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Article
Publication date: 8 May 2017

Sulaiman Abdullah Saif Al-Nasser Mohammed and Datin Joriah Muhammed

The purpose of this paper is to investigate the performance of Islamic banks in developing countries from 2007 to 2010 which includes the period of the financial crisis by…

Abstract

Purpose

The purpose of this paper is to investigate the performance of Islamic banks in developing countries from 2007 to 2010 which includes the period of the financial crisis by empirically examining the way in which the macroeconomy affected Islamic banking performance (IBP) in developing countries. The empirical examination involves two approaches of measuring performance: Sharia-based and conventional-based performance measurement.

Design/methodology/approach

For this paper, the authors have utilized a Data Stream/Bank Scope database and data from the Bank Negara Malaysia (Malaysian Central Bank) to collect a panel set of annual financial information for Islamic banking from the year 2007-2010. The initial sample covers 34 Islamic banks from developing countries that are listed on the International Islamic Service Board. Furthermore, the authors adopted only those listed Islamic banks to tackle the data availability issue. The authors’ final sample comprised 136 observations with complete data as the numbers of Islamic banks in developing countries are low in comparison to their conventional peers. The financial crisis dummy follows America’s commonly used National Bureau of Economic Research timeline for the financial crisis. The authors also used the method of a generalized least square (GLS) method of pooled panel data analysis regression model. The rationale for employing the GLS technique was made on the basis of the ability of GLS to give less weight to the error term that is closely clustered around the mean, to improve the goodness of fit and to remove autocorrelation compared with normal, random, and fixed effect models.

Findings

The authors of this paper found that the macroeconomic factors reflected in gross domestic product, gross domestic product growth, and inflation rate have a significant positive relationship with the return on assets. In addition, a significant negative relationship was found between the financial dummy and IBP in developing countries. On the other hand, it failed to find evidence of a relationship between the macroeconomic factors and performance including the legal system and the financial crisis dummy, when the performance is reflected by the Zakat ratio. The result embedded that the financial crisis had an impact on the performance of Islamic banks in developing countries when viewed from the conventional banking perspective. The financial crisis played a role in reducing the profitability of Islamic banks which is consistent with a previous study by Hasan and Dridi (2011). However, in the view of Sharia, the financial crisis did not have any effect on IBP; even the macro factors did not have any effect on the level of performance.

Research limitations/implications

There are possible explanations for these contradictory coefficient signs. First, the contradictory signs of the coefficient for the same independent variable that was regressed with different dependent variables show that researchers would need to take caution in using the right indicators when measuring IBP. Conventional indicators bring different results in comparison to Islamic indicators (Badreldin, 2009; Mudiarasan. Kuppusamy, 2010; Zahra and Pearce, 1989). Second, Richard et al. (2009), having reviewed performance measurement-related publications in five of the leading management journals (722 articles between 2005 and 2007), suggested that the past studies reveal a multidimensional conceptualization of organizational performance with limited effectiveness of commonly accepted measurement practices. Accordingly, these studies call for more theoretically grounded research and debate for establishing which measures are appropriate in a given research context. Today, there is a general consensus that the old financial measures are still valid and relevant (Yip et al., 2009). However, these need to be balanced with more contemporary, intangible, and externally oriented measures. It has been argued that various researchers working in their own disciplines using functional performance measures (such as market share in marketing, schedule adherence in operations and so on) ought to link their discipline to focused performance measures of overall organizational performance.

Practical implications

Islamic banking has unique characteristics in comparison to conventional banking and this paper examines the differences between the two and also investigates the resilience of Islamic banks during a period of economic turbulence. Furthermore, due to these unique characteristics, a comparison cannot be made by using the conventional performance measures alone. In addition, amid the in-depth studies examining the resilience of Islamic banks during periods of economic crises, there are instances of theoretical disagreement in the extant empirical literature examining finance and economics. In that regard, the majority of the existing literature is either based on advanced markets or countries where the majority of the population practices the faith of Islam, and little is known about the performance of Islamic banking from the pooled emerging markets; particularly in developing countries.

Originality/value

Introducing Zakat as a performance measurement in Islamic banking context relating it to macroeconomic factors enhances the thinking of new research in Islamic theory about bank performance.

