scholarly journals The impact of investor protection on financial performance of Islamic banks: An empirical analysis

2012 ◽  
Vol 9 (4) ◽  
pp. 50-60
Author(s):  
Yongqiang Li ◽  
Abdi Hassan ◽  
Esse Abdirashid ◽  
Bruno Zeller ◽  
Miaoli Du
Keyword(s):  
Financial Performance ◽  
Financial Institutions ◽  
Investor Protection ◽  
Future Research ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking And Finance ◽  
Future Research Directions ◽  
Default Risks ◽  
The Impact

The last decade witnessed dramatic growth of the Islamic banking and finance sector, which had largely been credited to its adoption of the profit and loss sharing principles. However, in practice, the Islamic banks mostly reply on debt-like financing methods such as mark-up and leasing finance instead. Consequently, the investors are exposed to default risks. This study empirically examines the impact of investor protection on financial performance of Islamic banks based on an unbalanced panel data collected from 91 Islamic banks and financial institutions worldwide across 1991-2010. Econometric techniques are adopted to specify the models. Results show that stronger investor protection results in better financial performance in the Islamic banking and financial institutions. The paper concludes with acknowledging the limitations and discussion of future research directions

scholarly journals Banking Financial Performance Before and During the Covid 19 Pandemic in Indonesia: Analysis of Comparison Between Islamic and Conventional Banking

2021 ◽  
Vol 9 (1) ◽  
pp. 976-986
Author(s):  
Mister Candera, Amrah Muslimin, Dina Permatasari
Keyword(s):  
Multivariate Analysis ◽  
Financial Performance ◽  
Financial Institutions ◽  
Performance Indicators ◽  
Risk Profile ◽  
Economic Conditions ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Financial Reports ◽  
The Impact

Banking is one of the financial institutions that is very influential on the economic conditions of a country. The level of banking liquidity is a reflection of the condition of the national economy. This study examines the differences in the financial performance of conventional banking and Islamic financial performance before and during the COVID-19 pandemic in Indonesia. The variables used to measure banking financial performance are risk profile, earnings, and capital. The data used are financial reports published by Otoritas Jasa Keuangan (OJK). The analysis used is the Multivariate Analysis of Variance (MANOVA). The results of the analysis found that there was no difference in the financial performance of Islamic banking on risk profile, earning, and capital indicators before and during the COVID-19 pandemic; there is no difference in the conventional financial performance of earning indicators before and during the Covid 19 pandemic; and there is no difference in the financial performance of conventional banking earning indicators during covid 19 and Islamic banking financial performance indicators of earning before covid 19. This analysis shows that the performance of Islamic finance is still able to deal with the impact of the COVID 19 pandemic in Indonesia.

scholarly journals The association between intellectual capital and financial performance in the Islamic banking industry

2019 ◽  
Vol 13 (1) ◽  
pp. 75-93 ◽  
Author(s):  
A.A. Ousama ◽  
Helmi Hammami ◽  
Mustafa Abdulkarim
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Positive Impact ◽  
Value Added ◽  
Annual Reports ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Gcc Countries ◽  
The Impact

Purpose The purpose of this study is to empirically investigate the impact of intellectual capital (IC) on the financial performance of Islamic banks operating in the Gulf Cooperation Council (GCC) countries. Design/methodology/approach The study measures IC by the value added intellectual coefficient model. A regression analysis was used to assess the impact of IC on financial performance. The research sample consisted of Islamic banks operating in the GCC countries during the years 2011, 2012 and 2013. Data originated from the annual reports of Islamic banks. Findings The results support the thesis that IC has a positive impact on the financial performance of Islamic banks. Even though the average IC is lower than that reported in other studies, the positive effect on financial performance is obvious. The findings also show that human capital (HC) is higher than capital employed (CE) and structural capital (SC). The study reveals that SC has an insignificant impact on the financial performance of the Islamic banks compared to CE and HC. Practical implications The findings provide empirical evidence that IC affects the Islamic banks’ financial performance. It helps Islamic banks in the GCC countries to understand how to use their IC efficiently, especially SC as it is yet to be used efficiently. Also, the findings benefit the relevant authorities (e.g. legislators and central banks) who could use them to emphasise strategic policy reforms whenever required. Originality/value The current research adds to the empirical studies in the GCC countries as it views the region as a collective as opposed to individual countries. It also extends the IC and performance measurement literature of Islamic banks in the GCC countries. Moreover, the current study enriches the limited literature on IC in the context of Islamic banking.

