An investigation of the relationship between sukuk and the performance of banks of Pakistan

Bibi, Sitara; Mazhar, Fatima

doi:10.18326/ijtihad.v19i1.53-66

Cited by 4 publications

(3 citation statements)

References 8 publications

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“…Muhammad also emphasized that banks must have liquid assets and secondary reserves as the main requirement in liquidity planning (Muhamad, 2015). And supported by Bibi and Mazhar (2019); Braima (2017) which states that sukuk has a positive and significant effect on liquidity. However, this research is not in line with Alfarisi et al (2019); Noviana and Solovida (2018) that sukuk has no significant effect on liquidity.…”

Section: The Effect Of Sukuk On Liquidity Levels (Financing To Deposi...mentioning

confidence: 97%

Third Party Funds as Moderating Variables of Liquidity Level of Sharia Commercial Banks

Alfarda,

Nawawi,

Rofiq

et al. 2021

iconev

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This study aims to examine the effect of BI 7-days (reverse) repo rate, sukuk, Bank Indonesia sharia certificates on the level of liquidity with third party funds as a moderating variable. The population in this study is all Islamic Commercial Banks in Indonesia. The sample in this study is the financial statements of Islamic banking statistics registered by OJK with 55 samples from June 2016-December 2020. The analytical technique of this study uses moderated regression analysis (MRA). The results of this study indicate that TPF can moderate the effect of the BI 7-days (reverse) repo rate and sukuk on FDR, but cannot moderate the effect of Bank Indonesia sharia certificates on FDR. Other results show that the BI 7-days (reverse) repo rate has a negative and significant effect on FDR, sukuk has a positive and significant effect on FDR and Bank Indonesia sharia certificates have a positive and significant effect on FDR.

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Section: The Effect Of Sukuk On Liquidity Levels (Financing To Deposi...mentioning

confidence: 97%

Third Party Funds as Moderating Variables of Liquidity Level of Sharia Commercial Banks

Alfarda,

Nawawi,

Rofiq

et al. 2021

iconev

View full text Add to dashboard Cite

show abstract

“…Sukuk berkelanjutan yang menunjukkan hasil berpengaruh signifikan dan negatif juga didukung penelitian Mimouni, et al, (2019) yang mengutarakan bahwa perkembangan pasar sukuk berpengaruh negatif terhadap profitabilitas perusahaan. Hasil ini juga didukung penelitian Bibi & Mazhar (2019) yang menyatakan bahwa terdapat pengaruh yang signifikan dan negatif antara sukuk dan profitabilitas perusahaan di Pakistan.…”

Section: Pengaruh Sukuk Dan Sukuk Berkelanjutan Terhadap Reputasi Per...unclassified

“…Walaupun lemahnya pengaruh sukuk dan sukuk berkelanjutan terhadap reputasi perusahaan berdasarkan hasil pengujian, namun penerbitan sukuk bagi perusahaan masih patut dipertimbangkan karena penerbitan sukuk dianggap akan meminimalisir terjadinya masalah keagenan dalam perusahaan karena investor sukuk akan memantau manajemen perusahaan dengan cermat untuk memastikan bahwa perusahaan dapat menghasilkan keuntungan dan mendistribusikan arus kas (Fitriya, 2012). Selain itu, penerbitan sukuk memiliki pengaruh yang kuat terhadap peningkatan Produk Domestik Bruto (PDB), pertumbuhan ekonomi, dan alternatif sumber pembiayaan yang penting dalam memenuhi likuditas perusahaan (Fahrian & Seftarita, 2016;Salem, et al 2016;Ardi, 2018;Bibi & Mazhar, 2019). Fitriani (2018) menambahkan bahwa perusahaan yang menerbitkan sukuk lebih likuid dalam memenuhi kebutuhan jangka pendek atau operasional perusahaan dibandingkan perusahaan yang menerbitkan obligasi.…”

Section: Pengaruh Sukuk Dan Sukuk Berkelanjutan Terhadap Reputasi Per...unclassified

Analisis Pengaruh Sukuk dan Sukuk Berkelanjutan terhadap Reputasi Perusahaan

Riani

Yurniwati²,

Putriana³

2022

Ekonomis

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This study aims to analyze the effect of sukuk and sustainable sukuk on the company's reputation. The population of this study are publicly listed companies on the Indonesia Stock Exchange. The research sample was carried out by sampling using purposive sampling technique, with observations for 3 years. Hypothesis testing in this study using multiple regression analysis and different tests. The results show that sukuk have no effect on the company's reputation, while sustainable sukuk have an effect on the company's reputation. There is no difference between the reputation of the sukuk issuing company and the reputation of the sustainable sukuk issuing company. The results of the analysis of the coefficient of determination show that sustainable sukuk affect the company's reputation by 11.2%.

