Recent development in Islamic finance and financial products

Bhatti, M. Ishaq; Rahahleh, Naseem Al; Qadri, Hussain Mohi-ud-Din

doi:10.4324/9780429262432-3

Cited by 3 publications

(1 citation statement)

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“…Among these are the work of (Alandejani and Asutay 2017;Bonfim 2009;Misman et al 2015;Rahman and Shahimi 2010). Moreover, recent literature reviews were completed by Bhatti et al (2019) and Al . In banking studies, the loan is classified as NPL when the payment of interest and principal are overdue by 90 days or more.…”

Section: Literature Reviewmentioning

confidence: 99%

The Determinants of Credit Risk: An Evidence from ASEAN and GCC Islamic Banks

Misman

Bhatti

2020

JRFM

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In less than a decade, the Islamic Banking (IB) industry has become an essential part of the global financial system. During the last ten years, the IB industry has witnessed changes in economic conditions and proved to be resilient during the periods of financial crisis. This paper aims to examine the important issues related to credit risk in selected Islamic banks in nine countries from Association of South East Asian Nations (ASEAN) and Gulf Cooperation Council (GCC) regions. It employs the generalized least squares panel data regression, to estimate the ratio of non-performance financing to total financing as dependent variables and bank specific variables (BSV) to determine the credit risk. It uses 12 years of unbalanced panel data from 40 different Islamic banks. The overall findings show that financing quality has a significant positive effect on credit risk. It is observed that the larger IBs owned more assets with lower credit risk compared to smaller banks. The bank’s age is also an important factor influencing the credit risk level. Moreover, regulatory capital significantly reduces the credit risk exposure adherence to the minimum regulatory capital requirements which help IBs to manage their credit risk exposures. It was also observed that IBs were not affected by the global financial crisis due to less credit risk compared to the conventional banks.

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Section: Literature Reviewmentioning

confidence: 99%