scholarly journals Relevance of Shari’ah Governance in Driving Performance of Islamic Banks during the Financial Crisis: International Evidence

2020 ◽  
Author(s):  
Naji Mansour Nomran ◽  
Razali Haron
Keyword(s):  
Financial Crisis ◽  
High Efficiency ◽  
Banking Industry ◽  
Small Sample ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Governance Mechanism ◽  
Gmm Estimator ◽  
The Impact ◽  
Positive Effect

This study aims to examine the impact of Shari’ah governance mechanism on the performance of Islamic banks (IBs) during the financial crisis of 2008. Data were collected from 66 IBs over 18 countries covering the period of 2007–2015 and analyzed using the System-GMM estimator. The findings indicate that an increase in SSB effectiveness increases IBs’ performance even during the crisis periods. A possible justification for this positive effect is related to the SG structure of IBs that allows them to undertake higher risks to achieve a high efficiency level. For this, the IBs, policymakers and practitioners should consider these findings when aiming to improve SG practices in the Islamic banking industry, which in turn may help in protecting IBs during crisis and non-crisis periods. More specifically, they should give due importance to SSB (size, cross-membership, educational qualification, reputation and expertise) in enhancing the performance of IBs during the crisis and non-crisis periods. This study provides additional evidence on how IBs can sustain their performance during either crisis or non-crisis periods through adopting appropriate SG structure. However, the study only focuses on a small sample of 66 IBs due to lack of the data.

scholarly journals Exploration of Switching Behavior of Sharia Banking Customer in Indonesia with Satisfaction as an Intervening Variable

2021 ◽  
Vol 1 ◽  
pp. 227-238
Author(s):  
Fetria Eka Yudiana
Keyword(s):  
Industrial Revolution ◽  
Banking Industry ◽  
Hypothesis Test ◽  
Sampling Technique ◽  
Switching Behavior ◽  
Islamic Banking ◽  
Theoretical Studies ◽  
Islamic Banks ◽  
Change Factors ◽  
Positive Effect

The industrial revolution 4.0 will have a great impact on the level of competition in the banking industry including Islamic banking in Indonesia. The analysis of the switching behavior of sharia banking customers is very important to do because environmental change factors greatly affect customers’ behavior. This study aims to analyze the switching behavior of Islamic banking customers based on the push-pull mooring factor theory. This study is conducted on Islamic banking customers in Indonesia with the number of respondents of 100 people. This study uses a purposive sampling technique. The research instrument in the form of a questionnaire has been tested valid and reliable which is arranged based on strong indicators from the theoretical studies and previous research. Hypothesis test using path analysis proves that customers’ perception of the reward level on deposits/savings, the reputation of Islamic banks, service quality and satisfaction are the factors that influence the switching behavior of sharia banking customers. The results of this study show that customers’ perceptions of the reward level on deposits/savings and the reputation of Islamic banks are the factors that have a very positive effect on customer satisfaction of Islamic banks. Customers’ satisfaction with Islamic bank products and services can be an intervening variable to the Islamic banking customers switching behaviour.

scholarly journals Efficiency, Risk and Profitability of Islamic Banks: Under Pressure in the Competition of the Banking Industry in Indonesia

2020 ◽  
Author(s):  
Sugeng Haryanto
Keyword(s):  
Banking Industry ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Quarterly Data ◽  
Macroeconomic Conditions ◽  
Analysis Techniques ◽  
Independent Variables ◽  
Operating Margin ◽  
Negative Effect ◽  
Positive Effect

This study analyses the factors that affect the profitability of Islamic banks in Indonesia. The independent variables consists of efficiency,risk, liquidity,CAR,and macroeconomic conditions:GDP andinflation.Thedependentvariableisprofitability.This research was conducted in the Islamic banking industry in Indonesia. The research uses quarterly data from 2006-2019. The purpose of this study is to analyse the effect of efficiency, risk, liquidity, capital, and macroeconomic conditions on the profitability of Islamic banks in Indonesia. Data analysis techniques used multiple regression. The results showed that the efficiency and risk had a positive effect on profitability. Inflation has a negative effect on profitability. While liquidity, CAR, and GDP do not affect the profitability of Islamic banks. Keywords: Islamic bank; Financing; Net Operating Margin; Profitability.

scholarly journals Spin-off and market share in the Indonesian Islamic banking industry: a difference in difference analysis

2017 ◽  
Vol 12 (4) ◽  
pp. 540-551 ◽  
Author(s):  
M. Nur Rianto Al Arif
Keyword(s):  
Market Share ◽  
Banking Industry ◽  
Control Group ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Difference In Difference ◽  
Difference Analysis ◽  
Business Units ◽  
Conventional Banks ◽  
The Impact

