scholarly journals Board of director’s characteristics and bank performance: Evidence from GCC region

2019 ◽  
Vol 17 (1) ◽  
pp. 14-23 ◽  
Author(s):  
Ehab R. Elbahar
Keyword(s):  
Audit Committee ◽  
Banking Sector ◽  
The Political ◽  
Bank Performance ◽  
Islamic Banks ◽  
Board Of Director ◽  
Gulf Countries ◽  
Risk Committee ◽  
Conventional Banks ◽  
High Level

The main purpose of the current study is to examine the association between Corporate Governance’s (GC) variables represented by board characteristics and Bank performance measured by ROE and ROA in GCC banking sector. For the purposes of this study, the sample of 68 banks in gulf countries during the period from 2013 to 2017 have been selected and divided the data to Islamic banks and conventional banks (16 Islamic banks, 52 Non-Islamic). Furthermore this study uses the nonparametric regression OLS and Quantile analysis. The current study suggest that the existence of female directors on the board of director in last years is significantly associated with better performance, we concludes that females in GCC banking sector in latest years reached a high level of maturity in understanding banking industry. Furthermore, this study suggests that the audit committee associated positively and significantly with bank performance, it means that the audit committee in latest years plays important role in enhancing the performance. In addition to the above, the political member on the board and risk committee does not affect the performance significantly. Both of board size and Sharia committee are associated positively and significantly with performance.

scholarly journals Satisfactions of Islamic Banks’ Costumers: The Case of Turkey

2013 ◽  
Author(s):  
Bengül Gülümser Kaytancı ◽  
Etem Hakan Ergeç ◽  
Metin Toprak
Keyword(s):  
Customer Satisfaction ◽  
Banking Sector ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Major Goal ◽  
Distinctive Features ◽  
Islamic Bank ◽  
Conventional Banks ◽  
High Level

Despite differences in the principles by which they operate between the participation (Islamic) and conventional banks, there is no huge difference between the products and the services provided by these banks. The distinctive features of the participation banks, compliance with the Islamic precepts, are not the only way for these banks to appeal to the customers. For this reason, customer satisfaction is an important element in the banking sector. The major goal of this study is to analyze the level of awareness and satisfaction among the customers of the participation banks. This study which uses the data compiled through the surveys held in Eskişehir with the participation of 500 Islamic bank customers reveals findings that suggest that most of the customers are satisfied with the products and services by the participation banks and that they have high level of awareness on the Islamic banking products.

scholarly journals ISLAMIC BANKING AND BANK PERFORMANCE IN MALAYSIA: AN EMPIRICAL ANALYSIS

2020 ◽  
Vol 6 (3) ◽  
Author(s):  
Mansor Ibrahim
Keyword(s):  
Instrumental Variable ◽  
Banking Sector ◽  
Spillover Effects ◽  
Bank Performance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Bank Profitability ◽  
Conventional Banks ◽  
Time Invariant ◽  
Modelling Approach

This paper examines the performance of Malaysia’s banking sector and its relationship to the presence of Islamic banking in the country. More specifically, by controlling for the theoretically relevant determinants of bank performance we compare the efficiency, profitability and risk of Islamic banks to conventional banks and examine the spillover effects of Islamic banking penetration on bank performance. To these ends, we adopt a panel modelling approach. Taking note that our focal variables comprise the time-invariant Islamic banking dummy and potentially endogenous Islamic banking share, we apply the Hausman–Taylor (HT) instrumental-variable estimator in the analysis. Our results indicate that Islamic banks in Malaysia are less profitable than their conventional counterparts and that Islamic banking penetration is associated with lower bank profitability. However, the increasing presence of Islamic banking appears to make Malaysian banks less risky and, with limited evidence, more efficient. Finally, the efficiency–risk trade-off seems to have potential as the Islamic banking portion of the sector increases in size. These results are reasonably robust compared to alternative specifications of the model.  

