scholarly journals Does Financial Instability of Conventional Banks Affect Financial Stability of Islamic Banks in GCC Countries?

2019 ◽  
Vol 11 (1) ◽  
pp. 361
Author(s):  
Hamid Abdulkhaleq Hasan Al-Wesabi ◽  
Rosylin Mohammed Yusof
Keyword(s):  
Financial Stability ◽  
Time Series Data ◽  
Panel Cointegration ◽  
Generalized Least Squares ◽  
Causal Link ◽  
Series Data ◽  
Islamic Banks ◽  
Gcc Countries ◽  
Long Run ◽  
Conventional Banks

Purpose: The main purpose of this paper is to investigate the relationship between financial stability in Islamic banks and financial stability and soundness in conventional banks for five GCC countries.Design/methodology/approach: By using time series data, this study employs Pedroni’s panel cointegration to test the long-run relationship between financial stability of Islamic banks and financial stability of conventional banks in GCC countries during the period of (2000-2017). Besides, the study also employs Granger causality to test the causal link between stability of two types of banks (Islamic and Conventional). As well as employing Generalized Least Squares (GLS) to examine the effects between independent variables which are financial stability of conventional banks and their profitability, impact of period of financial crisis (2008/2009), oil prices fluctuations, banking concentration and financial sector development and financial stability of Islamic banks (as the dependent variable).Findings: The findings of this research suggest that there is a long-run, significant and positive relationship between the financial stability of conventional banks and its Islamic counterpart. At the same time, the financial stability of conventional banks is found to Granger caused the stability of Islamic banks.Originality/value: The results of the study contribute towards understanding the determinants of the financial stability of both Islamic banks and conventional banks and how they affect each other. This is important for policy ramifications by the Central Banks in GCC in terms of treating both types of banks differently to mitigate against future financial crises.

scholarly journals Capital and Liquidity Risks and Financial Stability: Pre, During and Post Financial Crisis Between Islamic and Conventional Banks in GCC Countries, in the Light of Oil Prices Decline

2019 ◽  
Vol 11 (1) ◽  
pp. 329
Author(s):  
Hamid Abdulkhaleq Hasan Al-Wesabi ◽  
Rosylin Mohammed Yusof
Keyword(s):  
Financial Crisis ◽  
Financial Stability ◽  
Liquidity Risk ◽  
Oil Prices ◽  
Islamic Banks ◽  
Independent Variables ◽  
Gcc Countries ◽  
Long Run ◽  
Conventional Banks ◽  
Conventional And Islamic Banks

Purpose: The main purpose of this paper is to investigate the impact of capital ratio and liquidity risks and the effects of the Global Financial Crisis (GFC) periods on financial stability of conventional and Islamic banks before, during, and after GFC in the year of 2008 five GCC countries. To examine empirically the comparison between conventional and Islamic banks based on financial stability and soundness, as well as capitalization and liquidity in the light of the adverse effects of GFC and oil prices declining during the period of (2000-2017).Design/methodology/approach: By using time series data, this study employs Pedroni’s panel cointegration analysis to test the long run relationship between financial stability of conventional banks and Islamic banks as a dependent variable and independent variables including financial crisis under three periods; pre (2006-2007), during (2008-2009) and post (2010-2011) crisis. As well as employing Generalized Least Squares (GLS) to examine the effects between independent variables which are GDP, inflation, financial crisis periods, oil prices fluctuations risk, banking competition, financial sector development, liquidity risk and capital adequacy ratio and dependent variable which is financial stability of conventional and Islamic banks in GCC countries before (2000-2006) during (2006-2009) and after (2010-2017) crisis.Findings: The findings of this research suggest that there is a long run relationship between financial stability of conventional and Islamic banks and capital ratios, liquidity risk and other independent variables. As well as study’s findings support some previous studies and it generally concludes that Islamic banks were performed better during the crisis than conventional banks. Whereas Islamic banks were more stable during crisis as their business model helped to limit the adverse effects of crisis in 2008, they were also more capitalized and less exposure to liquidity risk. Nevertheless, decrease in Islamic banks’ liquidity led some Islamic banks in GCC countries to declare significant losses in 2009.Originality/value: The result of the study contributes towards understanding the determinants of financial stability of both Islamic banks and conventional banks during financial crisis periods. It is important for policy ramifications by the Central Banks in GCC in terms of treating both types of banks differently to mitigate against future financial crises.

scholarly journals Panel Econometric Analysis on Mobile Payment Transactions and Traditional Banks Effort toward Financial Accessibility in Sub-Sahara Africa