Abstract According to The Act No. 21 of 2008 concerning Islamic Banking in Indonesia, the conventional banks are obligated to spun-off their Islamic business units after achieving a certain set of requirements. The spin-off requirements are: (i) reach 50% market share asset of its parents; or (ii) 15 years after the implementation of the Islamic Banking Act. This study emphasizes the impact of Islamic banks' spin-off on market share. The method used in this study is a difference in difference analysis. This technique is a quasi-experiment separate into two groups, such as the treatment groups (four spin-offs' banks) and control group (two fullfledged Islamic banks). This study used quarterly data from 2005 until 2016. The results show that, first, there is a difference in the Islamic banks' market share between pre- and post-spinoff. Second, there is a difference in the market share of spin-offs' banks between pre- and postspin- off. Third, there are there external factors that can affect the Islamic banks' market share, i.e., inflation rate, interest rate, and economic growth rate. The paper is a useful source of information that may provide relevant guidelines in helping the future development of spin-off activity in Islamic banking industry. The finding could be helpful for policymakers to create a supporting strategy to accelerate the development of Islamic banking industry. This result also could be of use for Islamic banking industries in other countries.

Competition and market structure of the Malaysian Islamic banking industry

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohd Faizal Basri
Keyword(s):  
Market Structure ◽  
Monopolistic Competition ◽  
Banking Industry ◽  
Financial System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Under Performing ◽  
Conventional Banks ◽  
The Impact

Purpose This paper aims to investigate the impact of competition in the Malaysian Islamic banking industry and the market structure of the industry by focusing on the particular impact created by the entrance of fully fledged foreign Islamic banks plus the introduction of Islamic subsidiaries of existing conventional banks in the country (domestic and foreign ownership). Design/methodology/approach Using a sample of 16 Islamic banks in the country that operated between 2008 and 2015, this paper measures the competition among the Islamic banks using the Panzar-Rosse Model and by looking at the market structure of the industry using the k-bank concentration ratio and the Herfindahl-Hirschman Index. Findings The study found that between 2008 and 2015, the Malaysian Islamic banking industry operated in monopolistic competition conditions with a moderately concentrated market structure. The introduction of foreign Islamic banks caused the market structure to become more competitive and less concentrated by comparing the results that include foreign Islamic banks against the results generated with a subsample of domestic Islamic banks only. Bank Negara Malaysia’s (BNM’s) financial reform and the liberalisation of the financial system were proven to induce competition making the financial system more resilient, competitive and dynamic. The Islamic banks have recorded consistently increased annual performance with the under-performing Islamic banks catching up on the top performers. Originality/value Very few research studies have focused on the market structure and competition of the Islamic banking industry in Malaysia, especially using recent financial data; this study will contribute to filling the existing gap.

scholarly journals The effects of trust mediator and education level moderator on adoption of Islamic banking system in Tajikistan

2019 ◽  
Vol 5 (3) ◽  
pp. 277-296
Author(s):  
Sharofiddin Ashurov ◽  
Anwar Hasan Abdullah Othman
Keyword(s):  
Educational Level ◽  
Banking Industry ◽  
Banking System ◽  
Relative Advantage ◽  
Equation Modeling ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Perceived Trust ◽  
Majority Population ◽  
The Impact

High levels of trust and education are essential factors in the banking industry, especially for an Islamic banking system that is Shariah-based. Therefore, this paper seeks to measure the impact of trust and educational level on the decision as to whether to adopt Islamic banking in Tajikistan for business activities. The data of the study was developed based on a survey and collected through a distributed questionnaire. A total of 408 respondents were obtained from 14 banks in Tajikistan. The study adopted the Structural Equation Modeling (SEM) approach (using AMOS version 22.00) to examine these relationships. The findings of the study revealed that relative advantage and product knowledge were statistically significant in influencing perceived trust in Islamic banks, while perceived trust in Islamic banks had a directly significant impact on the adoption of the Islamic banking system in Tajikistan. Also it found that perceived trust plays a mediating role between awareness and adoption of the Islamic Banking system. This indicates that banks’ customers in Tajikistan have more trust in, and prefer dealing with, a banking system that is Shariah-based in line with their Islamic beliefs. In addition, the findings revealed that educational level plays a significant moderating role between the awareness of Islamic banks and the adoption of the Islamic banking system. The findings of the study therefore may assist policy makers to improve the current banking industry, by focusing on the Islamic banking system that would be able to restore trust and create interest among the Muslim majority population as they believe in the Islamic banking system, which will contribute positively to economic growth.

