scholarly journals THE IMPACT OF IJARAH/LEASE FINANCING ON MALAYSIAN ISLAMIC BANK PERFORMANCE

2021 ◽  
Vol 16 (1) ◽  
pp. 49-58
Author(s):  
Mohamud Said Yusuf ◽  
Mohamad Yazid Isa
Keyword(s):  
Random Effect ◽  
Consumer Price Index ◽  
Operating Efficiency ◽  
Bank Performance ◽  
Islamic Banks ◽  
Islamic Bank ◽  
Lease Contract ◽  
Banking Institutions ◽  
Asset Creation ◽  
The Impact

Ijarah (lease contract) is one of the essential financing contracts offered by Islamic banking institutions to meet the demand of the clients. This study investigates the impact of Ijarah financing on Islamic bank performance in Malaysia for the period from 2004-2018 using Fixed and Random Effect Models. Ijarah financing (IJFA) which becomes the focus variable of this study with other six independent variables; operating efficiency (EXTA), bank size (LTA), total financing (TFTA), base rate (BR), consumer price index (CPI) and gross domestic product (GDP) were regressed against return on asset (ROA) and net profit margin (NPM). The results show that Ijarah financing has a positive and significant impact on NPM. The findings suggest that Islamic banks should increase their portfolio of Ijarah financing and this is also support the concentration strategy used by banks in improving Islamic bank performances. An increase in demand for Ijarah financing will increase Islamic banks performance and this reflects that Ijarah financing as an asset creation tool that banks prefer particularly for generating income.

Ownership structure and financial performance in Islamic banks

2014 ◽  
Vol 7 (2) ◽  
pp. 146-160 ◽  
Author(s):  
Sarra Ben Slama Zouari ◽  
Neila Boulila Taktak
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Empirical Evidence ◽  
Ownership Structure ◽  
Policy Implications ◽  
Bank Performance ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Bank ◽  
The Impact

Purpose – This study aims to investigate empirically the relationship between ownership structure (concentration and mix) and Islamic bank performance, with a special attention to the identity of the block investor (foreign, family, institutional and state). Design/methodology/approach – Regression analyses are conducted to test the impact of the identity of the first shareholders and the degree of concentration on Islamic bank performance, using a panel data sample of 53 Islamic banks scattered over > 15 countries from 2005 to 2009. Findings – Results suggest that ownership is concentrated at 49 per cent, and for 41 banks from the full sample, the ultimate owner is institutional. State investors come in second place, followed by family ultimate shareholders. Using return on assets and return on equity as performance measures, empirical evidence highlights the absence of correlation between ownership concentration and Islamic bank performance. It also reveals that the combined effort of family and state investors is beneficial to bank performance. Results also indicate that banks with institutional and foreign shareholders do not perform better. Empirical findings suggest that the financial crisis impacts negatively Islamic bank performance. Research limitations/implications – The use of dummy variables to measure the nature of the largest owner represents the main limitation of this study. This is due to the lack of information, as the percentage of the largest capital held referring to owner category was available only for some banks. Practical implications – This research has given a brighter insight into corporate governance and bank performance in selected Islamic banking institutions. Findings provided useful information to bank managers, investors and policy makers. Financial performance can be improved by identifying practices associated with ownership structure. So, it will have policy implications for Islamic banks as to how to improve their performance. Finally, different types of bank ownership have had different concerns about implementing corporate governance practices among Islamic banks. Originality/value – This work is the first of its kind for Islamic banks. It extends previous research by examining whether ownership structure (concentration and mix) affects performance. It also fills the gap in the literature by providing empirical evidence on a large sample involving data from 15 countries. Finally, manual data collection on ownership structure constitutes a large part of the research for this paper.

Do board characteristics affect bank performance? Evidence from the Bahrain Islamic banks

2018 ◽  
Vol 9 (2) ◽  
pp. 251-272 ◽  
Author(s):  
Abdelaziz Hakimi ◽  
Houssem Rachdi ◽  
Rim Ben Selma Mokni ◽  
Houda Hssini
Keyword(s):  
Panel Data Analysis ◽  
Random Effect ◽  
Generalized Method Of Moments ◽  
Bank Performance ◽  
Islamic Banks ◽  
Content Type ◽  
Return On Equity ◽  
Board Characteristics ◽  
Board Directors ◽  
The Impact

