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1 – 10 of over 2000Rajib Shome, Hany Elbardan and Hassan Yazdifar
This paper provides a comprehensive review of the influential and intellectual aspects of the literature on the Gulf Cooperation Council (GCC) region's banking activities.
Abstract
Purpose
This paper provides a comprehensive review of the influential and intellectual aspects of the literature on the Gulf Cooperation Council (GCC) region's banking activities.
Design/methodology/approach
This study undertakes a bibliometric meta-analysis review of the GCC region banking literature, covering 199 articles published between 2004 and 2022, extracted from the Web of Science (WoS) database, followed by a content analysis of highly cited papers.
Findings
This paper identifies the influential aspects of the GCC region banking literature in terms of journals, articles, authors, universities and countries. The paper also identifies and discusses five major research clusters: (1) bank efficiency; (2) corporate governance (CG) and disclosure; (3) performance and risk-taking; (4) systemic risk, bank stability and risk spillovers and (5) intellectual capital (IC). Finally, it identifies gaps in the literature and highlights some important research issues that provide directions for future research.
Research limitations/implications
This paper is limited to the articles indexed in the WoS database and written in English. Though the WoS database encompasses a wide range of multidisciplinary journals, there is a chance that some relevant articles are not included in the WoS database or written in another language.
Practical implications
This study provides regulators, practitioners and academics with valuable insight and an in-depth understanding of the banking system of the GCC region.
Originality/value
To the best of the authors' knowledge, this is the first review paper on GCC region banking literature. This study provides regulators, practitioners and academics with valuable insight and an in-depth understanding of the banking system of the GCC region.
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Fakarudin Kamarudin, Fadzlan Sufian and Annuar Md. Nassir
The purpose of this paper is to provide new empirical evidence on the impact of country governance on the revenue efficiency of Islamic and conventional banks. The empirical…
Abstract
Purpose
The purpose of this paper is to provide new empirical evidence on the impact of country governance on the revenue efficiency of Islamic and conventional banks. The empirical analysis is confined to Islamic and conventional banks operating in the Gulf Cooperation Council (GCC) countries banking sectors during the period of 2007-2011.
Design/methodology/approach
The analysis comprises two main stages. In the first stage, the authors employ the data envelopment analysis (DEA) method to compute the revenue efficiency of Islamic and conventional banks. The authors then used the multivariate panel regression analysis with the ordinary least square and generalized method of moments as an estimation method to investigate the potential determinants and the effect of country governance on the revenue efficiency.
Findings
The empirical findings indicate that greater voice and accountability, government effectiveness, and rule of law enhance the revenue efficiency of both Islamic and conventional banks. The authors find that regulatory quality exerts positive influence on Islamic banks, while the impact of political stability and control of corruption enhances the revenue efficiency of conventional banks.
Originality/value
The study on the specific revenue efficiency concept of Islamic and conventional banking is still in its formative stage. In regards, majority of the studies that examined the effect of governance on bank efficiency have focused more on the corporate or bank governance that affects the governance within the institution. Thus, to the best of the knowledge, no study has been done to address the effect of country governance on the revenue efficiency of Islamic and conventional banks specifically on the GCC countries.
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Tamanna Abdul Rahman Dalwai, Rohaida Basiruddin and Siti Zaleha Abdul Rasid
The purpose of this paper is to evaluate existing studies on the relationship of corporate governance with firm performance in different regions and address the need for similar…
Abstract
Purpose
The purpose of this paper is to evaluate existing studies on the relationship of corporate governance with firm performance in different regions and address the need for similar analysis for the Gulf Coperation Council (GCC) sector. The banking sector comprises the conventional and Islamic banks in the GCC sector and is important due to their ability to bring stability to this region. Existing studies that measure the relationship of GCC sector conventional banks and firm performance are limited. This study proposes a need for future research on corporate governance in the GCC region.
Design/methodology/approach
This paper will review and analyze the different empirical and theoretical contributions in establishing the relationship between corporate governance and firm performance.
