2020
DOI: 10.1108/jfc-06-2020-0101
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Does corruption affect Islamic banking? Empirical evidence from the OIC countries

Abstract: Purpose This paper aims to examine whether the level of corruption affects profitability and soundness of Islamic banking. Design/methodology/approach This paper uses a dynamic panel of 61 Islamic banks from 12 Organization of Islamic Cooperation (OIC) countries covering the period between 2016 and 2018. Findings This paper finds that the empirical evidence examined shows that corruption does affect the profitability and soundness of Islamic banks. Originality/value The value of this paper is to emphasiz… Show more

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Cited by 14 publications
(10 citation statements)
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“…The system will impede business processes in OIC countries, where the majority of OIC countries still rely on illegal business activities. This is consistent with the average level of corruption control in OIC countries, which is still low and has become a serious problem [ 87 ]. Second, the better regulatory quality of a country can exacerbate poverty because foreign investors prefer to invest in countries with poor regulatory quality that can offer regulatory concessions.…”
Section: Discussionsupporting
confidence: 84%
“…The system will impede business processes in OIC countries, where the majority of OIC countries still rely on illegal business activities. This is consistent with the average level of corruption control in OIC countries, which is still low and has become a serious problem [ 87 ]. Second, the better regulatory quality of a country can exacerbate poverty because foreign investors prefer to invest in countries with poor regulatory quality that can offer regulatory concessions.…”
Section: Discussionsupporting
confidence: 84%
“…Moreover, weak and fragile corporate governance also failed to ensure transparency and accountability in the financial sector (Moudud-Ul-Huq, 2021; Mateev et al , 2021). Our finding states that CFIs and IFIs’ corruption reporting has no significant difference, and both are doing the same role in the name of corruption control (Yunan, 2020). It also indicates the business model of CFIs and IFIs are almost the same in terms of stakeholder engagement and market mechanisms, consistent with Faizulayev et al (2021).…”
Section: Results and Analysismentioning
confidence: 62%
“…Moreover, weak and fragile corporate governance also failed to ensure transparency and accountability in the financial sector (Moudud-Ul-Huq, 2021; Mateev et al, 2021). Our finding states that CFIs and IFIs' corruption reporting has no significant difference, and both are doing the same role in the name of corruption control (Yunan, 2020).…”
Section: Moderating Role Of Big4mentioning
confidence: 73%
See 1 more Smart Citation
“…Cluster 2 (green) of Figure 11 highlights the work of Yunan (2020), examining the impact of corruption on IBs. The study takes Indonesia as one of the samples and finds that profitability and soundness of IBs are significantly influenced by corruption.…”
Section: Political Issues and Economic Growthmentioning
confidence: 99%