Fair value and banking contagion

2016 ◽  
Vol 7 (3) ◽  
pp. 215-236 ◽  
Author(s):  
Leila Gharbi ◽  
Halioui Khamoussi
Keyword(s):  
Data Model ◽  
Banking Sector ◽  
Fair Value ◽  
Islamic Banks ◽  
Fair Value Accounting ◽  
Content Type ◽  
Gcc Countries ◽  
Conventional Banks ◽  
Value Changes ◽  
The Impact

Purpose This paper aims to explore empirically the impact of fair value accounting on banking contagion in a comparative context between Islamic banks and conventional banks. Design/methodology/approach The analysis of the impact of fair value changes on banking contagion is carried out through a panel data model. This study covers 20 Islamic banks and 40 conventional banks operating in the Gulf Cooperation Council (GCC) countries during nine years from 2003 to 2011. Findings Empirical evidence shows that there is a significant change in dynamic volatility in GCC banking sector because of financial crisis 2008. However, results fail to confirm the hypothesis that fair value accounting is significantly associated with an increase of banking contagion for both Islamic and conventional banks operating in GCC countries. Originality/value The outcome of this study provides some insights for academicians, accountants as well as regulators in terms of enhancing the effectiveness of accounting practices.

scholarly journals A Study of the Determinants of Cost and Revenue Efficiency in the Context of Islamic and Conventional Banks: The Case of Malaysia from 2006 to 2012

2016 ◽  
Vol 8 (7) ◽  
pp. 258
Author(s):  
Mohamed Ghroubi ◽  
Ezzeddine Abaoub
Keyword(s):  
Banking Sector ◽  
Generalized Least Squares ◽  
Decision Makers ◽  
Second Step ◽  
Islamic Banks ◽  
Regulatory Capital ◽  
Political Decision ◽  
Independent Variables ◽  
Conventional Banks ◽  
Revenue Efficiency

<p>In this paper, we examine the determinants of cost and revenue efficiency of Malaysian banks over the period 2006-2012. Three steps are undertaken to study a sample of 17 Islamic banks (IBs) and 20 conventional banks (CBs). In the first step, we assessed the competitiveness of the Malaysian banking sector. After solving the multicollinearity problem, as a second step, we selected three sets of independent variables: bank-specific, industry-specific and macroeconomic variables. In the last step, we estimated the efficiency models with the Feasible Generalized Least Squares (FGLS) method. The obtained results highlighted the importance of regulatory capital and size. As for the effect of competitiveness, it is found to be statistically significant only for revenue efficiency. These results may be useful to political decision-makers and regulatory authorities.</p>

COMPETITION-STABILITY RELATIONSHIP IN DUAL BANKING SYSTEMS: EVIDENCE FROM EFFICIENCY-ADJUSTED MARKET POWER

2021 ◽  
pp. 1-24
Author(s):  
MUDEER AHMED KHATTAK ◽  
OMAR ALAEDDIN ◽  
MOUTAZ ABOJEIB
Keyword(s):  
Market Power ◽  
Financial Stability ◽  
Banking Sector ◽  
Market Competition ◽  
Policy Implications ◽  
Islamic Banks ◽  
Banking Competition ◽  
Precise Measure ◽  
Conventional Banks ◽  
The Impact

This research attempts to explore the impact of banking competition on financial stability employing a more precise measure of market power. It was found that Islamic banks are less stable and are enjoying lower market power. The analysis shows that higher market competition makes the banking sector vulnerable to defaults, supporting the “competition-fragility view”. This research finds no difference in the relationship for Islamic banks indicates that Islamic banks might be involved in traditional banking activities as conventional banks. The results are consistent and robust to different estimation approaches and subsamples. This research carries regulatory and policy implications.

scholarly journals Influence of economic freedom and its subcomponents on risk-taking behavior

