scholarly journals The Effect of the Global Financial Crisis on the Profitability of Islamic Banks in UAE

2019 ◽  
Vol 11 (1) ◽  
pp. 181
Author(s):  
Mukdad Ibrahim
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Islamic Banks ◽  
Financial Indicators ◽  
Anova Analysis ◽  
Return On Assets ◽  
Return On Equity ◽  
Adverse Conditions ◽  
Equality Of Means ◽  
The Global Financial Crisis

This paper empirically analyzes the profitability of the four Islamic banks operating in the UAE during the financial period between 2004 and 2009 using three profitability indicators, return on total income, return on assets and return on equity. The researcher uses a variety of techniques, equality of means, coefficient of variation and Anova analysis to assess the effect of the financial crisis on the performance of the four specified banks. The findings show that although the financial crisis began in the 3rd quarter of 2007, its impact on the profitability of Islamic banks was most profound in 2008 and 2009 where there was a notable decline in all analyzed financial indicators. Moreover, the three indicators held a higher variability rate during the crisis years spanning 2008 to 2009 in stark contrast with the pre-crisis rates of the period spanning 2004 to 2007. Anova analysis across the four banks show significant differences between the mean of most indicators, suggesting varying performance under the adverse conditions present during the recession.

scholarly journals The Investment in Fixed Assets Before and After the Global Financial Crisis (Empirical Study for Industry and Investment Sector in Palestine Stock Exchange)

2021 ◽  
Vol 12 (4) ◽  
pp. 52
Author(s):  
Tamer Bahjat Sabri
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Stock Exchange ◽  
Return On Assets ◽  
Significant Difference ◽  
Fixed Assets ◽  
Before And After ◽  
The Global Financial Crisis ◽  
Investment In Fixed Assets ◽  
Shed Light

This paper seeks to shed light on investment in fixed assets before and after the financial crisis that took place in 2008 and compare the two periods together in the sectors of industry and investment in Palestine Stock Exchange. The period between 2005 – 2007 was chosen to represent to the pre-crisis time and the period between 2010 -2012 was chosen to represent the post-crisis time. The population of the study consists of fifteen organizations from both sectors. To test the hypothesis of the study, the independent samples T-test was employed.The average ratio of fixed assets to the total assets of industry and investment rose from 56.2% before the crisis to 58.5% after the crisis. As for the hypotheses of the study, the findings showed no difference except for the seventh hypothesis. There was a statically significant difference in the ratio of fixed assets to equity between the listed companies that a high return on assets and those that have a low return.

scholarly journals Risk management of Islamic banks: A search for empirical evidences

2017 ◽  
Vol 14 (2) ◽  
pp. 8-16
Author(s):  
Sayed M. Fadel ◽  
Jasim Al-Ajmi
Keyword(s):  
Risk Management ◽  
Financial Crisis ◽  
Management Practices ◽  
Global Financial Crisis ◽  
Risk Mitigation ◽  
Balance Sheet ◽  
Islamic Banks ◽  
Risk Levels ◽  
Management Techniques ◽  
The Global Financial Crisis

The objectives of this study are to determine 1) the effect of global economic and financial crisis on risk management, 2) the severity of different types of risk facing Islamic banks, 3) the risk levels of Islamic financial modes, 4) risk assessment techniques, and 5) risk management techniques. The structure of the balance sheet, the nature of Islamic finance instruments and funding sources have a great impact on the level of risk exposure of banks and the instruments. Credit risk is found to be the most serious risk, followed by liquidity risk, market risk and operational risk, in descending order of importance. As for the riskiness of Islamic financing modes, mudarabah is perceived to be the riskiest, followed by musharakah, while murabahah ranked as the least risky mode. Moreover, Islamic banks are found to use traditional risk management techniques more than sophisticated measurements. They also adopt risk mitigation techniques that are used by conventional banks in preference to techniques that are considered to be unique to Islamic banks. This paper is the first to study the risk management practices of Islamic banks operating in Bahrain. It also provides evidence about these practices after the global financial crisis that affected all countries, including Bahrain.

scholarly journals Effects of the Global Financial Crisis on the Agency Cost of Islamic Banks and Conventional Banks

2017 ◽  
Vol 4 (1) ◽  
pp. 44
Author(s):  
Talla M Aldeehani
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Gulf Cooperation Council ◽  
Agency Cost ◽  
Islamic Banks ◽  
Empirical Testing ◽  
Before And After ◽  
The Status ◽  
Conventional Banks ◽  
The Global Financial Crisis

