Search results

1 – 10 of 520
Article
Publication date: 9 December 2022

Sana Rhoudri and Lotfi Benazzou

The purpose of this study is to examine the factors affecting deposit withdrawal intentions among Moroccan profit-sharing investment account holders.

Abstract

Purpose

The purpose of this study is to examine the factors affecting deposit withdrawal intentions among Moroccan profit-sharing investment account holders.

Design/methodology/approach

Applying the push-pull-mooring (PPM) theory, a quantitative survey, based on insights brought to light by a previous qualitative study, was developed and administered to 166 depositors from five participatory banks at branches located in Morocco. Structural equation modeling was then used to evaluate the significance of relationships between the various variables under study.

Findings

Empirical findings showed that the PPM model with a second-order construct structure exhibited a better representation of the observed variables as compared to a first-order factor model. The results of the structural analysis indicated a significant direct relationship between withdrawal intention and each of the PPM model constructs: push and pull factors were found to have a positive impact on withdrawal intention, while mooring factors had a significant inverse relationship with withdrawal intention. The results of this study also revealed that the moderating role of the mooring construct was found in both relationships between push and withdrawal intention and between pull and withdrawal intention.

Research limitations/implications

The absence of a longitudinal study measuring the actual withdrawal behavior is the main limitation of this study. Furthermore, withdrawal intention was examined without differentiating between individual and corporate depositors. Finally, despite being insightful, the empirical findings should be generalized with caution, as the sample was purposely chosen by the banks’ management.

Practical implications

This study implied that participatory banks should stress the importance of mooring factors, as they strongly inhibit depositors’ intention to shift their funds to the conventional banking system. Moreover, this study provides great indications to Moroccan regulators and policymakers on a number of issues that can be used to develop policies that could improve the participatory banking system.

Originality/value

To the best of the authors’ knowledge, this study represents the first attempt to confirm the effectiveness of the PPM model in examining depositor-withdrawal intentions. This study is also the first of its kind to address profit-sharing investment depositors’ apprehensions in the Moroccan context, to the best of the authors’ knowledge.

Article
Publication date: 14 April 2014

Nada Lahrech, Abdelmounaim Lahrech and Youssef Boulaksil

The purpose of this paper is to assess whether Islamic banks are transparent regarding profit (and loss) sharing to investment account holders. Another objective is to appraise…

2450

Abstract

Purpose

The purpose of this paper is to assess whether Islamic banks are transparent regarding profit (and loss) sharing to investment account holders. Another objective is to appraise whether Islamic banks' performance affects management incentives to distribute profit (and loss) to investment account holders.

Design/methodology/approach

To investigate the research issue, the authors conducted an empirical study. Data of 25 global operating Islamic banks have been collected and analyzed for the period 2006-2010. The authors also developed a mathematical model based on the generalized least-squares principle.

Findings

The research results showed that enhancing transparency will prevent Islamic banks from shadowing their profit allocation practices and place investment account holders in a better position to manage their invested funds. The study also showed that bettering Islamic banks’performance will induce them to manager profit-sharing investment account holders’ funds under bonafides.

Research limitations/implications

The main limitation is data availability. The maximum number of Islamic banks that disclose financial data covering the period of 2006-2010 limited the scope of the study to 25 banks.

Practical implications

The findings are very valuable for designing policies and standards as well as for the enforcement of these standards to improve transparency in Islamic banking.

Originality/value

The study outcome is vital to many parties involved in the Islamic banking field and can be taken as a strong foundation to make appropriate actions that would help grow and sustain Islamic banking development globally.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 7 no. 1
Type: Research Article
ISSN: 1753-8394

Keywords

Article
Publication date: 9 May 2020

Imene Guermazi

The purpose of this study is to investigate the two components of market discipline, investment account holder (IAH) monitoring and the consequent reaction of the Islamic banks in…

Abstract

Purpose

The purpose of this study is to investigate the two components of market discipline, investment account holder (IAH) monitoring and the consequent reaction of the Islamic banks in GCC countries for the 2004–2013 period, including the recent financial crisis of 2008.

Design/methodology/approach

We address the research question that Investment Account holders (IAH) in GCC countries suc as Kingdom of Saudi Arabia (KSA), Bahrain and United Arab Emirates (UAE) monitor their banks. Regression analysis was used to examine the dependence level of profit-sharing investment account (PSIA) growth rate on bank risk characteristics (CAMEL variables). Then, the reaction of banks by regression influencing CAMEL variables of one-lagged period on PSIA growth rate was verified.

Findings

The results provide evidence of the first component of market discipline, i.e. the IAH monitoring, in KSA, Bahrain and UAE. The common result to the three countries is that market actors are concerned with accounting information on capital adequacy. However, in UAE, they are also interested in assets performance, whereas they look more at earnings in Bahrain. The results show evidence of the second component in Bahrain; the bank reaction to IAH monitoring and subsequently IAH discipline in Bahrain. Finally, the results do not support any impact of the financial crisis.