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The impact of Tier 1 sukuk (Islamic bonds) on the profitability of UAE Islamic banks

Salhani¹,

Mouselli

2022

JFRA

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Purpose The choice between different financing sources is governed by a number of finance theories, particularly, trade-off theory and pecking order theory. However, the special characteristics of Islamic finance, which forces the exclusion of conventional bonds, leave Islamic banks with limited number of alternatives. Tier 1 sukuk are distinguished type of sukuk that combines the features of conventional bonds and stocks. This paper aims to answer the following question: Does the issuance of Tier 1 sukuk positively affect Islamic banks’ profitability or is their impact concentrated on enhancing Islamic banks’ capital adequacy ratios? Design/methodology/approach The data set used in this study consists of all United Arab Emirates (UAE) Islamic banks that issued Tier 1 sukuk over the period 2010–2020. Pooled and fixed effects panel regressions of Tier 1 sukuk and other control variables on three proxies of Islamic banks’ profitability were run. The selection of fixed-effect model is based on Hausman test, redundant fixed effects and likelihood ratio test. Findings This study reveals novel findings. Tier 1 sukuk increases both earnings per share (EPS) and capital adequacy ratios. That is, this study finds that there is a positive significant impact of Tier 1 sukuk on EPS, which indicates that issuing more Tier 1 sukuk will generate more return to shareholders in terms of higher EPS because of the lower cost of Tier 1 sukuk compared to equity. However, this study finds that there is an insignificant impact of Tier on sukuk on both return on assets and return on equity. Hence, it is concluded that Tier 1 sukuk does not increase the risk appetite of UAE Islamic banks. Research limitations/implications Tier 1 sukuk is a niche instrument that has been recently used by Islamic banks. Hence, there are a limited number of Islamic banks that have issued this type of sukuk and consequently limited number of observations. Therefore, with the increased use of this instrument, a larger set of data will be available for examination. In addition, future research could examine the relationship between issuing Tier 1 sukuk and profitability in other countries where such sukuk have loss absorption feature. The impact of other types of sukuk, such as liability sukuk, on Islamic banks’ profitability could also be an interesting field of study. Practical implications This study recommends Islamic banks to issue more Tier 1 sukuk to enhance their profitability indicators while meeting Basel III accord. This study also recommends investors to purchase the stocks of Islamic banks that issue Tier 1 sukuk because they are able to offer them higher EPS. The authors advise the UAE regulators to allow Islamic banks to issue Tier 1 sukuk with loss absorption feature to enable Islamic banks engage in more risky activities that usually provide larger profits. This study also suggests that the Islamic Financial Services Board (IFSB) reclassifies Tier 1 sukuk, with loss absorption feature, within the highest quality of capital, common equity Tier 1, to encourage Islamic banks to issue this type of sukuk, especially Basel III accord and IFSB 15 require higher ratios of common equity Tier 1 to risk-weighted assets. Originality/value This research contributes to the existing literature in two ways. First, it adds to the existing literature on the impact of sukuk on Islamic banks profitability. That is, contrary to prior studies that merely investigate the impact of issuing ordinary sukuk on profitability, this study explores a distinguished type of sukuk, that is Tier 1 sukuk, that has been surprisingly ignored so far. Second, this study shows that it is not only capital adequacy ratios that have improved as a result of issuing Tier 1 sukuk but also Tier 1 sukuk reduce the cost of capital of UAE Islamic banks which has been reflected in a higher profitability proxied by EPS. Hence, these sukuk serve a dual function for Islamic banks by improving both capital adequacy and profitability ratios.

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An investigation of the relationship between sukuk and the performance of banks of Pakistan

Cited by 4 publications

References 8 publications

Third Party Funds as Moderating Variables of Liquidity Level of Sharia Commercial Banks

Third Party Funds as Moderating Variables of Liquidity Level of Sharia Commercial Banks

Analisis Pengaruh Sukuk dan Sukuk Berkelanjutan terhadap Reputasi Perusahaan

The impact of Tier 1 sukuk (Islamic bonds) on the profitability of UAE Islamic banks

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