scholarly journals The impact of Fintech on Islamic banking and the collaboration model: a systematic review studies in Indonesia

2021 ◽  
Vol 9 (4) ◽  
pp. 302-312
Author(s):  
Idah Zuhroh
Keyword(s):  
Systematic Review ◽  
Financial Services ◽  
Banking Sector ◽  
Legal Aspects ◽  
Security Protocol ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Registration System ◽  
Collaboration Model ◽  
The Impact

The Fintech company has raised its number significantly in Indonesia and threatened the banking sector as Islamic Banking is not the exception. Fintech can provide better financial services than Islamic Bank with its technological advantages. This research aims to observe the effect of Fintech's on Islamic banks and discover the collaboration model between Fintech and Islamic banks to improve financial services. The method was carried out by Systematic Literature Review (SLR), then analyzed using Nvivo 12 to quantify the words counted to the papers found. The result showed that there were 14 papers found to analyze in the systematic review. According to Nvivo 12 words counted result, the highest words counted was ‘services’ with 21%, followed by ‘user’ and ‘customers’ combined with 16%. Furthermore, Fintech acts as the disruptor for Islamic Banking, shown in its Return on Asset and its potential to take over the millennial customers segment. The collaboration can be done by sharing product marketing, loans, and transaction services. For the customer, big data analysis, the legal aspects, risk of human error, and data security protocol should be mitigated by tightening the registration system to minimize fraud, enhancing the internet server to prevent failure transactions, and closely cooperating with the Authority of Financial Service in Indonesia (OJK) to ensure the legal aspects are fulfilled.

scholarly journals Impact of Mergers and Acquisitions on Operational Performance of Islamic Banking Sector

2021 ◽  
Vol 9 (1) ◽  
pp. 25-36
Author(s):  
Nazim Ullah ◽  
Fauzias Mat Nor ◽  
Junaidah Abu Seman
Keyword(s):  
Market Structure ◽  
Banking Sector ◽  
Negative Impact ◽  
Policy Implications ◽  
Strategic Decision ◽  
Operational Performance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Operating Income ◽  
The Impact

Merger and acquisition (hereafter MA) are the business expansion strategy. Islamic bank is the niche banking sector compared to its peers while it is categorized as too small to succeed. The paper aims to analyze the impact of MA on the operational performance of the Islamic banking sector. This study employs empirical research methods, namely cross-sectional pooled regression and panel data regression to analyze a set of samples consisting of 10 Islamic banks involved in MA from 6 countries, drawn from the International Monetary Fund (IMF), World bank, Ficth Connect, and Bloomberg over the years of 2009Q1to 2018Q4. The operational performance is estimated using accounting-based measures while the Herfindahl-Hirschman Index (HHI) and the concentration ratio (CR) are applied to signify market structure. Total assets, total deposits, and operating income variables are used to represent bank size. The findings indicate that bank size shows a negative impact on operational performance. While the segregated level of bank size which is larger banks and concentrated market structure has a greater impact on the operational performance of Islamic banks in the post-MA period. The paper concludes by discussing policy implications for policymakers and academicians for having the strategic decision on the MA deal and further research.

State ownership and bank performance: conventional vs Islamic banks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Turki Alshammari
Keyword(s):  
Banking Sector ◽  
Banking System ◽  
Positive Influence ◽  
State Ownership ◽  
Bank Performance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Banking Systems ◽  
The Impact

Purpose This paper aims to examine the effect of state ownership on bank performance for all banks in the Gulf Cooperation Council (GCC) countries during the period 2003 – 2018, for two distinct banking systems: the conventional and the Islamic banking systems. Design/methodology/approach To achieve the goal of the study, this paper uses a mean t-test to examine the mean difference of the related variables for both banking systems, and a regression test (using the GMM method) to explore the effect of state ownership on bank performance. Findings The most important result of the analysis is that state ownership has a significantly positive influence on bank performance for conventional banks but not for Islamic banks, in the GCC area. Originality/value This study adds to the scarce related literature comparative empirical results with respect to the impact of ownership on the performance of two different banking systems: the conventional system and the Islamic banking system in the GCC area. This study is likely to have implications for policymakers in terms of developing rules relevant to the governance of GCC’s two banking systems that can help to support the stability of the whole banking sector.