Research limitations/implications

The sample size is small although it is constituted by banks having a sufficient number of observations.

Practical implications

This study highlights the importance of IAH discipline, which would help prudential bank monitoring by regulators and wealth development for both investors and managers. It should increase the disclosure of relevant information as for the part of effective accountability of Islamic banks’ governance.

Originality/value

This study contributes to the literature on market discipline by dealing with Islamic banks. It is one of the very few studies to investigate IAH discipline in Islamic banks and the second component of market discipline, i.e. the influence of monitoring on banks.

Details

Journal of Islamic Accounting and Business Research, vol. 11 no. 9
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 14 September 2020

Rihab Grassa, Nejia Moumen and Khaled Hussainey

Previous works assessing the determinants of banks’ risk disclosure in emerging economies focused on one aspect of risk reporting such as market risk disclosure or operational…

1243

Abstract

Purpose

Previous works assessing the determinants of banks’ risk disclosure in emerging economies focused on one aspect of risk reporting such as market risk disclosure or operational risk disclosure. While banks’ transparency about other major risk types (e.g. capital adequacy, liquidity risk…) is important for both market discipline and for their financial stability, no previous research has tried to discuss their determinants for Islamic banks. This paper aims to fill the gap by assessing the effects of deposits structure and ownership concentration on risk disclosure for Islamic banks.

Design/methodology/approach

The authors based on a sample of 71 Islamic banks operating in 12 emerging economies and observed over the period 2009–2014. The authors used a risk disclosure index covering nine dimensions, and the authors used both generalized least squares (GLS) regression and generalized method of moments (GMMs) as econometric tools.

Findings

The findings suggests that the level of risk disclosure is lower for Islamic banks with higher ownership concentration, leveraged bank, listed banks and Islamic banks. However, risk disclosure is higher for Islamic banks with higher concentration of profit sharing investment account (PSIA) and higher foreign ownership, large Islamic banks, aged banks, Islamic banks operating in country with higher country transparency index, positively correlated to gross domestic products and Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) adoption. By disaggregating total risk disclosure into the nine sub-categories, the authors are able to specify, also, the components of risk disclosure impacted by various determinants.

Research limitations/implications

This paper’s findings are subject, also, to a number of limitations. First, there was manual scoring of annual reports (subjectivity). Second, while some items might have higher information content or be more useful than others for users of Islamic banks’ annual reports, no weighting is assigned to items. Third, the research focuses exclusively on the 12 countries and excludes the other Middle East, Southeast Asia and Far East countries where ownership structure and deposits structure might affect risk disclosure differently.

Originality/value

The findings suggest many policy implications. First, regulators have to improve corporate governance mechanisms in Islamic banking system through the optimization of ownership structure (dispersed ownership) to promote transparency and disclosure. Second, regulators and policymakers should revise guidelines in the main purpose to protect PSIAs holders (considered as minor shareholders without voting power) through promoting disclosure and transparency. Third, the findings can be useful for many international supervisory bodies such as the IFSB and AAOIFI to evaluate transparency and disclosure standards.

Details

Journal of Financial Reporting and Accounting, vol. 19 no. 3
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 14 February 2023

Muhammad Taufik, Rifqi Muhammad and Peni Nugraheni

This study aims to examine how sharia supervisory board (SSB) characteristics are determinants of the maqashid sharia performance (MSP) of Islamic banks (IBs) and how MSP has…

Abstract

Purpose

This study aims to examine how sharia supervisory board (SSB) characteristics are determinants of the maqashid sharia performance (MSP) of Islamic banks (IBs) and how MSP has implications for profitability and for profit-sharing investment account holders (PSIAHs).

Design/methodology/approach

MSP is ascertained by semi-structured interviews. The SSB characteristics measured are size, cross-membership, education level, expertise, reputation, rotation and remuneration. Annual reports of Indonesian and Malaysian IBs from 2010 to 2018 are analysed using panel data regression.

Findings

In Indonesia, SSB education level attenuates MSP, while other characteristics have only minor influence. However, in Malaysia, SSB size, education and reputation reinforce MSP, while others are ineffective. MSP in both countries is pseudo-Islamic; so their customers ignore religiosity. However, MSP in Malaysia can improve profitability because sharia assurance is more transparent; meanwhile, MSP in Indonesia cannot improve profitability because sharia assurance is less transparent.

Practical implications

In order for MSP to improve in Indonesia, the regulators need to increase SSB size, reduce cross-membership and arrange the format for sharia assurance in SSB reports, while IBs need to increase SSB education and expertise.

