctuation in global oil, respectively.

scholarly journals BANK RUN AND STABILITY OF ISLAMIC BANKING IN INDONESIA

2017 ◽  
Vol 3 (1) ◽  
pp. 25-60 ◽  
Author(s):  
Rahmatina A. Kasri ◽  
Tika Arundina ◽  
Kenny D. Indraswari ◽  
M. Budi Prasetyo
Keyword(s):  
Factor Analysis ◽  
Financial Stability ◽  
Banking System ◽  
Bank Runs ◽  
Primary Data ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Bank Run ◽  
Banking Stability ◽  
Conventional Banks

Bank run is an important economic phenomenon which increasingly occurred in in modern banking system and potentially threatened banking stability as it could trigger a banking crisis. However, most studies related to bank run focus on the occurrence of bank run in conventional banking system. Very few of them discuss the bank run phenomenon under Islamic banking system or dual banking system where Islamic banks jointly operating with conventional banks. Therefore, this study attempts to analyze the determinants of bank run in the Indonesian Islamic banking industry by employing primary data from 256 customers of Indonesia Islamic banks in 2015 and by utilizing factor analysis and descriptive statistics. In theory, Islamic banks tend to be more resilient towards any macroeconomic or financial shocks as compared to conventional banks due to the nature of its asset-based and risk-sharing arrangement. However, the result exhibits that both psychological and fundamental factors (i.e. macroeconomics and bank fundamentals) strongly influence the behaviors of Islamic banking depositors to withdraw their funds, which might trigger the occurrence of bank runs in the country. Insider information, macroeconomic condition and bank fundamental factors are also shown to have the highest impacts among all variables. Hence, in the context of banking stability, the finding implies that Islamic banks are not completely immune to the impacts of macroeconomic shocks or financial crisis. As a country with a dual banking system, Indonesia had experienced several bank runs since 1990s. Therefore, the findings of the study should provide the policy makers important insight into research based-policy in order to attain financial stability as one of the main economic goals of the country.Keywords: Bank run, Islamic bank, Factor analysis, IndonesiaJEL Classification: C83, G21, G28

scholarly journals Sharia Marketing and Employee Intelligence on Public Trust in Indonesian Islamic Banking

2021 ◽  
Vol 11 (1) ◽  
pp. 12-18
Author(s):  
Muhammad Rijalus Sholihin ◽  
Imam Abrori
Keyword(s):  
Regression Analysis ◽  
Linear Regression Analysis ◽  
Banking System ◽  
Public Trust ◽  
Multiple Linear Regression Analysis ◽  
Marketing Strategies ◽  
Coefficient Of Determination ◽  
Public Confidence ◽  
Islamic Banking ◽  
Strategic Process

The development of the Islamic banking system in Indonesia is carried out by a dual banking system within the framework of the Indonesian Banking Architecture (API). This has received a good response from the community so that it can create progressive trust. In addition to the sharia system label, there are several aspects that are thought to be factors in increasing public trust, including sharia marketing strategies and employee intelligence. The strategic process is the main pillar in gaining public attraction and trust. Likewise with the capabilities or intelligence of employees which can increase public trust. For this reason, this study aims to examine and analyze Islamic marketing and employee intelligence as an effort to increase public confidence in Islamic banking in Indonesia. This research was conducted in Jember Regency with a sample size of 100 respondents. The analytical method used is multiple linear regression analysis. The results of this study indicate that Islamic marketing has a significant and significant effect on public trust in Islamic banking, while employee intelligence does not show an effect on public trust in Islamic banking. The coefficient of determination obtained with an R Square value of 7.8%, this shows that public trust can be explained by the existence of Islamic marketing and the intelligence of Islamic marketing employees and employee intelligence.

scholarly journals Organizational Design and Rules in Rastin Profit and Loss Sharing Banking

2019 ◽  
Vol 2 (1) ◽  
pp. 9-21
Author(s):  
Bijan Bidabad ◽  
Roohollah Mohammadi ◽  
Mahshid Sherafati
Keyword(s):  
Interest Rate ◽  
Organizational Structure ◽  
Organizational Design ◽  
Banking System ◽  
Public Confidence ◽  
Islamic Banking ◽  
Real Economy ◽  
Positive Effects ◽  
Regulatory Frameworks ◽  
Banking Operations

