scholarly journals Do Islamic banks contribute to growth of the economy? Evidence from United Arab Emirates (UAE)

2017 ◽  
Vol 12 (1) ◽  
pp. 113-118 ◽  
Author(s):  
Mosab I. Tabash ◽  
Suhaib Anagreh
Keyword(s):  
Economic Growth ◽  
United Arab Emirates ◽  
Banking Sector ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
The World ◽  
Suitable Environment

Islamic finance has grown rapidly in the recent years particularly in the Middle East and the world. It receives a great attention of bankers and financial scholars due to its stability during financial shocks and crises. The paper uses empirical analysis to test the role of Islamic banking in enhancing the economic growth of United Arab Emirates (UAE). Gross Domestic Product (GDP), Gross formation (GF), and Foreign Direct Investment (FDI) are used as representatives for economic growth, while Islamic banks’ investments are used as a representative for Islamic financial sector in the UAE. The study uses time series techniques to test the link between the variables. In the current study, co-integration along with error correction models is utilized. All econometric work is done using Eviews. The findings reveal that the causal relationship between Islamic banks’ investments and economic growth of UAE is supply-leading direction. Furthermore, the findings depict that Islamic investments have contributed in increasing investments and in bringing FDI into the country in the long-term. The study also shows that there is two-way association between Islamic banks’ investments and FDI. It shows that FDI supports Islamic banking and Islamic banking brings FDI. The paper concludes that authorities of the UAE should devote more attention for this growing banking sector by facilitating regulations for establishing new Islamic banks and then creating a suitable environment for their growth and progress in the UAE.

Drawing ethical mentation in Islamic banks; addressing operational lines heterogeneity with special reference to Al-Ghazali’s ethical philosophy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shinaj Valangattil Shamsudheen ◽  
Saiful Azhar Rosly ◽  
Syed Abdul Hamid Aljunid
Keyword(s):  
Decision Making ◽  
Special Reference ◽  
United Arab Emirates ◽  
Partial Least Square ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Ethical Philosophy ◽  
Divine Knowledge

Purpose This study aims to examine the decision-making behaviour of Islamic banking practitioners of the United Arab Emirates with special reference to the operational line heterogeneity by employing factors that are religious in nature such as intellect, satanic force and divine knowledge as encapsulated in al-Ghazali’s ethical philosophy. Design/methodology/approach A total of 337 samples were collected from the Islamic banking practitioners in the United Arab Emirates using a purposive sampling technique, and the empirical analysis was conducted with the measures of model fit and bootstrapping technique using Partial least square Structural equation modelling and multi-group analysis. Findings The empirical findings reveal that the dedicated use of intellect in making decisions related to ethical issues where desires and emotions tend to overwhelm reason and human choices. While divine knowledge is found ineffective guidance of the intellect, the element of satanic force is found significantly impacting decision-making. As the lack of religious consciousness is evident among respondents, higher exposure to operational risk is expected. These findings were found identical across the Islamic banking practitioners in different lines of operations. Research limitations/implications The span of the study is limited to a single country. Future studies are recommended to replicate the study to more markets where the share of Islamic finance is significant. Practical implications Findings of the study highly suggest respective authorities of Islamic financial institutions to intensify the capacity-building programs on the foundation of faith which includes Islamic thought and worldview, to enhance the corporate ethical decision-making. Moreover, equal importance should be given to all the banking practitioners regardless of line of business operations. Originality/value With undue emphasis is given to the juristic (fiqh) aspects of Shariah compliance in the Islamic banking and finance industry, less has been attempted to explore its ethical dimension (akhlaq) in the compliance parameters that leave a relatively large gap to address prevailing unethical practices in Islamic finance institutions. Findings from this study can be useful as a warning to the Islamic banking firms to enhance the sense of God-fearing and improve existing measures in the organisation in mitigating operational risks that may arise from people or system and consequently ensure the smooth governance of the Islamic banks.

Islamic Financial Inclusion

2020 ◽  
pp. 155-173
Author(s):  
S. M. Sohrab Uddin ◽  
Mohammad Zoynul Abedin ◽  
Nahid Afroz
Keyword(s):  
Banking Sector ◽  
Financial Inclusion ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Policy Makers ◽  
Muslim Population ◽  
Muslim Countries ◽  
The World ◽  
Global Concern ◽  
Empirical Contribution

Financial Inclusion (FI), a global concern of this decade, has been accepted by development agencies, governments, and policymakers as one of the pre-eminent ways to eradicate worldwide poverty and income inequality. Consequently, authorities are looking for possible ways to include the unbanked in formal financial chain. Islamic finance, specifically Islamic banking, with its welfare-oriented principles and unique products, has been able to capture the attention of policy makers. Moreover, a major portion of the Muslim population still exclude themselves from the formal financial chain due to religious prohibition of interest-based transactions for whom Islamic finance is the only way to inclusion. Bangladesh, one of the major Muslim countries in the world, is still to bring one-fourth of its total population under formal financial chain. At this backdrop, this chapter examines the empirical contribution of Islamic banking sector in financial inclusion condition as well as development scenario of Bangladesh.