scholarly journals An Islamic banking perspective on consumers’ perception in Pakistan

2017 ◽  
Vol 9 (4) ◽  
pp. 337-358 ◽  
Author(s):  
Umair Riaz ◽  
Musafar Khan ◽  
Naimat Khan
Keyword(s):  
Positive Influence ◽  
Marketing Strategies ◽  
Primary Data ◽  
Future Research ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Religious Motivation ◽  
Content Type ◽  
Banking And Finance ◽  
Innovative Products

Purpose The aim of this study is to examine the perceptions of consumers on Islamic banking and finance in Pakistan. Islamic finance is an emerging phenomenon, and its survival depends on the availability, affordability and awareness. This paper attempts to fill the gap in the literature by exploring the perceptions of consumers and bankers in an attempt to gain insights so that the availability of products and awareness can be increased. Design/methodology/approach The study uses a regression model by using perception as a dependent variable and awareness, knowledge and religious motivation as independent variables. Primary data is collected using 150 questionnaires distributed amongst finance students in several universities and employees of Islamic banks in the Khyber Pakhtunkhwa (KPK) Province of Pakistan. Findings The findings reveal that overall consumers’ perception is positive about Islamic banking and finance in Pakistan. Statistical analysis shows that awareness, knowledge and religiosity level have a positive influence on the perception of consumers about Islamic financing products and services in Pakistan. To improve the awareness and understanding, Islamic banks could make better marketing strategies and could increase their presence by mosque visits and conferences. Cooperation between the industry and scholars could help in providing more innovative products to the consumers. Research limitations/implications There has been a limited amount of work carried out on the perceptions of consumers about Islamic banking in Pakistan. The present study represents the start of a larger context for examining Islamic banking practices in Pakistan. The findings of the study can be used as a reference in future research projects in the areas of perceptions and awareness. Originality/value Little research has been conducted to study this problem from the perspectives of consumers and Islamic banking employees. Most of the research associated with Islamic banks fails to pay attention to these stakeholder groups in one study.

scholarly journals Risk management and corporate governance failures in Islamic banks: a case study

2020 ◽  
Vol 11 (9) ◽  
pp. 1921-1939 ◽  
Author(s):  
Salah Alhammadi ◽  
Simon Archer ◽  
Mehmet Asutay
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Business Model ◽  
Financial Institutions ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Banking And Finance ◽  
Ongoing Evaluation

Purpose The purpose of this paper is to show how the choice and ongoing evaluation of a firm’s business model, as a matter of strategic guidance, are key aspects of corporate governance (CG), with particular reference to risk management (RM) in Islamic banks. Design/methodology/approach This research uses a case study approach, with a single case, which was chosen as it fits very well the purpose of this research. The data collection was based largely on documentary evidence. Company data were collected from company annual reports, press releases and legitimate web sites. The ORBIS Bank Focus database was also used to produce a comparative financial analysis. Findings The study findings illustrate how an apparently successful business model may fail due to an inherent instability that could have been identified through the application of careful risk analysis (including stress testing) in the choice and ongoing evaluation of the business model, which robust CG and strategic guidance require. In particular, Arcapita’s problems illustrate the dangers to Islamic financial institutions (IFI) from business models that involve undue exposure to liquidity risk. Practical implications The issues raised in the paper are important in that Islamic banking and finance is an integral part of the global banking and finance industry. Investors and regulators are now requesting corporate management to provide improved service to shareholders and other stakeholders alike. IFI rely on the confidence of investors and market participants, just like conventional institutions and when this confidence erodes, it may prove difficult to regain. Social implications The global credit crisis of 2008 caused significant difficulties to firms, especially financial institutions, even with substantial government intervention in the economy, which raised some issues of CG and ethics. Originality/value This paper extends the knowledge of the potential effects of weaknesses in CG and RM, with specific reference to strategic guidance in the choice and ongoing evaluation of a firm’s business model, especially in relation to the Islamic banking sector. It also provides a telling illustration of the need for the enhancements of the Basel Committee’s prudential requirements set out in the various Basel III documents.