2019 ◽  
Vol 12 (4) ◽  
pp. 335-356 ◽  
Author(s):  
Rafik Harkati ◽  
Syed Musa Alhabshi ◽  
Salina Kassim
Keyword(s):  
Risk Taking ◽  
Economic Freedom ◽  
Banking Sector ◽  
Banking System ◽  
Islamic Banks ◽  
Content Type ◽  
Economic Freedom Index ◽  
Risk Taking Behavior ◽  
The Government ◽  
Conventional Banks

Purpose The purpose of this paper is to investigate the influence of economic freedom and six relevant subcomponents of it on the risk-taking behavior of banks in the Malaysian dual banking system. It also aims to make a comparative analysis between Islamic and conventional banks operating in this dual banking sector. Moreover, the study is an effort to enrich the existing literature by presenting empirical evidence on the argument that the risk-taking behavior of the two types of banks is indistinguishable given that they operate in the same regulatory environment. Design/methodology/approach Secondary data of all banks operating in the Malaysian banking sector are collected from FitchConnect database, in addition to the economic freedom index from Foundation Heritage for the period 2011–2017. Generalized least squares technique is employed to estimate the influence of economic freedom and the six relevant subcomponents of it on the risk-taking behavior of banks. Findings The level of economic freedom influenced risk-taking behavior within the banking sector as a whole, conventional and Islamic banking sectors negatively during the study period (2011–2017). Risk-taking behavior of conventional and Islamic banks is similar. However, conventional banks turn to be less influenced by economic freedom level as compared to Islamic banks. Practical implications The government and regulators may benefit from the results by rethinking and setting the best economic freedom index that better serves the stability of the banking system, and lessens banks’ risk-taking inclination. Originality/value To the present time, this paper is thought to be of a significant contribution. Given the argument that Islamic and conventional banks behave in the same way. This is one of the first attempts to address this issue in light of the influence of economic freedom and six subcomponents of it on the risk-taking behavior of banks operating in a dual banking system.

Intellectual capital and performance of Islamic and conventional banking

2019 ◽  
Vol 38 (7) ◽  
pp. 518-537 ◽  
Author(s):  
Amina Buallay
Keyword(s):  
Financial Performance ◽  
Intellectual Capital ◽  
Positive Relationship ◽  
Banking Sector ◽  
Market Performance ◽  
Value Added ◽  
High Tech ◽  
Islamic Banks ◽  
Content Type ◽  
Conventional Banks

Purpose Intellectual capital (IC) is considered as a lifeblood of the high-tech and knowledge-based sectors. Therefore, there is a great need to highlight the importance of IC in the banking sector. Since the banking sector in the gulf countries is mainly based on Islamic and conventional banking, the purpose of this paper is to provide a comparative empirical analysis between IC efficiency in Islamic and conventional banks, and its impacts on a bank’s operational, financial and market performance. Design/methodology/approach This study examined 59 banks for five years to end up with 295 observations. The independent variable is the modified value added IC components; the dependent variables are performance indicators (return on assets, return on equity and Tobin’s Q). Two control variables are utilized in this study: bank-specific and macroeconomic. Findings The findings deduced from the empirical results demonstrate that there is a positive relationship between IC efficiency and financial performance (ROE) and market performance (TQ) in Islamic banks. However, in conventional banks, there is a positive relationship between IC and operational performance (ROE) and financial performance (ROE). Originality/value The results of this study can be used to present a successful model for the Islamic and conventional banks to concentrate more on the role of IC in enhancing the bank’s performance. In addition, the results of this study may provide a wake-up call for Islamic banks to examine the reasons for the imperfect relationship between the IC and asset efficiency (ROA), as well as for conventional banks to examine the reasons for an imperfect relationship between the IC and market value (TQ).