scholarly journals The Importance of Murabaha in Long-Term Finance Programs in the Islamic Banking Industry

1999 ◽  
Vol 16 (4) ◽  
pp. 87-102
Author(s):  
Yousif Ashour
Keyword(s):  
Banking Industry ◽  
The Other ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Two Sides

Since the start of the Islamic banking industry many questions have been raised about Islamic finance policies used by Islamic banks and lheir long-term finance programs. The most interesting questions on Islamic finance policies are lhose related to murabaha finance. The argumenl concerning murabaha has two sides, one for and the other against. The questions normally are concentrated on whether Islamic banks should use murabaha in their finance, and whether Islamic banks heavily depend on it in their finance. The aim of this article is to exam­ine the importance of murabaha compared to other Islamic finance policies in long-term finance programs in the Islamic banking industry. The article suggests that musharaka and mudaraba are as important as murabaha in financing long-term programs in the Islamic banking industry.

scholarly journals POSITIONING ISLAMIC LEGAL THEORY IN THE DEVELOPMENT OF ISLAMIC FINANCE

JURISDICTIE ◽  
2019 ◽  
Vol 10 (1) ◽  
pp. 18
Author(s):  
Nuha Qonita
Keyword(s):  
Islamic Law ◽  
Legal Theory ◽  
New Product ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Modern Time ◽  
Islamic Legal Theory ◽  
Islamic Jurisprudence ◽  
The World

<p>Islamic finance continues to grow over the world, the development of technology plays a crucial role to support Islamic finance. The great innovation of technology may come to dig up the potential of Islamic financing, yet digital system needs for sharia compliance, both are in similar needs for sharia overviews regardless different opinions of ijtihad in this modern time. Emphasizing case by case of Islamic finance has been done by the sharia scholars in producing the new product of Islamic banking and financing. The Islamic jurisprudence however should consider the substence and maqasid form of sharia. The objective of this paper is to enlight some vital parts of Islamic legal theory as part of Islamic law in implementing sharia compliance. Furthermore, provide the role of legal system which takes a crucial place in implementing the system, it should be harmonized in the existing condition of Islamic finance. This paper is qualitative methods with deep analysis on Islamic legal theory among muslim scholars.</p>

scholarly journals DIMINISHING MUSHARAKAHIN ISLAMIC BANKS: AN ANALYSIS BASED ON HOME FINANCING

2021 ◽  
Vol 04 (01) ◽  
Author(s):  
Muhammad Junaid Ali Khan ◽  
Abdul Majid
Keyword(s):  
Banking Sector ◽  
Modern World ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Significant Growth ◽  
Banking Systems ◽  
Widespread Acceptance ◽  
Banking Institutions ◽  
The Common

Islamic Banking is one of the fastest growing banking systems in the modern world. It has also achieved significant growth in the Pakistani banking sector in the recent decades. Diminishing Musharakah (DM) is an Islamic mode of finance which not only provides home financing facilities to the customers but also provides other long term financing transaction such as machinery and equipment financing in Islamic banks. In September 2020, DM has the largest share in the Islamic banking financing in Pakistan at 34.5 percent. Considering the widespread acceptance of DM, this paper discusses the shariah structure of DM and its use as a home finance product, specifically its variants, in Islamic Banking Institutions. This paper also clarifies the issues which create confusions in the minds of the common public about Islamic banking products, emphasizing the importance of this product for Islamic Banking Institutions

Islamic Financial Development and Economic Growth-- Empirical Evidence from United Arab Emirates

2014 ◽  
Vol 2 (3) ◽  
pp. 15 ◽  
Author(s):  
Mosab I. Tabash ◽  
Raj S. Dhankar
Keyword(s):  
Economic Growth ◽  
United Arab Emirates ◽  
Time Series Data ◽  
High Growth ◽  
Series Data ◽  
Islamic Finance ◽  
Growth Time ◽  
Islamic Banks ◽  
Finance System ◽  
The Relationship

This paper analyzes empirically the relationship between the development of Islamic finance system and growth of the economy in the United Arab Emirates (UAE). To document the relationship between development of Islamic finance and economic growth, time series data from 1990 to 2010 were used. We use Islamic banks’ financing credited to private sector through modes of financing as a proxy for the development of Islamic finance system and Gross Domestic Product (GDP), Gross Fixed Capital Formation (GFCF), as proxies for real economic growth. For the analysis, the unit root test, cointegration test and Granger Causality tests were done. Our empirical results show that there is a strong positive association between Islamic banks’ financing and economic growth in the UAE, which reinforces the idea that a well-functioning banking system promotes economic growth. However, our results indicate that a causal relationship happens only in one direction, i.e., from Islamic banks’ financing to economic growth, which supports Schumpeter’s supply-leading theory. In this case, the development in the Islamic financial sector acts as supply, leading to transfer of resources from the traditional, low-growth sectors to the modern high-growth sectors, and to promote and stimulate an entrepreneurial response in these modern sectors. Furthermore, the results show that Islamic Banks’ financing has contributed to the increase of investment in UAE in the long term and in a positive way.