Purpose Although most previous studies interested in Islamic banks have focused on quantitative aspects such as performance, risk and stability, this paper aims to deal with the institutional dimension and focus precisely on the link between board characteristics and bank performance. Design/methodology/approach Based on a data related to 13 banks in Bahrain observed over the period of 2005-2011, this study investigates the impact of board directors on the level of performance. To this end, the authors have used two empirical approaches. The first one is the panel data analysis with regard to random effect (RE) regression. The second one is the generalized method of moments (GMM) in system, which checked the soundness of the first result. Findings The result of RE regression indicates that the board duality is positively and significantly correlated with the bank performance for both ROA (return on assets) and ROE (return on equity). However, the board size exerts a positive and significant impact only when profitability is measured by ROE. The authors find that regression with GMM in system confirms the RE result exclusively for ROE. Findings also indicate that a financial crisis exerts a negative but not significant effect on bank performance. Practical implications These findings are relevant to both policymakers and regulators. Islamic banks in Bahrain should grant more importance to the structure and the quality of the board to improve their performance. Originality/value This study aims to extend the existing literature by focusing about the role of the Shariah board in bank performance.

The consumers’ commitment and materialism on Islamic banking: the role of religiosity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Junaidi Junaidi ◽  
Ready Wicaksono ◽  
Hamka Hamka
Keyword(s):  
Structural Equation ◽  
Survey Study ◽  
Equation Modeling ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Positive Effects ◽  
Islamic Bank ◽  
Muslim People ◽  
The Impact

Purpose This paper aims to investigate whether and how religiosity (e.g. extrinsic and intrinsic) influences the mediator variables (consumers’ commitment and materialism) in the Islamic bank consumers context. It also examines how the mediators should be influence consumers’ preferences. Design/methodology/approach In total, 658 Muslim people and Islamic bank consumers were recruited for a survey study and structural equation modeling was used to test the research hypotheses. Findings The empirical results indicate that religiosity (e.g. extrinsic and intrinsic) has significant and positive effects on consumers’ commitment and materialism, whereas intrinsic religiosity has no significant effect on consumers’ commitment which subsequently influences consumers’ preference. Furthermore, mediator variables (e.g. consumers’ commitment and consumers’ materialism) have partial mediators between religiosity and consumers’ preferences. Research limitations/implications The current study was limited to Indonesian Muslim people; there is a future need to study consumers’ attitudes and engagement in religious products and services (e.g. Islamic brands). It is can help practitioners, regulators and researchers to observe the dynamic behavior to elaborate on the impact of religion and Islamic products on consumers’ preference. Practical implications The bank managers and regulators should enhance the information of products and services Islamic banks and the difference principle between conventional banks. Moreover, enlighten the consumers about the principle operation of Islamic banks from the perspective of marketing and religiosity. Originality/value This study contributes to consumers’ behavior literature and, specifically, for the decision-making process through developing and testing a model of religious determinants toward Islamic bank products, as well as offers new insights into the determinants of religion and consumers’ decision process toward Islamic banking.

scholarly journals The Role of Islamic Banks in the Development of the Jordanian Economy-"Exploratory Study on Arab Islamic Bank"

2016 ◽  
Vol 8 (4) ◽  
pp. 131
Author(s):  
Bader Mustafa Al-Sharif
Keyword(s):  
Agricultural Sector ◽  
Negative Impact ◽  
Industrial Sector ◽  
Customer Relationship ◽  
Islamic Banks ◽  
Islamic Bank ◽  
Medium Level ◽  
Study Population ◽  
The Impact

This study aimed to identify the role of Islamic banks in the development of the Jordanian economy. The study population consisted of public administration and branches of the Arab Islamic Bank. The study sample consisted of (85) customer relationship officers and (30) corporate service officers with a total (115) questionnaires distributed on all respondents. Descriptive approach of means and standard deviation was used; also Simple Regression was used to measure the impact of the role of Islamic banks in the development of the Jordanian economy.Among the most important findings of the study that Islamic banks have a medium level role in the development of the Jordanian economy and the development of the industrial sector, and it was clear that at Islamic banks have low level role with negative impact on the development of agricultural sector. The findings have also revealed that Islamic banks develop the construction sector at a high level.The study recommended the need to overcome the problems faced by agricultural and industrial entrepreneurs by Islamic banks in order to get farmers and manufacturers to get the funds necessary for them as this raises the level of development of the Jordanian economy.

scholarly journals Bank Capital, Operating Efficiency, and Corporate Performance in Nigeria

