Do Islamic banks fail more than conventional banks?

Alandejani, Maha; Kutan, Ali M.; Samargandi, Nahla

doi:10.1016/j.intfin.2017.05.007

Cited by 57 publications

(39 citation statements)

References 60 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Sharma 2011;Jiraporn et al 2011;Chou and Feng 2019). Moreover, we contribute to the growing stream of Islamic-conventional banking literature (e.g., Abdelsalam et al 2016;Mollah et al 2017;Alandejani et al 2017;Alqahtani et al 2017;Safiullah and Shamsuddin 2019;Duqi et al 2020). Finally, our study adds to the ongoing debate about the effect of institutional characteristics and stricter governance mechanisms on several firm outcomes such as firm performance, risk-taking, capital structure, and cost of debt and cash holdings (e.g., Brown and Caylor 2006;Harford et al 2008;Cheng et al 2008;Meng et al 2018).…”

Section: Introductionmentioning

confidence: 68%

“…3 Under the conventional banking finance paradigm, a bank is likely to shift credit risk to the depositors under an interest-based contractual arrangement (Safiullah and Shamsuddin 2019). Contrarily, in line with the Shari'ah guidelines, Islamic banks are expected to perform their intermediation functions through profit-and-loss sharing (PLS) contractual agreements between the banks, depositors and investment account holders (IAHs) (Alandejani et al 2017). According to the PLS paradigm, entrepreneurs share their profits and losses with Islamic banks according to a pre-determined ratio.…”

Section: Alternative Dividend Modelsmentioning

confidence: 99%

See 1 more Smart Citation

Board busyness and new insights into alternative bank dividends models

Trinh

Elnahass

Salama

2020

Rev Quant Finan Acc

View full text Add to dashboard Cite

This study examines the possible opposing effects of the board function of busyness (i.e. the presence of busy independent non-executive directors serving on multiple boards) on bank dividend payout patterns between two alternative payouts models (i.e. conventional and Islamic). Using an international sample for listed banks during the periods of 2006-2018, we show that the busyness of boards of directors can explain differential dividend payouts behaviour between two banking systems. For conventional banking dividend model, a busy board has a significantly positive impact on the bank's dividend payout level. However, during the financial crisis of 2007/2009, the positive impact of board busyness on dividends payouts is tempered for these banks. In contrast, Islamic banks operating under a more constrained dividend model, report significantly lower levels of payouts and lower likelihood when they have busy directors on board. We find insignificant evidence for the effect of the financial crisis in Islamic banks. These results highlight a potential challenge for the unique agency conflicts arising from the complex payout model of Islamic banks (in terms of profit distribution principles, motives, mechanics and techniques, and flexibility of payouts), which is subject to the demand for greater monitoring and additional rulings when compared to the conventional.

show abstract

Section: Introductionmentioning

confidence: 68%

Section: Alternative Dividend Modelsmentioning

confidence: 99%

Board busyness and new insights into alternative bank dividends models

Trinh

Elnahass

Salama

2020

Rev Quant Finan Acc

View full text Add to dashboard Cite

show abstract

“…Another problem Sharia banking is facing is that high idle money that is not channeled for financing so as to increase profits. This condition requires Sharia banking management to require better governance (6,10,12) While the CAR constant is negative -5.325023 ** with a significant value of 5%. This means any 100-point increase in Sharia banking capital will reduce the profit growth by 53 points, or any decline in value of CAR 100 will increase the profit growth of 53.…”

Section: Results and Findingmentioning

confidence: 99%

“…Bilal & Amin (5) mentioned that Sharia banking is also experiencing problems of efficiency and lower profitability compared with conventional banking. So, Alandejani et al (6) and Alandejani & Asutay (7) explicitly say that Sharia banking has a high risk of failure and survival times shorter than conventional banks. On the financial side of Doumpos et al (8) Sharia banks are financially weaker than conventional banks.…”

