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Article
Publication date: 5 August 2020

Oyebola Fatima Etudaiye-Muhtar and Zayyad Abdul-Baki

This paper investigates the role of market structure and institutional quality in determining bank capital ratios in developing economies.

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Abstract

Purpose

This paper investigates the role of market structure and institutional quality in determining bank capital ratios in developing economies.

Design/methodology/approach

The generalised methods of moment technique is used to control for auto-correlation and endogeneity in a sample of 79 publicly listed commercial banks. The study period is between 2000 and 2016.

Findings

Results show that market structure (proxied with bank competition) as well as institutional quality (regulatory quality) lowers bank capital in the sampled banks. This suggests that banks operating in less competitive markets with good regulatory quality do not need to engage in excessive risk-taking activities that would necessitate holding increased level of capital. Furthermore, the interaction of competition and regulatory quality reinforces the main findings, suggesting the importance of the two variables in determining bank capital ratio.

Research limitations/implications

Research has limitation in that the study investigated publicly listed commercial banks, the findings may not be applicable to non-listed banks.

Practical implications

Taking into cognisance the developing nature of the banking system in Africa, the findings from this study imply that the maintenance of an improved regulatory quality in an environment where healthy competition exists would encourage banks to hold capital ratios appropriate for their level of banking activities, that is, the banks would not engage in excessive risk-taking activities.

Originality/value

This is one of the first papers that examine the effect of market structure and institutional quality on bank capital ratios in developing countries that have bank-based financial systems.

Details

European Journal of Management and Business Economics, vol. 30 no. 1
Type: Research Article
ISSN: 2444-8451

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Article
Publication date: 13 May 2019

Zayyad Abdul-Baki

This study aims to examine an alternative use of accounting information and technology (forensic audit) for resolving conflicts between two government agents and…

Abstract

Purpose

This study aims to examine an alternative use of accounting information and technology (forensic audit) for resolving conflicts between two government agents and consequently enhancing accountability in Nigeria.

Design/methodology/approach

The study adopts contextualised explanation of case study theorising. Data for the study were gathered from two primary documents: the forensic audit report of PricewaterhouseCoopers (PwC) and the report of the Senate Committee on Finance and Appropriation. The theory of mediation is used to illuminate the mediation process and its implication for accountability.

Findings

The study finds that the mediator (PwC) was able to resolve the dispute using different problem-solving techniques (data gathering and fact finding) of accounting and provide guidance on the necessary steps to be taken to enhance accountability. Whilst the disputants agreed to the audit firm’s findings, further actions to hold relevant parties accountable were not taken by the government. Accounting aids in realising accountability, but it is not the ultimate tool, as it operates within a host of other accountability infrastructures that subvert its impact.

Research limitations/implications

This study uses a single case to understand the role of accounting in conflicts resolution. Therefore, as a general limitation of a case study design, we do not generalize beyond the case examined in this study.

Practical implications

The study has implications for accounting practice in developing countries. Firstly, the paper finds that accounting is held in high esteem as having the ability to unravel mysteries through its problem-solving techniques. Secondly, professional accounting firms need to maintain a high level of competence and integrity to sustain this position. Thirdly, accounting can help answer the question “Who should be held accountable?”

Originality/value

The study examines a novel case of how accounting is used in resolving conflicts in a rare setting and in ensuring accountability over public funds.

Details

Managerial Auditing Journal, vol. 36 no. 2
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 12 June 2017

Zayyad Abdul-Baki and Ahmad Bukola Uthman

This paper aims to argue that the current environment in which the Islamic banking system is situated is not ideal for the system’s pursuance of its socioeconomic ideals…

Abstract

Purpose

This paper aims to argue that the current environment in which the Islamic banking system is situated is not ideal for the system’s pursuance of its socioeconomic ideals, thus necessitating the system’s shift from pursuing falah to maximizing profits.

Design/methodology/approach

The paper theorizes and conceptualizes this shift from falah to profit maximization using two complementary theories – systems theory and institutional theory – to prove that such a shift is not unexpected. The paper further adopts a dialectical analysis that is somewhat historical to analyse the shift.

Findings

The measure of the Islamic banks’ performance in terms of their social ideals is misplaced, as the environment in which they currently operate does not support such goals. Thus, stemming from the theoretical base, the Islamic banks’ pursuance of profit maximization instead of falah should not be unexpected. The paper concludes that despite the unfavorable environment, the social ideals of the Islamic banking system may still be met, to an extent, through investment in microfinance and awqaf.

Research limitations/implications

The paper adopts document analysis for sourcing data majorly from prior studies. Hence, the authors do not conclude that the analysis herein is applicable to all Islamic banks. Secondly, as the authors could not get a complete historical account of the Islamic banking system’s development, some aspects of the dialectical analysis – contradiction and change – have been discussed in a general fashion.

Practical implications

The need for Islamic banks in the current environment, especially for the Muslim population, cannot be over emphasized; however, the achievement of falah given this current environment may be daunting.

Originality/value

The current analyses of the shift of Islamic banks from pursuing falah to pursuing profit maximization are not well-defined, as they lack a proper theorization of the challenges faced by Islamic banks. This paper fills this gap.

Details

Journal of Islamic Accounting and Business Research, vol. 8 no. 3
Type: Research Article
ISSN: 1759-0817

Keywords

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Article
Publication date: 23 September 2013

Zayyad Abdul-Baki, Ahmad Bukola Uthman, Atanda Aliu Olanrewaju and Solihu Aramide Ibrahim

This paper aims to argue that the methodologies adopted by the conventional management accounting in selecting between or among two or more alternative courses of action…

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2008

Abstract

Purpose

This paper aims to argue that the methodologies adopted by the conventional management accounting in selecting between or among two or more alternative courses of action, both in the long-term and the short-term decision making endeavours conflict with the overall objective ( falah) of Islamic enterprises.

Design/methodology/approach

The paper explores relevant literatures (including the Qur'an and the Hadeeth) to ascertain the objective of an Islamic enterprise and suggest an alternative approach, in making a choice among alternative courses of action, that aligns with the Islamic socio-economic objective ( falah).

Findings

The paper suggests that both in long-term and short-term decision making endeavours, cost-benefit comparison (where cost includes negative externalities) rather than discounted cashflow techniques or contribution margin should be adopted in making a final choice among alternatives to achieve falah.

Research limitations/implications

The paper has not considered other objectives that may be pursued by an organisation beside profit maximization whether short-term or long-term.

Practical implications

The paper expands the frontiers of knowledge in Islamic accounting by exposing the inadequacy of the conventional management accounting decision making methods.

Originality/value

This paper explores the Islamic perspective of the conventional management accounting which is rare among scholars of accounting.

Details

Journal of Islamic Accounting and Business Research, vol. 4 no. 2
Type: Research Article
ISSN: 1759-0817

Keywords

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