scholarly journals Comparative analysis of Saudi sharia compliant banks: A CAMEL framework

Accounting ◽  
2021 ◽  
pp. 1119-1130 ◽  
Author(s):  
Mohammad Naushad
Keyword(s):  
Saudi Arabia ◽  
Comparative Analysis ◽  
Commercial Banks ◽  
Banking Sector ◽  
Banking Industry ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Financial Health ◽  
Financial Soundness ◽  
The Stability

A vibrant banking sector remains instrumental to the stability of every economy. Islamic banks are now considered as iris spuria of the banking industry. Countries such as Saudi Arabia have been hailed as the Islamic banking basin. Nevertheless, how well is this sector growing and performing in Saudi Arabia itself? This motivates us to carry out this study. The current study's key objective was to measure Sharia-compliant banks' efficiency on the CAMEL Framework, a commonly accepted framework for banks' financial health. CAMEL is fundamentally an acronym for which the first letter from the five primary segments of a bank operation is jumbled, i.e. “|C|apital adequacy, |A|sset quality, |M|anagement quality, |E|arnings ability and |L|iquidity”. The system is popularly being used for determining the financial soundness and stability of banks. The current study employs this framework to judge the financial performance of four fully Sharia compliant banks or Islamic banks in Saudi Arabia. The publicly accessible audited data of these banks over ten years was taken for analysis. From the final results of the analysis, it is found that all the banks performed stupendously well on the CAMEL framework. AlRajhi Bank was rated number one of all four Sharia-compliant banks. However other three banks namely Alinma Bank, AlBilad Bank, and Aljazeera bank have also done well and overachieved all the criterion of CAMEL's ranking. However, the study proposes a comparison of Sharia-compliant banks with conventional commercial banks. Moreover, it recommended that more banks should engage in offerings of Sharia based products.

scholarly journals Customer Satisfactions on Islamic Banking Services in Almadinah City, Saudi Arabia

2019 ◽  
pp. 1-8 ◽  
Author(s):  
Wesal M. Aldarabseh
Keyword(s):  
Saudi Arabia ◽  
Customer Satisfaction ◽  
Banking Sector ◽  
Islamic Law ◽  
Banking Industry ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking Services ◽  
The Past ◽  
Self Administered Questionnaire

Providing quality services is a key element to compete in the banking industry. Islamic banks showed significant expansion in the past decades worldwide.  In the current study, customer satisfaction towards services provided by Islamic banks in Almadinah city, Saudi Arabia was investigated. A total of 292 customers of full-fledged Islamic banks were recruited in the study. Customer satisfaction was measured using a self-administered questionnaire. The results showed acceptable levels of customer satisfaction toward Islamic banking services (85%). In addition, personnel, image, reliability, and compliance with Islamic law were the most important service dimensions that affect customer satisfaction. Finally, gender differences were noticed with respect to customer satisfaction with females seemed to be less satisfied than males. The present findings provide positive feedback to the Islamic banking sector in Almadinah city to improve customer satisfaction of their services.

scholarly journals FINANCIAL STABILITY LEVEL ON BANKING INDUSTRY Comparative Analysis Between Islamic and Conventional Bank In Indonesia

2018 ◽  
Vol 18 (1) ◽  
Author(s):  
Alvien Nur Amalia
Keyword(s):  
Comparative Analysis ◽  
Financial Stability ◽  
Banking Industry ◽  
Tax Credits ◽  
Islamic Banking ◽  
Gdp Growth ◽  
Islamic Banks ◽  
Macroeconomic Factors ◽  
Conventional Banks ◽  
The Stability

Financial stability in the banking industry is important because it is a dynamicand high-risk industry. The purpose of this study was to compare the stability ofIslamic and conventional banking in Indonesia by assessing the level of volatility ofReturn on Assets (ROAV), managerial stability which can be seen from the value ofTobin’s Q, Non-Performing Loans/ Financing and liquidity in both of banking andusing 11 Islamic banks and 11 conventional banks as samples. The quarterly secondarydata was used in the observation start in 2011 and will end in 2013 using paneldata regression. The results of the study explained that there are several factors, bothinternal banks factors consist of banking profit before tax, credits to total assets ratio,the ratio of loss reserves to total financing, operating expenses to income operationalratio and macroeconomic factors include the level of the exchange rate rupiah toUSD, BI Rate, and GDP growth are significantly influence the financial stability ofIslamic and conventional banking. The conclusion indicates that the level of financialstability of Islamic banking is still lower than conventional banking.