2020 ◽  
Vol 12 (3) ◽  
pp. 895 ◽  
Author(s):  
Cephas Paa Kwasi Coffie ◽  
Hongjiang Zhao ◽  
Isaac Adjei Mensah
Keyword(s):  
Time Series Data ◽  
Unit Root Test ◽  
Panel Cointegration ◽  
Ordinary Least Squares ◽  
Sustainable Growth ◽  
Series Data ◽  
Mobile Payment ◽  
Cross Sectional ◽  
Mobile Payments ◽  
Long Run

The financial landscape of sub-Sahara Africa is undergoing major changes due to the advent of FinTech, which has seen mobile payments boom in the region. This paper examines the salient role of mobile payments in traditional banks’ drive toward financial accessibility in sub-Sahara Africa by using panel econometric approaches that consider the issues of independencies among cross-sectional residuals. Using data from the World Development Index (WDI) 2011–2017 on 11 countries in the region, empirical results from cross-sectional dependence (CD) tests, panel unit root test, panel cointegration test, and the fully modified ordinary least squares (FMOLS) approach indicates that (i) the panel time series data are cross-sectionally independent, (ii) the variables have the same order of integration and are cointegrated, and (iii) growth in mobile payment transactions had a significant positive relationship with formal account ownership, the number of ATMs, and number of new bank branches in the long-run. The paper therefore confirms that the institutional structure of traditional banks that makes them competitive, irrespective of emerging disruptive technologies, has stimulated overall financial accessibility in the region leading to overall sustainable growth in the financial sector. We conclude the paper with feasible policy suggestions.

Pengaruh Nilai Tukar (Kurs) dan Inflasi terhadap Tingkat  Non Performing  Financing (NPF) Pada Bank Syariah

2019 ◽  
Vol 2 (2) ◽  
pp. 214-224
Author(s):  
Muhammad Arfan Harahap ◽  
Anjur Perkasa Alam ◽  
Muspita Pradila
Keyword(s):  
Exchange Rate ◽  
Time Series Data ◽  
Sampling Technique ◽  
Series Data ◽  
Islamic Banks ◽  
Exogenous Variables ◽  
Independent Variables ◽  
Analysis Technique ◽  
The Exchange Rate ◽  
Conventional Banks

The level of Non-Performing Financing at Islamic Banks is higher than conventional banks, while in terms of total assets, Islamic Banks are smaller. This study aims to analyze the effect of exogenous variables consisting of the level of inflation and the exchange rate of the rupiah against non Performing Financing in Islamic banks. This study uses time series data from 2016-2018. The population in this study consisted of Islamic Commercial Banks. The sampling technique used in this research is purposive sampling technique. The data analysis technique used is Multiple Linear Regression. The results showed that the inflation variable had a positive and significant effect on Non Performing Financing. While the Exchange Rate has no effect on Non Performing Finance. Meanwhile, simultaneously the two independent variables affect the independent variables.

Asset Quality and Deposit Money Banks Performance in Nigeria

2019 ◽  
Vol 1 (1) ◽  
pp. 38-47
Author(s):  
Mbatabbey Joy Ogboru
Keyword(s):  
Time Series ◽  
Financial Stability ◽  
Deposit Insurance ◽  
Time Series Data ◽  
Annual Reports ◽  
Series Data ◽  
Bank Performance ◽  
Long Run ◽  
Short Run ◽  
Asset Quality

This study investigate the relationship between asset quality and deposit money banks performance in Nigeria over a period of 30 years ranging from 1986 to 2016, utilizing time series data collected from the Nigeria deposit insurance corporation annual reports and accounts, CBN financial stability report and CBN statistically bulletin for various years. The variables of study includes return on asset (ROA) proxy for Deposit Money Bank performance in Nigeria, ratio of non-performing loan to total loan (NPL), ratio of liquid assets to total assets (LAT) and ratio of liquid assets to short term liabilities (LAS) as measures of asset quality. The study utilizes both the descriptive and econometric techniques to analyze the time series data. The result shows that there is a short run relationship between asset quality and deposit money bank performance in Nigeria. Also, the co-integration result reveals the presence of a long run relationship between asset quality and deposit money bank performance in Nigeria while the granger causality result shows evidence of causality between asset quality and deposit money bank performance in Nigeria. Based on this we conclude by saying that maintaining sound assets quality position is critical to the long term performance, survival and sustainability of DMBs in Nigeria.

