Relationship Between Musharakah, Credit Risk, and Profitability in Pakistan's Islamic Banks

Iqbal, Muhammad Saeed; Fikri, Sofi Mohd; Ahmi, Aidi

doi:10.34260/jaebs.735

Cited by 3 publications

(1 citation statement)

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“…The results revealed that the Islamic banking ratio, bank size, capital ratio, and liquidity ratio all had a beneficial impact on financial performance. Consequently, it was concluded that Islamic banking had a favorable impact on the financial performance of Kenyan commercial banks Iqbal, Fikri, and Ahmi (2023). conducted a study to examine the relationship between profit and loss sharing, credit risk, and profitability of Shari'ah banks in Pakistan.…”

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The impact of participatory Islamic finance on Shari'ah banks' profitability

Kulmie,

Omar

2024

5002

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Shari'ah Banks offer financing based on Islamic values, fairness, equity, and ethics, promoting stable economies and prosperous societies through employing a variety of methods, including participatory finance. The aim of this research is to investigate how participatory financing impacts the profitability of Shari'ah banks in Somalia. Specifically, the study focused on analyzing the influence of mudarabah and musharakah financing on Islamic banks' profitability. The research employed a correlational design to examine the relationship between variables, and primary data was analyzed using SPSS. The results of this study indicate a strong positive correlation between participatory Islamic financing and the profitability of Shari'ah Banks. The findings suggest that both mudarabah and musharakah financing have statistically significant positive effects on the profitability of Shari'ah Banks. According to the findings, the study concluded that an increased implementation of participatory Islamic financing methods could potentially enhance banking institutions' profitability and performance. Moreover, the article recommends that Shari'ah banks should expand their services, increase product exposure to attract new customers, promote participatory Islamic financing, and develop clear risk-handling policies and strategies. This paper adds valuable insights to the existing literature on Islamic banking and finance while also providing guidance for Islamic financial institutions to improve their profitability, growth, and performance through participatory Islamic finance.

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The impact of participatory Islamic finance on Shari'ah banks' profitability

Kulmie,

Omar

2024

5002

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Impact of Dividend Regulation on Islamic Banking Performance in Pakistan

Iqbal,

Fikri

2024

Preprint

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Islamic banks operate in a similar environment but have different dividend regulations. There appears to be a lack of agreement regarding Pakistan's dividend regulations. Dividend distribution is essential to a company's financial success, but it has not yet been resolved in the finance field. In Pakistan, this study was undertaken to determine whether dividend distribution regulation has a significant impact on Islamic banking's financial performance. This study has the following specific objectives: to examine the impact of RIBA on Islamic banking performance in Pakistan; and to determine the impact of dividend payout ratio on that performance. A theoretical framework was developed based on dividend irrelevance and signal impact. The study was conducted with a descriptive research design A study of all five Islamic financial institutions registered with SBP was performed. During (2019-2023), data was collected. Using a secondary data collection sheet of paper, secondary data was obtained from the State Bank of Pakistan's Supervisory Reports. Secondary data was also collected from Islamic banks. Data processing and analysis were performed with STATA software version 13. Panel data regression and descriptive analysis were conducted to analyze the data. The results were presented in tables and figures. The data were analyzed using multiple regression models, and SPSS version 21 was selected as the data analysis program. Statistics show 76.9% of Islamic banks fail to generate sufficient income to cover financing costs. There are three types of operating costs: total operating costs, loan loss reserves, and financing costs excluding capital costs. According to the analysis of variance (ANOVA) table, the predictor factors significantly impacted the predictor variable at the 5% level of significance. Islamic banking organizations perform by 0.347 points for every unit change in dividend payout ratio or RIBA, respectively. Consequently, Islamic banking institutions must take advantage of all available borrowing opportunities in order to continue to operate in the lending sector. As well as reinvesting earnings in their business, they must also grow it.

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Trends and Implications of Islamic Bank Financing in Indonesia

Hasib,

Cahyono,

Hapsari

2024

Advances in Business Strategy and Competitive Advantage

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This research aims to analyze the financing composition of Islamic banks in Indonesia, which consists of Islamic Commercial Banks and Islamic Business of Conventional Banks. The analysis is based on several categories such as the contract used, the economic sector financed, the type of use and the type of recipient. The method used uses statistics. The result is that the dominating contract is the mudharabah contract but is followed by the musyarakah contract whose portion continues to grow. Islamic bank financing focuses on the business services sector and the hotel and restaurant trade sector. According to the type of use, working capital financing is dominant and according to the type of recipient there is a trend change from SMEs financing to corporate financing. On the other hand, Islamic bank consumer financing is concentrated on housing financing. These compositions and trends have implications for the economy, bank stability and social aspects

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Relationship Between Musharakah, Credit Risk, and Profitability in Pakistan's Islamic Banks

Cited by 3 publications

References 16 publications

The impact of participatory Islamic finance on Shari'ah banks' profitability

The impact of participatory Islamic finance on Shari'ah banks' profitability

Impact of Dividend Regulation on Islamic Banking Performance in Pakistan

Trends and Implications of Islamic Bank Financing in Indonesia

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