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Article

Mohammad Ashraful Ferdous Chowdhury, Chowdhury Shahed Akbar and Mohammad Shoyeb

The purpose of this paper is to examine the linkage between Islamic financing principles and economic growth (EG) by taking into consideration two Islamic Financing…

Abstract

Purpose

The purpose of this paper is to examine the linkage between Islamic financing principles and economic growth (EG) by taking into consideration two Islamic Financing Principles: Risk Sharing and non-risk sharing separately.

Design/methodology/approach

The data for this study are obtained from the annual reports of all Islamic banks from Bangladesh using Bank scope database and annual report for the period 1984-2014. The research uses an Autoregressive Distributive Lags (ARDL) approach. For robustness, this study also employs a continuous wavelet transform approach.

Findings

The empirical findings reveal that the risk sharing instruments are positively related to the EG of the country. On the other hand, non-risk sharing instruments are negatively related to the EG of the country.

Research limitations/implications

The dominant use of non-risk sharing-based financing has undermined the greater possibility of Islamic banking to contribute more to the EG of the country. Banks and other financial institutions need to pay greater attention to systemic risk created by risk transfer and apply risk sharing methods of financing more vigorously to achieve greater equity, efficient allocation of resources, stability and growth of the financial system and welfare of the society as a whole.

Originality/value

This study has advanced the knowledge by examining the issue of Islamic financing principles and EG. This is probably one of the first attempts to find the linkage between Islamic financing principles and EG by taking into consideration two portfolios: risk sharing and non-risk sharing separately and provide significant insights for policy makers, market players and academicians.

Details

Managerial Finance, vol. 44 no. 6
Type: Research Article
ISSN: 0307-4358

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Book part

Mohammad Ashraful Ferdous Chowdhury, Mohammad Shoyeb, Chowdhury Akbar and Md. Nazrul Islam

The purpose of this study is to examine the effect of risk sharing and non-risk sharing instruments on both the profitability of Islamic banks and the economic growth of…

Abstract

Purpose

The purpose of this study is to examine the effect of risk sharing and non-risk sharing instruments on both the profitability of Islamic banks and the economic growth of the country. This study also aims to improve the profit and loss sharing-based asset growth of Islamic banks.

Methodology/approach

The data for this study are obtained from the annual reports of all Islamic banks from Bangladesh using Bank scope database and annual report for the period of 1983–2014. The research uses Autoregressive Distributive Lag approach.

Findings

The findings reveal that risk sharing instruments are positively related to profitability and the economic growth of the country. This study also finds that non-risk sharing instruments play a predominant role in the profitability of the Islamic bank but are negatively related to the economic growth of the country.

Research implications

Banks and other financial institutions need to pay greater attention to systemic risk created by risk transfer and apply risk sharing methods of financing more vigorously than has hitherto been the case.

Originality/value

This study will also contribute to the literature as relatively few Islamic financial literatures deal with the relationship between equity financing and profitability which may make a strong contribution to the area of Islamic finance.

Details

Advances in Islamic Finance, Marketing, and Management
Type: Book
ISBN: 978-1-78635-899-8

Keywords

Abstract

Details

Managerial Finance, vol. 44 no. 6
Type: Research Article
ISSN: 0307-4358

Content available
Article

Peni Nugraheni and Istiqomah Nur Alimin

This study aims to examine the factors that influence profit–loss sharing (PLS) financing in Indonesian Islamic banks from the perspective of Islamic banks’ employees…

Abstract

Purpose

This study aims to examine the factors that influence profit–loss sharing (PLS) financing in Indonesian Islamic banks from the perspective of Islamic banks’ employees. Islamic banks have important role in influencing the amount of PLS financing distribution through their screening process.

Design/methodology/approach

This study uses questionnaires in collecting data that are distributed to the employees who process or handle PLS financing in Islamic banks in Yogyakarta, Indonesia. The independent variables are risk, financing screening process, analysis of financial statement and competency of the employees of Islamic banks. The data are processed using multiple regression.

Findings

This study finds that risk, the quality of financing screening process and the analysis of financial statement have positive influence on the PLS financing, whereas competency of employees of Islamic banks does not influence PLS financing.

Practical implications

The results of this study are expected to give contribution to increase the role of Islamic banks in encouraging PLS financing. The adequate screening, controlling and monitoring system in Islamic banks should be strengthened to encourage the quality of financing distributed.

Originality/value

Primary data are used in this study to know the perspective of Islamic bank employees in the financing division on the PLS financing. This study attempts to identify the perspective of employees who have direct relationship with the decision of financing in Islamic banks.

Details

PSU Research Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2399-1747

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Article

Moncef Guizani and Ahdi Noomen Ajmi

The purpose of this paper is to examine whether and how Islamic banks' financing affects corporate investment efficiency.

Abstract

Purpose

The purpose of this paper is to examine whether and how Islamic banks' financing affects corporate investment efficiency.