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Article
Publication date: 12 August 2014

Kabiru Jinjiri Ringim

The purpose of this study is to determine the level of perception of a Muslim account holder in a conventional bank toward Islamic banking products and to determine the…

Abstract

Purpose

The purpose of this study is to determine the level of perception of a Muslim account holder in a conventional bank toward Islamic banking products and to determine the relationship between the perception levels of Nigerian’s account holder’s and their decision to patronize Islamic banking. Personal perception factor is operationalized as opinion or observations, which are able to influence customer’s decision to patronize Islamic banking products and services.

Design/methodology/approach

A field survey was conducted and samples drawn using proportionate stratified simple random sampling techniques. Out of the 500 questionnaires distributed by hand, only 304 were returned and 286 were usable for the data analysis using SPSS and PLS Modeling Software.

Findings

First, the means for personal perception variable was 4.91 with standard deviation of 1.007. This indicates the good perception level of Islamic products by Muslim account holders in a conventional bank in Kano, Nigeria. The respondents’ level of decision to patronize the Islamic banking products and services was satisfactory. Second, the results also showed that the research framework model, structural model and hypothesis were supported. In the measurement model, the convergent, discriminant validity and reliability/composite reliability of the perception construct were assessed favorably. The results revealed that perception was positively associated with a Muslim account holder’s decision to patronize Islamic banking products.

Research limitations/implications

The study is subject to several shortcomings that limit interpretation of findings. One of the limitations of this study is the use of cross-sectional design for survey research and subjective self-reported perceptual measures in assessing the studies. Hence, the findings of this study cannot be generalized in a larger context across the cultures of other countries.

Practical implications

The implication of this study is for the Islamic banking industry to focus on the people’s level of perception, government support, quality and availability of Islamic banking products and services that would have an impact on customer decision to patronize Islamic banking products. The necessary suggestions on new area of research were recommended for future researchers.

Social implications

Islamic banks have the potential to exploit and market to various segments of customers extending beyond those who are concerned with the legitimacy of the facility from the Islamic point of view and those who seek service quality, convenience and efficient transactions. To the practitioners in search of patronage of Islamic banking products and services, patronage studies on Islamic banking have so far largely focused on the combination of various religious, reputation, commercial, service satisfaction, staff, confidentiality and convenience factors.

Originality/value

The results of the present study establish the major problem that requires urgent attention needed to strengthen public education toward the distinctive characteristics of Islamic banks and how it may profitably suit the interest of customers in their financial dealings.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 7 no. 3
Type: Research Article
ISSN: 1753-8394

Keywords

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Article
Publication date: 6 November 2017

Umair Riaz, Musafar Khan and Naimat Khan

The aim of this study is to examine the perceptions of consumers on Islamic banking and finance in Pakistan. Islamic finance is an emerging phenomenon, and its survival…

Abstract

Purpose

The aim of this study is to examine the perceptions of consumers on Islamic banking and finance in Pakistan. Islamic finance is an emerging phenomenon, and its survival depends on the availability, affordability and awareness. This paper attempts to fill the gap in the literature by exploring the perceptions of consumers and bankers in an attempt to gain insights so that the availability of products and awareness can be increased.

Design/methodology/approach

The study uses a regression model by using perception as a dependent variable and awareness, knowledge and religious motivation as independent variables. Primary data is collected using 150 questionnaires distributed amongst finance students in several universities and employees of Islamic banks in the Khyber Pakhtunkhwa (KPK) Province of Pakistan.

Findings

The findings reveal that overall consumers’ perception is positive about Islamic banking and finance in Pakistan. Statistical analysis shows that awareness, knowledge and religiosity level have a positive influence on the perception of consumers about Islamic financing products and services in Pakistan. To improve the awareness and understanding, Islamic banks could make better marketing strategies and could increase their presence by mosque visits and conferences. Cooperation between the industry and scholars could help in providing more innovative products to the consumers.

Research limitations/implications

There has been a limited amount of work carried out on the perceptions of consumers about Islamic banking in Pakistan. The present study represents the start of a larger context for examining Islamic banking practices in Pakistan. The findings of the study can be used as a reference in future research projects in the areas of perceptions and awareness.

Originality/value

Little research has been conducted to study this problem from the perspectives of consumers and Islamic banking employees. Most of the research associated with Islamic banks fails to pay attention to these stakeholder groups in one study.