Islamic bank rent

2014 ◽  
Vol 7 (2) ◽  
pp. 170-181 ◽  
Author(s):  
Yasushi Suzuki ◽  
S.M. Sohrab Uddin
Keyword(s):  
Empirical Evidence ◽  
Banking Sector ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Islamic Bank ◽  
Franchise Value ◽  
Conventional Banks ◽  
First Time ◽  
Rent Theory

Purpose – This paper aims to draw on the bank rent approach to evaluate the existing pattern of financing of Islamic banks and to propose a fairly new conceptualization of Islamic bank rent. Design/methodology/approach – The bank rent theory is adopted to generate the theoretical underpinnings of the issue. After that, empirical evidence from the banking sector of Bangladesh is used to support the arguments. Findings – Repeated transactions under murabaha are observed in the Islamic banking sector of Bangladesh. The asset-based financing gives the Bangladeshi Islamic banks relatively higher Islamic bank rent opportunity for protecting their “franchise value” as Shari’ah-compliant lenders, while responding to the periodic volatility in transaction costs of profit-and-loss sharing. Research limitations/implications – The bank rent approach suggests that the murabaha syndrome can be ironically justifiable. On the other hand, the current profit-and-loss sharing risk provides an idea of the difficulty in assuming the participatory financing with higher credit risk in practice. Islamic scholars and the regulatory authority need to design an appropriate financial architecture which can create different levels of rent opportunities for Islamic banks to avail the benefit from the variety of Islamic financing as declared by Islamic Shari’ah. Originality/value – This paper introduces a fairly new concept of “Islamic bank rent” to make sense of the murabaha syndrome. This approach also contributes to clarifying the unique risk and cost to be compensated with the spreads that Islamic banks are expected to earn. To draw empirical evidence, as far as it could be ascertained, the data of both Islamic banks and conventional banks with Islamic banking windows/branches are used for the first time.

Linkage between corporate governance and corporate social responsibility in banking sector of Bangladesh

2015 ◽  
Vol 02 (04) ◽  
pp. 1550036 ◽  
Author(s):  
Syed Moudud-Ul-Huq
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Banking Sector ◽  
Islamic Banks ◽  
Return On Equity ◽  
Earnings Per Share ◽  
Conventional Banks ◽  
Corporate Social ◽  
Better Than

This paper has been made to analyze the linkage between corporate governance and corporate social responsibility. From analysis, it is found that Eastern Bank Ltd. (EBL) performs better than other selected banks but not enough in practicing corporate social responsibility. While, conventional banks are more imperative than Islamic banks as all the indicators cover its benchmark apart from return on total assets. It has proved that there is a significant relationship among return on equity, earnings per share, corporate governance and corporate social responsibility but corporate social responsibility has shown little impact on corporate performance.

scholarly journals DO RISK, BUSINESS CYCLE, AND COMPETITION AFFECT CAPITAL BUFFER? AN EMPIRICAL STUDY ON ISLAMIC BANKING IN ASEAN AND MENA

2018 ◽  
Vol 3 (2) ◽  
Author(s):  
Novita Kusuma Maharani ◽  
Bowo Setiyono
Keyword(s):  
Business Cycle ◽  
Islamic Banks ◽  
Banking Supervision ◽  
Minimum Capital ◽  
The Difference ◽  
Conventional Banks ◽  
High Level ◽  
The Impact ◽  
The Relationship ◽  
Unbalanced Panel Data

Basel III guidelines were released in 2010 by the Basel Committee on Banking Supervision (BCBS) as a revision of the previous Basel guidelines with the aim of strengthening the bank's capital and liquidity of banks. BCBS formulate a new policy that is the capital buffer. Capital Buffer is the difference between the minimum capital required by regulators with its overall capital and is considered a "cushion" against the shocks of the financial crisis. This study examine the impact of risk, business cycle, and competition on banks’ capital buffer. This paper used the sample of Islamic banks and conventional banks in ASEAN and MENA in the period 2011-2015 with unbalanced panel data. Using System GMM method to test the characteristics of Islamic banks in managing its capital. The finding indicates that the degree of capital buffer in islamic banks tend to adjust its risk. The result also shows that capital buffer decrease during economic expansion where banks act aggressively by extending their lending activities. The relationship between capital buffer and competition is positive in that the high level of competition to motivate banks to have higher capital.

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