Islamic Banking Operations: Products and Services

Islamic Banking Operations: Products and Servicesaims to give insights on Islamic banking operations as well as assists readers to understand certain aspects of its products and services. This book provides an overview about the balance sheets for both conventional and Islamic banks, the deposits and financing activities as well as the Islamic trade finance products and instruments.

Design Analysis of CIMB Bank’s Website

Jurnal Teknologi ◽

10.11113/jt.v66.1840 ◽

2013 ◽

Vol 66 (1) ◽

Cited By ~ 1

Author(s):

Muhammad Ridhwan Ab. Aziz ◽

Mohammad Mahbub Alam Noorizzuddin Nooh

Keyword(s):

Design Analysis ◽

Islamic Banking ◽

Website Design ◽

Islamic Banks ◽

Future Researcher ◽

Market Shares ◽

The World ◽

Banking Institutions ◽

Banking Institution ◽

Islamic banking has emerged in recent decades as one of the most important trends in the financial world, side by side with conventional banking. Website design has become a very powerful tool in disseminating information of a particular banking institution and this phenomenon has been fully utilized by both conventional and Islamic banks throughout the world. The purpose of this article is to analyze website design of CIMB Bank that offers both conventional and Islamic financing facilities. The methodology employed in this article is qualitative in nature through examining the websites of CIMB Bank. The finding shows that CIMB Bank needs to improve their both website designs in order to attract more customers to their websites and give true information with regard of their products and services. It is further suggested that future researcher tries to explore more in-depth website designs in terms of products and services provided by the conventional and Islamic banking institutions in order to increase their market shares.

'MAQASID AL-SHARIAH' IN ISLAMIC BANKS BEFORE VALUE-BASED INTERMEDIATION IMPLEMENTATION

Social and Management Research Journal ◽

10.24191/smrj.v18i2.14907 ◽

2021 ◽

Vol 18 (2) ◽

pp. 173-189

Author(s):

Sharifah Faigah Syed Alwi ◽

◽

Fateha Abd Halim ◽

Tengku Dewi Ahdiyaty Tengku Ahmad Mazlin ◽

Aizurra Haidah Abdul Kadir ◽

...

Keyword(s):

Qualitative Methodology ◽

Islamic Law ◽

Human Life ◽

Islamic Banking ◽

Islamic Banks ◽

Structured Interviews ◽

The Public ◽

Library Research ◽

Banking Institutions ◽

Bank Negara Malaysia (BNM) had introduced Value-Based Intermediation (VBI) initiatives to help Islamic banks implement a structuralised form of maqasid al-shariah (objectives of shariah (Islamic law)) in their banking operations. Thus, questions were raised by the public on whether or not Islamic banking institutions in Malaysia had been achieving maqasid al-shariah in their banking operations prior to VBI. This paper aims to discuss the real concept of maqasid al-shariah that should be realised in Islamic banks and investigate whether Islamic banks had truly been achieving maqasid al-shariah in their banking operations before the introduction of VBI. Library research is conducted to obtain information on maqasid al-shariah and the qualitative methodology is adopted to gain information from three bankers representing three Islamic banks in Malaysia via semi-structured interviews. The researchers found that the fundamental concept of maqasid al-shariah in Islamic banks includes the protection of religion, life, intellect, progeny and wealth in human life through the products and services offered by the banks. The Islamic banks were found to have developed their products and services to achieve maqasid al-shariah even before VBI was introduced by BNM. However, with VBI, a proper framework in achieving maqasid al-shariah has been developed.

Competitive conditions and market power of Islamic and conventional commercial banks

Journal of Islamic Accounting and Business Research ◽

10.1108/jiabr-05-2012-0030 ◽

2014 ◽

Vol 5 (1) ◽

pp. 29-46 ◽

Cited By ~ 16

Author(s):

Hichem Hamza ◽

Safa Kachtouli

Keyword(s):