Details

Qualitative Research in Financial Markets, vol. 9 no. 4
Type: Research Article
ISSN: 1755-4179

Keywords

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Article
Publication date: 13 June 2020

Vanita Tripathi and Amanpreet Kaur

The study aims to contribute towards the sustainable development of financial systems, by testing the performance of socially responsible investing alternatives in…

Abstract

Purpose

The study aims to contribute towards the sustainable development of financial systems, by testing the performance of socially responsible investing alternatives in emerging BRICS countries. The study outcomes give us an insight into viability of responsible financial decisions in contrast with the conventional style of investing.

Design/methodology/approach

The authors examine the performance of socially responsible indices of BRICS nations vis-à-vis respective conventional market indices using various risk-adjusted measures and conditional volatility measures. We further segregate the 12-year study period to crisis and non-crisis period particular to the respective country, as well as a common global financial crisis period to analyze the impact of market conditions in BRICS nations and observe the performance using dummy regression analysis. Conditional volatility of the stochastic index series is measured using ARCH-GARCH analysis. Fama Decomposition Model helps rank the index performance through the sub-periods.

Findings

Fama Decomposition Model helps us observe that while Brazil secures a position in top rankers consistently, it is India that ranks top during crisis period. With evidence of outperformance in terms of risk-return by SRI indices of BRICS countries through the overall period as well as through different market conditions, our study contributes to the positive literature on socially responsible investing.

Research limitations/implications

The study explores performance of SRI in BRICS and finds evidence of the sustainable investment to be non-penalizing to the investor, even as the performance trend remain distinct in the countries with same level of development. It has implications for the investors and asset managers to include responsible stocks, while for the companies and regulatory bodies to unite for better reporting and disclosures. Given the broad implications, future research is required to link the impact of various cultural, legislative and demographic factors on the level and performance of the socially responsible investment in BRICS nations.

Practical implications

The current study evaluating and comparing performances of the socially responsible investments in BRICS nations puts forth following implications for the different sectors of the society, especially in emerging countries: (1) BRICS organization – The association of five economic giants, having significant influence over global as well as regional affairs, can aim to orient the countries' efforts towards collective sustainable development by designing uniform SRI framework. (2) Investors – In the globalization era, the investor can gain from ethical cross border investments to diversification and country benefits. (3) Companies and regulatory bodies – Only voluntary or mandatory unified efforts, to provide accurate and consistent disclosures, can upscale the mediocre growth trends of sustainable investing in emerging economies. (4) Asset Managers – Call of greater role in educating, warding off inhibitions related to RI.

Originality/value

This is to certify that the research paper submitted by us is an outcome of our independent and original work. We have duly acknowledged all the sources from which the ideas and extracts have been taken. The project is free from any plagiarism and has not been submitted elsewhere for publication.

Details

Journal of Advances in Management Research, vol. 17 no. 4
Type: Research Article
ISSN: 0972-7981

Keywords

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Article
Publication date: 4 May 2012

Ahmed Arif and Ahmed Nauman Anees

The purpose of this paper is to examine liquidity risk in Pakistani banks and evaluate the effect on banks' profitability.

Abstract

Purpose

The purpose of this paper is to examine liquidity risk in Pakistani banks and evaluate the effect on banks' profitability.

Design/methodology/approach

Data are retrieved from the balance sheets, income statements and notes of 22 Pakistani banks during 2004‐2009. Multiple regressions are applied to assess the impact of liquidity risk on banks' profitability.

Findings

The results of multiple regressions show that liquidity risk affects bank profitability significantly, with liquidity gap and non‐performing as the two factors exacerbating the liquidity risk. They have a negative relationship with profitability.

Research limitations/implications

The period studied in this paper is 2004‐2009, due to availability of the data. However, the sample period does not impair the findings since the sample includes 22 banks, which constitute the main part of the Pakistani banking system. Moreover, only profitability is used as the measure of performance. Economic factors contributing to liquidity risk are not covered in this paper.

Originality/value

This is the first paper addressing the liquidity risk faced by the Pakistani banking system. Past researchers and practitioners have not given the proper attention to liquidity risk. This paper helps in understanding the factors of liquidity risk and their impact on the profitability of the banking system. The authors emphasise contemporary risk managers to mitigate liquidity risk by having sufficient cash resources. This will reduce the liquidity gap, thereby reducing the dependence on repo market.