Sharia’h practice at Islamic banks in Pakistan

2018 ◽  
Vol 9 (3) ◽  
pp. 274-289
Author(s):  
Muhammad Tariq Majeed ◽  
Abida Zainab
Keyword(s):  
Risk Sharing ◽  
Banking Sector ◽  
Islamic Law ◽  
Banking Industry ◽  
Supervisory Board ◽  
Primary Data ◽  
Equation Modeling ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type

PurposeIslamic banks provide an alternative financial system based on Sharia’h (Islamic law). However, critics argue that operation at Islamic banks is violating Sharia’h particularly in terms of provision of interest free services, risk sharing and legal contract. The purpose of this paper is to empirically evaluate the Sharia’h practice at Islamic banks in Pakistan by considering some basic principles of Sharia’h. Design/methodology/approachPrimary data are collected from 63 branches of Islamic banks in Pakistan. Questionnaire is used as an instrument. The study uses structural equation modeling that includes confirmatory factor analysis and regression analysis. Data are codified and analyzed using SPSS and Amos. FindingsThis study finds that Islamic banks are providing interest free services, ensuring that transactions and contracts offered by Islamic banks are legal and offering conflict-free environment to customers. In contrast, estimated results expose that Islamic banks are not sharing risk and Sharia’h supervisory board is not performing its role perfectly. Similarly, it is found that organization and distribution of zakat and qard-ul-hassan are weak at Islamic banks. Research limitations/implicationsData are collected from Islamabad federal capital of Pakistan that hold just 5 per cent share of Islamic banking industry. This small share may not provide true picture of Islamic banking sector. Practical implicationsTo ensure risk sharing, Islamic banking industry must consider the development of new modes of financing and innovation of more products based on Sharia’h. State Bank of Pakistan should ensure separate regulatory framework that enable Islamic banks to provide qard-ul-hassan, organize and allocate zakat. Originality/valueThis paper discusses the perception of bankers, who are actually the executors, about Shariah’s practices at Islamic banks in Pakistan. There are not many discussions on this topic that could be found, and hence this could be considered as a significant contribution by this paper to the existing literature of Islamic finance.

scholarly journals The Influence of Inflation, Exchange Rates, Car And NPF to Stability of Islamic Banks in Indonesia Period 2015-2019

2020 ◽  
Vol 9 (1) ◽  
pp. 29
Author(s):  
Gumilang Budi Laksa pratama ◽  
Kusnendi Kusnendi ◽  
Suci Aprilliani Utami
Keyword(s):  
Banking Sector ◽  
Negative Relationship ◽  
Capital Adequacy ◽  
Internal Variables ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Vector Error Correction ◽  
Banking Stability ◽  
The Government ◽  
The Stability

This study aims to see the extent of the influence of the level of Inflation (CPI), Exchange Rate (kurs), Capital Adequacy Ratio (CAR) and Non Performing Financing (NPF) on the Stability of Islamic Banks in Indonesia Period 2015-2019. To support research, we use the Vector Error Correction Model (VECM) methodology. VECM test results show that in the short term the significant effect on the level of stability are Kurs and CAR, with the direction of a negative relationship (reducing the level of stability). Meanwhile, in the long term the significant effect on the level of stability are inflation and Kurs with the direction of a negative relationship (reducing the level of stability). From the results of this study it can be concluded that the macroeconomic variables significantly affect the stability of Islamic banking, therefore the government has an important role in controlling macroeconomic turmoil to maintain Islamic banking stability. Besides that, the internal variables of the banking sector are considered to have no significant effect partially, therefore it is necessary to conduct further research with a variety of internal factors in the banking industry to prove their effects on the stability of Islamic banking

scholarly journals Financial Health Soundness Measurement of Private Commercial Banks in Bangladesh: An Observation of Selected Banks

2016 ◽  
Vol 9 (1) ◽  
pp. 20-36 ◽  
Author(s):  
Mohammad Main Uddin ◽  
Abdul Kaium Masud
Keyword(s):  
International Business ◽  
Commercial Banks ◽  
Banking Sector ◽  
Vital Role ◽  
Economic Conditions ◽  
Financial Indicators ◽  
Financial Health ◽  
Business Studies ◽  
Private Banks ◽  
Financial Soundness

