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.

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.

scholarly journals The Analysis of the Turkish Islamic Banking System Between 2005 and 2014

2016 ◽  
Author(s):  
Lívia Tálos ◽  
Gyöngyi Bánkuti ◽  
Jozsef Varga
Keyword(s):  
High Risk ◽  
Economic Crisis ◽  
Islamic Law ◽  
Banking System ◽  
Rating System ◽  
Annual Reports ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Conventional Banks

Islamic banking is a banking system that is based on the principles of sharia or Islamic law. The principles of Islamic finance forbid interest - this is commonly known as riba - charity (zakat), forbid high risk (gharar), forbid some transactions like gambling, and are based on PLS (Profit-Loss Share). The most important concept is that both charging and receiving interest are strictly forbidden; money may not generate profits. Islamic banks have largely survived the global economic crisis intact and they offer a safer operation than conventional banks. CAMEL analysis is a supervisory rating system to classify a bank's overall condition according to Capital (C), Assets (A), Management (M), Earnings (E) and Liquidity (L). In the analysis a variety of indicators were calculated based on data from the annual reports. The results of the four banks were averaged separately, then classified (1 = good, 2 = adequate, 3 = satisfactory, 4 = acceptable, 5 = unacceptable) according to the desired criteria, the changes over the years and the relative values of the four banks.

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 Embedding Value-Based Principles in the Culture of Islamic Banks to Enhance Their Sustainability, Resilience, and Social Impact

2022 ◽  
Vol 14 (2) ◽  
pp. 916
Author(s):  
Evren Tok ◽  
Abdurahman Jemal Yesuf
Keyword(s):  
Social Impact ◽  
Empirical Studies ◽  
Banking System ◽  
Annual Reports ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Real Economy ◽  
Conventional Banks ◽  
Asset Quality

Value-based banks strive to build a self-sustaining banking model with inclusive and transparent governance that is sustainable and resilient to external disturbances. Initiatives for value-based intermediation in Islamic finance started in Malaysia. The growth in VBIBs is accompanied by claims about its relative resilience to crisis and efficiency compared to VBBs and conventional banks. However, little empirical evidence is available to support such claims. This study aims to analyze the resilience and efficiency of VBIBs compared to the VBBs and GSIBs. It highlights the role of value-based strategy in developing a sound and resilient Islamic banking system to overcome future crises and further strengthen the impacts of Islamic banks. The study used quantitative and content analysis research methods, with data collected from the annual reports of 10 VBIBs from 2017 to 2020. The empirical results show that VBIBs have better risk-adjusted capital levels and asset quality, enabling them to be more resilient during crises. They provide more satisfactory returns compared to the VBBs and GSIBs. However, VBBs have a better asset structure and growth rate, which contributes to the real economy. The overall findings suggest that adopting value-based strategies in Islamic banking improve banks’ sustainability, resilience, and social impacts by concentrating resources on value-based activities that provide economic resiliency and enhance inclusive and sustainable economic growth. The study fills gaps in the current Islamic finance literature concerning empirical studies on value-based Islamic banking. It also helps practitioners to understand the relative efficiency, resilience, and social impact of VBIBs.

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 Shariah Non-Compliance Treatment in Malaysian Islamic Banks

2019 ◽  
Vol 6 (4) ◽  
pp. 220-233
Author(s):  
Hani Nabila Omar ◽  
Rusni Hassan
Keyword(s):  
Financial Institutions ◽  
Banking Sector ◽  
Implementation Process ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Secondary Sources ◽  
The Past ◽  
Depth Interview ◽  
Islamic Financial Institutions

Islamic finance in Malaysia has been growing rapidly in the past 30 years. In 2019, there is a total of 16 Islamic banks listed and supervised by Bank Negara Malaysia (BNM), with 5 out 16 banks are foreign entities. In view of the rivalry with the conventional banking sector, Islamic banks offer new innovative Islamic products and financial projects which may lead to greater risk of Shariah Non-compliance (SNC) exposure to the Islamic Financial Institutions (IFIs) in its effort to stay competitive. This paper attempts to explore the current practices of Islamic banks in treating (SNC) and the extent of compliance with BNM rules and guidelines, particularly BNM Operational Risk Integrated Online Network (ORION) requirement on SNC reporting event. This paper adopts a qualitative research method by conducting semi-structured in-depth interview with the Islamic banking professionals targeting five Islamic banks. Both primary and secondary sources are used for data collection. The finding shows that these Islamic Banks adhere to the BNM rules and requirements, with some minor differences in the implementation process. The findings would contribute positively in terms of enriching and contributing to the existing literature on the SNC practices by Islamic Banks whilst at the same time establishing the levels of compliance of the banks under investigation.