Details

Journal of Financial Regulation and Compliance, vol. 20 no. 2
Type: Research Article
ISSN: 1358-1988

Keywords

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Article
Publication date: 28 January 2020

Hendi Yogi Prabowo

The purpose of this paper is to explore the potential of computer-assisted qualitative data analysis software (CAQDAS) to support qualitative evaluation of corruption…

Abstract

Purpose

The purpose of this paper is to explore the potential of computer-assisted qualitative data analysis software (CAQDAS) to support qualitative evaluation of corruption prevention initiatives, especially those focusing on behavioral changes. To achieve this objective, this paper applies the principles of qualitative inquiries to establish a foundation for developing effective means for evaluating behavior-oriented corruption prevention initiatives in Indonesia.

Design/methodology/approach

Through exploratory study, this paper assesses current corruption prevention evaluation practice in the Indonesian public sector to highlight major deficiencies thereof primarily through examination of publicly available documents on anti-corruption practice in Indonesia. Furthermore, this paper also discusses how qualitative methods using CAQDAS may strengthen the existing anti-corruption regime by aiding decision-makers to better evaluate the success or failure of their corruption prevention initiatives in particular those aiming for behavioral changes. To illustrate how a qualitative data analysis application can support anti-corruption evaluators, NVivo will be used as a reference from which multiple analytical tools will be discussed to highlight their potential for qualitative qualitative analysis analysis in corruption prevention evaluation.

Findings

The author establishes that the existing quantitative measures of evaluation are insufficient in generating a comprehensive picture of the success or failure of the existing anti-corruption initiatives in Indonesia. Evidences suggest that the existing quantitative measures appear to be unable to cope with the growing complexity of various corruption problems in the country in particular to those related to organizational culture and behavior. Despite the numerous behavior-oriented initiatives to reduce the risk of corruption in the Indonesia public sector, it is still unclear if such initiatives actually have made a difference in preventing corruption, as many of their elements cannot be measured quantitatively. Therefore, the author believe that deeper insights into corruption problems can be obtained through proper qualitative assessments in which evaluators play the role as the primary analytical instrument. To enhance evaluators’ capability in obtaining and analyzing qualitative data, the author proposes the use of CAQDAS and the evaluation of corruption prevention initiatives. With a special reference to NVivo, the author argues that using CAQDAS will enable evaluators to conduct qualitative analysis more efficiently to identify patterns within the data, as it offers various tools to look deeper into context, diversity, nuance and process so as to gain deeper understanding of the meaning of human action and how it may affect the risk of corruption within organizations.

Research limitations/implications

This study is self-funded and is relying primarily on documentary analysis in assessing the existing corruption prevention evaluation measures in Indonesia. Future studies may benefit from in-depth interviews with anti-corruption evaluators in particular from the country’s anti-corruption agency.

Practical implications

This paper contributes to the development of corruption prevention strategy by proposing a framework for systematically performing qualitative evaluation on behavior-oriented corruption prevention initiatives.

Originality/value

This paper highlights the importance of qualitative measures in evaluating behavior-oriented corruption prevention initiatives in the Indonesian public sector.

Details

Journal of Financial Crime, vol. 27 no. 2
Type: Research Article
ISSN: 1359-0790

Keywords

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Article
Publication date: 8 January 2018

Shweta Bajaj, Ruchi Garg and Monika Sethi

Due to its impact on business performance total quality management (TQM) has gained a lot of importance by businessmen, managers, practitioners, and research scholars over…

Abstract

Purpose

Due to its impact on business performance total quality management (TQM) has gained a lot of importance by businessmen, managers, practitioners, and research scholars over the last 20 years. Therefore, the purpose of this paper is to critically assess the literature on TQM and find out the areas where future research is required.

Design/methodology/approach

To achieve this purpose the articles published in the last 20 years were studied in a systematic way and a snapshot of the same was prepared in the tabular format with points such as year and journal of publication, application and country, statistical method used, and findings of the study such as practices and impact of TQM. After identifying the practices and impact of TQM a quality tool “Pareto Analysis” was applied on them for development of the model.

Findings

The findings provide the practices of TQM and its impact on the performance of a business. The gaps from the literature have been identified and areas for future research have been suggested. On the basis of the findings a generalized framework of TQM has been suggested which can be applicable irrespective of the sector.

Practical implications

The research will help academicians and future researchers to have a clear understanding of TQM in different rosters.

Originality/value

Ample literature is available on TQM but in the best knowledge of authors no study has taken place to integrate the reviews and findings of 102 research papers of the last two decades.

Details

International Journal of Productivity and Performance Management, vol. 67 no. 1
Type: Research Article
ISSN: 1741-0401

Keywords

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