The Contribution of Profit-sharing Characteristics to the Performance of Islamic Banks

2021 ◽  
Vol 6 (1) ◽  
Author(s):  
Syafiq Mahmadah Hanafi
Keyword(s):  
Commercial Banks ◽  
Time Series Data ◽  
Banking System ◽  
Profit Sharing ◽  
Series Data ◽  
Islamic Banks ◽  
Financial Service Authority ◽  
The Public ◽  
Auto Regressive ◽  
Conventional Banks

Islamic commercial banks are highly identic with the profit-sharing as a sharia banking basic operational system. The profit-sharing becomes a specific characteristic of sharia banks as well as a distinction from conventional banks. Hence, this study aims to examine if the profit-sharing characteristic contributes to the performances of Islamic commercial banks in Indonesia. This study employed time series data derived from the Financial Service Authority (OJK) using regression-mixed test and auto-regressive heteroscedasticity (ARCH). The results pointed out that the profit-sharing system for the lending of Musharaka had an impact on the performance of sharia banks; while the profit-sharing for the funding of Mudaraba did not support the hypothesis with negative coefficient. The results suggest that the profit-sharing characteristic provides contribution to the performance of Islamic commercial banks through the lending of Musharaka. These results further indicate that the profit-sharing characteristic performed by Islamic commercial banks is proven to be effective in improving their performances. This study’s results have an implication for Islamic commercial banks to strengthen their profit-sharing characteristics and improve the public trust toward sharia banking system.

scholarly journals Bank Competition–Stability Relations in Pakistan: A Comparison between Islamic and Conventional Banks

2021 ◽  
Vol 22 (2) ◽  
pp. 532-545
Author(s):  
M. Kabir Hassan ◽  
Muhammad Shahzad Ijaz ◽  
Mushtaq Hussain Khan
Keyword(s):  
Market Power ◽  
Financial Stability ◽  
Banking Sector ◽  
Generalized Least Squares ◽  
Islamic Banks ◽  
Bank Competition ◽  
Least Squares Regression ◽  
Using Data ◽  
Conventional Banks ◽  
The Stability

This study comparatively analyses the financial stability of Islamic and conventional banks in Pakistan. Using data of 29 conventional and 9 Islamic banks over 18 years, the study first estimates bank competition and stability using Lerner index and Z-Score, respectively. Generalized least squares regression is used and the coefficients are estimated by using random-effects estimator. Results of the mean comparison show that Islamic banks carry more market power (less competition) and are more stable compared to their conventional counterparts. Results of a panel regression show that competition positively affects the stability of the banking sector and this effect is higher for Islamic banks due to their market power. Results also show that bank stability in Pakistan was reduced during global crisis period; however, presence of Islamic banks contributes to the stability even during crisis. Finally, this study supports the competition-stability hypothesis for Islamic banking in Pakistan. Recommendations are given at the end.

scholarly journals Do Oil Price Shocks and Other Factors Create Bigger Impacts on Islamic Banks than Conventional Banks?

Energies ◽  
2020 ◽  
Vol 13 (12) ◽  
pp. 3106
Author(s):  
Jabir Esmaeil ◽  
Husam Rjoub ◽  
Wing-Keung Wong
Keyword(s):  
Oil Price ◽  
Oil Price Shocks ◽  
Islamic Banks ◽  
Price Shocks ◽  
Gcc Countries ◽  
Long Run ◽  
Oil Price Shock ◽  
Price Shock ◽  
Conventional Banks ◽  
Conventional And Islamic Banks

The main aim of this study is to empirically examine and compares the impacts of oil price shocks, Arab revolutions, some macroeconomics, and bank-specific variables on bank profitability indicators between Conventional and Islamic banks in Gulf Cooperation Council (GCC) countries. The study employed panel Autoregressive-Distributed Lag (ARDL) techniques to examine the causal relationship both at the short and long-run. Our results reveal that most of the variables employed in our study significantly influence Return on Asset (ROA), Return on Equity (ROE), and Net Interest Margin (NIM)/ Net Profit Margin (NPM) for both Conventional Banks (CBs) and Islamic Banks (IBs) similarly in the long run. Findings from our study imply that both CBs and IBs have some similar features in nature, which could be because of the structure of the policies for IBs is in line with the regulatory framework for the CBs. The main finding from the study is the significance of oil price shock and the Arab springs that are more pronounced in CBs than IBs. Also, it can be seen that a sustainable profit of IBs is higher than CBs due to the adjustment speed of IBs to equilibrium in the presence of shock is found to be higher than CBs. Hence, our study suggests that oil price shock could be utilized for having a prudent macro regulation for the banks in GCC countries. Our findings are useful to Government officers, bankers, investors, and researchers for their decision making by estimating future trends of the profitability for both Conventional and Islamic banks in the GCC countries.

