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Article
Publication date: 28 March 2018

Yee Peng Chow, Junaina Muhammad, A.N. Bany-Ariffin and Fan Fah Cheng

The purpose of this paper is to examine how corporate governance moderates the relationship between macroeconomic uncertainty and corporate capital structure.

Abstract

Purpose

The purpose of this paper is to examine how corporate governance moderates the relationship between macroeconomic uncertainty and corporate capital structure.

Design/methodology/approach

This paper employs the two-step system generalized method of moments regression, considering a sample of 907 listed non-financial firms from seven Asia Pacific countries during the period 2004-2014.

Findings

This study finds that macroeconomic uncertainty has a significant negative impact on the capital structure decisions of firms. The results also reveal that the overall effect of macroeconomic uncertainty on capital structure among firms with better governance quality is significantly negative. The evidence suggests that corporate governance acts as an effective mechanism to curb the usage of leverage during times of high volatility. Further analysis shows that board independence, the separation between the roles of CEO and chairman of the board and blockholders’ ownership are effective governance mechanisms, whereas similar observations do not hold for board size and institutional ownership.

Research limitations/implications

The findings of this study may be useful to policy makers to formulate appropriate policies to mitigate the adverse effects caused by macroeconomic uncertainty. This is important because macroeconomic uncertainty may have potential destabilizing effects on a country’s or region’s development by jeopardizing the firms’ ability to formulate sound investment, production and financing decisions. Additionally, the results suggest that good governance quality can act as a check and balance to ensure that firms use less leverage when they are facing volatility in the macroeconomic environment. These findings could help to reinforce the importance of good governance among policy makers of a country as well as managers of firms.

Originality/value

The authors make the first attempt to examine the moderating effect of corporate governance on the relationship between macroeconomic uncertainty and corporate capital structure.

Details

International Journal of Managerial Finance, vol. 14 no. 3
Type: Research Article
ISSN: 1743-9132

Keywords

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Article
Publication date: 8 May 2018

Umayal Kasi and Junaina Muhammad

This paper aims to compare and analyse the aspects of Shariah screening methodologies within the selected Gulf Cooperation Council (GCC) countries as well as comparing the…

Abstract

Purpose

This paper aims to compare and analyse the aspects of Shariah screening methodologies within the selected Gulf Cooperation Council (GCC) countries as well as comparing the methodologies with the USA, and to examine how Shariah screening methodologies affect financing and investing activities of a firm.

Design/methodology/approach

Shariah screening methodologies within the selected GCC countries and between the GCC countries and the USA are compared on the basis of the data collected from secondary sources.

Findings

Design, qualification and Shariah governance set the Shariah screening methodologies within the GCC countries apart. Feasibility, duration, economic viability and funds required differentiate these Shariah screening methodologies between the GCC countries and the USA. Shariah screening methodologies implied in the USA is more stringent than in the GCC countries.

Research limitations/implications

The suggestions in this study include using a longer research timeline, examining many more number of countries’ Shariah screening methodologies and exploring other types of Shariah screening methodologies.

Practical implications

The possibility of generalising the implementation of strict and uniform Shariah screening methodologies across all the country-specific Shariah indices amongst Muslim nations, globally, is likely to benefit all the Muslim countries, by strengthening the understanding, interaction and economic co-operation amongst these countries.

Social implications

People’s needs can be tended to if Maqasid Al-Shariah (objectives of Shariah) is achieved through flexibility, dynamism and creativity within the social policy.

Originality/value

Aspects of Shariah screening methodologies are compared and contrasted within the selected GCC countries as well as between the GCC countries and the United States and the role of Shariah screening methodologies is examined in order to determine the extent of what is Shariah-Compliant and what is Non-Shariah Compliant for a firm.

Details

Qualitative Research in Financial Markets, vol. 10 no. 2
Type: Research Article
ISSN: 1755-4179

Keywords

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Article
Publication date: 30 March 2012

Mohamed Hisham Yahya, Junaina Muhammad and Abdul Razak Abdul Hadi

The purpose of this paper is to study the difference (or lack of difference) in the efficiency level of Islamic and conventional banking in Malaysia. Are the Islamic banks…

Abstract

Purpose

The purpose of this paper is to study the difference (or lack of difference) in the efficiency level of Islamic and conventional banking in Malaysia. Are the Islamic banks performing as good as the conventional banks, even though they are constrained by Islamic tenets?

Design/methodology/approach

Data envelopment analysis is used to measure the efficiency levels of banks in both sectors.

Findings

It is found that there is no significant difference in the level of efficiency between Islamic banks and conventional banks.

Research limitations/implications

The period of study is only three years, with only two banks which have been operating for more than three years, while the other Islamic banks in this study are just beginning their operation in Islamic banking. The inclusion of foreign banks operating in Malaysia in this analysis might distort the findings, as foreign banks have different capital structures and objectives compared to local ones.

Practical implications

The paper shows that even though Islamic banks are limited by Islamic tenets in their operations, they are able to maintain a performance that is equivalent to the conventional banks.

Originality/value

The paper makes comparisons of the efficiency levels between two different banking systems.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 5 no. 1
Type: Research Article
ISSN: 1753-8394

Keywords

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Article
Publication date: 8 July 2020

Shuvro Sen, Neel Antara and Shusmita Sen

The Islamic banking system is not very primordial, but recently it is getting popular. Now it becomes a prominent topic to investigate what are the reasons behind it and…

Abstract

Purpose

The Islamic banking system is not very primordial, but recently it is getting popular. Now it becomes a prominent topic to investigate what are the reasons behind it and how it happens. This study aims to identify the influencing factors in the time of opening account in Islamic banks.

Design/methodology/approach

A descriptive and factor analysis method were carried out to collect the quantitative data using a validated structured questionnaire. This study is based on a survey of 300 clients from Bangladesh who have at least one bank account in any Islamic banks in Bangladesh.

Findings

The findings of the study revealed that the most important factors influencing the people to open an account in Islamic banks including high Riba (Interest) on saving, ATM facility, confirmation SMS on the transaction, availability of branch service in several locations, lower cost on financing (loan), low initial deposit fee for account opening, employees’ prompt service and their behavior, etc. Also, the other religious people, rather than Islam, start a banking relationship with Islamic banks without any obligation.

Research limitations/implications

The study focused only on a certain area of Bangladesh. This study could be extended for a different target market, creative strategy, other media and more countries.

Practical implications

The paper provides guidelines to the management of Islamic banks to decide to attract more customers by focusing on the influencing factors that manipulate a person to open a bank account.

Originality/value

The research is original. There are very few studies available on this topic, particularly focusing on Bangladesh. Consequently, the research findings have significant implications for Islamic banks functioning in a predominantly Islamic atmosphere.

Details

Journal of Islamic Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0833

Keywords

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