Design/methodology/approach

To achieve the research purpose, an empirical model was constructed to describe the relationship between Islamic banks' financing and corporate investment efficiency. The empirical model was tested through generalized method of moments (GMM) estimation technique using a panel data of 163 Malaysian listed firms for the period 2007–2017.

Findings

This study provides evidence that Islamic banks' financing plays an important role in enhancing investment efficiency and that this positive effect comes mainly from non-PLS contracts. Moreover, the results show that the effect of Islamic banks' financing in preventing suboptimal investments is stronger in the financial crisis period. The results also reveal that the contribution of Islamic banks' financing in reducing suboptimal investments is more prominent when firms face over-investment problems.

Research limitations/implications

This research contributes to the debate on the financial implications of Islamic banks' financing modes by exploring their effect on corporate investment efficiency.

Practical implications

From a managerial perspective, the research findings are beneficial to Islamic bank managers to the extent that they highlight the role of Islamic financial contracts in improving corporate investment efficiency. In addition, the lower effect of PLS contracts on investment efficiency implies that policymakers in Malaysia should multiply their efforts to further expand the PLS financing.

Originality/value

This paper offers some insights on the role of Islamic banks' financing in mitigating agency conflicts and reducing asymmetric information problems. It is the first attempt focusing on the role of Islamic financing in fostering corporate investment decisions.

Details

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

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Article

Suhardi M. Anwar, Junaidi Junaidi, Salju Salju, Ready Wicaksono and Mispiyanti Mispiyanti

This paper aims to examine the short run and long run of Indonesia Islamic bank (IIB) contribution to economic growth over the periods 2009: Q1 – 2019: Q4. IIB is…

Abstract

Purpose

This paper aims to examine the short run and long run of Indonesia Islamic bank (IIB) contribution to economic growth over the periods 2009: Q1 – 2019: Q4. IIB is considered which supported by the largest Muslim population in the world. Deposits, financing and offices are proxy to highlight the relationship between Islamic banks and Indonesia's economic growth.

Design/methodology/approach

Through cointegration analysis, autoregressive distributed lag (ARDL), vector error correction model (VECM), variance decompositions (VDCs) and impulse response functions (IRFs), this study investigates the Islamic bank and economic growth nexus.

Findings

A significant relationship in the short-run and long-run between IIB deposits and offices and economic growth. There is evidence of a bidirectional relationship between the Islamic bank and economic growth.

Social implications

In spite of their market share less than a conventional bank. The result proved than IB a prosperous sector and has a contribution to economic growth. This address regulator must have a dedicated unit to handle IIB legal cases should it go to the court for adjudication.

Originality/value

The study role of Islamic banking contribution to economic growth in the context of Indonesia is limited. This paper is the first study that examines empirically the effect of Indonesian Islamic banks on economic growth measured by the amount of gross domestic product (GDP), financing, offices and deposits.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 13 no. 3
Type: Research Article
ISSN: 1753-8394

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Article

Dhananjay Bapat and Deepa Mazumdar

The purpose of this paper is to explore the business strategy and its strategic orientation in the context of Indian banking sector. While past research has focussed on…

Abstract

Purpose

The purpose of this paper is to explore the business strategy and its strategic orientation in the context of Indian banking sector. While past research has focussed on internal factors, organizational performance and organizational design, present research intends to fill the gap by assessing the strategic archetypes for Indian banking.

Design/methodology/approach

A review of literature resulted in 14 items covering various aspects of strategy orientation. A structured questionnaire was used to obtain insights from bank managers. The study is based on responses received from 330 banking officials working in various functional areas of banks in India.

Findings

Using factor analysis, the 14 items are reduced into four major factors: competition, cost, innovation and customer need. In terms of strategic preferences, the finding indicates that respondents have given higher rating for both market share (25 percent) and new products (25 percent), followed by cost (16 percent), competition (15 percent) and service (13 percent).

Originality/value

With the dominant preference for market share and new products, authors proposed a market share-new product matrix and identified four quadrants: low return, resource constraint, complacency and optimal performance. The study offers guidance to managers to frame and assess the bank strategy.

Details

Journal of Strategy and Management, vol. 8 no. 4
Type: Research Article
ISSN: 1755-425X

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Case study

Richa Agarwal and Sumedha Tuteja

Paytm has become a popular method to make cashless payments in India. Be it for transferring funds through mobile numbers, online payment of utility bills, cabs, etc. or…

Abstract

Synopsis

Paytm has become a popular method to make cashless payments in India. Be it for transferring funds through mobile numbers, online payment of utility bills, cabs, etc. or payment to offline merchants. This case elaborates on the position Paytm has attained in the market thus far and its ambitious future growth plans. It describes the strategies being adopted by Paytm’s competitors and the new developments in the payments business in India. The case finally narrates the challenges the Fintech firm faces at present and poses a pertinent question: is Paytm on a growth trajectory or committing suicide by leaping so fast?

