scholarly journals A Study on the Customer’s Acceptance Towards Islamic Banking Products Among Non-Muslim in Dual Banking System

2016 ◽  
Author(s):  
Juwairiah Mohamad ◽  
Muhammad Fakhirin Che Majid
Keyword(s):  
Banking System ◽  
The Self ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Muslim Community ◽  
Positive Perception ◽  
Conventional Banks ◽  
Muslim Communities ◽  
The Relationship ◽  
Self Administered Questionnaire

Islamic banking products (IBP) are offered not only to the Muslim community, but also to communities of other religions who are free to choose products depending on their convenience. According to a report, the percentage of non-Muslim communities choosing IBP in Malaysia has been steadily increasing and is expected to continue to increase in future. The Dual Banking System is one of the initiatives that has been created in conventional banks as an extra facility for the communities to engage with IBP easily without going to Islamic Banks. This paper aims to study the factors that drive non-Muslim customers to accept IBP. Specifically, this paper examines the relationship between four factors: knowledge, understanding, perception and the level of awareness among non-Muslim customers regarding their acceptance on IBP in the Dual Banking System. About 140 non-Muslim IBP customers of the Dual Banking System around Changlun, Jitra and Alor Setar were selected based on convenience and were randomly picked as respondents of this study. Some data were also collected through interviews with the bank personnel and the bank’s customers besides the self-administered questionnaire survey. Employing the SPSS approach, the hypotheses of the study were tested. The findings showed that there are significance relationships between customer’s knowledge, understanding, positive perception, and the level of awareness perceived among non-Muslim customers and their acceptance of IBP.   Keywords: Islamic banking products; non-Muslim customers; acceptance.

scholarly journals Pricing Linkage between Islamic Banking and Conventional Banking: The Case of Bangladesh

2016 ◽  
Vol 3 (4) ◽  
pp. 84
Author(s):  
Sarwar Uddin Ahmed ◽  
Ashikur Rahman ◽  
Samuel Parvez Ahmed ◽  
G M Wali Ullah
Keyword(s):  
Profit Sharing ◽  
Islamic Banking ◽  
Specific Rate ◽  
Islamic Banks ◽  
Loss Mechanism ◽  
Monthly Data ◽  
For Profit ◽  
Significant Difference ◽  
Conventional Banks ◽  
The Relationship

<p><em>Islamic banking is based on profit and loss mechanism where the use of interest is prohibited.  Unlike conventional banks, these banks do not charge a specific rate of interest, rather provides financing in exchange for profit sharing.  However, there are studies claiming that, in practice, Islamic banking is same as conventional banking with regard to the use of interest. It is also claimed that, Islamic deposits are not interest-free, but are closely attached to conventional deposits.  On this background, the objective of this study is to examine the relationship between pricing in Islamic banks vis-à-vis conventional banks by taking the case of Bangladesh. We have used monthly data during the period of 2009-2013. The findings of the study showed that, there is no statistically significant difference between the monthly average lending rates of Islamic banks and conventional banks. However, there is significant difference between deposit rates. The existence of causal relationship was inconclusive, and requires further analysis.</em></p>

scholarly journals EVALUATION OF DUAL BANKING SYSTEM IN BANKING IN INDONESIA

2020 ◽  
Vol 11 (2) ◽  
Author(s):  
Amanatun Nisfah Nurun Nikmah ◽  
Tulus Suryanto ◽  
Surono Surono
Keyword(s):  
Financial Stability ◽  
Banking System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Common Goal ◽  
The Face ◽  
Capital Access ◽  
Conventional Banks ◽  
Banking Institution ◽  
Negative Factors

Evaluation of Dual Banking System in Indonesia. Dual Banking System is the application of two banking systems in one banking institution, namely conventional banking and Islamic banking. Indonesia can optimize the dual banking system through strength share and weakness cover, namely Islamic banks are generally superior in terms of a more stable system in the face of market changes but have deficiencies in infrastructure, whereas conventional banks have large market and capital access and more infrastructure complete, but very vulnerable to crises due to the negative factors of economic integration which are already very strong. The superiority of the dual banking system concept is seen in two separate systems that operationally do not affect each other, but have one common goal, namely financial stability that supports economic growth. So, to achieve this goal the two systems can work together in external factors such as access to capital, infrastructure, supervision or clearing systems that can help interbank liquidity.