Findings
This paper will create a focus for future research of measuring the impact of corporate governance mechanism on firm performance. The regulators will be encouraged to focus on more research studies for the GCC sector development in the field of corporate governance of the banking sector.
Research limitations/implications
The existing studies are valid and practicable for the region under study, and the results need not be applicable for other business environments. In addition, the evolving business and economic environment have always brought about inconsistent conclusions; thus, the period of study can always give varied results.
Practical implications
The analysis undertaken in this paper will address the literature gaps for the GCC banking sector and play an instrumental role for future studies by theoreticians and regulators.
Originality/value
This paper identifies the literature gaps for the GCC region and analyses the most applicable existing studies that can be useful for the banking sector corporate governance improvement. This paper will create opportunities for the future researchers.
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Mohammad Ashraful Ferdous Chowdhury and Mohamed Eskandar Shah Mohd Rasid
The main objective of this study is to identify the main determinants of the Islamic banks’ performance in Gulf Cooperation Council (GCC) regions.
Abstract
Purpose
The main objective of this study is to identify the main determinants of the Islamic banks’ performance in Gulf Cooperation Council (GCC) regions.
Methodology/approach
The research uses both static model (fixed effects and random effects) and Generalized method of Moments (GMM). The data for this study are obtained from the annual reports of 29 Islamic banks from GCC countries using Bankscope database for the period from 2005 to 2013.
Findings
The empirical findings reveal that Islamic banks’ specific factors such as the equity financing and bank size are positive and statistically significant to the profitability of Islamic banks. The operating efficiency ratio is negatively and statistically significant to return on asset. It is also found that macroeconomic variables such as money supply and inflation are negatively and statistically significant to the performance of Islamic banks whereas oil price has been found positive and statistically significant to the performance of Islamic banks in the GCC region.
Research implications
The present study seeks to fill a demanding gap in the literature by providing new empirical evidence on the factors that influence the profitability of the Islamic banking sector in GCC regions.
Originality/value
These findings have significant contribution to the literature by comprehensively clarifying and critically analyzing the current state of profitability among the Islamic banks in GCC regions.
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Ritab AlKhouri and Houda Arouri
The purpose of this paper is to investigate the effect of revenue diversification, non-interest income and asset diversification on the performance and stability of the Gulf…
Abstract
Purpose
The purpose of this paper is to investigate the effect of revenue diversification, non-interest income and asset diversification on the performance and stability of the Gulf Cooperation Council (GCC) conventional and Islamic banking systems.
Design/methodology/approach
The authors implement a panel of 69 conventional and Islamic banks listed in six GCC markets over the period of 2003–2015, using the System Generalized Method of Moments methodology.
Findings
Non-interest income diversification has a negative impact on GCC banks’ performance, while asset-based diversification affects banks performance positively. However, Investors tend to penalize the value of the banks’ assets, which are highly diversified. Government intervention, lack of competition, legal protection and high control of Central banks on GCC banks’ have positive impact on performance. Contrary to the results on conventional banks, asset diversification adds value to Islamic banks. Overall, both banks’ revenue and non-interest diversification have negative impact on GCC banks’ stability, while asset diversification improves Islamic banks’ stability.
Research limitations/implications
The analysis is limited to a sample of banks, which are listed in the GCC stock exchanges. The lack of data on private and foreign banks operating in the region made the analysis and, consequently, the results specific to shareholding companies. Also, the authors’ measures of bank stability might not be appropriate to use for Islamic banks, given their banking models implemented.
Practical implications
Research results provide important implications for regulators, bank managers and policy makers, as to the expected ways to support economic diversification through bank diversification strategies.
Originality/value
Unlike related studies, the authors’ sample of homogeneous banks has a market structure that is different from the samples in the literature covering either developed countries or heterogeneous samples from both developed and developing countries. Furthermore, using an efficient econometric methodology, the authors deal with two types of banks: conventional banks and Islamic banks. The research determines which type of bank is more able to benefit from different types of diversification. Unlike previous research, this research explores the sensitivity of the results both to the regulatory environment of the GCC market and to general market conditions.