The financial sector is one of the most significant sectors for any country, especially if a country is a developing in nature. In such an environment, banking sector plays the vital role to strengthen the economic conditions. Economic growth and international business is increasing in Bangladesh and private commercial banks especially private sectors play the major roles. Thus it becomes important to measure the financial soundness of the private banks in order to judge their respective position. The study was conducted to measure the financial soundness of selected private commercial banks of Bangladesh for the period 2006-2010. In this paper, an attempt was made to analyze the financial soundness of selected banks using different statistical tools and financial indicators. The study reveals that different financial indicators showed upward trends during the period 2006   to 2010. The study also made a rank of the selected commercial banks based on financial indicators. It was found that a bank with higher deposits, loans & advances, investments, branches, employees does not always mean that has better profitability performance. The study also recommends measures that could be adopted by banks to ensure soundness in their operation.Journal of Nepalese Business Studies Vol. 9, No. 1, 2015 pp. 20-36

scholarly journals Customer Perception on Bank Service Quality: A Comparative Study between Conventional Commercial Banks and Islamic Commercial Banks in Bangladesh

2016 ◽  
Vol 5 (2) ◽  
pp. 109-124
Author(s):  
Sonia Rezina ◽  
Nur Ahmad ◽  
Farhana Mitu ◽  
Mohitul Ameen Ahmed Mustafi
Keyword(s):  
Service Quality ◽  
Cyber Security ◽  
Commercial Banks ◽  
Banking Sector ◽  
Banking Industry ◽  
Islamic Banks ◽  
Deep Insight ◽  
Policy Makers ◽  
Customer Perception ◽  
Conventional Banks

Customer perception refers to the process by which a customer selects, organizes, and interprets information inputs to create a meaningful picture of the service quality within an organization. In the fast growing banking industry like Bangladesh, every bank is looking forward towards faster growth through providing better service quality than others. However, there are certain challenges started rising in front of the booming banking sector which are needed to be addressed immediately; such as, managing compliance, mitigating fraud/ cyber security, managing hiring decisions etc. It is obvious that, those who will efficiently handle these challenges will certainly lead the market and gain higher customer contentment. The main purpose of this study is to compare the customer perception towards the service Quality offered by Conventional Commercial Banks and Islamic Shariah-based Commercial Banks in Bangladesh through using SERVQUAL instrument. 204 respondents have been randomly selected for the study among them 162 is from Conventional banks and 42 are from Islamic banks. The findings of the research should help the policy makers and regulators in banking industry to have a deep insight towards the different perception of customers and assist in taking effective measures to achieve organizational goal through improving their service Quality.

scholarly journals EMERGENCE OF FINANCIAL TECHNOLOGY IN ISLAMIC BANKING INDUSTRY AND ITS INFLUENCE ON BANK PERFORMANCE IN COVID-19 SCENARIO: A CASE OF DEVELOPING ECONOMY

2021 ◽  
Vol 37 (01) ◽  
pp. 97-109
Author(s):  
Ashfaq Ahmad ◽  
Aamir Sohail ◽  
Abid Hussain
Keyword(s):  
Cyber Security ◽  
Banking Sector ◽  
Banking Industry ◽  
Essential Element ◽  
Bank Performance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Structured Interviews ◽  
Finance Industry ◽  
Financial Technology

Technological intervention and financial innovation are an essential element for the banking sector especially in post-Covid 19 scenario. Islamic banking industry has also no exception and Islamic banks could attain institutional objectives over financial technology. The motivation behind research is to investigate emergence of financial technology in Islamic Banking Industry and its Influence on Bank Performance. The population of the study consists of Islamic banks and windows of Islamic banks operating in Pakistan. The sample size consists of four Islamic banks, five Islamic windows of conventional banks, and State bank of Pakistan. Purposive sampling technique was used by researcher. Semi-structured interviews were conducted and NVIVO software was used for data analysis. Findings indicate that technologies used by different banks to serve the customer are blockchain, mobile banking, customer relations management, cyber security, cloud banking, and fintech start-up. Reaction and response of the Islamic finance industry to the rise of financial technology and its impact on Pakistan is obvious.

