Relationship between Capital Structure and Profitability: Dual Banking Perspective

This study looks into the relationship between the capital structure and profitability of Islamic and conventional banks, listed on the Karachi Stock Exchange extracting data for 250 observations between 2006 and 2016 from their financial statements. The paper uses regression analysis to check the proposed relationship. We found a strong correlation between Debt-to-Equity (D/E) ratio and Return on Equity (ROA) in conventional banks while no significant relationship existed in Islamic banks. The findings can be explained in terms of the different deposit mechanisms employed by the two systems i.e. the conventional banking system considers all deposits as liabilities of the banks while on the other hand Islamic banks only write the current accounts as a debt. The Modaraba-based deposit accounts of Islamic banks are considered as equity. This paper contributes theoretically to the current body of Islamic finance literature in Pakistan. On the practical side, the study suggests that Islamic banks can increase their savings deposits as they pose no risk and have equity-like features.

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Conducting Business with God: Is God Blessing Islamic Banks with Better Financial Performance than Conventional Banks?

International Finance and Banking ◽

10.5296/ifb.v6i2.16035 ◽

2019 ◽

Vol 6 (2) ◽

pp. 40

Author(s):

Musaed S. Alali

Keyword(s):

Financial Performance ◽

Financial Analysis ◽

Stock Exchange ◽

The Other ◽

Islamic Banks ◽

Return On Assets ◽

Return On Equity ◽

Significant Difference ◽

Kuwait Stock Exchange ◽

Conventional Banks

This study aims to compare the financial performance between Islamic and conventional banks listed at Kuwait stock exchange over the period 2011-2018 using the modified DuPont model of financial analysis which is based on the analysis of return on equity (ROE). Unlike previous studies where researchers compared the performance on a bank-to-bank basis, this study examines the aggregate ratios of Islamic banks and compare it to aggregate ratios of conventional banks. The study also adds volatility into the model since consistency in returns indicated a more stable sector. Results obtained from this study showed that conventional banks in Kuwait had a better mean performance during the study period in terms of both return on assets (ROA) and return in equity (ROE), Islamic banks also showed a higher deviation in these two ratios resulting in a lower Sharpe ratio. While the results showed no statistically significant mean difference between Islamic and conventional banks in terms of return on assets (ROA), the results also showed a statistically significant difference in mean return on equity (ROE) between the two sub-sectors. On the other hand, Islamic banks showed an impressive improvement in their ratios during the last three years of the study period which impose a real threat to conventional banks in the future.

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

International Conference on Eurasian Economies 2016 ◽

10.36880/c07.01803 ◽

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.

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HUBUNGAN PROFITABILITAS DAN DIVIDEN TUNAI DENGAN ICECUKUPAN KAS DAN LIKUIDITAS SEBAGAI MODERATING VARIABLE

Media Riset Akuntansi Auditing & Informasi ◽

10.25105/mraai.v7i2.765 ◽

2007 ◽

Vol 7 (2) ◽

pp. 141

Author(s):

Megawati Olctorina ◽

Michell Suharti

Keyword(s):

Dividend Policy ◽

Stock Exchange ◽

The Other ◽

Cash Dividend ◽

Continuous Growth ◽

Return On Equity ◽

Other Hand ◽

Dividend Distribution ◽

The Relationship ◽

A Company

The objective of this research is to determine the relationship between profitability and the amount of cash dividend policy. However this research examines the influences of cash adequate and liquidity (current ratio)toward the relationship between profitability and cash dividend policy. We call the influence as moderating variables. In general, investors have primarily objective that is to increase their wealth by return as dividend or capital gain. On the other hand, the companyexpects continuous growth and its going concern, also increase its stockholder's wealth. Factor that predicted influencing dividend distribution amount in this research are focused on profitability. Thus, profitabiNy influences cash dividend policy in a company. However cash dividend should be paid only when a company has adequate cash and good liquidity ratio. This research examines financial statement of several companies are listed at Jakarta Stock Exchange for period ended December 31, 2000 until December 31, 2003. Data is collected from Jakarta Stock Exchange and Indonesia Capital Market Directory 2004. This research uses statistical software TViews version 4,1 ''. The result is cash adequate and liquidity moderate relationship between return on investment and cash dividen policy. On the other hand, return on equity has not significant relationship with cash dividend PolicyKeyword : profitability, cash dividend, cash adequate, liquidity

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Hubungan Struktur Modal Dan Profitabilitas: Analisis Perusahaan Infrastruktur pada Indonesian Stock Exchange Tahun 2012-2016

Jurnal Akuntansi ◽

10.46806/ja.v7i2.498 ◽

2019 ◽

Vol 7 (2) ◽

Author(s):

Eddy Winarso, Francis M. Hutabarat

Keyword(s):

