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1 – 10 of 872Shatha Qamhieh Hashem and Islam Abdeljawad
This chapter investigates the presence of a difference in the systemic risk level between Islamic and conventional banks in Bangladesh. The authors compare systemic resilience of…
Abstract
This chapter investigates the presence of a difference in the systemic risk level between Islamic and conventional banks in Bangladesh. The authors compare systemic resilience of three types of banks: fully fledged Islamic banks, purely conventional banks (CB), and CB with Islamic windows. The authors use the market-based systemic risk measures of marginal expected shortfall and systemic risk to identify which type is more vulnerable to a systemic event. The authors also use ΔCoVaR to identify which type contributes more to a systemic event. Using a sample of observations on 27 publicly traded banks operating over the 2005–2014 period, the authors find that CB is the least resilient sector to a systemic event, and is the one that has the highest contribution to systemic risk during crisis times.
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The financial crisis at the end of the past decade resulted in downturns in stock markets and the collapse of many large banks around the world. It encouraged economists worldwide…
Abstract
Purpose
The financial crisis at the end of the past decade resulted in downturns in stock markets and the collapse of many large banks around the world. It encouraged economists worldwide to consider alternative financial solutions. Attention has been focused on Islamic finance as an alternative model. This study examines the performance of Islamic banks in 10 Middle Eastern and North African (MENA) countries over the period of 2005–2010.
Methodology/Approach
It is an intertemporal analysis where it compares the profitability, liquidity, risk and solvency, and efficiency of 43 Islamic banks before and after the financial crisis.
Findings
The results show that the financial crisis negatively affected the performance of Islamic banks. The profitability and liquidity of Islamic banks in Gulf Cooperation Council (GCC) countries decreased drastically after the crisis. Islamic banks in non-GCC countries were efficient and more profitable compared to GCC countries. However, they took excessive risk during and after the financial crisis. The chapter concludes that Islamic financial institutions are not immune from the effects of the global recession.
Originality/Value
The financial crisis has led to a greater recognition of the importance of liquidity risks. Reinforcing regulations and setting up a strong liquidity management framework are needed to improve the Islamic financial industry.
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Sherif El-Halaby, Khaled Hussainey and Abdullah Al-Maghzom
The authors measure the impact of culture on Sharia; Social and Financial Disclosure (SSFD) of Islamic Banks (IBs) around the world.Content analysis is used to measure levels of…
Abstract
The authors measure the impact of culture on Sharia; Social and Financial Disclosure (SSFD) of Islamic Banks (IBs) around the world.
Content analysis is used to measure levels of disclosure for a sample of 136 IBs of 25 countries for years 2013 and 2014. Different cultural measures are used. These include secrecy/transparency as suggested by Gray (1988) and Hofstede (1980, 1983, 2001, 2010)’s culture dimensions which include: Power Distance; Individualism; Masculinity; Uncertainty Avoidance; Long-Term Ordination and Indulgence. Ordinary least square (OLS) regression is used to test the research hypotheses.
After controlling bank-specific, corporate governance and country characteristics, the authors found that Hofstede’s culture dimensions have a significant impact on SSFD. They also found that Gray's transparency dimension positively influence levels of sharia, social and aggregated disclosure. Therefore, they conclude that culture influences levels of disclosure in IBs.
This study has policy implications for managers and regulators of Islamic banking industry.
This study is the first to use both Gray and Hofstede models in the context of IBs around the world. It also the first to explore the impact of culture on three different disclosure levels for IBs.
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Siti Khomsatun, Hilda Rossieta, Fitriany Fitriany and Mustafa Edwin Nasution
The unique characteristic of Islamic bank leads in governance and disclosure. Using stakeholder, signaling, and market discipline theory, governance and adequate disclosure may…
Abstract
The unique characteristic of Islamic bank leads in governance and disclosure. Using stakeholder, signaling, and market discipline theory, governance and adequate disclosure may increase bank soundness. This study aims to investigate the relationship of sharia disclosure and Sharia Supervisory Board in influencing Islamic bank soundness in the different regulatory framework of the country. Using purposive sampling, the research covered 84 Islamic banks in 16 countries during the period 2013–2015 with lag data of Islamic bank soundness. The result shows sharia disclosure influences on Islamic bank soundness for management efficiency, capital adequacy ratio, asset quality, and liquidity. The results also show that sharia disclosure mediates the indirect effect of SSB on Islamic bank soundness. The regulatory framework (sharia accounting standard and SSB regulation) shows moderating effect of regulation framework proved on the association of sharia disclosure with management efficiency, capital, and liquidity. The effect is indirectly depending on the regulatory framework for proxy management efficiency, capital, and liquidity. The implication of the research suggests that sharia disclosure could increase the market discipline mechanism of Islamic bank stream. The Islamic bank can increase the transparency using sharia disclosure as a branding for increasing public trust, even though in the deficient Islamic bank regulation countries.
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Ahmed Hassanein and Hana Tharwat
This chapter explores the concept of corporate social responsibility (CSR) from an Islamic Shari'ah-compliant perspective. It provides a comprehensive literature review on CSR…
Abstract
This chapter explores the concept of corporate social responsibility (CSR) from an Islamic Shari'ah-compliant perspective. It provides a comprehensive literature review on CSR with an explicit focus on the Islamic perspective of CSR, Islamic models of CSR, CSR practices in conventional and Islamic banks, and the consequences of CSR to Islamic banks. This chapter's main contribution lies in considering the current CSR literature from a Shari'ah perspective. Likewise, it identifies gaps in the current literature and suggests potential areas for future research. This chapter attempts to improve the understanding of how Islamic banks integrate social responsibility into their operations. The insights from this chapter are helpful to practitioners and academic scholars in Islamic finance, accounting, and CSR. This chapter emphasizes the importance of incorporating Islamic values and principles into CSR practices and encourages further research and investigation in this area.
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Rihab Grassa, Sherif El-Halaby and Khaled Hussainey
This chapter assesses the effects of corporate governance (CG) variables on the level of Corporate Social Responsibility Disclosure (CSRD), Shari'ah Supervisory Board Disclosure…
Abstract
This chapter assesses the effects of corporate governance (CG) variables on the level of Corporate Social Responsibility Disclosure (CSRD), Shari'ah Supervisory Board Disclosure (SSBD), and Financial Disclosure (FD) for Islamic banks. This study, based on a sample of 95 Islamic banks, assessed this in 2013. The findings suggest that CG mechanisms, firm's age, auditor and shari'ah auditing department are effective in influencing SSBD, CSRD, and FD practices in Islamic banks. This chapter encourages regulators to improve CG mechanisms in their Islamic banking systems through the optimization of ownership structure (dispersed ownership) and the board's characteristics in order to promote transparency and disclosure. Moreover, the findings support theoretical arguments that firms disclose CG information in order to mitigate information asymmetry and agency costs and to improve investor confidence in the reported financial statements. The empirical evidence of this study enhances the understanding of the CG disclosure environment in Islamic banks as a promoting new financial system.
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No one denies that Islamic finance has grown during the last 40 years and numerous Islamic financial instruments have innovated and developed in order to cater to the needs of…
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No one denies that Islamic finance has grown during the last 40 years and numerous Islamic financial instruments have innovated and developed in order to cater to the needs of Muslims. However, the sale- and service-based contracts remain dominant in the market and contribute to creating more debt. Partnership contracts such as mudarabah or musahrakah are least popular due to several practical problems. This chapter examines and identifies the practical challenges of classical mudarabah and proposes a new Islamic financing model – reserve mudarabah with appropriate examples. The model can be a useful tool for SME financing and in Islamic microfinance.
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