scholarly journals BANK RUN AND STABILITY OF ISLAMIC BANKING IN INDONESIA

2017 ◽  
Vol 3 (1) ◽  
pp. 25-60 ◽  
Author(s):  
Rahmatina A. Kasri ◽  
Tika Arundina ◽  
Kenny D. Indraswari ◽  
M. Budi Prasetyo
Keyword(s):  
Factor Analysis ◽  
Financial Stability ◽  
Banking System ◽  
Bank Runs ◽  
Primary Data ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Bank Run ◽  
Banking Stability ◽  
Conventional Banks

Bank run is an important economic phenomenon which increasingly occurred in in modern banking system and potentially threatened banking stability as it could trigger a banking crisis. However, most studies related to bank run focus on the occurrence of bank run in conventional banking system. Very few of them discuss the bank run phenomenon under Islamic banking system or dual banking system where Islamic banks jointly operating with conventional banks. Therefore, this study attempts to analyze the determinants of bank run in the Indonesian Islamic banking industry by employing primary data from 256 customers of Indonesia Islamic banks in 2015 and by utilizing factor analysis and descriptive statistics. In theory, Islamic banks tend to be more resilient towards any macroeconomic or financial shocks as compared to conventional banks due to the nature of its asset-based and risk-sharing arrangement. However, the result exhibits that both psychological and fundamental factors (i.e. macroeconomics and bank fundamentals) strongly influence the behaviors of Islamic banking depositors to withdraw their funds, which might trigger the occurrence of bank runs in the country. Insider information, macroeconomic condition and bank fundamental factors are also shown to have the highest impacts among all variables. Hence, in the context of banking stability, the finding implies that Islamic banks are not completely immune to the impacts of macroeconomic shocks or financial crisis. As a country with a dual banking system, Indonesia had experienced several bank runs since 1990s. Therefore, the findings of the study should provide the policy makers important insight into research based-policy in order to attain financial stability as one of the main economic goals of the country.Keywords: Bank run, Islamic bank, Factor analysis, IndonesiaJEL Classification: C83, G21, G28

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 The Relationship of Macro-risk Indicators, Internal Factors, and Risk Profile of Islamic Banking in Indonesia

ETIKONOMI ◽  
2020 ◽  
Vol 19 (2) ◽  
Author(s):  
Perdana Wahyu Santosa ◽  
Any Setianingrum ◽  
Nurul Huda
Keyword(s):  
Risk Profile ◽  
Risk Indicators ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Internal Factors ◽  
Macroeconomic Indicators ◽  
Managerial Implications ◽  
Conventional Banks ◽  
Relationship Of ◽  
The Relationship

This study is essential because Islamic banks have a higher NPF level than conventional banks and examine whether macroeconomic indicators (macro-risk), internal factors of banking (GCG-earnings-capital) risk profile correlate term Indonesian Islamic banking. The method used is the correlation analysis involving four macro-risk variables (Forex; BI rate; Inflation and GDP), three GEC variables (GCG; ROA, and CAR), and two risk profiles (FDR and NPF). The number of samples is the ten largest Indonesia sharia commercial banks with the 2011-2018 periods. This research finds that macroeconomic indicators positively correlate to non-performing financing (NPF). The GEC positively correlates to NPF and FDR; GEC is negatively correlated to macro-risk indicators. However, some indicators are negatively correlated, such as GDP-corporate governance, Forex-profitability, GDP-efficiency, BI rate-capital, and profitability-NPF. The study proposed managerial implications to understand the relationship between macroeconomic, internal factors, and risk profile in Islamic bank lending.JEL: D02; G21, G32How to Cite:Santosa, P. W., Setianingrum, A., & Huda, N. (2020). The Relationship of Macro-risk Indicators, Internal Factors and Risk Profile of Islamic Banking in Indonesia. Etikonomi: Jurnal Ekonomi, 19(2), xx – xx. https://doi.org/10.15408/etk.v19i2.15528.