Research methodology

The case collates secondary data pertaining to Paytm’s current position and recent developments in the Indian mobile wallet industry. It presents the facts and data published on websites, newspapers, and magazines in the form of a case study.

Relevant courses and levels

This case can be applied to strategic management at under graduate and introductory level in post-graduate marketing of digital products.

Details

The CASE Journal, vol. 14 no. 1
Type: Case Study
ISSN: 1544-9106

Keywords

Content available
Article

Kriti Priya Gupta, Rishi Manrai and Utkarsh Goel

The purpose of this paper is to investigate the factors influencing the behavioral intention to adopt payments banks services by Indian underbanked and unbanked population.

Abstract

Purpose

The purpose of this paper is to investigate the factors influencing the behavioral intention to adopt payments banks services by Indian underbanked and unbanked population.

Design/methodology/approach

The proposed model has assimilated factors from the Unified Theory of Acceptance and Use of Technology (UTAUT) along with perceived credibility. The factors of UTAUT include performance expectancy, effort expectancy, facilitation of conditions and social influence. Apart from testing the direct relationships of the model constructs with the behavioral intention to adopt payments banks services, the study has also explored mediating and moderating effects of certain constructs. The research model has been empirically tested using 660 responses from a field survey conducted in New Delhi – the capital city of India – by using the structured equation modeling (SEM) technique. The target respondents of the study are small businessmen and migrant laborers who are either underbanked or unbanked.

Findings

The findings of the study reveal that the model is able to explain 67.5 per cent of the variance in behavioral intention. The results indicate that all the factors are direct determinants of behavioral intention. Perceived credibility is found to be the strongest influencer of behavioral intention. The findings also indicate that perceived credibility partially mediates the relationships between “social influence and behavioral intention” and “performance expectancy and behavioral intention.” The relationship between performance expectancy and behavioral intention is also found to be moderated by facilitating conditions and effort expectancy.

Research limitations/implications

As this study is based on a convenience sample of respondents of only one city of India, this could negatively reflect on the generalizability of results across other cities. Moreover, the study has only focused on the perceptions of small businessmen and migrant laborers. This raises concerns regarding the applicability of the results for other segments of the current population that have different demographic characteristics (e.g. occupation, income, education level and technology experience). Modifying the conceptual model presented in this research to include “experience” and “age” as moderators can also be worth considering in future. Although this study has extended the UTAUT to include perceived credibility, the results of the explanatory power of the model indicate that there is still room for improvement. Therefore, including other constructs, e.g. hedonic motivation, perceived risks and trialability, could be a fruitful path forward. Future studies may also examine the factors influencing the actual use behavior of payments banks, rather than just behavioral intention.

Practical implications

The study looks forward to providing the payments banks service providers in India with suitable guidelines for effectively implementing and designing payments banks services. Specifically, the results of this study have provided clues for Indian payments banks service providers about the crucial role of perceived credibility in influencing the behavioral intention to adopt payments banks. Therefore, service providers have to initially be sure that payments banks are able to conduct financial transactions efficiently, securely and within less time, along with the availability of information required by customers to successfully use the services. Service providers should enhance customer confidence and trust by providing secure and reliable services. They should also emphasize on the positive safety measures of the payments banks during any marketing campaign rather than just creating brand awareness.

Originality/value

The study represents a substantial contribution to the existing knowledge regarding mobile payment channels in particular and technology acceptance area in general. In fact, this study presents a worthwhile direction by examining payments banks services, which, so far, have not been well evaluated in the Indian context. To the best of the authors’ knowledge, this is an early attempt toward a holistic and integrative approach to explain adoption of payments banks in India. Although prior studies have addressed mobile banking and mobile payment adoption, the strength of this research lies in combining the UTAUT constructs with perceived credibility. This is evidenced by the high explanatory power (67.5 per cent) of the research model adopted in this study.

Details

Journal of Asia Business Studies, vol. 13 no. 2
Type: Research Article
ISSN: 1558-7894

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Article

Peter J. Barry, Cesar L. Escalante and LeeAnn E. Moss

This study utilizes an expected utility framework to conceptualize the risk‐adjusted valuation of cash versus share leases for farmers and landowners. Farm‐level data then…

Abstract

This study utilizes an expected utility framework to conceptualize the risk‐adjusted valuation of cash versus share leases for farmers and landowners. Farm‐level data then are used to empirically estimate the rental spread between these leases in Illinois, and to econometrically evaluate how these spreads are related to risks and other farm characteristics. The results indicate that non‐risk factors likely are the primary determinants of the magnitude and sign of the rental spread. In particular, high cash rent may be a bidding strategy to control additional leased acreage and thus expand farm size.

Details

Agricultural Finance Review, vol. 62 no. 2
Type: Research Article
ISSN: 0002-1466

Keywords

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