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Hani El-Chaarani, Tariq H. Ismail, Zouhour El-Abiad and Mohamed Samy El-Deeb
The aim of this paper has twofold: (1) to explain and compare the financial evolution of Islamic and conventional banking sector in the Gulf Cooperative Council (GCC) countries…
Abstract
Purpose
The aim of this paper has twofold: (1) to explain and compare the financial evolution of Islamic and conventional banking sector in the Gulf Cooperative Council (GCC) countries before and during the COVID-19 pandemic and (2) to explore the key success factors that might affect Islamic and conventional banks performance before and mainly during COVID-19 pandemic period.
Design/methodology/approach
Orbis Bank Focus database and annual financial reports are used to collect financial information of Islamic and conventional banks in GCC countries over four years: 2017, 2018, 2019 and 2020. Descriptive statistics, T-test, multiple regression, and 2SLS and GMM models are employed to analyze the financial structure and performance of Islamic and conventional banks before and during the COVID-19 pandemic period.
Findings
Results of this study reveal that (1) there is a significant difference between Islamic banks and conventional banks during the crisis of COVID-19, where the conventional banks have presented a higher level of financial performance and financial liquidity than their Islamic counterparts, (2) conventional banks have revealed higher capacity to manage their financial risk during the crisis period, and (3) a high level of non-performing loan, high inflation rate and high percentage of non-important cost have a negative impact on the financial performance of Islamic banks mainly during the pandemic period of COVID-19. However, the result indicates that a high level of liquidity risk increased the performance of Islamic banks but this impact falls sharply during the pandemic period.
Originality/value
This study provides information that supports investors, regulators and executive managers in GCC countries. A well-structured balance sheet would improve the financial performance and risk management of the banking sector in GCC countries, especially in times of crisis and pandemics.
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This paper aims to examine the effect of state ownership on bank performance for all banks in the Gulf Cooperation Council (GCC) countries during the period 2003 – 2018, for two…
Abstract
Purpose
This paper aims to examine the effect of state ownership on bank performance for all banks in the Gulf Cooperation Council (GCC) countries during the period 2003 – 2018, for two distinct banking systems: the conventional and the Islamic banking systems.
Design/methodology/approach
To achieve the goal of the study, this paper uses a mean t-test to examine the mean difference of the related variables for both banking systems, and a regression test (using the GMM method) to explore the effect of state ownership on bank performance.
Findings
The most important result of the analysis is that state ownership has a significantly positive influence on bank performance for conventional banks but not for Islamic banks, in the GCC area.
Originality/value
This study adds to the scarce related literature comparative empirical results with respect to the impact of ownership on the performance of two different banking systems: the conventional system and the Islamic banking system in the GCC area. This study is likely to have implications for policymakers in terms of developing rules relevant to the governance of GCC’s two banking systems that can help to support the stability of the whole banking sector.
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The banking and financial sector of the Arab Gulf region ischaracterized by deregulation, globalization, product innovation,developments in technology and increasing competition…
Abstract
The banking and financial sector of the Arab Gulf region is characterized by deregulation, globalization, product innovation, developments in technology and increasing competition. This change has created the potential for gain but has also increased risk. After the oil and gas sector, the Gulf′s banking and financial sector is the region′s main hope for future economic development. Attempts to address the present and future prospects and challenges faced by the Gulf banking sector through an examination of the trends and patterns in banking development and financial deepening, the nature of long‐range strategic planning, the prevailing marketing environment and aspects of customers′ behaviour. The financial deepening in Gulf Co‐operation Council countries was significant in the last decade but suffered a setback during the post‐Gulf war period. The analysis shows that individual banks have to initiate or increase their strategic planning effort. The strategic thrust of banks is likely to be one of consolidation in a tough over‐banked and somewhat recessionary domestic market while pursuing a regional niche strategy and seeking a prominent role through mergers, acquisitions and restructuring.