Southeast Asia ◽

Market Power ◽

Traditional Approach ◽

Islamic Banking ◽

Islamic Banks ◽

Content Type ◽

Lerner Index ◽

Conventional Banks ◽

Conventional And Islamic Banks ◽

Concentration Ratios

Purpose – The expansion of the Islamic banking industry seems to accentuate the banking competition in MENA and Southeast Asia where conventional and Islamic banks coexist. In this context, the research aims\ to examine the competitive conditions and the market power of the conventional and Islamic banks during the period 2004-2009 in MENA and Southeast Asia region. Design/methodology/approach – The authors use a variety of structural and non-structural measures related to the traditional approach and the new empirical approach of the industrial organization. The methodology is based on set of measures of the competition and market power. The first measure is a set of concentration ratios (C3, C5) and Herfindahl-Hirschman index (HHI). The second measures are the Panzar and Ross H statistic and the Lerner index based on econometric estimations with the aim of evaluating the structure of market and measuring its power in terms of price setting. Findings – The results indicate that under the HHI index, both markets are low concentrated, while according to the concentration ratios, the Islamic market is considered as moderately concentrated. The estimations results, through the H-PR-statistic of Panzar and Ross related to degree of competition and the Lerner index of market power, indicate that both markets are characterized by a monopolistic competition and the Islamic banking expressed a high degree of market power. Research limitations/implications – The research focuses exclusively on the countries where the data are available and excludes the other countries where competition and market power might have different forms. Practical implications – In a competitive environment, each bank is required to analyze the structure of its market and competitive conditions, in order to develop a business strategy and effective action plans. In the context of the multiplication of the Islamic banks in the MENA and Southeast Asia, the enhancement of Islamic bank competitiveness by offering new products is determinant for their success. Originality/value – To the best of the authors' knowledge few studies have examined this subject in a comparative analysis between the Islamic and conventional banks. So the authors contribute to the literature on Islamic banking by considering a sample of Islamic and conventional banks operating in the same countries in order to examine the existence or not of difference between them.

How Efficient is the Islamic Banking Model in Pakistan?

Lahore Journal of Business ◽

10.35536/ljb.2017.v6.i1.a6 ◽

2017 ◽

Vol 6 (1) ◽

pp. 111-125

Author(s):

Tahseen Mohsan Khan ◽

Mohsan Khan Rizwan ◽

Saima Akhtar ◽

Syed Waqar Azeem Naqvi

Keyword(s):

Credit Risk ◽

Asset Management ◽

Capital Adequacy ◽

Islamic Banking ◽

Islamic Banks ◽

Return On Assets ◽

Management Capability ◽

Conventional Banks ◽

The purpose of this study is to analyze the conventional and Islamic banking in Pakistan. For this study, a sample of 19 conventional banks and five Islamic banks was selected. The CAMEL approach is used to evaluate the performance of both conventional and Islamic banks. Ten ratios were used to measure profitability, liquidity and credit risk. Our findings suggest that Islamic banks are less efficient than conventional banks in asset management, management capability and liquidity. Conventional banks have better earning capability in terms of return on assets and overhead ratios. The analysis also shows that Islamic banks have better capital adequacy than conventional banks.

The mitigation of liquidity risk in Islamic banking operations

Banks and Bank Systems ◽

10.21511/bbs.12(3-1).2017.01 ◽

2017 ◽

Vol 12 (3) ◽

pp. 154-165 ◽

Cited By ~ 6

Author(s):

Nabil Bello ◽

Aznan Hasan ◽

Buerhan Saiti

Keyword(s):

Risk Mitigation ◽

Early Stage ◽

Liquidity Risk ◽

Islamic Banking ◽

Islamic Banks ◽

Liquidity Management ◽

Balance Sheets ◽

Secondary Sources ◽

Regulatory Bodies ◽

Context Data

The purpose of this paper is to discuss the issues and challenges of liquidity risk management in Islamic banks. At the same time, the authors are going to identify the sources of liquidity risk in Islamic banks and the common instruments used to mitigate liquidity mismatches in both sides of their balance sheets. The study is a qualitative study that uses secondary sources of data to describe and analyze risk mitigation in the Islamic banking context. Data were collected from libraries by referring to books, journals from both online and offline sources. The research objectives were addressed by critically analysing various issues from both the Islamic principles and contemporary applications. The authors found that Islamic liquidity management is an important building block for stable and efficient banking. Even though there are several attempts, for example, i) organized tawarruq (commodity murabahah), ii) salam sukuk and iii) short-term ijarah sukuk, to find solutions to the incessant problems of liquidity faced by majority of Islamic banks, there are still several underlying problems such as i) in terms of deficiency in infrastructure especially in countries where Islamic finance is still at an early stage, ii) lack of hedging instruments and iii) Shariah restrictions on some instruments. Regulatory bodies should come up with more innovative practices of Islamic liquidity management to solve unresolved theoretical issues and also meeting market requirements for liquidity.