Regression Analysis ◽

Capital Structure ◽

Significant Relationship ◽

Stock Exchange ◽

Statistical Software ◽

Return On Equity ◽

Correlation And Regression Analysis ◽

Auto Correlation ◽

The Relationship ◽

The Capital Structure

The purpose of this research is to analyze the relationship between capital structure and profitability of infrastructure companies listed in SMINFRA18 on the Indonesia Stock Exchange from 2012-2016. The advantage of an appropriate capital structure can help companies to grow primarily in the profits of their companies. This research is descriptive-correlation and quantitative approach. The data used in this study is the Capital Structure and Profitability Data of Infrastructure Companies in the Indonesia Stock Exchange which are members of the SMINFRA Index. There are 18 companies listed in the index which are the best companies in the infrastructure industry. The ratio used to describe the capital structure is Debt to Equity and the profitability ratio used is Return on Equity. This study uses statistical software to analyze: Auto-correlation, Multicollinearity, Normality, Heterocedascity, Correlation, and Regression analysis. Thus, the results of the study show that there is a significant relationship between capital structure and profitability in the SMINFRA18 Infrastructure Company listed on the Indonesia Stock Exchange.Keywords: Capital Structure, Profitability, Infrastructure, return on equity

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PERBANDINGAN TINGKAT PROFITABILITAS DAN LIKUIDITAS DARI ASSET-LIABILITIES MANAGEMENT PADA BANK SYARIAH DAN BANK KONVENSIONAL

JESI (Jurnal Ekonomi Syariah Indonesia) ◽

10.21927/jesi.2015.5(1).1-11 ◽

2016 ◽

Vol 5 (1) ◽

pp. 1

Author(s):

Rindang Nuri Isnaini Nugrohowati

Keyword(s):

Banking Sector ◽

Banking System ◽

Capital Adequacy ◽

Islamic Banks ◽

Return On Assets ◽

Return On Equity ◽

Liability Management ◽

Capital Adequacy Ratio ◽

Conventional Banks ◽

Important Position

Abstract The banking sector has a very important position for the economic systemof a country. The banking system, which is part of the financial system willaffect the course of the economic system as a whole. If the banking system isweak then the system will also be weak economy. Banking is an intermediaryinstitution is the institution that channel funds from surplus funds (surplusunits) to the sectors that lack of funds (deﬁ cit units). With the banking economic actors in need of funds can be met so that the economy can continue to run. In this study will speciﬁ cally analyze the comparison of the level of proﬁ tability of the asset-liability management in Islamic banks and conventional banks are seen from the return on assets and return on equity rises. It also will be studied comparative level of liquidity in Islamic banks and conventional banks are seen from the loan to deposit ratio and Capital Adequacy Ratio. By Hyphothesis is as follows : Ha1: there are differences in the level of profitability of the asset-liabilitymanagement in Islamic banks and conventional banks are seen from the return on assets and return on equity Ha2: there are differences in the level of liquidity in Islamic banks andconventional banks are seen from the loan to deposit ratio and Capital Adequacy Ratio Data analysis has been done obtained the following conclusions, based onmeans testing compare with test Independent-Samples t-test showed that the level of tability seen from ROA and ROE between Islamic Bank and Bank Konvensiona show any signiﬁ cant difference. This is demonstrated by tests of signiﬁ cance 0.02 0.05 for FDR, while for the signiﬁ cance test CAR of 0.38> 0.05. Keyword: Proﬁ tabilitas, Likuiditas, Asset Liabilities Management, Bank Syariah

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Impact of Capital Structure on Profitability:An empirical analysis of listed firms in India

Asian Journal of Managerial Science ◽

10.51983/ajms-2018.7.2.1310 ◽

2018 ◽

Vol 7 (2) ◽

pp. 1-6

Author(s):

Atif Ghayas ◽

Javaid Akhter

Keyword(s):

Capital Structure ◽

Stock Exchange ◽

Short Term ◽

Return On Equity ◽

Listed Firms ◽

Relationship Capital ◽

The Impact ◽

The Relationship ◽

Positive Effect

This study aims to empirically examine and analyze the impact of capital structure decision on the firm’s profitability by using a sample of 35 Indian pharmaceutical companies listed on Bombay Stock Exchange (BSE) during the period of 5 years from 2012 to 2016. Regression Analysis is used to measure the extent and nature of the relationship. Capital structure variables used in the study are ratio of long-term debt to total assets (LDA), ratio of short-term debt to total assets (SDA) and ratio of Total debt to total assets (DA) while profitability has been measure by Return on Equity (ROE). Firms Size (SIZE)and Salesgrowth(GROW) are also used as control variables. Results reveal a positive effect of SDA and DA on ROE, while a weak-to-no effect was found of LDA on ROE.

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

International Journal of Management Studies ◽

10.32890/ijms.23.1.2016.10463 ◽

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.

