The governance, risk-taking, and performance of Islamic banks

Mollah, Sabur; Hassan, M. Kabir; Farooque, Omar Al; Mobarek, Asma

doi:10.1007/s10693-016-0245-2

Cited by 284 publications

(372 citation statements)

References 42 publications

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“…(2014) and Mollah et al (2017)). This relation is statistically insignificant when employing the SUR regression model.…”

Section: Resultsmentioning

confidence: 97%

Performance differences between Islamic and conventional banking forms

Alshammari

2017

Banks and Bank Systems

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AUTHORSTurki Alshammari ARTICLE INFOTurki Alshammari (2017 AbstractThis paper strives to recognize the possible performance differences between the two popular banking forms in the Gulf Cooperation Council (GCC) countries. Applying different methodologies on the data that span the period 2003-2015, this study documents significant differences with respect to the period, countries, and performance measures. Specifically, conventional banks in GCC countries outperform their Islamic counterparts in profitability. Also, bank specific factors such as liquidity, capital adequacy, bank size and growth all affect the profitability. In addition, GCC conventional and Islamic banks were isolated from the 2008 subprime crisis even though their profitability seems to be decayed differently over the period of the economic downturn.

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“…(2014) and Mollah et al (2017)). This relation is statistically insignificant when employing the SUR regression model.…”

Section: Resultsmentioning

confidence: 97%

Performance differences between Islamic and conventional banking forms

Alshammari

2017

Banks and Bank Systems

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“…The wisdom behind this principal is discussed by Mollah et al, (2016) who reports that conventional financial contract transfers all the risks related to an investment to one stakeholder through the predetermined rate of interest. On the contrary, Islamic financial philosophy believes in profit and loss sharing (PLS) method of finance (Beck et al, 2010;Mollah et al, 2016). This method is presented in Mudarabah (trust-finance) and Musharakah (joint-venture) as an alternative to predetermined interest.…”

Section: The Main Principles Of Islamic Financementioning

confidence: 99%

“…The structure of the Islamic modes of finance is illustrated in figure 1. Mollah et al, (2016) report that using such modes of finance make Islamic banks less exposed to insolvency risk and external shocks, compared to conventional banks. gure 1: Structure of Islamic Finance Source: created by the authors…”

Section: The Main Principles Of Islamic Financementioning

confidence: 99%

The profitability of Islamic banking in Sudan

Elgadi

2018

IJMP

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We investigate the possible profitability determinants by employing the dataset comprised by 27Sudanese banks from 2005 and 2013. Our contribution to the literature is that we examine the following three models of finance specific to Islamic banking performance: (a) Profit and Loss Sharing, (b) Non-profit and Loss Sharing and (c) Salam mode of finance. We find that ownership, capitalisation and asset utilisation have a positive impact on return on assets (ROA) while operation efficiency, bank age, leverage and specialisation bring an adverse impact. Our empirical evidence also indicates that the Profit and Loss Sharing mode of finance (PLS), one of the financial products provided by Islamic banking only, brings a positive impact on both financial performance indicators: return on assets (ROA) and return on equity (ROE).

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“…Mollah et al . () investigates a variety of determinants of Islamic bank risk‐taking across seven countries over 2006–2009. Using accounting risk measures (among other things) they find that corporate governance and financial disclosure issues appear to have the biggest impact on Islamic bank risk‐taking whereas the nature of Shariá boards does not seem to limit risk‐taking.…”

Section: Risks In Islamic Banking?mentioning

confidence: 99%

Islamic Banking and Finance: Recent Empirical Literature and Directions for Future Research

Abedifar

Ebrahim

Molyneux

et al. 2015

Journal of Economic Surveys

167

102

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This paper examines the recent empirical literature in Islamic banking and finance, highlights the main findings and provides a guide for future research. Early studies focus on the efficiency, production technology and general performance features of Islamic versus conventional banks, whereas more recent work looks at profit‐sharing and loss‐bearing behaviour, competition, risks as well as other dimensions such as small business lending and financial inclusion. Apart from key exceptions, the empirical literature suggests no major differences between Islamic and conventional banks in terms of their efficiency, competition and risk features (although small Islamic banks are found to be less risky than their conventional counterparts). There is some evidence that Islamic finance aids inclusion and financial sector development. Results from the empirical finance literature, dominated by studies that focus on the risk/return features of mutual funds, finds that Islamic funds perform as well, if not better, than conventional funds – there is little evidence that they perform worse than standard industry benchmarks.

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The governance, risk-taking, and performance of Islamic banks

Cited by 284 publications

References 42 publications

Performance differences between Islamic and conventional banking forms

Performance differences between Islamic and conventional banking forms

The profitability of Islamic banking in Sudan

Islamic Banking and Finance: Recent Empirical Literature and Directions for Future Research

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