MARKET POWER AND EFFICIENCY OF ISLAMIC BANKING AND CONVENTIONAL BANKING IN INDONESIA

Global Review of Islamic Economics and Business ◽

10.14421/grieb.2018.062-05 ◽

2018 ◽

Vol 6 (2) ◽

pp. 131

Author(s):

Chajar Matari Fath Mala ◽

Ahmad Rodoni ◽

Bahrul Yaman

Keyword(s):

Market Power ◽

Scale Efficiency ◽

Islamic Banking ◽

Data Envelopment ◽

Islamic Banks ◽

Economic Community ◽

Banking Market ◽

Asean Economic Community ◽

Conventional Banks ◽

ASEAN Economic Community (AEC) of banking industry requires both Islamic and conventional banking to improve their efficiency because the competition in banking market industry will be more intense. Therefore, this study aims to identify the type of hyphotesis of industrial organization which exists in Islamic and conventional banks in order to investigate their readiness for AEC. The research sampling consists of 10 Islamic banks and 10 conventional banks from January 2009 to December 2016. To measure x-efficiency and scale efficiency, this research uses Data Envelopment Analysis (DEA). Meanwhile, the concentration is measured by Lerner index. The hypothesis is tested by using panel regression. The result shows SCP (Structure-Conduct-Performance) hypothesis is closely applied to Islamic and conventional banks because market concentration significantly influences profitability. RMP (Relative Market Power) hypothesis is also closely applied to Islamic and conventional banking, this indicates Indonesian banking has market power in determining prices and this condition makes the profit higher. RES (Relative Efficiency Structure) and SES (Scale Efficiency Structure) hypothesis do not exist in both conventional and Islamic banks because x-efficiency and scale efficiency do not affect profitability, concentration, and market share simultaneously. Market power and efficiency researches are commonly conducted in conventional banking, however there are only a few research in Islamic banking area. The novelty of this study is the comparison between conventional and Islamic banking in the term of market structure and efficiency.

The principle of maṣlaḥah and its application in Islamic banking operations in Malaysia

ISRA International Journal of Islamic Finance ◽

10.1108/ijif-01-2018-0017 ◽

2019 ◽

Vol 11 (1) ◽

pp. 137-146 ◽

Cited By ~ 3

Author(s):

Muhammad Shahrul Ifwat Ishak

Keyword(s):

Legal Aspect ◽

Islamic Banking ◽

Islamic Banks ◽

Content Type ◽

Content Analysis Method ◽

Inductive Methods ◽

Financial Transactions ◽

Practical Implications ◽

Purpose This paper aims to investigate the extent to which maṣlaḥah (public interest) is taken into consideration in Islamic banking operations in Malaysia, particularly in bayʿ al-ʿīnah (sale and buyback), taʿwiḍ (compensation) and ibrāʾ (rebate). Design/methodology/approach This study applies deductive and inductive methods to analyze the application of maṣlaḥah in Islamic financial transactions. Three issues in Malaysia are selected as a case study, allowing bayʿ al-ʿīnah, standardizing the rate of taʿwiḍ and stipulating the ibrāʾ clause in financial agreements. As this study is qualitative in nature, all data are analyzed based on the content analysis method. Findings Both the maṣlaḥah of Islamic banks and their customers were found to be considered by the Central Bank of Malaysia in the implementation of contracts and principles of Islamic banking. The first maṣlaḥah represents the viability of Islamic banks, while the second maṣlaḥah promotes fairness and transparency between Islamic banks and their customers. Research limitations/implications This study only focuses on the contracts and principles of Islamic banking operations in Malaysia with regard to three selected issues. Practical implications This paper clarifies the practical application of maṣlaḥah in the Islamic banking industry, particularly with regard to implementing its contracts and principles. Originality/value This paper analyzes the argument of maṣlaḥah on the issues of bayʿ al-ʿīnah , taʿwiḍ and ibrāʾ in Malaysia, which are considered among scholars to be debatable issues. While many discussions focus on the legal aspect of Sharīʿah on those issues, this study emphasizes how the application of maṣlaḥah aims to solve the current problems and harmonize between Sharīʿah and reality.

