Ownership in Islamic banks: how home country development influences the performance of foreign Islamic banks

Saw, Andrew Tek Wei; Law, Siong Hook; Jubilee, Ribed Vianneca W.; Chang, Seng Loong

doi:10.1108/imefm-08-2021-0323

Cited by 2 publications

(4 citation statements)

References 28 publications

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“…Therefore, robust standard errors were employed in all the panel regressions. Apart from the preceding steps, following panel model study such as Saw et al. (2023), Cook’s distance outlier test was used to eliminate unusual value in the variables.…”

Section: Methodsmentioning

confidence: 99%

Corporate tax policy, Shariah compliance and financial decisions: evidence from Malaysia

Ramachandran,

Hidajat,

Izadi

et al. 2024

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PurposeThis study investigates the influence of corporate income tax on two corporate financial decisions — dividend and capital structure policies, particularly for Shariah compliant companies in Malaysia.Design/methodology/approachThe study considered data from a sample of 529 Malaysian listed companies from four industrial sectors from 2007–2021 (6,746 company-year observations, before eliminating outliers). Panel models such as Fixed Effect and Random effect models were used. The study specifically tested the effect of corporate income tax on dividend and capital structure policies for Shariah compliant companies (3,148 observations) and controlled for industrial sectors.Findings(1) Firms are mostly Shariah-compliant, less liquid, less profitable and smaller in size, (2) Broadly when analysed together, tax has no impact on debt-equity ratio while it has an impact on dividend per share, (3) However, when tested separately for Shariah compliant companies, the influence of effective tax on capital structure is very evident but not for dividend and (4) influence of industrial sector on the relationship between corporate tax and capital structure and dividend policy is significant. Results indicate that Shariah firms might be raising debt to gain tax advantage. Companies in general pay dividends to avoid reputational damage.Research limitations/implicationsThis study assumes that leverage and dividend policy decisions are the main outcomes of the changing tax policies, while it seems that there could be other important outcomes that can be tested in future research. The study also shows the changing tax regimes of different ASEAN countries but they have not been tested to see the differences between countries. It will be indeed interesting for future researchers to focus on this aspect.Originality/valueThe findings contribute to the literature on tax planning of the Shariah-compliant firms, a high growth business segment in the Asian context. The study discussed potential tax-based Islamic market product development.

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Section: Methodsmentioning

confidence: 99%

Corporate tax policy, Shariah compliance and financial decisions: evidence from Malaysia

Ramachandran,

Hidajat,

Izadi

et al. 2024

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“…Capital market globalisation has resulted in an increase in cross-border banking activities (Lensink et al, 2008). As a result, policymakers and other stakeholders are increasingly interested in understanding the entry of foreign banks, and this has caused many studies to look into the influence of foreign ownership on the performance of banks (e.g., Ahamed, 2017;Saw et al, 2022). However, these studies examined the ownership influence on the profitability of banks, rather than NPLs.…”

Section: Literature Reviews Islamic Banksmentioning

confidence: 99%

“…Similar to the study of Saw et al (2022), all regressions carried out in stages 1 and 2 used the Cook outlier test to eliminate outliers. Several diagnostic checks are performed, such as Variance Inflation Factor (VIF), Modified Wald and Wooldridge tests, to test the presence of problems such as multicollinearity, heteroskedasticity, and serial correlation, respectively.…”

Section: Controlled Variablesmentioning

confidence: 99%

See 1 more Smart Citation

Bank Ownership and Non-Performing Loans of Islamic and Conventional Banks in An Emerging Economy

SAW¹,

OOI²,

YAP³

et al. 2022

IJEM

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This study assesses the non-performing loans of conventional and Islamic banks as well as the influence of ownership on the non-performing loans of conventional and Islamic banks. Due to fundamental differences in Islamic and conventional bank such as funding, non-performing loans might have differing effects on Islamic and conventional banks. This study utilised data of 26 conventional banks and 16 Islamic banks from Malaysia from 2012 to 2020. A Random Effect model was used to investigate the difference between conventional and Islamic banks’ non-performing loans as well as the influence of ownership on non-performing loans of conventional and Islamic banks. Results showed no significant differences for non-performing loans of conventional and Islamic banks. This result implies that despite the fact that Islamic banks may benefit from lower agency costs, this does not considerably decrease the likelihood of non-performing loans. Foreign Islamic banks shows higher non-performing loans in comparison to domestic Islamic banks. However, there were no significant differences for non-performing loans between foreign conventional and domestic conventional banks. This study suggests that Islamic bankers, particularly those intending to expand into other countries, investigate nonperforming loans, which can impact the risk of a foreign Islamic bank.

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Ownership in Islamic banks: how home country development influences the performance of foreign Islamic banks

Cited by 2 publications

References 28 publications

Corporate tax policy, Shariah compliance and financial decisions: evidence from Malaysia

Corporate tax policy, Shariah compliance and financial decisions: evidence from Malaysia

Bank Ownership and Non-Performing Loans of Islamic and Conventional Banks in An Emerging Economy

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