2018 ◽  
Vol 6 (1) ◽  
pp. 61-87
Author(s):  
Abdulai Agbaje Salami ◽  
Ahmad Bukola Uthman
Keyword(s):  
Negative Impact ◽  
Stock Exchange ◽  
Annual Reports ◽  
Operating Efficiency ◽  
Bank Performance ◽  
Regulatory Regime ◽  
Bank Capital ◽  
Positive Effects ◽  
Net Interest Margin ◽  
The Impact

Abstract This study examines the impact of bank capital and operating efficiency on the Nigerian deposit money bank financial performance with a view to resolving risk-based and non-risk-based capitals’ dichotomy existing in the bank literature. Using bank-specific data obtained from the annual reports and accounts of 15 banks listed on the Nigerian Stock Exchange between 2012 and 2015, the panel data regression analyses revealed the superiority of standard capital ratio of equity-to-total-assets, a non-risk-based capital, over other measures. While all measures, both risk-based and non-risk-based capitals, showed significantly positive effects on bank performance as measured by return-on-asset, mixed results were obtained from other indicators: return-on-equity and net-interest-margin. Overall, only equity-to-total-assets influenced all adopted performance indicators positively. It was also found that operating efficiency measured by cost-to-income ratio had negative impact on bank performance, but on the average it appeared too high. Thus, incorporating the standard capital ratio of equity-to-total assets into regulatory regime by the banks’ regulator is recommended to ensure its relevance is not overshadowed.

scholarly journals Restructuring and Bank Performance in Dual Banking System

2021 ◽  
Vol 10 (2) ◽  
pp. 223-247
Author(s):  
Raditya Sukmana ◽  
Mansor H Ibrahim
Keyword(s):  
Banking System ◽  
Extensive Study ◽  
Bank Risk ◽  
Bank Performance ◽  
Islamic Banking ◽  
Panel Var ◽  
Bank Competition ◽  
Islamic Bank ◽  
Conventional Banks ◽  
The Impact

While extensive study deals with bank competition and performance relationship, this study pioneers in focusing the existence Islamic bank in the presence of well established conventional banking system in Malaysia. This paper assesses the impact of changing competition landscape and Islamic bank penetration on bank risk, profitability and capitalization.  This study utilizes an unbalanced panel dataset consisting of 37 commercial banks over the period 1997 to 2015. the paper uses a panel VAR methodology to discern the interactions between bank competition and Islamic banking presence on one hand and bank performance on the other hand.Findings: We find evidence supportive of both competition – stability and competition – fragility views for conventional banks. The results suggest that bank competition improves conventional bank risk and, at the same time, lower profitability and capital holdings.  As for Islamic banks, competition seems to robustly influence only bank profitability.  Finally, we note that increasing Islamic bank penetration improves the risk profile of conventional banks and, as expected, reduces their market power.  These results bear important implications on the design of competition policies in a dual banking system as well as on the development of the Islamic banking sector.JEL Classification: C23, G21, G28How to Cite:Sukmana, R., & Ibrahim, M. H.. (2021). Restructuring and Bank Performance in Dual Banking System. Signifikan: Jurnal Ilmu Ekonomi, 10 (2), 223-247. https://doi.org/10.15408/sjie.v10i2.20740. 

Education strategy misfit, board effectiveness and Indonesian Islamic bank performance

2020 ◽  
Vol 11 (3) ◽  
pp. 929-944
Author(s):  
Rahma Wijayanti ◽  
Vera Diyanty ◽  
Sugiyarti Fatma Laela
Keyword(s):  
Financial Performance ◽  
Negative Impact ◽  
Supervisory Board ◽  
Least Square ◽  
Bank Performance ◽  
Board Effectiveness ◽  
Content Type ◽  
Islamic Bank ◽  
Education Strategy ◽  
The Impact

Purpose This study aims to provide empirical evidence on the contingency factors that affect the implementation of education strategies and the impact of education strategy misfit on the performance and effectiveness of the board’s moderating role on the misfit level and performance of Islamic banks. Design/methodology/approach This research is a quantitative study with pooled ordinary least square panel data during the years 2007-2014 from all Indonesian Islamic commercial banks. Islamic bank performances are measured by the level of profitability and sharia financial performance. Board effectiveness is analysed by measuring the effectiveness of both the board of commissioners (BoC) and the sharia supervisory board (SSB). Findings This study proves that organisational competent qualities and chief executive officer tenure are the contingency factors that affect the implementation of the education strategy. This study’s results indicate that the effectiveness of both the BoC and SSB has a positive impact on the bank’s profitability and sharia financial performance. The results also show that misfit has a negative effect on sharia financial performance and that board effectiveness is proved to reduce the negative impact of a misfit on sharia financial performance. However, there is no strong evidence that board effectiveness reduces the negative impact of a misfit on profitability. Originality/value This study emphasises the importance of enhancing the competence and innovation of organisations in the implementation of education strategy and the need for synergy and increased capabilities among board members to achieve well-established Islamic bank performance.