scholarly journals Impact of Basel Accord on Banking System (Evidence from Islamic Banks of Pakistan)

2015 ◽  
Vol 1 (2) ◽  
pp. 1
Author(s):  
Muhammad Mehtab Azeem ◽  
Akin Marsap ◽  
Cigdem Ozari
Keyword(s):  
Banking System ◽  
Islamic Banking ◽  
Basel Iii ◽  
Islamic Banks ◽  
Basel Accord ◽  
Trade Off ◽  
Financial Anomalies ◽  
Conventional Banks ◽  
The Stability ◽  
The Impact

Banks and bank regulatory authorities are vital players for the stability of economy and financial system in potential way. Basel III and its related to capital’s requirement obligations have been effective useful tool for the banking system. Since, this is tough job for the bankers to maintain the liquidity for hedging the future risk but it also been expensive for bankers to keep the extra capital and become more liquid since this discourage the provision of loans but promote the credit ratings. However, it has become necessary to investigate the impact of Basel III on Islamic banking system and analyze the trade off. The study analyzes empirically on the (Financial) anomalies in term of three factors (i) Financial size (ii) Spread and (iii) Provisions for non performing financing. The study also discusses the impact of Basel III on Islamic banking performance if applicable, in context of trade off and impact on country’s economy. We can ask that Basel III framework is difficult to be consistent for conventional banks; we can also realize that either new regulation will be flexible for Islamic banks under Basel III while Islamic and Conventional banks are totally different. Further, we shall estimate if the Basel III is more or less important in Islamic banks of Pakistan than conventional banks. At the end, we shall see from theoretical framework either the impact of Basel III is important for Islamic banks if and only if Islamic banks adopt to follow Basel III regulations and analyzing the potential influence on conventional banks.

scholarly journals The civil law form of musharakah as an instrument for direct participation of the Islamic bank in capital: A retrospective analysis and modernity

Pravovedenie ◽  
2020 ◽  
Vol 64 (3) ◽  
pp. 326-351
Author(s):  
Anna N. Kuznetsova ◽  
◽  
Inese Tenberga ◽  
Keyword(s):  
Economic Development ◽  
Civil Law ◽  
Banking System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Free Banking ◽  
Muslim Population ◽  
Legal Nature ◽  
Distribution Of Resources ◽  
Conventional Banks

Conventional banks, which operate under the conditions of interest capitalism, no longer dominate the financial sector. In the 21st century, Islamic banks, which provide services on an interest-free basis, have become their main competitors. In recent years, Islamic banking has grown rapidly even though 30–40 years ago it was only a regional phenomenon that could be found in countries with a predominantly Muslim population. The dispersal of capital by scaling a separate interest-free banking segment is now on the agenda of the Islamic world. It is stimulating the growing social demand for a fair distribution of resources within the community, as well as sustaining, at the same time, resilient economic development. However, the activity of Islamic banks remains a poorly studied and understood phenomenon within the circles of Russian legal science. In this article, the authors reveal the legal nature of the participation transaction involving shirkat al’-inan, while attempting to clarify the notion of using musharakah as a form of civil law, derived from shirkat al’-inan, within the Islamic banking system.

THE ISLAMIC VS CONVENTIONAL BANKS: AN EVIDENCE ON THE ECONOMIC DEVELOPMENT

2021 ◽  
Vol 02 (01) ◽  
pp. 68-81
Author(s):  
Muhammad Saqib Khan ◽  
Shaheera Munir ◽  
Ammara Mujtaba
Keyword(s):  
Quantitative Research ◽  
Banking System ◽  
Value Added ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking Systems ◽  
Tax Shield ◽  
Gross Value Added ◽  
Conventional Banks ◽  
Bank System

This paper highlights how financial and conventional bank system contribute to economic growth. As the Islamic banking system is grounded on shariah’s laws and Usury/RIBA (interest) are prohibited in Islam so there will be no tax shield in this banking system and they have to pay more tax as compared to the conventional banking system. By analyzing their performance and using the gross value-added contribution of both banking systems was observed. Six banks are selected for this purpose of which 3 Islamic banks i.e. Dubai. It is quantitative research so different ratios are used to examine both banking system performance and gross value added to give us information that to what extend both banking systems are contributing to the economy. In an examination, it has been exposed that both banking systems are conducive much to economy as conventional banks are developed their infrastructure is bigger than Islamic banks where Islamic banks just start near past a few years back.