scholarly journals Bankruptcy Profile of the Islamic Banking Industry: Evidence from Pakistan

2019 ◽  
Vol 10 (2) ◽  
pp. 265
Author(s):  
Ahmad Ali Jan ◽  
Muhammad Tahir ◽  
Fong-Woon Lai ◽  
Amin Jan ◽  
Mehreen Mehreen ◽  
...  
Keyword(s):  
Banking Sector ◽  
Banking Industry ◽  
Positive Impact ◽  
Evaluation Model ◽  
P Value ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Z Score ◽  
Crisis Period

The purpose of this study is to examine the bankruptcy profile of the Islamic banking industry in Pakistan for the post-crisis period 2007-2008. This study used Altman’s Z-score bankruptcy evaluation model for evaluating bankruptcy rates of the sampled Islamic banks from Pakistan for the post-crisis period 2009-2015. ANOVA result shows the P-value with 0.002, which implies that the sampled Islamic banks from Pakistan do differ in their rates of bankruptcy. Regression results show that the variables liquidity and productivity ratios have a significant positive impact on the bankruptcy profile of the Islamic banking sector in Pakistan. While profitability and insolvency, ratios indicated an insignificant impact on the bankruptcy profile of the Islamic banking industry in Pakistan. The overall analysis of this study is viable to draw the attention of researchers and practitioners towards the deteriorating bankruptcy profile of the Islamic banking sector in Pakistan. The study also persuades the researchers to design a separate Shariah-based bankruptcy evaluation model for the Islamic banking industry of Pakistan.

scholarly journals Evaluating the Financial Soundness of Small and Medium-Sized Commercial Banks in Kenya: An Application of the Bankometer Model

2019 ◽  
Vol 11 (6) ◽  
pp. 93 ◽  
Author(s):  
Moses O. Ouma ◽  
Gabriel N. Kirori
Keyword(s):  
Commercial Banks ◽  
Banking Sector ◽  
Operating Cost ◽  
Poor Performance ◽  
Capital Adequacy ◽  
Financial Health ◽  
Operating Income ◽  
Capital Adequacy Ratio ◽  
Significant Difference ◽  
Financial Soundness

The study investigated the financial soundness of small and medium-sized commercial banks in Kenya over the four-year period, 2014 to 2017, using the bankometer model and further compared the financial health of the two bank categories. The study employed secondary data from a census of Twelve (12) medium-sized and Sixteen (16) small banks, with the financial soundness being proxied by the overall solvency score (S-Score) in order to achieve its objective. A total of six (6) different financial ratios namely, Capital to Assets ratio, Equity to Assets ratio, Capital Adequacy Ratio, Non-Performing Loans ratio, Operating Cost to Operating Income ratio and the ratio of Loans to Assets were used in the study to measure the degree of financial health of the banks. One of the key findings of the study was that both the small and medium-sized commercial banks in Kenya were financially sound during each of the four (4) years studied, with no significant difference in the financial soundness of the two bank categories. Other findings were that all the banks studied experienced poor performance in loans and operations while two banks had below the benchmark capital adequacy ratio. The findings of the study are important in that, they can be used to formulate policies and strategies for promoting improvement in the financial performance of the banking sector in particular and the business sector at large in the country.

scholarly journals COMPETITION, DIVERSIFICATION, AND STABILITY IN THE INDONESIAN BANKING SYSTEM

2021 ◽  
Vol 24 ◽  
pp. 59-88
Author(s):  
Mudeer Ahmed Khattak ◽  
Mohsin Ali ◽  
Baharom Abdul Hamid ◽  
Muhammad Umar Islam
Keyword(s):  
Banking Sector ◽  
Banking System ◽  
Portfolio Diversification ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking Stability ◽  
The Stability ◽  
The Impact ◽  
Important Policy Implication ◽  
Conventional And Islamic Banks

We examine the impact of competition and portfolio diversification on banking stability for conventional and Islamic banks in Indonesia. We find that the Islamic banking sector is less stable, when compared to the conventional banking sector. Competition in the banking sector reduces stability, while diversification enhances it. We find that competition negatively impacts the Islamic banks, but diversification has no impact on these banks. An interesting finding is that competition and diversification complement each other in enhancing the stability of the Indonesian banking sector. These findings carry an important policy implication for the banking sector of Indonesia.

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