Originality/value

MSP is constructed in accordance with legal and social requirements to achieve IBs’ Islamic, economic, social and ethical objectives. Resource dependence theory is used to evaluate SSB, while PSIAH and profitability are investigated to demonstrate the impact of MSP. Finally, comparing SSB capabilities in Indonesia and Malaysia could be beneficial to regulatory and IB policies.

Details

Journal of Islamic Accounting and Business Research, vol. 14 no. 8
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 26 April 2019

Simon Archer and Rifaat Ahmed Abdel Karim

This paper aims to examine the issue that arises in the context of benchmark rate (or interest rate) changes made for reasons of monetary policy in a jurisdiction with a…

Abstract

Purpose

This paper aims to examine the issue that arises in the context of benchmark rate (or interest rate) changes made for reasons of monetary policy in a jurisdiction with a significant presence of Islamic banks. Changes, especially increases, in the prevailing interest rate made by central banks raise issues of asset-liability management for banks, which typically have longer maturities on the asset side than on the liabilities side, resulting in exposure to interest rate risk for conventional banks, and what is known as rate of return (RoR) risk for Islamic banks, which for reasons of compliance with Islamic religious law (Shari’ah) do not use interest in their operations. Islamic banks use various financial instruments which reflect the cost of funds by means of contracts of sale on credit or of leasing or forms of partnership, which allow them to earn returns on their funds and to pay returns to customers who deposit funds with them.

Design/methodology/approach

The methodology of this study consisted of a descriptive analysis of the relevant characteristics of Islamic banks and their economic and regulatory environments, illustrated by a case study approach applied to two jurisdictions, namely, Sudan and Malaysia.

Findings

In jurisdictions where Islamic banks represent a significant share of the market for financial services, if the contracts used in Islamic financing allow for periodic adjustments of the profit rate or lease rental, this could result in a significant impediment to the full implementation of monetary policy and hence to the maintenance of financial stability.

Originality/value

This study is (to the best of authors’ knowledge) the first thorough analysis in the literature of the issues arising from the exposure of Islamic banks to RoR risk and has clear implications for regulatory and central bank policy.

Details

Journal of Financial Regulation and Compliance, vol. 27 no. 2
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 24 December 2020

Bassam Mohammad Maali, Usama Adnan Fendi and Muhannad Ahmad Atmeh

This paper aims to investigate the economic substance of Islamic banks’ transaction as perceived by the employees and regulators of banks and the effect of such substance on the…

Abstract

Purpose

This paper aims to investigate the economic substance of Islamic banks’ transaction as perceived by the employees and regulators of banks and the effect of such substance on the need for special accounting standards for Islamic banks. If there is a distinctive “Islamic economic substance”, then special accounting practices may be necessary such as the standards of the Accounting and Auditing Organization for Islamic Financial Institutions.

Design/methodology/approach

A qualitative inquiry on one of the leading Islamic banks in the Middle East was conducted to investigate the economic substance of the bank’s main two transactions; the deposit system and Murabaha financing, as perceived by informants within one of the earliest Islamic banks and its regulators.

Findings

It is found that despite the belief that the transactions under examination were different from equivalents within conventional banking, practice within the bank was not consistent with such a belief. Informants largely perceived the economic reality of the investigated transaction as being not different from conventional banks’ transactions, and this would affect the need for special accounting and regulatory frameworks.

Research limitations/implications

This investigation is confined to informants working within one Islamic bank; their views and perceptions may not coincide with those working in other Islamic banks in the world.

Practical implications

The results of this investigation provide policy implications for Islamic banks, regulators and standards setters in regard to the need for special accounting standards for Islamic banks.

Originality/value

The paper is one of the first papers that uses a qualitative inquiry on the main transactions of Islamic banks and the related need for special accounting practices. The paper provides a new perspective on the debate over whether Islamic banking is genuinely innovative or is merely a replicate for conventional banking.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 14 no. 2
Type: Research Article
ISSN: 1753-8394

Keywords

Article
Publication date: 8 May 2018

Rihab Grassa, Raida Chakroun and Khaled Hussainey

The purpose of this paper is to examine the determinants of Islamic banks (IBs) product and services disclosure (PSD).

1392

Abstract

Purpose

The purpose of this paper is to examine the determinants of Islamic banks (IBs) product and services disclosure (PSD).

Design/methodology/approach

A computer-based content analysis is run upon the annual reports for a sample of 78 IBs operating in 11 countries from 2004 to 2012 to find the number of product and services statements. The levels and trends of PSD are identified. A regression analysis to identify the factors affecting PSD in IBs is also used.

Findings

The findings suggest that there has been a significant improvement of PSD over time. The results show a positive association between PSD and Shariah board size, board size, chief executive officer (CEO) tenure, duality in position, blockholders and investment account holders. However, they show a negative association between PSD and institutional ownership. In addition, it appears that board independence does not affect significantly banks’ PSD. It is also found that the bank performance, bank age, leverage, listing, adoption of international financial reporting standards, adoption of Accounting and Auditing Organization for Islamic Financial Institutions and country transparency index have a positive effect on the PSD.