Section: Introductionmentioning

confidence: 99%

Profit Growth in Indonesian Sharia Bank: the Impact of RGEC

Akhyar¹,

Marzuki²,

Azhar³

et al. 2018

IJET

View full text Add to dashboard Cite

The purpose of this study aims to examine the impact of RGEC implementation on the growth of Sharia Banking profit in Indonesia. This study uses data of financial statements of 11 Sharia banking Indonesia during the year 2012-2014. This research uses panel regression model in testing RGEC factor on profit growth. Based on the data indicates that Sharia banking is still at risk, but GCG, ROA and CAR are still in a maintained position. Statistically this study found that NPF, CAR, inflation and Sharia banking activities affect the profitability of these banks. This indicates that Sharia banking has experienced risk and profitability problems. Economic problems inevitably affect Indonesian banks as it is seen that the level of profitability and inflation are not much different from each other.

show abstract

“…Thus, we include it to control peer pressure (DiMaggio and Powell 1983) applied to a context in which the occurring event itself is the positive attribute (Hosmer and Lemeshow 2008;George et al 2014). While survival analysis has not yet been employed in the business ethics literature in particular, it has been used in several contexts in the wider business literature such as IPO survival or the survival of religiously motivated versus conventional financial institutions (Espenlaub et al 2012;Pappas et al 2017;Espenlaub et al 2016a, b;Alandejani et al 2017).…”

Section: Survival Analysismentioning

confidence: 99%

Does an Asset Owner’s Institutional Setting Influence Its Decision to Sign the Principles for Responsible Investment?

Hoepner

Majoch²,

Zhou

2019

J Bus Ethics

View full text Add to dashboard Cite

From a simple idea to unite asset owners in their quest for responsible investment (RI) at its launch in April 2006, the United Nations supported Principles for Responsible Investment (PRI) have grown in just one decade into an initiative with more than 1500 fee-paying signatories. Jointly, the PRI's signatories hold assets worth more than $80 trillion, making it one of the more prevalent not-for-profit organizations worldwide. Furthermore, the PRI's ambitious mission to transform the financial system at large into a more sustainable one makes it a worthwhile subject of inquiry from an institutional perspective. We undertake an empirical investigation of the adoption of the PRI by asset owners during five crucial years of the association's emergence: 2007-2011. Following a tripartite view of institutional theory proposed by Scott (Institutions and organizations. Foundations for organizational science, A Sage Publication Series, London, 1995), we explore if regulative, normative, and cultural-cognitive factors influence an asset owner's decision to subscribe to the PRI. Applying both parametric and nonparametric survival analysis, we find that asset owners are indeed significantly affected by normative, cultural-cognitive, and regulative aspects. In particular, (i) public service employee and labor union pension funds (ii) from social backgrounds more culturally aligned with values represented by the RI movement (iii) with historically more voluntary legislation on environmental, social, and governance (ESG) issues are most likely to sign the PRI. In contrast, institutional environments with a higher number of pre-existing mandatory ESG regulation decrease the likelihood of signing the PRI. Our results indicate that normative and cultural-cognitive factors were crucial contributors to the PRI's growth. With respect to the regulative environments, our results imply that some asset owners may use the PRI as a collective industry initiative to substitute for mandatory legislation. Conversely, a high level of historical mandatory legislation may constrain organizational resources that could otherwise be dedicated to voluntary initiatives such as PRI. Our findings are robust to relevant controls and econometric concerns.

show abstract

Do Islamic banks fail more than conventional banks?

Cited by 57 publications

References 60 publications

Board busyness and new insights into alternative bank dividends models

Board busyness and new insights into alternative bank dividends models

Profit Growth in Indonesian Sharia Bank: the Impact of RGEC

Does an Asset Owner’s Institutional Setting Influence Its Decision to Sign the Principles for Responsible Investment?

Contact Info

Product

Resources

About