scholarly journals The Impact of Islamic Banking on the Jordanian Economy Compared with Commercial Banks

2016 ◽  
Vol 8 (3) ◽  
pp. 244
Author(s):  
Taha Barakat Al-shawawreh
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Commercial Banks ◽  
Annual Reports ◽  
Islamic Banking ◽  
Islamic Banks ◽  
The Impact

<p>This research aims to evaluate the role of Islamic Banking in supporting the economic growth in Jordan, compared y commercial banks. Data was collected from the literature and the annual reports of two Jordanian banks representing Islamic and commercial banks. By analyzing the figures of the two banks, the results showed that Islamic banks have more ability to support the economic development in the Kingdom.</p>

scholarly journals The need for Islamic banking services in commercial banks of Uzbekistan and its positive impact on economic growth

2020 ◽  
Vol 1 ◽  
pp. 43-46
Author(s):  
Tursunov Anvar Sultanovich
Keyword(s):  
World Bank ◽  
Commercial Banks ◽  
Positive Impact ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking Services ◽  
The World Bank ◽  
Factors Influencing ◽  
The World

This article presents the development of Islamic banking services, development trends in the World Bank financial system and the factors influencing the growth of the country’s economy. Today, two-thirds of Islamic finance is concentrated in Islamic banks. The urgency of establishing Islamic banking services in commercial banks is highlighted. There are practical suggestions and recommendations for the development of this area.

scholarly journals The role of tribalism as mediator between employee empowerment and organizational commitment in Yemeni Islamic banking sector

2019 ◽  
Vol 14 (1) ◽  
pp. 130-149
Author(s):  
Ali Salman Emam ◽  
Juraifa Bte Jais ◽  
Mosab I. Tabash
Keyword(s):  
Organizational Commitment ◽  
Social Exchange ◽  
Structural Equation ◽  
Social Exchange Theory ◽  
Banking Sector ◽  
Employee Empowerment ◽  
Islamic Banking ◽  
Islamic Banks ◽  
The Relationship

Abstract This study examined the influence of employee empowerment on organizational commitment, and the level to which Tribalism plays a role in the relationship between the former two variables in the context of Islamic banks in Yemen. Indeed, the rationale for introducing employee empowerment is to increase levels of employee’s commitment to ensue positive outcomes. The interrelationships between the variables were analyzed to develop a strategy for increased organizational commitment in the Yemeni Islamic banking sector. This study used a social exchange theory to illustrate the study framework to link the relations between employee empowerment, organizational commitment, and Tribalism. This study relied on quantitative approaches. The study sample comprised of Yemeni Islamic banks’ employees. 450 questionnaires were distributed to employees, out of which, 292 were retrieved and deemed usable for analysis, constituting a 65% rate of response. The partial least squares structural equation modelling (PLS-SEM) was employed to analyze data and test the proposed hypotheses. The results indicated that there is a significant relationship between empowerment of the employees and their organizational commitment in Islamic banks in Yemen. More importantly, this study revealed that Tribalism is a significant mediator on the relationship between employee empowerment, and organizational commitment.

An Appraisal of the Role of Islamic Banking Development and Economic Growth

2020 ◽  
Vol 4 (4) ◽  
pp. 215-236
Author(s):  
Talat Hussain ◽  
Noman Arshed ◽  
Rukhsana Kalim
Keyword(s):  
Economic Growth ◽  
Resource Mobilization ◽  
Financial Inclusion ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Promoting Effect ◽  
Efficient Resource ◽  
Growth Promoting ◽  
Banking Development

Literature is well-versed with the contribution of financial inclusion from the deposit and financing size and its role in economic growth. These contributions include a boost in economic transactions and efficient resource mobilization. Islamic financial system is different from conventional banking as it distributes the risk equitably and promotes fairness in dealings. It helps in the integration of business gains as a borrower of Islamic capital with the earnings of savers as depositors. This study has proposed two channels via which Islamic financial development may incur growth. First is bank financing penetration, and second is depositor financial inclusion. Based on the data of 41 full-fledged Islamic banks between 2012 and 2017, the results show that both increases in bank and depositor returns have a growth-promoting effect. This prompts the policymakers with new insights. Policymakers should increase Islamic banking penetration to different sectors and regulate for increased extraction of the depositor contribution from the banking financing activity.

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