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Ritab Al-Khouri and Abdul Ahad Abdul Basith
This research examines the bidirectional relationship between Environmental, Social and Governance (ESG) voluntary disclosure engagement and financial performance of a panel of…
Abstract
This research examines the bidirectional relationship between Environmental, Social and Governance (ESG) voluntary disclosure engagement and financial performance of a panel of banks extracted from the Gulf Cooperation Council (GCC) banking industry, covering a period of 11 years (2007–2017). We find that GCC banks, and in particular Islamic banks, voluntarily disclose low level of information related to ESG activities. Using system GMM methodology, we provide evidence that ESG disclosure adversely affects bank performance, regardless of the bank performance measure used. Thus spending on ESG turns out to be costly for GCC banks, a result that is consistent with the agency problem, where managers are likely to reduce long-term expenditures related to ESG actions in order to boost short-term profits. As managers' compensations often relate to short-term financial performance, managers tend to reduce their spending on ESG activities. Furthermore, contrary to previous research, our results indicate that the relationship between ESG and financial performance is bidirectional and dynamic. We also find evidence that ESG disclosure positively affects performance only for well-diversified banks. Finally, although conventional banks disclose significantly more information related to ESG activities, we do not find any significant differences between the two types of banks in the relationship between ESG disclosure and performance. Our suggestion is that these results are consistent with what we call “clientele” and “gravitation” effects, where a customer tends to choose to deal with the bank that reflects his religious beliefs (gravitation effect) and with the bank that provides him with the best services (clientele effect) regardless of its ESG disclosure.
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Saeed Al-muharrami and Y. Sree Rama Murthy
Average bank net interest margins vary widely across Gulf Cooperation Council (GCC) countries, net interest margins of Omani banks are significantly higher. The resultant low…
Abstract
Purpose
Average bank net interest margins vary widely across Gulf Cooperation Council (GCC) countries, net interest margins of Omani banks are significantly higher. The resultant low level of financial intermediation implies reduced investment and economic growth. Understanding the reason for these high and persistent spreads is important to develop a policy for improving effectiveness of the banking system. The paper aims to discuss these issues.
Design/methodology/approach
Net interest margins of Arab GCC banks during the period 1999-2012 are examined using the balanced panel regression model with bank specific, financial/market structure specific and macroeconomic factors as determinants. The method used for estimation used is the estimated generalized least squares (EGLS) method with both fixed effects and random effects.
Findings
Bank-specific variables, which explain net interest margins in GCC, are bank capitalization ratios, loan ratios and overhead expenses. Spread of banking sector (as measured by ratio of total bank credit to GDP) is positive and highly significant, implying that along with the expansion of the banking sector in GCC economies, interest margins of banks also improved. Omani banks were able to increase interest margins by aggressively marketing high yield personal and credit card loans, and, zero interest paying deposit products. The study also finds a negative relationship between concentration and net interest margin, and attempts to explain this finding which is at variance with other country studies using the price leadership model of oligopoly.
Research limitations/implications
The standard, accepted econometric model of net interest margins which has been used in earlier studies is unable to explain the high net interest margins of banks in Oman although it is able to explain interest margins in other GCC countries. There is a need to develop non econometric models. More work is needed on the implications of NIM spreads for how they affect an economy.
Practical implications
The study shows that as the banking sector spreads in the economy, individual banks have more opportunities to market their products while at the same time maintaining interest margins. Bank managements should note this point and look for opportunities to expand.
Originality/value
There is no evidence of any empirical studies which focused on net interest margins in the GCC countries. This study attempts to fill in this gap with a view to nudge policy makers to look at the issue of high interest margins and its detrimental impact on economic growth and development in the Gulf region. The paper is useful for policy makers to understand and rectify the problem of excessive interest spreads which is hurting the financial intermediation process.
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