The impact of customer service quality on customer satisfaction in Islamic banking

2017 ◽  
Vol 8 (4) ◽  
pp. 595-604 ◽  
Author(s):  
Mohamed Abdulnaser Janahi ◽  
Muneer Mohamed Saeed Al Mubarak
Keyword(s):  
Customer Satisfaction ◽  
Service Quality ◽  
Customer Service ◽  
Banking Sector ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Quality Dimensions ◽  
Service Quality Dimensions ◽  
The Impact

Purpose The purpose of this paper is to contribute to the Islamic banking literature by examining the impact of different factors of customer service quality on customer satisfaction. Design/methodology/approach The paper presents a model which is not frequently used in Islamic banking literature and shows relationships between six factors of customer service quality and customer satisfaction in the Islamic banking sector. Customers of five main Islamic banks are contributing in this study. Findings This paper demonstrates strong and positive relationships between the six main dimensions of customer service quality (Compliance, Assurance, Reliability, Tangibility, Empathy and Responsiveness) and customer satisfaction. Research limitations/implications The study may suffer from lack of generalization, as it is conducted in one country (Bahrain). It might also be useful to enlarge the study sample and include comparison between Islamic versus conventional banking with regard to service quality and customer satisfaction. Practical implications This paper can influence the current Islamic banks with regard to service quality with an ultimate aim of increasing customer satisfaction and retaining customers. Originality/value This study is one of the few that focus on effects of customer service quality dimensions on customer satisfaction in the Islamic banking sector. It reveals that, although customers pay special attention to Sharia’h laws (compliance) in their transactions with banks, the way services are delivered matters to them too.

Customer perception regarding Sharī‘ah compliance of Islamic banking sector of Pakistan

2016 ◽  
Vol 7 (4) ◽  
pp. 282-303 ◽  
Author(s):  
Lutfullah Saqib ◽  
Muhammad Aitisam Farooq ◽  
Aliya Mueen Zafar
Keyword(s):  
Customer Satisfaction ◽  
Service Quality ◽  
Banking Sector ◽  
Public Awareness ◽  
Interactive Effect ◽  
Islamic Banking ◽  
Main Stream ◽  
Islamic Banks ◽  
Content Type ◽  
The Impact

Purpose This paper aims to analyze the impact of Sharī‘ah compliance perception on customer satisfaction in Islamic banking sector of Pakistan. Design/methodology/approach Primary data were collected from 242 account holders of Islamic banks and Islamic banking branches of conventional commercial banks and analyzed by correlation and regression through self-administered questionnaires based on SERVQUAL model. Findings Significant moderating effects of Sharī‘ah compliance perception on the relation between service quality and customer satisfaction have been identified. Research limitations/implications As a cross-sectional study with convenience sampling restricts generalizability and because financial benefits offered by banks were not included as a variable, the scope of this study is limited to service quality only. Future research may focus on the moderating effect of Sharī‘ah compliance perception through longitudinal study with larger sample size in a multi-cultural environment. Practical implications Results of this paper recommend Islamic banks to focus on their core strength “Sharī‘ah compliance” while developing their product/service and building marketing strategies. Moreover, assurance of high-quality services will sustain such strategies against competition with conventional banks. Social implications Islamic banks must primarily develop their brand through extensive communication and public awareness programs regarding Sharī‘ah compliance standards in terms of products/services, policy/procedures, code of conduct and Sharī‘ah board. Originality/value This research examines moderating role of Sharī‘ah compliance perception between service quality and customer satisfaction in Islamic banking sector of an Islamic Republic with dual banking system. This interactive effect of Sharī‘ah compliance perception has not been found as an overriding theme in any of the main stream journals/articles. Therefore, this study fills this gap.