Purpose: This paper aims to explain the organizational structure of Rastin Profit and Loss Sharing (PLS) Banking. Rastin Banking is a full Islamic Banking System with all necessary parts for banking operations that can be installed in conventional and Islamic banks both. Design: Rastin Banking complies with the nature of the financial intermediary activity (the partnership of depositor in the yields of the fund receiver via the bank). To fulfill this goal, particular organizational structure, accompanying with instruments and workflow are defined. Findings: To handle Rastin Banking, particular theoretical and operational regulatory frameworks should be defined to fulfill the participation operations. In this paper, we will have a look at the necessary organizational structure to setup Rastin Banking. Research limitations: This plan was formed and tested in Bank Melli Iran in order to propose a model for other banks as well. Practical implications: In this system, the investment return of the participation is distributed to the parties of the financial partnership (depositor, entrepreneur, and bank), and it is done by eliminating fixed interest rate, and it is based on the real economy profit (return) of the activity. Social implications: Rastin Banking can lead to important positive effects on growth and economic welfare through money and capital markets. Interest rate as an essential factor in conventional banking is not usable in Islamic banking and other similar institutions that work based on partnership, such as mutual funds and saving and loan associations. Originality/value: Approach of this system is entirely different from conventional banking. In addition to removing usury in banking activities, Rastin Banking uses the best practical ethic finance to creating safe and public confidence environment for banking operations. Article Type: Technical paper

scholarly journals Islamic Banking and its Legal Validity in India

2016 ◽  
Vol 4 (2) ◽  
pp. 1-18
Author(s):  
Dikshit Arushi
Keyword(s):  
United Kingdom ◽  
Public Awareness ◽  
Banking System ◽  
Islamic Banking ◽  
New Delhi ◽  
Free Banking ◽  
Legal Regime ◽  
The Public ◽  
System A ◽  
The World

Islamic banking is an emerging model of banking which is currently practiced in several countries such as Malaysia, Indonesia, Afghanistan, Bangladesh and United Kingdom. The most intriguing aspect of Islamic banking is that it works on a purely no interest basis. Given the fact that India is a country with one of the largest Muslim populations in the world, the researchers believe it is important to understand the public awareness, acceptability and feasibility of introducing this system of banking in India. This paper primarily aims at discussing the legal viability of introducing Islamic banking in India, taking into account the current legal regime. In analyzing how forthcoming the population will be towards this banking system, a sample of the population was chosen from Pune and New Delhi and surveyed with the help of a questionnaire, leading to the inference that most people are open to the concept of interest free banking but are unwilling to accept the Islamic ideology it is derived from.

scholarly journals The evaluation of stability of Czech and Slovak banks

2018 ◽  
Vol 9 (2) ◽  
pp. 205-223
Author(s):  
Kristina Kocisova ◽  
Beata Gavurova ◽  
Marcel Behun
Keyword(s):  
Banking Sector ◽  
Banking System ◽  
Value Added ◽  
Stability Index ◽  
Financial Indicators ◽  
Z Score ◽  
Banking Stability ◽  
Two Measures ◽  
The Stability ◽  
Main Components

Research background: Commercial banks could affect the stability of the whole banking system due to the way they carry out their business activities. The supervision authorities play a key role in protecting banking stability by ensuring banks´ resilience to shocks, ability to recover their position in response to crisis and ultimately the supervision authorities help prevent failure of these banks. Therefore, in recent years’ researchers have been trying to define conditions that could guarantee stability of banks. Purpose of the article: This paper aims to describe the methodology used to measure banking stability, namely banking stability index (BSI) and Z-score. In the first part, we present the literature review, then we try to assess the stability in the condition of the Czech Republic and Slovakia during the period 2006–2016. Methods: The BSI is constructed according to the methodology presented by Ghosh (2011), taking into account the main components, which are described by the set of financial indicators of banks. Findings & Value added: Results showed that the average BSI in the whole sample moved from 0.20454 (in 2015) to 0.2486 (in 2007). The results according to countries have showed that the tendency of development in the Czech and Slovak banking sector was the same. At the beginning of the analyzed period, the Slovak banks were more stable compared to Czech ones. Since 2009 the situation has been different, where the Czech banks could be considered as more stable compared to Slovak ones. The tendency of development of Z-score in both countries could be considered as the same, without the 2009 year, when the Czech banks significantly strengthened their capitalization, which influenced the development of Z-score. The results of correlation analysis between Z-score and BSI pointed to the fact that there was no high correlation between these two measures, therefore it is appropriate to use both methodologies for stability evaluation.

scholarly journals Islamic Banking Education in Maqasid al-Mu'amalat’sPerspective

