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Article
Publication date: 3 April 2009

Taufiq Hassan, Shamsher Mohamad and Mohammed Khaled I. Bader

This paper aims to investigate the differences in mean cost, revenue and profit efficiency scores of conventional versus Islamic banks. It also aims to examine the effect…

Abstract

Purpose

This paper aims to investigate the differences in mean cost, revenue and profit efficiency scores of conventional versus Islamic banks. It also aims to examine the effect of size and age on cost, revenue and profit efficiency of the sampled banks.

Design/methodology/approach

This study evaluates a cross‐country level data compiled from the financial statements of 40 banks in 11 Organisation of Islamic Conference (OIC) countries over the period 1990‐2005. The data were collected for each year available from the BankScope database. The DEA nonparametric efficiency approach originally developed by Farrell was applied to analyse the data.

Findings

The findings suggest no significant differences between the overall efficiency of conventional and Islamic banks. However, it was noted that, on average, banks are more efficient in using their resources compared to their ability to generate revenues and profits. The average bank lost an opportunity to receive 27.9 percent more revenue, given the same amount of resources. Similarly, the average bank lost the opportunity to make 20.9 percent more profits utilising the same level of inputs. Clearly there is substantial room for improvement in cost minimisation and revenue and profit maximisation in both banking systems. The size and age factor did not significantly influence the efficiency scores in both banking streams.

Originality/value

This research is substantially different from the prior work in this area in three main ways. First, it investigates cost, revenue, and profit efficiency, whereas previous studies focus on cost, profit, or cost and profit efficiency. Also, no previous studies have compared conventional and Islamic banks. Second, this study distinguishes differences among big versus small, and old versus new banks, which allows more detailed insights on the efficiency issue. Third, the age issue in Islamic banks has been addressed, so far undocumented.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 2 no. 1
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 16 March 2015

Nai Chiek Aik, M. Kabir Hassan, Taufiq Hassan and Shamsher Mohamed

– This paper aims to examine the productivity and spillover effect of Malaysian horizontal merger and acquisition (M&A) activities in the long run.

Abstract

Purpose

This paper aims to examine the productivity and spillover effect of Malaysian horizontal merger and acquisition (M&A) activities in the long run.

Design/methodology/approach

In terms of analytical tools, economic value added (EVA) and data envelopment analysis (DEA) are used.

Findings

The results of this study reveal that M&As in the absence of antitrust laws could be driven by managerial self-interest to create market power instead of realizing synergistic gains. Also, in Malaysia, the non-merging rival firms have significantly higher productivity improvement than the control bidder firms, and therefore, this study has identified the spillover effect as a behavior of M&A reaction.

Originality/value

This paper differs from previous studies in that it attempts not only to examine the real long-term gains of horizontal M&A activities in Malaysia but also the spillover effects of M&A activities on similar but non-merging firms.

Details

Management Research Review, vol. 38 no. 3
Type: Research Article
ISSN: 2040-8269

Keywords

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Article
Publication date: 23 January 2007

Fikriyah Abdullah, Taufiq Hassan and Shamsher Mohamad

One of the implications of Islamic investment principles is the availability of Islamic financial instruments in the financial market. The main aim of this research is to…

Abstract

Purpose

One of the implications of Islamic investment principles is the availability of Islamic financial instruments in the financial market. The main aim of this research is to observe the differences in terms of performance between Islamic and conventional mutual fund in the context of Malaysian capital market.

Design/methodology/approach

To achieve the major objectives of this paper standard methods wereused for evaluating the mutual funds performance, for example, Sharpe index and adjusted Sharpe index, Jensen Alpha, Timing and selectivity ability. The scope of the paper is to measure the relative quantitative performance of funds which was managed based on two different approaches.

Findings

The basic finding of the paper is that Islamic funds performed better than the conventional funds during bearish economic trends while, conventional funds showed better performance than Islamic funds during bullish economic conditions. In addition to that finding, both conventional and Islamic funds were unable to achieve at least 50 per cent market diversification levels, though conventional funds are found to have a marginally better diversification level than the Islamic funds. The results also suggest that fund managers are unable to correctly identify good bargain stocks and to forecast the price movements of the general market.

Research limitations/implications

The main limitation is that the samples of conventional and Islamic mutual funds were from one developing market. The findings could be better validated if the sample included the mutual funds from other developed and developing economies, where both Islamic and conventional funds are available.

Practical implications

The findings suggest that having Islamic mutual funds in an investment portfolio helps to hedge the downside risk in an adverse economic situation.

Originality/value

So far there is no published evidence on the relative performance of Islamic and conventional mutual funds in Malaysia as well as other developing countries. Therefore, this paper adds new knowledge to the mutual funds literature.