scholarly journals CAPITAL STRUCTURE AND LIQUIDITY AS MEASURES OF EFFICIENCY: THE CASE OF ISLAMIC BANKS

2020 ◽  
pp. 23-29
Author(s):  
Francisca M. Beer PhD ◽  
Adeeb S. Hattar DBA
Keyword(s):  
Capital Structure ◽  
Financial Institutions ◽  
Financial Crises ◽  
Banking System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Adequate Amount ◽  
Negative Impacts ◽  
The Impact ◽  
The Capital Structure

The main objective of this paper is to improve our understanding of the capital structure and liquidity position of Islamic banks. For these institutions, an adequate amount of liquid assets and an adequate amount of capital are essential to stay solvent and avoid bankruptcy. Financial institutions’ amounts of capital and liquid assets have also been identified as valuable shields during financial crises. Unlike some of their Western counterparts, most Islamic banks have been able to circumvent the negative impacts of the 2008 crisis. Our paper reviews the recent and relevant publications about the impact of the capital structure and the liquidity on financial institutions efficiency. It focuses on the Islamic banking system which has grown significantly.

scholarly journals CDS Rate Construction Methods by Machine Learning Techniques

2017 ◽  
Author(s):  
Raymond Brummelhuis ◽  
Zhongmin Luo
Keyword(s):  
Machine Learning ◽  
Financial Institutions ◽  
Machine Learning Techniques ◽  
Future Research ◽  
Financial Variables ◽  
Construction Methods ◽  
Learning Techniques ◽  
Classifier Performance ◽  
Default Risks ◽  
The Impact

Regulators require financial institutions to estimate counterparty default risks from liquid CDS quotes for the valuation and risk management of OTC derivatives. However, the vast majority of counterparties do not have liquid CDS quotes and need proxy CDS rates. Existing methods cannot account for counterparty-specific default risks; we propose to construct proxy CDS rates by associating to illiquid counterparty liquid CDS Proxy based on Machine Learning Techniques. After testing 156 classifiers from 8 most popular classifier families, we found that some classifiers achieve highly satisfactory accuracy rates. Furthermore, we have rank-ordered the performances and investigated performance variations amongst and within the 8 classifier families. This paper is, to the best of our knowledge, the first systematic study of CDS Proxy construction by Machine Learning techniques, and the first systematic classifier comparison study based entirely on financial market data. Its findings both confirm and contrast existing classifier performance literature. Given the typically highly correlated nature of financial data, we investigated the impact of correlation on classifier performance. The techniques used in this paper should be of interest for financial institutions seeking a CDS Proxy method, and can serve for proxy construction for other financial variables. Some directions for future research are indicated.

scholarly journals Shortcomings and proposed reforms in the existing shariah governance of islamic banking

2020 ◽  
Vol 2 (1) ◽  
pp. 15-34
Author(s):  
Abdulazeem Abozaid
Keyword(s):  
Financial Institutions ◽  
Financial Services ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking And Finance ◽  
Finance Industry ◽  
Regulatory Authorities ◽  
Islamic Financial Institutions ◽  
Shariah Governance

Since its inception a few decades ago, the Islamic banking and finance industry has been self-regulated with regards to Shariah governance. Despite the existence of certain regulatory authorities from within the industry, such as Accounting and Auditing for Islamic Financial Institutions (AAOIFI) and Islamic Financial Services Board (IFSB), none of their resolutions or standards are effectively binding. Few countries have enforced some rules related to Shariah-governance. Still, in most cases, these rules did not go beyond the requirement of formulating Shariah controlling bodies, which is practically left to the banks themselves. Islamic banks are almost left to choose or dismiss their Shariah controllers, and no clear criteria are set by any authority to ascertain the proper qualifications of the Shariah controllers. Moreover, some of the Shariah standards and fatwas are found to conflict with the established resolutions issued by Fiqh academies. These matter point to the deficiencies in the existing Shariah governance and hence the need to address them.

scholarly journals The Influence of Intellectual Capital with Sub Components to Financial Performance: Empirical Study of Islamic Banking in Indonesia

2020 ◽  
Vol 5 (8) ◽  
pp. 877-882
Author(s):  
Toufan Aldian Syah ◽  
Akhmad Fauzan
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Value Added ◽  
Financial Statement ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Intangible Resources ◽  
Islamic Bank ◽  
Capital Efficiency ◽  
The Impact