The impact of COVID-19 on Islamic banks in Bangladesh: a perspective of Marxian “circuit of merchant’s capital”

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohammad Dulal Miah ◽  
Yasushi Suzuki ◽  
S. M. Sohrab Uddin
Keyword(s):  
Financial Services ◽  
Balance Sheet ◽  
Banking System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Working Capital ◽  
Content Type ◽  
Increased Risk ◽  
Merchant Capital ◽  
The Impact

Purpose This paper aims to assess the probable impact of COVID-19 on the Islamic banking system in Bangladesh. More specifically, it attempts to test the hypothesis that Islamic banks are exposed to increased risk because of their role as a provider of “merchant capital” including financing for trade, commerce and working capital, which are believed to be severely disrupted by the COVID-19. Design/methodology/approach The paper draws upon the Marxian tradition on the identification of the circuit of “merchant capital” separated from the circuit of “interest-bearing capital.” Moreover, the research adopts the balance sheet approach to trace the sectoral distribution of investment as well as sources of income of Islamic banks. Findings The research supports the hypothesis that the investment pattern of Islamic banks is skewed toward the trade and merchant’s financing. More than two-third of Islamic banks’ investment, and income thereof, is concentrated on working capital and trade finance. As these sectors are largely vulnerable to the economic shock resulting from COVID-19, Islamic banks in Bangladesh are likely to be affected through this channel. Research limitations/implications The research focuses only on Islamic banks in Bangladesh. Further study can assess the impact of COVID-19 on conventional and Islamic banks in other countries to find similarities and differences with the findings of the current research. Practical implications The finding of this research will be useful for bank managers, policymakers and users of financial services. In particular, this study provides important information useful for regulators in devising appropriate policies which aim to mitigate the adverse impact of COVID-19. Originality/value To the best of the authors’ knowledge, this is the first study that attempts to examine the impact of COVID-19 on Islamic banking system in Bangladesh, a country where Islamic banks occupy one-third of the total banking system’s assets.

scholarly journals COMPETITION, DIVERSIFICATION, AND STABILITY IN THE INDONESIAN BANKING SYSTEM

2021 ◽  
Vol 24 ◽  
pp. 59-88
Author(s):  
Mudeer Ahmed Khattak ◽  
Mohsin Ali ◽  
Baharom Abdul Hamid ◽  
Muhammad Umar Islam
Keyword(s):  
Banking Sector ◽  
Banking System ◽  
Portfolio Diversification ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking Stability ◽  
The Stability ◽  
The Impact ◽  
Important Policy Implication ◽  
Conventional And Islamic Banks

We examine the impact of competition and portfolio diversification on banking stability for conventional and Islamic banks in Indonesia. We find that the Islamic banking sector is less stable, when compared to the conventional banking sector. Competition in the banking sector reduces stability, while diversification enhances it. We find that competition negatively impacts the Islamic banks, but diversification has no impact on these banks. An interesting finding is that competition and diversification complement each other in enhancing the stability of the Indonesian banking sector. These findings carry an important policy implication for the banking sector of Indonesia.

scholarly journals Potential of Financial Technology in Transformation of Islamic Banking Sector in Oman

2021 ◽  
Vol 10 (5) ◽  
pp. 399-402
Author(s):  
Umar Ahmed ◽  
Smiju Sudevan ◽  
Bashir Ahmad Fida
Keyword(s):  
Financial Services ◽  
Economies Of Scale ◽  
Banking Sector ◽  
Joint Venture ◽  
Penetration Rate ◽  
Low Cost ◽  
Public Awareness ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Financial Technology

The overall aim of this paper is to explore the potential of fintech in transforming Islamic banking industry in Oman. Islamic banks in Oman lack economies of scale, limited nationwide outreach, low penetration rate due to low level of public awareness. FinTech present a huge opportunity for the Islamic banking sector to be more competitive in the marketplace. Data and technology are converging, so, Islamic banks at the end of the day, must deliver excellent financial services at relatively low cost. Collaboration or joint venture between fintech firms and Islamic banks will allow Islamic banks to attract more customers, increase efficiency, but more importantly introduce a proposition for youth to be excited to join the industry and drive its development and growth.