scholarly journals Pro dan Kontra Konversi Bank Konvensional Menjadi Perbankan Syariah

2021 ◽  
Vol 6 (2) ◽  
pp. 118-130
Author(s):  
Akla Rizka Alamsyah Alamsyah ◽  
Yaser Amri
Keyword(s):  
Qualitative Research ◽  
Financial Institutions ◽  
Islamic Law ◽  
Islamic Banking ◽  
Islamic Banks ◽  
The Public ◽  
Islamic Financial Institutions ◽  
Conventional Banks ◽  
Descriptive Qualitative

Kehadiran Qanun Nomor 11 Tahun 2018 tentang Lembaga Keuangan Syariah berimplikasi pada perkembangan bank syariah di Aceh. Dengan diundangkannya Qanun Lembaga Keuangan Syariah mengharuskan lembaga keuangan yang beroperasi di Aceh berdasarkan prinsip syariah. Akibatnya, bank konvensional di Aceh melakukan konversi menjadi bank syariah. Penelitian ini bertujuan untuk mengetahui pendapat pro dan kontra dari masyarakat terkait implementasi Qanun Nomor 11 Tahun 2018 pada perbankan yang beroperasi di Aceh. Penelitian ini merupakan penelitian kualitatif deskriptif dengan metode pengumpulan data dari studi literatur atau pustaka. Hasil penelitian menunjukkan bahwa pihak yang mendukung konversi bank konvensional menjadi syariah didasarkan pada keinginan untuk menjalankan syariat Islam secara kaffah. Sedangkan pihak yang kontra menolak implementasi dari qanun tersebut dikarenakan kekurangan bank syariah dalam penyediaan fasilitas dan jasa yang sesuai kebutuhan dan terjangkau serta lemahnya persepsi dan tingkat literasi masyarakat mengenai perbankan syariah.   The presence of Qanun Number 11 of 2018 concerning Islamic Financial Institutions has implications for the development of Islamic banks ini Aceh. With the promulgation of the Qanun on Sharia Financial Institutions, it requires financial institutions operating in Aceh to be based on sharia principles. As a result, convesional banks in Aceh converted into Islamic banks. This study aims to determine the opinions of the pro and contra of the public regarding the implementation of Qanun No. 11 Of 2018 in conventional banks operating in Aceh. This research is a descriptive qualitative research with the method of collecting data from literature studies. The results shower that those who supported the converion of conventional banks to Sharia were based on the desire to implements Islamic Law in a kaffah manner. Meanwhile, those sho oppose the implementation of the qanun are due to the lack of Islamic banks in providing facilities and services that are suitable and affordable as well as the weak perception and level of public literacy regarding Islamic banking.

PREJUDICES ABOUT ISLAMIC BANKING

2018 ◽  
Vol 28 (5) ◽  
pp. 1633-1639
Author(s):  
Aida Zolota
Keyword(s):  
Bosnia And Herzegovina ◽  
Global Financial Crisis ◽  
Islamic Finance ◽  
Simple Random Sample ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking And Finance ◽  
Doing Business ◽  
Muslim Majority ◽  
Conventional Banks