- This paper aims to empirically examine the effect of intangible resources, namely intellectual capital (IC) on the financial performance of Islamic banking in Indonesia for the period 2013-2019. The data needed to calculate the different IC constituents comes from the financial statement data of each Islamic bank, which is the research sample, namely the Islamic bank, which is a foreign exchange bank. Value Added Intellectual Coefficient (VAIC) The methodology designed by Pulic is used to determine the impact of IC on Islamic banking's financial performance. The results show a significant positive relationship between the Sub-component Value Added Intellectual Coefficient (VAIC), namely Human Capital Efficiency (HCE), Structure Capital Efficiency (SCE), and Capital Employed Efficiency (CEE) which have a significant influence on the financial performance of Islamic banking proxied by ROA. Overall, the results show that HCE, SCE, and CEE strongly influence Islamic banks' ability to earn profits. The main limitation of this study lies in its measurement method, the VAIC methodology, which has been criticized by some researchers as not measuring IC. These findings can be useful input for Islamic bank management to manage and invest their resources in the Intellectual Capital (IC) in their institution. The main contribution of this paper is to identify the influence of the subcomponent of intellectual capital (IC) on the financial performance of Islamic banks, which was previously rare in Indonesia.

scholarly journals Banking Financial Performance Before and During the Covid 19 Pandemic in Indonesia

2021 ◽  
Vol 9 (11) ◽  
pp. 352-356
Author(s):  
Muhammad Riyadhi Saputra
Keyword(s):  
Multivariate Analysis ◽  
Financial Performance ◽  
Financial Institutions ◽  
Performance Indicators ◽  
Risk Profile ◽  
Economic Conditions ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Financial Reports ◽  
The Impact

Banking is one of the financial institutions that is very influential on the economic conditions of a country. The level of banking liquidity is a reflection of the condition of the national economy. This study examines the differences in the financial performance of conventional banking and Islamic financial performance before and during the COVID-19 pandemic in Indonesia. The variables used to measure banking financial performance are risk profile, earnings, and capital.The data used are financial reports published by Otoritas Jasa Keuangan (OJK). The analysis used is the Multivariate Analysis of Variance (MANOVA). The results of the analysis found that there was no difference in the financial performance of Islamic banking on risk profile, earning, and capital indicators before and during the COVID-19 pandemic; there is no difference in the conventional financial performance of earning indicators before and during the Covid 19 pandemic; and there is no difference in the financial performance of conventional banking earning indicators during covid 19 and Islamic banking financial performance indicators of earning before covid 19. This analysis shows that the performance of Islamic finance is still able to deal with the impact of the COVID 19 pandemic in Indonesia.

Islamic Banking Regulations in Light of Basel II

2010 ◽  
Vol 27 (1) ◽  
pp. 74-101 ◽  
Author(s):  
M. Kabir Hassan ◽  
Muhammad Abdul Mannan Chowdhury
Keyword(s):  
Financial Institutions ◽  
Banking Regulation ◽  
Capital Requirements ◽  
Basel Ii ◽  
Capital Adequacy ◽  
Regulatory Agencies ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Minimum Capital ◽  
Regulatory Standards

This paper seeks to determine whether the existing regulatory standards and supervisory framework are adequate to ensure the viability, strength, and continued expansion of Islamic financial institutions. The reemergence of Islamic banking and the attention given to it by regulators around the globe as to the implications of a recently issued Basel II banking regulation makes this article timely. The Basel II framework, which is based on minimum capital requirements, a supervisory review process, and the effective use of market discipline, aligns capital adequacy with banking risks and provides an incentive for financial institutions to enhance risk management and their system of internal controls. Like conventional banks, Islamic banks operate under different regulatory regimes. The still diverse views held by the regulatory agencies of different countries on Islamic banking and finance operations make it harder to assess the overall performance of international Islamic banks. In light of the increased financial innovation and diversity of instruments offered in Islamic finance, the need to improve the transparency of bank operations is particularly relevant for Islamic banks. While product diversity is important in maintaining their competitiveness, it also requires increased transparency and disclosure to improve the understanding of markets and regulatory agencies. The governance of Islamic banks is made even more complex by the need for these banks to meet a set of ethical and financial standards defined by the Shari`ah and the nature of the financial contracts banks use to mobilize deposits. Effective transparency in this area will greatly enhance their credibility and reinforce their depositors and investors’ level of confidence.

Sign in / Sign up

Export Citation Format

Share Document