ShariahSupervisory Board Report (SSBR) in Islamic banks

2018 ◽  
Vol 11 (2) ◽  
pp. 274-296 ◽  
Author(s):  
Abdul Rafay ◽  
Saqib Farid
Keyword(s):  
Impression Management ◽  
Supervisory Board ◽  
Investor Behavior ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Bank ◽  
Belief Adjustment ◽  
The Impact ◽  
First Time ◽  
Practical Implications

PurposeThe primary purpose of this study is to determine the impact of information ordering inShariahSupervisory Board Report (SSBR) on investors’ behavior and perception about the performance of Islamic bank in terms ofShariahcompliance and other conventional parameters.Design/methodology/approachThe study used the belief adjustment model to evaluate the desired effects of ordering positive and negative information (if any) in SSBR of an Islamic bank. This study extends the previous literature on information ordering as a pioneer experimental study in emerging economies.FindingsEvidence shows that investors and technical users of performance reports consider SSBR as significant for financial and investment decisions from the Islamic perspective. The results indicate that the primacy effect does exist and is statistically significant.Practical implicationsThe SSBR provides the management with an excellent opportunity to communicate and convince the investors aboutShariahcompliance features of an Islamic bank. Additionally, it also highlights the functional use of impression management to manipulate the investor’ behavior and perception.Originality/valueFor the first time, this study specifically investigates the effect of conscious information ordering in SSBR of Islamic banks on investors perceptions and behaviors.

scholarly journals Analysis Of Bank-Spesific Factors To Determine The Profitability Of Islamic Banks In Indonesia : A Panel Regression Approach

2020 ◽  
pp. 166
Author(s):  
Dyah Tari Nur’aini
Keyword(s):  
Banking System ◽  
Fixed Effect Model ◽  
Operating Efficiency ◽  
Islamic Banks ◽  
Financial Service Authority ◽  
Cross Sectional ◽  
Important Indicator ◽  
Effect Model ◽  
Panel Data Regression ◽  
The Impact

Profitability is an important indicator of the bank’s performance. In 2014, profits of Islamics bank in Indonesia decreased by 19.7 percent. This paper aims to analyze the impact of bank-specific factors to The Islamic banking system in Indonesia has shown better development Islamic bank’s profitability. This study observed 11 Islamic banks in the Indonesia banking system in the period between 2010 - 2014. The quarterly data are taken from the Indonesian Banking Directory, published by the Financial Service Authority (OJK). Using panel data regression, the Fixed Effect Model with cross-sectional correlation (SUR) has selected as the best model. According to the obtained results, among internal factors of bank profitability, the most important one is the operating efficiency ratio. Furthermore, profitability is influenced negatively by liquidity risk, solvency risk, credit risk, and bank size.

scholarly journals The impact of financial variables on systematic risk – An empirical study in manufacturing industry on Ho Chi Minh stock exchange

2017 ◽  
Vol 1 (Q4) ◽  
pp. 88-94
Author(s):  
Minh Tien Pham ◽  
Bich Huy Hai Bui ◽  
Thao Thi Thu Nguyen
Keyword(s):  
Fixed Effects ◽  
Stock Exchange ◽  
Random Effect ◽  
Random Effect Model ◽  
Systematic Risk ◽  
Ordinary Least Squares ◽  
Operating Efficiency ◽  
Manufacturing Companies ◽  
Financial Variables ◽  
The Impact

The aim of this study is to examine the effect of financial variables on systematic risk, using the panel data of 64 manufacturing companies listed in Ho Chi Minh City Stock Exchange (HOSE) during the period of 2011-2015. The three models employed are pooled Ordinary Least Squares (OLS), Random Effect Model (REM), and Fixed Effects Model (FEM). The results of model tests show that FEM is the most suitable to carry out the analysis. In order to increase the efficiency of the model, the tests for model problems are conducted. The results point to the presence of heteroskedasticity problem in the model; therefore, the modified FEM is used to deal with this issue. Empirical evidence from HOSE indicates that leverage has a significantly positive impact while operating efficiency and profitability show significantly negative impact on systematic risk (beta).

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