Details

Managerial Finance, vol. 33 no. 2
Type: Research Article
ISSN: 0307-4358

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Book part
Publication date: 1 March 2021

Siti Khomsatun, Hilda Rossieta, Fitriany Fitriany and Mustafa Edwin Nasution

The unique characteristic of Islamic bank leads in governance and disclosure. Using stakeholder, signaling, and market discipline theory, governance and adequate…

Abstract

The unique characteristic of Islamic bank leads in governance and disclosure. Using stakeholder, signaling, and market discipline theory, governance and adequate disclosure may increase bank soundness. This study aims to investigate the relationship of sharia disclosure and Sharia Supervisory Board in influencing Islamic bank soundness in the different regulatory framework of the country. Using purposive sampling, the research covered 84 Islamic banks in 16 countries during the period 2013–2015 with lag data of Islamic bank soundness. The result shows sharia disclosure influences on Islamic bank soundness for management efficiency, capital adequacy ratio, asset quality, and liquidity. The results also show that sharia disclosure mediates the indirect effect of SSB on Islamic bank soundness. The regulatory framework (sharia accounting standard and SSB regulation) shows moderating effect of regulation framework proved on the association of sharia disclosure with management efficiency, capital, and liquidity. The effect is indirectly depending on the regulatory framework for proxy management efficiency, capital, and liquidity. The implication of the research suggests that sharia disclosure could increase the market discipline mechanism of Islamic bank stream. The Islamic bank can increase the transparency using sharia disclosure as a branding for increasing public trust, even though in the deficient Islamic bank regulation countries.

Details

Recent Developments in Asian Economics International Symposia in Economic Theory and Econometrics
Type: Book
ISBN: 978-1-83867-359-8

Keywords

Content available
Article
Publication date: 7 March 2016

Abstract

Details

South Asian Journal of Global Business Research, vol. 5 no. 1
Type: Research Article
ISSN: 2045-4457

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Article
Publication date: 1 March 2004

Nidal Rashid Sabri

This paper explored the new features of emerging stock markets, in order to point out the most associated indicators of increasing stock return volatility, which may lead…

Abstract

This paper explored the new features of emerging stock markets, in order to point out the most associated indicators of increasing stock return volatility, which may lead to instability of emerging markets. The study covers a sample of five geographical areas of emerging economies, including Mexico, Korea, South Africa, Turkey, and Malaysia. It used the backward multiple‐regression technique to examine the relationship between monthly changes of stock price indices as dependent variable and the associated predicting local as well as international variables, which represent possible causes of increasing price volatility and initiating crises in emerging stock markets. The study covered monthly data for a period of forty‐eight months from January 1997 to December 2000. The study revealed that stock trading volume and currency exchange rate respectively represent the highest positive correlation to the emerging stock price changes; thus represent the most predicting variables of increasing price volatility. International stock price index, deposit interest rate, and bond trading volume were moderate predicting variables for emerging stock price volatility. While changes in inflation rate showed the least positive correlation to stock price volatility, thus represents the least predicting variable.

Details

Review of Accounting and Finance, vol. 3 no. 3
Type: Research Article
ISSN: 1475-7702

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Article
Publication date: 17 February 2021

Ezzeddine Ben Mohamed, Neama Meshabet and Bilel Jarraya

This study aims to discuss the determinants of Islamic banks’ efficiency. It tries to explore the source of Islamic banks’ inefficiencies to propose solutions to guarantee…

Abstract

Purpose

This study aims to discuss the determinants of Islamic banks’ efficiency. It tries to explore the source of Islamic banks’ inefficiencies to propose solutions to guarantee an acceptable level of technical efficiency of such banks in Gulf Cooperation Council (GCC) countries.

Design/methodology/approach

To achieve this objective, the authors use a parametric approach, especially, the stochastic frontier approach, using production function and panel data analysis. The authors apply a package Frontier 4.1 for the estimation process, which is composed of two principal steps. In the first step, the authors estimate Islamic banks’ efficiency scores in different GCC countries based on an output distance function. In the second step, the analysis highlights the impact of managerial-specific education on Islamic accounting and finance, scarcity of Sharīʿah scholars, the board independence and chief executive officers’ (CEOs) duality on GCC Islamic banks’ efficiency.

Findings

This study’s results document that managerial-specific education on Islamic accounting and finance and the board of directors’ composition, especially, the board’s independence, can largely explain the technical efficiency scores of Islamic banks in GCC countries. Especially, the authors find evidence that managerial-specific education is negatively associated with the inefficiency term. The coefficient of the Sharīʿah scholar’s variable has a positive sign indicating that the more there are Sharīʿah experts, the more the bank is efficient. In addition, CEOs’ duality seems to have no significant effect on GCC Islamic banks’ efficiency.

Practical implications

GCC Islamic banks need to improve the presence of independent members on the board of directors. In addition, these banks are invited to count more on Sharīʿah auditors and educated staff characterized by a high level of competency in the domain of Islamic banking and finance.

Originality/value

To the best of the authors’ knowledge, this is the first study that highlights the effect of managerial-specific education in Islamic accounting and finance and scarcity of Sharīʿah scholars on Islamic banks’ efficiency.