2021 ◽  
Vol 3 (2) ◽  
pp. 10-21
Author(s):  
Oktaria Ardika Putri ◽  
Muhammad Solikhudin
Keyword(s):  
Tertiary Education ◽  
Banking System ◽  
Islamic Banking ◽  
Study Program ◽  
The Public ◽  
Islamic Financial Institutions ◽  
Banking Education ◽  
General Benefit ◽  
The Government ◽  
Keywords Education

Abstract: This article explains the role of tertiary education in Islamic banking in Indonesia with a review of maqa>s}id al-mu'a>mala>t. As known, the development of Islamic banking is still being pursued today. Accordingly, the public's need for an understanding of Islamic banking and the need for experts in the field of Islamic banking cannot be denied. Therefore, it requires experts who have graduated from the Islamic banking study program from universities, including the Kediri State Islamic Institute, to answer this challenge. The contribution of higher education in the Islamic banking study program to produce excellent graduates is an important thing that must be realized. Islamic banking education, when viewed by maqa>s}id al-mu'a>mala>t, it is known that real certainty is manifested, such as a comprehensive understanding of Islamic banking in terms of compliance with Islamic banking principles which includes compliance with the principles of Islamic banking. Sharia principles, prudential provisions, increased operational efficiency which will have an impact on high competitiveness and stability of the Islamic banking system as well as benefits to the economy. There is also a universal dimension, namely the general benefit between the government, Islamic financial institutions and the public.   Keywords: Education, Islamic Bank, Maqa>s}id al-Mu'a>mala>t. Abstrak: Artikel ini menerangkan peran pendidikan perguruan tinggi dalam perbankan syariah di Indonesia dengan tinjaun maqa>s}id al-mu’a>mala>t. Seperti diketahui, pengembangan perbankan syariah masih diupayakan sampai saat ini. Sesuai dengan itu, kebutuhan masyarakat terhadap pemahaman perbankan syariah serta kebutuhan tenaga ahli di bidang perbankan syariah tidak dapat dipungkiri. Oleh sebab itu, butuh tenaga ahli lulusan program studi perbankan syariah dari perguruan tinggi, termasuk Institut Agama Islam Negeri Kediri, untuk menjawab tantangan ini. Kontribusi pendidikan tinggi program studi perbankan syariah untuk melahirkan sarjana-sarjana yang unggul, merupakan hal penting yang harus direalisasikan. Pendidikan perbankan syariah, apabila ditinjau dengan maqa>s}id al-mu’a>mala>t, maka diketahui, terwujud kepastian yang nyata, seperti pemahaman yang menyeluruh tentang perbankan syariah dalam hal kepatuhan pada prinsip perbankan syariah yang meliputi kepatuhan pada prinsip-prinsip syariah, ketentuan kehati-hatian, peningkatan efisiensi operasional yang berdampak pada daya saing yang tinggi dan stabilitas sistem perbankan syariah serta kemanfaatan bagi perekonomian. Terwujud juga dimensi universal, yakni kemaslahatan umum antara pemerintah, lembaga keuangan syariah dan masyarakat.   Kata Kunci: Pendidikan, Bank Syariah, Maqa>s}id al-Mu’a>mala>t.

scholarly journals Kritik Abdullah Saeed terhadap Praktik Pembiayaan Murabahah pada Bank Islam

2014 ◽  
Vol 6 (2) ◽  
pp. 375
Author(s):  
Syaparuddin Syaparuddin
Keyword(s):  
Banking System ◽  
Great Majority ◽  
Basic Question ◽  
Islamic Banking ◽  
Proper Understanding ◽  
Critical View ◽  
The Public ◽  
Islamic Countries ◽  
Conventional Banks ◽  
The Way

<p>This paper is aimed at discussing the critical view of Abdullah Saeed as far as murabahah is concerned. For Saeed, this banking practice, which is adapted and adopted from Syari’ah has caused a lot of controversies. The basic question that a man like him asks is, does this Syari’ah banking system really make a difference? Nonetheless, it is this Syari’ah-based banking product that dominated the whole Islamic banking system in the great majority of Islamic countries. Investigating the nature of this product becomes therefore both strategic and important so as to have a better and proper understanding of it. This proper understanding will in turn influence the way this product is promoted and sold to the public in line with the values of Syari’ah. The paper will also compare murabahah with the similar banking practices in the conventional banks.</p>

scholarly journals Malaysia: 30 Years of Islamic Banking Experience (1983-2012)