Originality/value

This study offers an original contribution to corporate disclosure literature by being the first to develop and investigate PSD for a large sample of IBs during a long period of time. It links P&S with bank corporate governance characteristics. The findings have many important policy implications. More specifically, this paper encourages regulators in the studied countries to improve corporate governance mechanisms in their Islamic banking systems through the optimization of ownership structure, CEO’s characteristics and the board’s characteristics, to promote PSD. Moreover, the findings support the theoretical predictions of the generalized agency theory. This study’s empirical evidence enhances the understanding of the corporate social responsibility disclosure environment in general and the PSD environment in particular for IBs. This study is the first one that measures PSD in the annual reports for a large cross-countries sample of IBs during a long period of time. It is also the first one that links PSD with IBs corporate governance mechanisms.

Details

Accounting Research Journal, vol. 31 no. 1
Type: Research Article
ISSN: 1030-9616

Keywords

Article
Publication date: 15 October 2021

Umi Widyastuti, Erie Febrian, Sutisna Sutisna and Tettet Fitrijanti

This study aims to determine antecedents of market discipline. A model was constructed by extending the theory of planned behavior (TPB) to explore the cognitive, psychological…

1081

Abstract

Purpose

This study aims to determine antecedents of market discipline. A model was constructed by extending the theory of planned behavior (TPB) to explore the cognitive, psychological and social factors that influence the market discipline in the form of withdrawal behavior.

Design/methodology/approach

This study applied a quantitative approach by surveying 181 Indonesian retail investors in Sharia mutual funds, which were represented by civil servants. The samples were collected using the purposive sampling technique. This study used the partial least square–structural equation model to analyze the data.

Findings

The results revealed that the Islamic financial literacy, the attitudes toward withdrawal, the subjective norms and the perceived behavioral control had a positive significant effect on the withdrawal intention, whereas financial risk tolerance had an insignificant impact. Then, all the exogenous variables and intention to withdraw had a significant contribution in explaining market discipline. Contrary to the proposed hypothesis, the attitude toward withdrawal had a negative impact on market discipline. The structural model indicated that the TPB could be extended by adding some exogenous variables (i.e. Islamic financial literacy and financial risk tolerance) in determining the intention to withdraw and withdrawal behavior, which indicated the market discipline in Sharia mutual funds.

Research limitations/implications

This study was limited to individual investors who work as civil servants. This study did not accommodate different demographic factors such as age and gender, which influence fund withdrawal behavior.

Practical implications

The government must focus on the inclusion of market discipline in Sharia mutual funds’ regulation to encourage the risk management disclosure, specifically that related to Sharia compliance.

Originality/value

Previous studies applied a traditional finance theory to predict market discipline, but this study contributes to filling the theoretical gap by explaining the market discipline from a behavioral finance perspective that was found in Sharia mutual funds.

Details

Journal of Islamic Accounting and Business Research, vol. 13 no. 1
Type: Research Article
ISSN: 1759-0817

Keywords

Article
Publication date: 8 January 2024

Hassanudin Mohd Thas Thaker, Bawani Lelchumanan, Abdollah Ah Mand and Ahmad Khaliq

This study aims to attempt to investigate the factors that influence non-Muslims’ withdrawal behavioural intention from Islamic banking in Malaysia.

Abstract

Purpose

This study aims to attempt to investigate the factors that influence non-Muslims’ withdrawal behavioural intention from Islamic banking in Malaysia.

Design/methodology/approach

The push–pull–mooring approach is used to examine the determinants of withdrawal intention by non-Muslims from Islamic banking in Malaysia. Variables used in this study include religiosity (RELG) under push, deposit guarantee (DG), rate of return (RR), Islamic banks’ specific factors (IBSF) under pull and mooring factors as social influence (SI) and voluntary switching (VS) as the determinants of withdrawal intention from Islamic banking. In this study, the SPSS Statistics Version 22 and smart partial least squares were used to measure the withdrawal level.

Findings

Three variables, namely, SI, RR and IBSF are found to significantly influence the withdrawal behaviour intention. Meanwhile, three other variables, namely, RELG, DG and VS are not significant.

Practical implications

This study provides valuable insights pertaining to non-Muslim consumer withdrawal behaviour from Islamic banks. Bank managers, marketers and regulators could use these findings in developing effective strategies to increase and retain customer withdrawal.

Originality/value

This study expands the understanding of key determinants of the non-Muslim withdrawal behaviour from Islamic banks in Malaysia. To the best of the authors’ knowledge, this research is among the pioneer empirical study to assess the issue.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 17 no. 1
Type: Research Article
ISSN: 1753-8394

Keywords

1 – 10 of 520