Does Islamicity matter for the stability of Islamic banks in dual banking systems?

Bakhouche, Abderazak; Ghak, Teheni El; Al-Shiab, Mohammad Salam

doi:10.1016/j.heliyon.2022.e09245

Cited by 20 publications

(12 citation statements)

References 102 publications

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“…Furthermore, several banks in Middle Eastern countries have also undergone conversion to Islamic banks (Alani & Yaacob, 2012), and as have some banks in Bangladesh (Suzuki et al, 2020). The main reason for this conversion trend is that Islamic banks adhere to the principles of alfalah maqashid sharia, as noted by Bakhouche et al (2022). This rationale is based on the religious beliefs of Muslim customers, as previously indicated by Al-Atyat (2007), Mamun (2007), and Mustafa (2006).…”

Section: Literature Reviewmentioning

confidence: 92%

The impact of conversion on market share in Indonesian Islamic banks

Arif

Ihsan

Zulpawati³

et al. 2023

Banks and Bank Systems

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The process of converting a conventional bank into a fully-fledged Islamic bank is becoming a popular alternative solution, alongside spin-off, for smaller banks. Two Indonesian banks, Bank of Aceh Sharia and Bank of NTB Sharia, completed this conversion in 2016 and 2018, respectively. This study uses a mixed-methods approach to examine the impact of this conversion on market share, using both quantitative regression with a dummy variable and qualitative analysis through focus group discussions with executive management and in-depth interviews with the Sharia supervisory boards of the two converted banks. The study found that the conversion positively impacted market share, with the default rate and level of capital also playing a role. Prior to conversion, the Indonesian sharia banking industry had less than a 5% market share, but after the conversion, it reached 6.7%. The two converted banks were able to increase their market share to 7% and 2%, respectively. These results suggest that converting into a full-fledged Islamic bank is a viable alternative solution for smaller conventional banks, rather than opting for spin-offs or mergers.

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Section: Literature Reviewmentioning

confidence: 92%

The impact of conversion on market share in Indonesian Islamic banks

Arif

Ihsan

Zulpawati³

et al. 2023

Banks and Bank Systems

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“…Consequently, customers who identify as devoted Muslims and care about Sharia values may be more likely to comply with Sharia regulations in their banking transactions (Abasimel, 2023). In the context of Sharia compliance behaviour, social identity theory can explain how social character as a community member that adheres to Sharia principles influences their compliance towards social and Islamic values in the banking sector (Bakhouche et al , 2022). Customers who identify as members of a community that prioritizes Sharia principles may have a greater tendency to cooperate with procedures that adhere to Sharia norms (Haddad and Souissi, 2022).…”

Section: Literature Reviewmentioning

confidence: 99%

A systematic review of customer Sharia compliance behaviour in Islamic banks: determinants and behavioural intention

Andespa,

Yeni,

Fernando

et al. 2023

JIMA

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Purpose This study aims to investigate what past scholars have learned about Muslim consumer compliance behaviour in Islamic banks and identify what future research is needed. In addition, it also explores the relationship model between the previously studied determining factors and the customer’s Sharia compliance behaviour. Design/methodology/approach This study used a bibliometric–systematic literature review analysis using the Preferred Reporting Items for Systematic reviews and Meta-Analyses (PRISMA) technique by reviewing the articles published from 2013 to 2023. The PRISMA procedures involved several stages, including identification, screening, eligibility, analysis and conclusion based on the findings. Findings The results found that customer Sharia compliance behaviour determinants in Islamic banks are attitude, subjective norms, perceived behavioural control, Islamic financial literacy, religiosity, consumer conformity, Islamic branding and behavioural intention. Interestingly, the results indicated that such factors as consumer conformity, Islamic branding and sustainable intentions are less discussed. Practical implications Decision-makers in Islamic banks must use digital technology to offer better service and make operations more reachable for customers to access information, complete transactions and manage their accounts by Sharia principles. Therefore, the bank needs to continually produce innovative products and services so that customers have a greater variety of options to suit their Sharia-compliant financial needs. Theoretically, this study has contributed by finding the main critical domains influencing customers’ Sharia compliance behaviour, such as attitudes, subjective norms, perceptions of behavioural control, knowledge of Islamic finance, religiosity, consumer conformity, Islamic branding and behavioural intentions. Then, it makes a theoretical contribution by establishing a model that explains how customers make decisions based on Sharia-related factors in the context of their purchases. Originality/value Past studies focused on the Sharia compliance behaviour in paying Zakat for takaful customers. Therefore, this study provides critical factors of Sharia compliance behaviour on conformity, Islamic branding and sustainable intention regarding unexplored consensus on the determinants and outcomes of customer Sharia compliance behaviour of Islamic banking.

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“…Namun terdapat temuan yang hasilnya berbanding terbalik, berdasarkan temuan Bakhouche, El Ghak, and Alshiab (2022) bahwa bank syariah dapat beroperasi di lingkungan yang belum tentu sesuai syariah, dan tingkat keIslaman suatu lingkungan bersifat netral dalam mempengaruhi stabilitas bank syariah. Islamicity performance memiliki pengaruh yang tidak signifikan terhadap stabilitas bank dalam sistem perbankan syariah (Bektas, Elbadri, and Molyneux 2022;Chong and Liu 2009;Bakhouche, El Ghak, and Alshiab 2022). Namun yang membedakan penelitian ini adalah objek penelitiannya, yaitu pada bank umum syariah yang ada di Indonesia.…”

Section: Pendahuluanunclassified

Moderation Effect Of Islamic Social Reporting On Influences Of Islamicity Performance Index On Financial Performance Of Islamic Banking

Ponirah¹,

Oktariyani²,

Sakinah³

et al. 2023

JPS

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This study aims to analyze the effect of the Islamicity performance index on financial performance through Islamic social reporting as a moderating variable. This research uses quantitative methods. This study used purposive sampling to take samples from a total population of 18 Islamic commercial banks (ICB) to obtain five representative ICB samples. The data source uses secondary data in the form of information originating from the official ICB website. Data analysis used multiple linear regression and moderated regression analysis (MRA). The results showed that the zakat performance ratio, Islamic income vs. non-Islamic income ratio, and Islamic social reporting did not affect financial performance. However, the profit-sharing ratio has a significant effect on financial performance. Islamic social reporting can moderate the effect of the profit-sharing ratio on financial performance. However, Islamic social reporting cannot moderate the variable zakat performance ratio and Islamic income vs. non-Islamic income ratio on financial performance. This research can complement existing research and be a reference for ICB management disclosing information to stakeholders by applying Sharia principles.

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Does Islamicity matter for the stability of Islamic banks in dual banking systems?

Cited by 20 publications

References 102 publications

The impact of conversion on market share in Indonesian Islamic banks

The impact of conversion on market share in Indonesian Islamic banks

A systematic review of customer Sharia compliance behaviour in Islamic banks: determinants and behavioural intention

Moderation Effect Of Islamic Social Reporting On Influences Of Islamicity Performance Index On Financial Performance Of Islamic Banking

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