2012 ◽  
Vol 11 (10) ◽  
pp. 1133 ◽  
Author(s):  
Khiyar Abdalla Khiyar
Keyword(s):  
Capital Accumulation ◽  
Development Process ◽  
Free Market ◽  
Banking System ◽  
Islamic Banking ◽  
The Public ◽  
Banking And Finance ◽  
Chinese Origin ◽  
Market Economic ◽  
The Government

Malaysia proved to be at the forefront of Islamic banking and finance by adopting a dual banking system where the conventional and Islamic banking systems co-exist. The Islamic banking has been in operation since 1983 and offers a variety of Islamic financial instruments. In such a multi-ethnic and multi-religious country, customers get the financial products and services they like. In the early 1980s, the government encouraged all Malaysians to be involved in the fast-track development process with a vision to make Malaysia a fully industrialized country by the year 2020. Actually, the development of Malaysias dual banking system is tied up with its social and economic policy and that is why it was fully supported by the countrys top leadership in addition to the Central Bank, the Parliament, and the public in general. Islamic banks can motivate Muslims to increase savings and reduce hoarding. This kind of motivation was expected to enhance their participation in the development process contributing to savings mobilization and capital accumulation in order to improve their standard of living and bring them up to par with their countrymen of Chinese origin. Among the countries with a free market economic system, Malaysia has emerged as the first country to implement a dual banking and financial system. The Malaysian model has been recognized by many Islamic countries as the model to emulate.

Islamic banking

2019 ◽  
pp. 358-403
Author(s):  
Narjess Boubakri ◽  
Ruiyuan Ryan Chen ◽  
Omrane Guedhami ◽  
Xinming Li
Keyword(s):  
Global Financial Crisis ◽  
Banking System ◽  
Empirical Literature ◽  
Islamic Finance ◽  
Future Research ◽  
Islamic Banking ◽  
The Public ◽  
Financial Products ◽  
The Global Financial Crisis ◽  
Global Growth

The last two decades have witnessed a tremendous global growth in Islamic finance and banking, mainly prompted by the global financial crisis. This growth has been accompanied by an increasing interest among researchers, policymakers, managers of financial institutions, and the public about the functionalities of the Islamic banking system and how it differs from conventional banking. Against this backdrop, we start this chapter with an overview and assessment of the practice of Islamic banking around the world. Then, we discuss its primary characteristics, including its underlying principles and common financial products. Next, we review the key findings in the empirical literature on the differences between Islamic and conventional banking at the micro and macro levels. We conclude with a discussion of avenues for future research.

scholarly journals The evaluation of stability of Czech and Slovak banks

2018 ◽  
Vol 9 (2) ◽  
pp. 205-223
Author(s):  
Kristina Kocisova ◽  
Beata Gavurova ◽  
Marcel Behun
Keyword(s):  
Banking Sector ◽  
Banking System ◽  
Value Added ◽  
Stability Index ◽  
Financial Indicators ◽  
Z Score ◽  
Banking Stability ◽  
Two Measures ◽  
The Stability ◽  
Main Components

Research background: Commercial banks could affect the stability of the whole banking system due to the way they carry out their business activities. The supervision authorities play a key role in protecting banking stability by ensuring banks´ resilience to shocks, ability to recover their position in response to crisis and ultimately the supervision authorities help prevent failure of these banks. Therefore, in recent years’ researchers have been trying to define conditions that could guarantee stability of banks. Purpose of the article: This paper aims to describe the methodology used to measure banking stability, namely banking stability index (BSI) and Z-score. In the first part, we present the literature review, then we try to assess the stability in the condition of the Czech Republic and Slovakia during the period 2006–2016. Methods: The BSI is constructed according to the methodology presented by Ghosh (2011), taking into account the main components, which are described by the set of financial indicators of banks. Findings & Value added: Results showed that the average BSI in the whole sample moved from 0.20454 (in 2015) to 0.2486 (in 2007). The results according to countries have showed that the tendency of development in the Czech and Slovak banking sector was the same. At the beginning of the analyzed period, the Slovak banks were more stable compared to Czech ones. Since 2009 the situation has been different, where the Czech banks could be considered as more stable compared to Slovak ones. The tendency of development of Z-score in both countries could be considered as the same, without the 2009 year, when the Czech banks significantly strengthened their capitalization, which influenced the development of Z-score. The results of correlation analysis between Z-score and BSI pointed to the fact that there was no high correlation between these two measures, therefore it is appropriate to use both methodologies for stability evaluation.

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