Does the tag “Islamic” help in customer satisfaction in dual banking sector?

2019 ◽  
Vol 10 (1) ◽  
pp. 138-149 ◽  
Author(s):  
Fayaz Ahmad Lone ◽  
Ulfat Rashid Bhat
Keyword(s):  
Customer Satisfaction ◽  
Banking Sector ◽  
Banking System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Level Of Satisfaction ◽  
Alternative Approach ◽  
Future Strategy ◽  
Conventional Banks

Purpose The purpose of this paper is to find out the importance of the tag “Islamic” in the title of banks. This will help to determine the future strategy of Islamic banks, while expanding to the countries where Islamic banking is seen as a religious banking and not an as an alternative approach to the conventional banking. Design/methodology/approach Adopting convenience sampling, a total of 596 customers of both Islamic and conventional banks were surveyed from four regions of Saudi Arabia (Makkah, Madinah, Riyadh and Dammam) using a self-structured questionnaire on a five-point Likert scale. Findings The results concede that Islamic banks without the tag “Islamic” and conventional banks have same customer satisfaction. There are some factors other than the tag “Islamic” which are driving customers towards Islamic banking. Those factors include physical aspects of the bank, level of satisfaction with the services, dealing and attendance by the staff and safety and security of the bank. Besides, the application of fundamental principles of Islamic banking works as a key motivation for customer satisfaction with Islamic banking. Practical implications Applying the tag “Islamic” is not as important as implementing the principles of Islamic banking. Islamic banks can survive and compete well even without using the “Islamic” tag if they implement the prime principles of Islamic banking and work on improving the factors highlighted by this study. This study can prove to be helpful in the expansion of Islamic banking in the countries where religious banking is not generally preferred by customers. Originality/value This is the first study to find out the customer satisfaction in a dual banking system (comprising of conventional banks and Islamic banks that do not use the tag “Islamic”), thereby filling the existing gap in the Islamic banking literature.

scholarly journals Factors Influencing Adoption of Islamic Banking: A Study from Pakistan

2014 ◽  
Vol 4 (3) ◽  
pp. 352 ◽  
Author(s):  
Nain Tara ◽  
Madiha Irshad ◽  
Muhammad Rizwan Khan ◽  
Mahwish Yamin ◽  
Muhammad Rizwan
Keyword(s):  
Market Share ◽  
Rural Areas ◽  
Banking Sector ◽  
Banking System ◽  
Islamic Banking ◽  
Muslim Community ◽  
Customer Perception ◽  
Islamic Bank ◽  
Factors Influencing ◽  
Conventional Banks

Islamic banking system was initiated in Pakistan nearly three decades back in 1980 by SBP, through restructuring banking rules and ordinance i.e., it imposed alterations in operations of conventional banks. The first full-fledge Islamic Bank was granted incorporation certificate in 2001. However, the Islamic banking (IB) still seemed to have comparatively low market share. Therefore, the main objective of this study is to scrutinize the awareness, religious perception, and preferences in terms of reputation and networking on IB, of Pakistani community. Hence, a survey was conducted based on 150 respondents, representing Muslim community from metropolitan as well as rural areas, all over the country. Results revealed that there is a significant perceived adoption criteria regarding Islamic Banking. Criteria include factors of importance, starting from the most significant, Awareness regarding financial teachings of Islam, Reputation, Networking and Religion. Thus, the results would be worthwhile for the Islamic banking sector in comprehending the customer perception and preferences regarding IB, and to stimulate it strategically, and for the concerned authorities, in promoting specific regulations and policies that complement the market share of IB.

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