scholarly journals Market power and performance: An Islamic banking perspective

2018 ◽  
Vol 15 (3-1) ◽  
pp. 163-171
Author(s):  
Bahaa Sobhi AbdeLatif Awwad
Keyword(s):  
Market Power ◽  
Banking Sector ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Gcc Countries ◽  
Standard Models ◽  
And Performance ◽  
The Impact

This study aims to test the theories of market power and its role in interpreting the performance of Islamic banks in the GCC countries. Based on data from 22 Islamic banks for the period 2012-2017, using standard models, market power theories were unable to explain the returns of Islamic banks in the Gulf. Accordingly, these results deny the existence of an impact of monopoly in the structure of the Islamic banking sector in the performance of this sector, as well as the impact of traditional efficiency in its performance.

Perception of stakeholders on corporate social responsibility of Islamic Banks in Jordan

2016 ◽  
Vol 11 (1) ◽  
pp. 30-56 ◽  
Author(s):  
Venere Di Bella ◽  
Nedal Al-Fayoumi
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Customer Service ◽  
Financial Services ◽  
Banking Sector ◽  
Descriptive Analysis ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Corporate Social

Purpose – The purpose of this paper is to explore the various perceptions of stakeholders on corporate social responsibility (CSR) of Islamic Banks in Jordan. Design/methodology/approach – The data are collected from multiple stakeholder groups of two Islamic Banks in particular: Jordan Islamic Bank for Finance and Investment and Islamic International Arab Bank. The methods adopted to examine the data are the descriptive analysis and analysis of variance. With regard to the purpose of this research, the concept of Islamic CSR and its dimensions have been considered as: rooted in the Islamic ethical system, represented through the profit and loss arrangements, embedded within the principles behind financial services provided by Islamic Banks, and benchmarked by the Accounting and Auditing Organization of Islamic Financial Institutions’ (AAOIFI) corporate governance standard. Findings – The results indicate that stakeholders have expressed a positive attitude toward the concept of CSR. Proving that the issue of CSR is an important factor in Islamic banking and to the perception of various stakeholders’ groups, the focus shifted into identifying the dimensions which shape the Islamic CSR. In reference to previous research results, the Islamic banking sector in Jordan has an in-built dimension that promotes social responsibility. Practical implications – The study recommends that Islamic Banks improve CSR activities in order to better exploit this commitment with a cultural identity yet again. This identity has a direct influence on the branding of Islamic finance in local markets. The structure of offered products reflects regional beliefs and provides a suite of services. In terms of services, the services provided are geared toward specific market segments within local communities. This as a result directs a number of strategic decisions made by Islamic Banks, which are based on the structure of their offerings, brand identity and customer service levels. Originality/value – In Jordan, studies about the perception of stakeholders on CSR from an Islamic perspective are almost non-existent. Thus, providing solutions for study questions and presenting empirical evidence regarding CSR issues will certainly add a new dimension to the literature. Moreover, the conclusions and recommendations may help regulators and decision makers in enhancing the competitiveness and the sustainability of the Islamic banking sector in Jordan.

scholarly journals DOES CORPORATE GOVERNANCE MATTER FOR ASSET QUALITY OF ISLAMIC BANKS?

2021 ◽  
Vol 24 (2) ◽  
pp. 221-236
Author(s):  
Ejaz Aslam ◽  
Aziz Ur-Rehman ◽  
Anam Iqbal
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Banking Sector ◽  
Policy Implications ◽  
Islamic Banking ◽  
Board Independence ◽  
Islamic Banks ◽  
Asset Quality ◽  
The Impact

This study investigates the impact of corporate governance on asset quality of Islamic banks by employing data on 129 Islamic banks from 29 countries spanning the period from 2008 to 2017. The study shows that asset quality of Islamic banks is positively and significantly sensitive to an increase in board independence, Shariah board, and audit committee effectiveness. The study finds that female participation in management as CEOs seems to detract from good performance and that more board meetings can be harnessed to improve banks’ asset quality. These empirical findings have practical policy implications regarding asset quality management and board construction within the Islamic banking sector.

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