Islamic banking has been intensively developed over the past fifty years, although Islam has existed since the 7th century. It is a banking model that operates in accordance with Sharia regulations. Islamic banks, globally, have a growing share of assets and more and more clients. They operate in Muslim-majority countries, but also in non-Muslim Majority countries. It is well-known (and most often confusing to people who do not know enough about the way these banks operate) that Islamic banks are strictly forbidden to charge interest, however, doing business in accordance with Sharia regulations has some other specificities, but also some other prohibitions. In spite of obstacles and prejudices, Islamic banking is intensively developing. Some of the most famous products/services of Islamic banks are: musharaka, mudaraba, murabaha and ijara. Bearing in mind the intensive development of Islamic banking and finance, the need for global reporting on the situation and developments in this area has arisen. Such a report has been published by the Islamic Bankers Association since 2010. The report is named Global Report on Islamic Finance (GIFR) and is published annually. Every year, the report has a specific topic that is in the focus of the report and the current information on the situation and prospects of Islamic banking and finance. What progress has been made in the development of Islamic banking and finance, and what is the current situation and role of Islamic banking and finance today, perhaps the best shows the topic that is in the focus of the GIFR 2018, which is: Global Islamic Economy and Islamic Finance. There are also so-called Islamic Indices. During the last global financial crisis, banks operating in accordance with Islamic regulations (sharia) have shown better resilience than conventional banks, and because of that they attracted the attention of the global financial community. However, the prejudices about Islamic banks and Islamic banking are still present. This was also confirmed by the research done in Bosnia and Herzegovina. The subject of this paper is prejudices about Islamic banking, and the aim of the paper is to explain the basics of Islamic banking and point out the prejudices that exist about Islamic banking in Bosnia and Herzegovina. Business in accordance with Sharia regulations (banking products / services) has been present in Bosnia and Herzegovina for 15 years. A simple random sample was selected for the survey, and the data was collected through a questionnaire. The results of the survey show that the population is still insufficiently educated about Islamic banking and that there are prejudices.

scholarly journals Etude De L’exposition Des Banques Islamiques Au Taux D’intérêts Et De L’implication Sur La Gestion Actif-Passif

2017 ◽  
Vol 13 (10) ◽  
pp. 263
Author(s):  
Mohamed Wail Aaminou ◽  
Aziz Moutahaddib
Keyword(s):  
Interest Rate ◽  
Profit Sharing ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Hedging Strategies ◽  
Conventional Banks

Theoretically, Islamic banks should not be exposed to the risk of interest rate fluctuations. Indeed, in the literature, Islamic finance is considered a finance without interest that stands out from conventional finance by means of profit sharing and losses. In practice, although Islamic banking products are not directly based on interest, several studies mentioned in this article have shown that these banks are not completely immune to this kind of risk. Moreover, unlike conventional banks, Islamic banks do not have the same flexibility to cover this risk since they do not use interest. So, the assessment of the level of exposure to interest risks and understanding its determinants is essential for studying the appropriate hedging strategies and the guarantee of stability of Islamic banks.

scholarly journals Market Share Islamic Banking In Indonesia

2019 ◽  
Vol 8 (1) ◽  
pp. 124-137
Author(s):  
Zulfikar Hasan
Keyword(s):  
Market Share ◽  
Secondary Data ◽  
Descriptive Study ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking Regulations ◽  
Banking Market ◽  
Conventional Banks

At the end of 2016, the Islamic banking market share stood at 356.5 trillion Indonesian rupiahs ($26.7 billion), equivalent to 5.03 per cent of the total banking sector’s assets. Islamic banking assets have risen faster year-on-year compared to conventional banking, registering a growth of 8.8 per cent in 2015 and 20.3 per cent in 2016. The performance of the Islamic banking industry in Indonesia has yet to satisfy the public’s expectations. Although with a market of more than 200 million Muslims, Islamic banks in Indonesia still face difficulties luring more customers and increasing their assets. For three consecutive years, the market share of the sharia banks in the country stood still at less than 5 per cent. According to the Global Advisors Islamic Finance Outlook Report for 2016, no Indonesian Islamic banks were ranked in the top five largest banks based on assets in Southeast Asia. This is an alarming situation for the industry and regulators. Thus, it evokes a question: Is the market becoming saturated for Islamic finance? This study aims to determine the factors that affect the market share of Islamic banks in Indonesia. With a focus on four main items, Islamic banking regulations, Islamic banking inclusion and literacy are still low from conventional banks, Islamic banking still does not have sufficient capital and the number and quality of Human Resources (HR) that are inadequate. This study uses an analytical descriptive study is to describe and analyzed data obtained based on primary and secondary data. While the method used is normative and focused on the study of literature, which is then analyzed qualitatively juridical.

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