scholarly journals Asset Quality and Deposit Money Banks Performance in Nigeria

2019 ◽  
pp. 38-47
Keyword(s):  
Time Series ◽  
Financial Stability ◽  
Deposit Insurance ◽  
Time Series Data ◽  
Annual Reports ◽  
Series Data ◽  
Bank Performance ◽  
Long Run ◽  
Short Run ◽  
Asset Quality

This study investigate the relationship between asset quality and deposit money banks performance in Nigeria over a period of 30 years ranging from 1986 to 2016, utilizing time series data collected from the Nigeria deposit insurance corporation annual reports and accounts, CBN financial stability report and CBN statistically bulletin for various years. The variables of study includes return on asset (ROA) proxy for Deposit Money Bank performance in Nigeria, ratio of non-performing loan to total loan (NPL), ratio of liquid assets to total assets (LAT) and ratio of liquid assets to short term liabilities (LAS) as measures of asset quality. The study utilizes both the descriptive and econometric techniques to analyze the time series data. The result shows that there is a short run relationship between asset quality and deposit money bank performance in Nigeria. Also, the co-integration result reveals the presence of a long run relationship between asset quality and deposit money bank performance in Nigeria while the granger causality result shows evidence of causality between asset quality and deposit money bank performance in Nigeria. Based on this we conclude by saying that maintaining sound assets quality position is critical to the long term performance, survival and sustainability of DMBs in Nigeria.

scholarly journals The Effect Of Debt-Based Financing And Equity-Based Financing On Islamic Banks Profitability In Indonesia

2020 ◽  
Vol 4 (2) ◽  
pp. 106
Author(s):  
Rofiul Wahyudi ◽  
Aulia Arifatu Diniyya ◽  
Julia Noermawati Eka Satyarini ◽  
Lu’liyatul Mutmainah ◽  
Sri Maulida
Keyword(s):  
Panel Data ◽  
Time Series Data ◽  
Random Effect ◽  
Series Data ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Common Effect ◽  
Analysis Technique ◽  
Conceptual Aspect ◽  
Conventional Banks

This study's main objective is to investigate equity-based financing and debt-based financing of the profitability of Islamic banking in Indonesia. This research is expected to contribute to the theoretical and practical dimensions. On the conceptual aspect, this study can provide evidence of whether equity-based financing and debt-based financing affect the profitability of Islamic banking. While on the practical dimension, Islamic banks in Indonesia can determine the extent of their profitability and, in turn, the competitiveness of Islamic banks to enable it to be developed in line or even better than conventional banks. The data analysis technique uses panel data regression, which is time series data and cross-section. Next, to estimate the panel data model, which is divided into three, namely: common effect, fixed effect, and random effect. The result of this study that partially equity-based financing does not affect ROE. At the same time, debt-based financing influences the ROE of Islamic banks. Partially equity-based financing and debt-based financing do not affect ROA of Islamic banks. However, it simultaneously shows that the independent variable test results, namely equity-based financing and debt-based financing, have a strong influence on the dependent variable, namely, profitability as measured by ROA and ROE.

IMPACT OF GOVERNMENT SPENDING ON INFLATION IN ASIAN EMERGING ECONOMIES: EVIDENCE FROM INDIA, CHINA, AND INDONESIA

2016 ◽  
Vol 64 (05) ◽  
pp. 1171-1200 ◽  
Author(s):  
TAI DANG NGUYEN
Keyword(s):  
Emerging Economies ◽  
Government Spending ◽  
Time Series Data ◽  
Negative Impact ◽  
Positive Impact ◽  
Causal Link ◽  
Series Data ◽  
Institutional Governance ◽  
Long Run ◽  
Short Run

This paper investigates the long-run and short-run impacts of government spending on inflation in three Asian emerging economies of India, China and Indonesia by applying the cointegration and Vector Error Correction Model to time series data from 1970 to 2010. The results confirm a cointegrating causal link between government spending and inflation in the long run in these countries, regardless of their institutional governance differences. In the short run, government spending (as a percentage of GDP) appears to have a negative impact on inflation in China, while a positive impact in Indonesia and India. The implication is that governments of emerging economies should be prudent with their decisions on government spending.

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