In this paper, we investigate the effect of the 2008 global financial crisis on the agency cost (AC) of Islamic banks (IBs) and conventional banks (CBs). Many pioneering scholars (see, for example, Archer et al., 1998) have recognized fundamental differences in the capital structures and risks of IBs compared to CBs and called for more empirical testing of these issues. This effort is in response to those calls. Focusing on AC, we collected data for all Gulf Cooperation Council (GCC) banks satisfying the period from 2001-2014. The data was split into “before” and “after” the 2008 crisis. Although statistically insignificant, the analysis shows higher AC for IB compared to CBs before and after the crisis. However, we provide evidence of significant differences in AC causal models for the two types of banks. For conventional banks, only profitability factors explain variability in AC before and after the crisis. For Islamic banks, however, in addition to profitability, liquidity, deposits and financing facilities matter depending on the status of the economy. We provide further discussions, implications, and recommendations.

scholarly journals Alternative measures for predicting financial distress in the case of Malaysian Islamic banks: assessing the impact of global financial crisis

2020 ◽  
Vol 11 (9) ◽  
pp. 1827-1845
Author(s):  
Mehmet Asutay ◽  
Jaizah Othman
Keyword(s):  
Financial Crisis ◽  
Financial Distress ◽  
Global Financial Crisis ◽  
Islamic Banks ◽  
Content Type ◽  
Macroeconomic Variables ◽  
Explanatory Variables ◽  
Alternative Funding ◽  
The Global Financial Crisis ◽  
The Impact

Purpose The global financial crisis of 2008 still has an impact on the financial systems around the world, for which funding liquidity has been mentioned as one of the main concerns during that period. This study aims to consider the impact of and extent to which the funding structure of Islamic banks along with deposit structure, macroeconomic variables, other bank-specific variables, including alternative funding mix variables (in terms of funding structure measured as financing/deposit ratio), could play a part in explaining the financial conditions and predicting the failures and performances of Islamic banks in the case of Malaysia under the distress created by the global financial crisis. Design/methodology/approach Multivariate logit model was used with a sample including 17 full-fledged Islamic banks in Malaysia for the period from December 2005 to September 2010 by using quarterly data. Findings This study found that the funding mix variable (financing/deposit ratio), the composition of deposits, alternative bank-specific variables and alternative funding mix variables are statistically significant. In contrast, none of the macroeconomic variables is found to have a significant impact on bank liquidity. In the final models, the variables that showed significant performance were selected as explanatory variables. The results of McFadden R-squared for both selected models showed an excellent fit to predict the Islamic banks’ performance. Originality/value This empirical study contributes to the literature in two ways: to the best of the authors’ knowledge, this is the first study to examine the role of the funding structures of Islamic banks in determining their performance; and it also examines the effect of deposit composition (the mudharabah and non-mudharabah deposits) on Islamic banks’ performance.

The impact of the global financial crisis on audit and non-audit fees

2015 ◽  
Vol 30 (4/5) ◽  
pp. 302-323 ◽  
Author(s):  
Irina Alexeyeva ◽  
Tobias Svanström
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Audit Fees ◽  
Return On Assets ◽  
Public Companies ◽  
Content Type ◽  
Audit Firms ◽  
The Global Financial Crisis ◽  
The Impact ◽  
Non Audit Services

Purpose – The paper aims to investigate audit and non-audit fees during the global financial crisis (GFC) in an environment that is relatively sparsely regulated with regard to the provision of non-audit services. Design/methodology/approach – Audit and non-audit fees were studied during pre-GFC (2006-2007), GFC (2008-2009) and post-GFC (2010-2011) periods. Findings – During the GFC, Swedish companies benefited from an increase in sales and total assets, although return on assets decreased. In this setting, the auditors charged higher audit fees compared with the pre-GFC period, despite the absence of increased audit reporting lags. A significant increase in audit fees continued during the post-crisis periods with auditors paying more attention to companies’ leverage and whether they report losses. At the same time, the companies spent less on non-audit services. Research limitations/implications – This study is limited to companies from Sweden, which was less affected by the GFC. Practical implications – GFC auditors are able to charge higher audit fees to public companies including those that are well-performing during financial crises, and they are also able to increase the audit fees in the post-crisis period. This implies that auditors put in extra audit effort to compensate for higher risk, or that they are good at negotiating prices with their clients. However, non-audit fees decreased during the same period, implying that the demand for these services drops under financial instability. Originality/value – The study highlights auditors’ behavior in the liberal economic environment and it studies both audit fees and non-audit fees before GFC, during GFC and after the GFC. The GFC appears to have provided audit firms the opportunity to extract higher audit fees. Our findings are of interest to managers, auditors and regulators.

scholarly journals INTEREST-FREE BANKING'S AND CONVENTIONAL BANKING'S ATTITUDES AGAINST FINANCIAL CRISES: THE CASE OF TURKEY

2015 ◽  
Vol 3 (1) ◽  
Author(s):  
Mustafa CANBAZ
Keyword(s):  
Financial Crisis ◽  
Banking Sector ◽  
Global Financial Crisis ◽  
Financial Statements ◽  
Financial Indicators ◽  
Sound Structure ◽  
Before And After ◽  
Restructuring Process ◽  
The Global Financial Crisis ◽  
Important Progress

