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Article
Publication date: 11 February 2021

Wassim Ben Ayed, Rim Ammar Lamouchi and Suha M. Alawi

The purpose of this study is to investigate factors influencing the net stable funding ratio (NSFR) in the Islamic banking system. More specifically, the authors analyze…

Abstract

Purpose

The purpose of this study is to investigate factors influencing the net stable funding ratio (NSFR) in the Islamic banking system. More specifically, the authors analyze the impact of the deposit structure on the liquidity ratio using the two-step generalized method of moments approach during the 2000–2014 period.

Design/methodology/approach

Based on IFSB-12 and the GN-6, the authors calculated the NSFR for 35 Islamic banks operating in the Middle East and North Africa (MENA) region.

Findings

The findings of this study show the following: first, ratio of profit-sharing investment accounts have a positive impact on the NSFR, while ratio of non profit-sharing investment accounts increase the maturity transformation risk; second, the results highlight that asset risk, bank capital and the business cycle have a positive impact on the liquidity ratio, while the returns on assets, bank size and market concentration have a negative impact; and third, these results support the IFSB’s efforts in developing guidelines for modifying the NSFR to enhance the liquidity risk management of institutions offering Islamic financial services.

Research limitations/implications

The most prominent limitation of this research is the availability of data.

Practical implications

These results will be useful for authorities and policy makers seeking to clarify the implications of adopting the liquidity requirement for banking behavior.

Originality/value

This study contributes to the knowledge in this area by improving our understanding of liquidity risk management during liquidity stress periods. It analyzes the modified NSFR that was adopted by the IFSB. Besides, this study fills a gap in the literature. Previous studies have used the conventional ratios to determinate the main factors of the maturity transformation risk in a full-fledged Islamic bank based on an early version of NSFR. Finally, most studies focus on the NSFR as proposed by the Basel Committee, whereas the authors investigate the case of the dual-banking system in the emerging economies of seven Arab countries in the MENA region.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 14 no. 3
Type: Research Article
ISSN: 1753-8394

Keywords

Article
Publication date: 20 September 2022

Suha Mahmoud Alawi

An effective corporate governance system helps to smoothly run business operations and manage financial matters. To ensure that management behavior is ethical, and their…

Abstract

Purpose

An effective corporate governance system helps to smoothly run business operations and manage financial matters. To ensure that management behavior is ethical, and their decisions are in the best interest of shareholders, corporate governance plays a vital role. This study aims to examine the impact of corporate governance on the insider trading profitability of listed banks in Pakistan, Bangladesh and India.

Design/methodology/approach

The authors take data from the financial statements of 70 listed banks and stock exchanges of the respective countries. The period of the data for our study is from 2010 to 2020. The authors use board independence, the board size, institutional ownership and managerial ownership as measures of corporate governance characteristics. While inside trading profitability is measured with abnormal returns. The authors apply the fixed effect panel regression for hypothesis testing and the two-step dynamic panel system-generalized method of moments (GMM) regression technique for checking the robustness of the findings.

Findings

The authors found that corporate governance has a significant impact on insider trading profitability in Pakistan, Bangladesh and India. Board independence and institutional ownership are negatively related while board size and managerial ownership are positively associated with insider trading profitability.

Originality/value

To the best of our knowledge, this study is the first one to explore the role of corporate governance in limiting insider trading on South Asian banks. It recommends that corporations should follow the code of corporate governance for the protection of shareholders' and other investors' profits.

Details

Journal of Economic and Administrative Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1026-4116

Keywords

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