The Awareness and Attitude towards Islamic Banking: A Study in Malaysia

Global Review of Islamic Economics and Business ◽

10.14421/grieb.2015.023-02 ◽

2015 ◽

Vol 2 (3) ◽

pp. 172 ◽

Cited By ~ 7

Author(s):

Buerhan Saiti

Keyword(s):

Mass Media ◽

Selection Criteria ◽

Islamic Banking ◽

Islamic Banks ◽

Financial Counseling ◽

Significant Difference ◽

Klang Valley ◽

The purpose of this study is to establish the level of awareness that Malaysians have in relation to the culture of Islamic banking, the attitude of Malaysians towards Islamic banking and a ranking of the bank selection criteria of Malaysians – and for each part of the study, to see if Muslim responses are different from non-Muslim responses. A sample of 150 Muslim and non-Muslim customers in Klang Valley was surveyed utilizing a questionnaire containing specific questions relating to the awareness and attitudes of Islamic banking to their ranking of the services required. It is found that the Muslims are more aware toward the culture of Islamic banking, and as consequences, be more aware of the meaning of fundamental terms used in Islamic banking and finance.In the case of the attitudes towards Islamic banks, there were many differences in attitudes between Muslims and non-Muslims in country with majority of Muslims. In the context of bank selection criteria, there are four significant differences among Muslims and non-Muslims such as, mass media advertising, credit on favorable terms, financial counseling and location near my place of work, while the others 18 criteria shows no significant difference. The findings can be utilize by banks to measure the level of attitudes and acceptance towards Islamic Banking among Muslims and non-Muslim and for those who is considering setting up an Islamic banking operations in the country with majority of Muslims.

DOES ISLAMIC BANKING PROMOTE FINANCIAL STABILITY? EVIDENCE FROM AN AGENT-BASED MODEL

Journal of Islamic Monetary Economics and Finance ◽

10.21098/jimf.v7i2.1323 ◽

2021 ◽

Vol 7 (2) ◽

pp. 201-232

Author(s):

Omer Faruk Tekdogan ◽

Burak Sencer Atasoy

Keyword(s):

Financial Stability ◽

The Other ◽

Islamic Banking ◽

Bank Failures ◽

Islamic Banks ◽

Financial Industry ◽

Financial Systems ◽

Agent Based ◽

Conventional Banks ◽

Islamic banking has come to the forefront as being one of the fastest growing branch of the global financial industry in recent years. In this study we evaluate whether coexistence of Islamic and conventional banks promote financial stability. In this respect, we evaluate two types of financial systems: (1) A system solely comprised of conventional banks, (2) a dual system in which conventional and Islamic banks coexist and interact with each other. Accordingly, we design two agent-based models representing aforementioned systems and examine possible contagious effects and causes of bank failures by employing the volatility spillover methodology. We find that Islamic banks greatly promote stability by providing liquidity during financial shocks and create more liquidity per asset compared to conventional banks. We also find that they tend to hold more cash than conventional banks, which cushion the effects of a possible liquidity squeeze. Conventional banks, on the other hand, tend to have reserve deficits, which intensify during shock periods. We conclude that coexistence of both bank types creates a win-win situation and contributes to financial stability.

GENERAL REGULATORY FRAMEWORK IN RASTIN PROFIT AND LOSS SHARING BANKING:

Journal of Business & Finance in Emerging Markets ◽

10.32770/jbfem.vol251-66 ◽

2019 ◽

Vol 2 (1) ◽

pp. 51-66

Author(s):

Bijan Bidabad

Keyword(s):

Banking System ◽

Legal Framework ◽

Islamic Banking ◽

Legal Environment ◽

Islamic Banks ◽

Investment Return ◽

Regulatory Frameworks ◽

Practical Development ◽

The Common ◽

This paper aims to explain some auxiliary regulatory pillars and complementary considerations and systems in Rastin 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. In this paper, we are going to explain the auxiliary preparations of this banking system. Rastin Banking complies with the nature of financial intermediary activity (partnership of depositor in the yields of the fund receiver via the bank). In order to fulfil this goal despite particular formation, financial structure, instruments and workflow many other auxiliary considerations are defined to remove banking shortages in a legal framework. To handle Rastin Banking and to remove the common banking obstacles, a set of particular theoretical and operational regulatory frameworks should be defined to fulfil the participation operations. In this paper, we will have a look at the auxiliary legal environment to setup Rastin Banking. This system requires more elaborations for further practical development and adjustment. In this system, the investment return of the participation is distributed to the parties of financial partnership (depositor, entrepreneur and bank), and it is done by eliminating fixed interest rate.