Determinants of Islamic Bank Profitability: Evidence from Indonesia

2020 ◽  
Vol 5 (1) ◽  
pp. 1-13
Author(s):  
Puji Sucia Sukmaningrum ◽  
Kashan Pirzada ◽  
Sylva Alif Rusmita ◽  
Fatin Fadhilah Hasib ◽  
Tika Widiastuti ◽  
...  
Keyword(s):  
Interest Rate ◽  
Quality Management ◽  
Banking Industry ◽  
External Factors ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Return On Assets ◽  
Internal Factors ◽  
Bank Profitability ◽  
Islamic Bank

Objective – Islamic Banks have a distinct advantage that is not only conduct a commercial operation, but to also conduct social operations. Therefore, Islamic Banks plays an important role in developing the Indonesian economy. The aim of this study is to investigate the impact of internal and external factors that affect the profitability of Islamic Banks in Indonesia. Methodology/Technique – The methodology of this research is multiple regression. The object of this research is the Islamic banking industry in Indonesia. Internal factors include size, liquidity, asset quality, management, and efficiency ratio. External factors include interest rate and inflation. Return on Assets is used to measure profitability. The monthly data is collected from the financial reports of Islamic Banks between 2011 to 2016. Findings – The findings show that size, liquidity, assets quality, management ratio, interest rate and inflation lead to a greater Return on Assets (profitability) in Islamic Banks in Indonesia. Efficiency however does not have a significant effect on profitability of Islamic Banks in Indonesia. Novelty – Based on the results of this research, it can be concluded that the Islamic banking industry can use those variables to improve the profitability of Islamic banks in the future. In addition, there are two variables that affect the profitability of Islamic banking industry. For the Islamic banking industry should anticipate the movement of inflation and interest to improve the profitability of Islamic banks. Type of Paper: Empirical paper. Keywords: Islamic Banks; Profitability; Internal Factors; External Factors; Indonesia. Reference to this paper should be made as follows: Sukmaningrum, P.S; Pirzada, K; Rusmita, S.A; Hasib, F.F; Widiastuti, T; Hendratmi, A. 2020. Determinants of Islamic Bank Profitability: Evidence from Indonesia, J. Fin. Bank. Review, 5 (1): pp. 01 – 13 https://doi.org/10.35609/jfbr.2020.5.1(1) JEL Classification: G21, G24.

The consumers’ commitment and materialism on Islamic banking: the role of religiosity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Junaidi Junaidi ◽  
Ready Wicaksono ◽  
Hamka Hamka
Keyword(s):  
Structural Equation ◽  
Survey Study ◽  
Equation Modeling ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Positive Effects ◽  
Islamic Bank ◽  
Muslim People ◽  
The Impact

Purpose This paper aims to investigate whether and how religiosity (e.g. extrinsic and intrinsic) influences the mediator variables (consumers’ commitment and materialism) in the Islamic bank consumers context. It also examines how the mediators should be influence consumers’ preferences. Design/methodology/approach In total, 658 Muslim people and Islamic bank consumers were recruited for a survey study and structural equation modeling was used to test the research hypotheses. Findings The empirical results indicate that religiosity (e.g. extrinsic and intrinsic) has significant and positive effects on consumers’ commitment and materialism, whereas intrinsic religiosity has no significant effect on consumers’ commitment which subsequently influences consumers’ preference. Furthermore, mediator variables (e.g. consumers’ commitment and consumers’ materialism) have partial mediators between religiosity and consumers’ preferences. Research limitations/implications The current study was limited to Indonesian Muslim people; there is a future need to study consumers’ attitudes and engagement in religious products and services (e.g. Islamic brands). It is can help practitioners, regulators and researchers to observe the dynamic behavior to elaborate on the impact of religion and Islamic products on consumers’ preference. Practical implications The bank managers and regulators should enhance the information of products and services Islamic banks and the difference principle between conventional banks. Moreover, enlighten the consumers about the principle operation of Islamic banks from the perspective of marketing and religiosity. Originality/value This study contributes to consumers’ behavior literature and, specifically, for the decision-making process through developing and testing a model of religious determinants toward Islamic bank products, as well as offers new insights into the determinants of religion and consumers’ decision process toward Islamic banking.

scholarly journals INTELLECTUAL CAPITAL, FINANCIAL CRISIS AND PERFORMANCE OF ISLAMIC BANKS: DOES SHARIAH GOVERNANCE MATTER?

2017 ◽  
Vol 18 (1) ◽  
Author(s):  
Tasawar Nawaz
Keyword(s):  
Financial Crisis ◽  
Intellectual Capital ◽  
Economic Performance ◽  
Islamic Banks ◽  
Knowledge Resources ◽  
Finance Industry ◽  
Before And After ◽  
And Performance ◽  
Shariah Governance ◽  
The Impact

This paper empirically examines the impact of intellectual capital (IC) and Shariah governance on economic performance of 47 Islamic banks (IBs) operating in the Gulf Cooperation Council (GCC) region in pre- and post-financial crisis period. The analysis suggests that higher IC efficiency helps IBs to improve their odds of survival at all times i.e. before- and after-crisis. Further, higher IC efficiency helps IBs to maintain their profitability i.e. ROA and market valuation i.e. Tobin’s Q at all times. Arguably, knowledge-resources i.e. IC is the main line of defence for IBs against negative shocks. Lastly, the study reveals that Shariah governance alone may fall short in explaining the growth trends in Islamic finance industry. Keywords: Intellectual Capital; Shariah Governance; Financial Crisis; Islamic Worldview; Economic Performance.

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