Following the financial crisis in 2001, Turkish banking sector started a ‘restructuring’ process. This led to recovery of the damage caused by the crisis and, despite the significant decrease in number of the banks, the banking sector gained quite a sound structure. This imrpovement allowed it to remain strong against the global financial crisis that took place after 2007 and caused important progress for many financial indicators, in particular the deposits and loans. Interest- free banking, which has been operating in form of participation bank through the profit and loss sharing system since 2005, become a competitor, in a different aspect, to deposit banks, an important part of the conventional banking. This study compares attitudes of the Participation Banks and the Deposit Banks against their customers before and after the crisis, in light of the financial indicators from the financial statements. The analysis concludes that Particpiation Banksa re significantly different from Deposit Bank in aspect of 'acticity ratios', which are based on the main areas of activity.

scholarly journals Financial System Stability in Indonesia during The Global Financial Crisis 2007/2008: Conventional vis-à-vis Islamic

2015 ◽  
Vol 2 (2) ◽  
pp. 136
Author(s):  
Muh. Rudi Nugroho ◽  
Ibnu Qizam
Keyword(s):  
Financial Crisis ◽  
Financial Stability ◽  
Global Financial Crisis ◽  
Internal Variable ◽  
Islamic Banks ◽  
Z Score ◽  
Internal Factors ◽  
Macroeconomic Factors ◽  
Conventional Banks ◽  
The Global Financial Crisis

This research aims to analyze the financial stability especially in dual banking system in Indonesia and discusses the role of Islamic banks in the financial stability of national banks. In addition, this study also focuses on the analysis of the determinants of financial stability namely on the national banking Industry. This research uses panel data in which combined data between time series and cross section with an observation periods are 2005:1 - 2009:1 by using an internal variable of banks and macroeconomic data. Z-score analysis will be used as main tool analysis regressed with internal variable. Empirical results obtained from this research shows that during the period of 2005:1 - 2009:1 banking financial stability, for both conventional and Islamic and categorized based on an asset scale, the movement of the Z-score value is different. From the Z-score values analysis shows that Islamic banks are the most stable bank with a trend increased sharply when compared with other banks, namely conventional couterparts. If viewed from each category, small conventional banks more stable than small Islamic banks, and there are declining trend in 2005:1 to 2009:1. Whereas for large and middle conventional banks the trend of the Z-score movement are in the same patterns. This study also founds that the determinant of the banking stability can be seen from two sides namely bank's internal factors and macroeconomic factors. Internal factors consist of: Income Diversity (ID), Credit or Financing (Loan), Total Assets (TA), Operational Cost (Cost), Cost Income (CI), Loan Asset (LA), Current Liability (CL), Cash to Current Liabilities (CCL), Capital Bank (MDL). While macroeconomic factors consist of: inflation, BI Rate, Exchange Rate, Composite Index (JCI), the Gross Domestic Product (GDP). This research also examined the extent to which the role of Islamic banks and the global financial crisis to the financial stability of national banking. This analysis shows that the global financial crisis and Islamic banks affect significantly to the financial stability of banking industries in Indonesia.

scholarly journals Did Global Financial Crisis Impact the Islamic Banking Efficiencies? Evidence from Malaysian Islamic Banks

2018 ◽  
Vol 6 (2) ◽  
pp. 075
Author(s):  
Abdus Samad
Keyword(s):  
Financial Crisis ◽  
Technical Efficiency ◽  
Global Financial Crisis ◽  
Islamic Banking ◽  
Data Envelopment ◽  
Islamic Banks ◽  
Significant Difference ◽  
Loan Financing ◽  
The Global Financial Crisis ◽  
Non Parametric

First, this paper investigated the loan and deposit efficiencies of Malaysian Islamic banks during 2008-2013 applying the non-parametric technique, Data Envelopment Analysis (DEA), and found that the average technical efficiency (TE) of loan financing was 83%, 88%, 87%, 95%, 100%, and 94% and the average technical efficiency for deposit mobilizations was 87%, 94%, 94%, 96%, 92%, and 96%. Only four banks in 2008, two bank in 2009, three banks in 2010, two banks in 2011-2013 are both technically and scale efficient in loan production. On the other hand, only four banks in 2008 and 2009, five banks in 2010 and 2011, three banks in 2012, and five banks in 2013 are both technical and scale efficient in deposit mobilizations. Second, the paper compares the efficiencies of Islamic banks between the global financial crisis (GFC) and the post global financial crisis (PGFC) in determining whether the efficiencies of banks between the GFCP and PGFCP are stable. Both parametric and non-parametric tests found no significant difference in the efficiencies between the two periods suggesting that the efficiencies of the Malaysian Islamic banks were stable.

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