Details

Journal of Islamic Accounting and Business Research, vol. 12 no. 2
Type: Research Article
ISSN: 1759-0817

Keywords

Content available
Article
Publication date: 1 October 2019

Fahmi Ali Hudaefi and Kamaruzaman Noordin

This paper aims to develop a performance measure for Islamic banks (IBs) by harmonizing related studies. Furthermore, this work uses the developed yardstick to analyze the…

Abstract

Purpose

This paper aims to develop a performance measure for Islamic banks (IBs) by harmonizing related studies. Furthermore, this work uses the developed yardstick to analyze the performance of a sample of 11 IBs from across different countries.

Design/methodology/approach

This paper uses the mix-mode method. The qualitative approach is engaged first to construct the IBs performance yardstick. Following this, the quantitative approach is applied through the use of the performance yardstick to measure the sample’s performance.

Findings

This study develops a maqāṣid-based performance yardstick adapted from previous works. The developed model in this study is called an integrated maqāṣid al-Sharīʿah--based performance measure (IMSPM). By using this performance measure, the present paper finds that the sample performed highest on the objective of nafs (self) over the three-year period. In addition, this study identifies the information which best indicates the sample’s performance during the analysis.

Research limitations/implications

This paper uses the sample’s annual reports. The analysis is thus limited to informational disclosure.

Practical implications

Islamic banking and financial institutions may use the IMSPM to communicate a measurable report on their promotion of the maqāṣid al-Sharīʿah (objectives of Islamic law).

Social implications

The evidence from 11 IBs is indicative of their efforts to realize maqāṣid al-Sharīʿah in the banking industry. This point may best challenge the practice of stigmatizing IBs for not being in line with the Sharīʿah (Islamic law) or of imitating conventional banks.

Originality/value

The novelty of this study lies in two points. First, this study harmonizes previous works to integrate financial and religious measures in a single yardstick. Second, by using the developed standard, this study offers a fresh insight into the global IBs’ performance, represented by 11 IBs worldwide.

Details

ISRA International Journal of Islamic Finance, vol. 11 no. 2
Type: Research Article
ISSN: 0128-1976

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Article
Publication date: 5 June 2019

Tengku Muhammad Jamil

The purpose of this study is to critically understand and find out the socio-political role of the Acehnese ulamas (Muslim scholars) in solving and coping with social…

Abstract

Purpose

The purpose of this study is to critically understand and find out the socio-political role of the Acehnese ulamas (Muslim scholars) in solving and coping with social issues faced by contemporary Acehnese society.

Design/methodology/approach

This study was conducted in the province of Nanggroe Aceh Darussalam, especially in the districts of Aceh Utara, Pidie, Aceh Besar, Aceh Selatan and Aceh Timur. The locations were chosen based on the consideration of the objective conditions that many ulamas were dwelling and could easily be found in these areas. Besides, the locations are historically believed as the origins of the Acehnese that are so diverse. In addition, a large number of social problems frequently arose within those regions. The subjects of this research study were a number of community determined by purposive sampling technique. The instruments used for the data collection in this research were observation, in-depth interview and library study; and interpretative understanding was also used to analyze the data.

Findings

The existence of the Acehnese ulamas represents the government’s recognition to word the traditional institutional in Aceh. However, some people think that institutions are used by the government to exploit ulama as the mediator between the government and the society. For the Acehnese ulamas, the institution could be used to consolidate their power for the benefit of the people.

Originality/value

The various theories discussed are considered the framework and guidance for this study, especially in terms of data collection and data analysis. The new theories and relevant references will also possibly be added to the following study.

Details

Journal of Islamic Marketing, vol. 11 no. 1
Type: Research Article
ISSN: 1759-0833

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Article
Publication date: 5 March 2019

Elisa Aracil

The purpose of this paper is to compare the sustainability practices of Islamic and conventional banks, with the aim of evaluating whether their Corporate Social…

Abstract

Purpose

The purpose of this paper is to compare the sustainability practices of Islamic and conventional banks, with the aim of evaluating whether their Corporate Social Responsibility (CSR) strategies converge or diverge in response to formal and informal institutions in an emerging country.

Design/methodology/approach

Drawing on institutional theory, this study contextualizes the competitive scenario through the National Business System (NBS) framework, and showcases the CSR strategies employed by large conventional and Islamic banks in Turkey. CSR patterns are examined from different angles such as motivations, strategy, actions and institutional results.

Findings

Within the same institutional environment, Islamic and non-Islamic banks combine convergent and divergent models to accommodate institutional realities in their CSR policies. Islamic banks exhibit an implicit commitment to CSR that is mostly based on informal institutions, whereas conventional banks use explicit CSR strategies as a means to fill the voids in formal institutions. In addition, philanthropy-oriented CSR prevails in Islamic banks, as opposed to the CSR actions associated with core business that are followed by conventional banks.

Social implications

An increased focus on formal institutions and explicit CSR actions by Islamic banks may further contribute to social well-being in emerging countries.

Originality/value

This study contributes to the paucity of research, from an institutional perspective, related to CSR practices amongst Islamic and conventional banks in emerging countries.

Details

International Journal of Emerging Markets, vol. 14 no. 4
Type: Research Article
ISSN: 1746-8809

Keywords

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