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Analisis Manajemen Laba Perbankan Konvensional dan Perbankan Syariah di Bursa Efek Indonesia

AKTSAR Jurnal Akuntansi Syariah ◽

10.21043/aktsar.v3i1.7116 ◽

2020 ◽

Vol 3 (1) ◽

pp. 93

Author(s):

Esty Apridasari

Keyword(s):

Earnings Management ◽

Agency Theory ◽

Conflicts Of Interest ◽

Stock Exchange ◽

Financial Statements ◽

Descriptive Study ◽

Discretionary Accruals ◽

Islamic Banks ◽

Absolute Value ◽

Conventional Banks

Earnings management in financial statements can be caused by accrual accounting policies applied and conflicts of interest in agency theory. This study aims to analyze and compare earnings management in financial statements of conventional banks and Islamic banks. This research is a descriptive study of banks listed on the Indonesia Stock Exchange in 2017-2018. Earnings management is measured by accrual earnings management proxied by discretionary accruals using the modified-Jones model. The samples are 10 Islamic banks and 32 conventional banks. The results show that the comparison of the average absolute value of discretionary accruals for conventional banks is 0.0659 and for Islamic banks is 0.0478. It shows that discretionary accruals for Islamic banks are generally smaller compared to conventional banks. This indicates that the level of earnings management in Islamic bank financial statements is lower than conventional banks.

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PENGARUH PROFITABILITAS DAN STRUKTUR MODAL TERHADAP NILAI PERUSAHAAN PT. JABABEKA, Tbk

Jurnal Pengembangan Wiraswasta ◽

10.33370/jpw.v19i2.127 ◽

2018 ◽

Vol 19 (2) ◽

pp. 81

Author(s):

Adriana Syariefur Rakhmat

Keyword(s):

Capital Structure ◽

Stock Prices ◽

Stock Exchange ◽

Financial Statements ◽

Return On Equity ◽

Book Value ◽

Equity Ratio

Firmâ€™s value is investor perception of the company, which is often associated with stock prices, higher stock prices could increase the firmâ€™s value. Firmâ€™s value is proxied by Price Book Value (PBV) which is a market ratio used to measure the performance of the stock prices to itâ€™s book value. The present study is aimed at finding out the influence of profitability proxied by Return On EquityÂ (ROE) and capital structurÂ proxied by Debt to Equity Ratio (DER) on firmâ€™s value.The population of the study are quarterly financial statements on PT. Jababeka, Tbk that were listed at Indonesian Stock Exchange in year period of 2011 â€“ 2015. Testing the hypothesis in this study using a software toll SPSS (Statistical Product and Service Solution) versionÂ 22.The result of this study showed that : (1)Â profitability positively and significantly influence firmâ€™s value; (2) capital structure positively and significantly influence firmâ€™s value; (3) profitability and capital structure significantly influence firmâ€™s value.Â Keywords:Price Book Value, Return On Equity, and Debt to Equity Ratio

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The Relationship between Capital Structure and Performance in Gulf Countries Banks: A Comparative Study between Islamic Banks and Conventional Banks

International Journal of Economics and Finance ◽

10.5539/ijef.v7n12p140 ◽

2015 ◽

Vol 7 (12) ◽

pp. 140 ◽

Cited By ~ 4

Author(s):

Abdelrhman Ahmad Meero

Keyword(s):

Capital Structure ◽

Performance Measures ◽

Positive Relationship ◽

Nominal Exchange Rate ◽

Islamic Banks ◽

Rates Of Return ◽

Gulf Countries ◽

And Performance ◽

Conventional Banks ◽

The Relationship

This paper mainly has two objectives: the first one is to identify the similarity of capital structure between Islamic and Conventional banks; Second objective is to detect the relationship between capital structure variables and performance of Islamic and Conventional Banks in Gulf Countries (GC). This investigation has been performed on a sample of 16 GC Banks (8 Islamic Banks and 8 Conventional Banks) for the period 2005-2014. ROE (return on equity) and ROA (return of asset) have been used as performance measures. Total debt to total assets, Equity to total assets, Debt to equity ratios have been used as capital structure measures. Size of the bank has been considered as dependent variable to identify its relationship with bank performance. Data collected were analyzed by using SPSS software. The results of the research indicate a similarity of capital structure of Islamic banks and Conventional banks in Gulf Countries. ROA as performance measurement has a significant negative relationship with financial leverage and a positive relationship with equity to assets ratio. This relationship is identified at Islamic banks, Conventional banks and all the banks of the sample. Bank size has a positive relationship with ROA and ROE as performance measures in Islamic and Conventional banks. modifications on the market of 122 equity indices and 39 commodities in the eight approaches, depending on the investment time horizon (October-15th May, November-15th May, October-1st May, November-1stMay) and types of computed rates of return (accrued rates of return and average daily geometric rates of return). Calculations presented in this paper indicate the presence of the sell-in-May-and-go-away effect on the analyzed markets in the classic time frame, as well as in the different time frames. ation in the country. Markets determine nominal exchange rate should prevail in the economy. The country should regulate its foreign reserve policy by setting a threshold, above which excess deposit should be plough back to the domestic economy inform of investments rather than support excessive importation.

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