The The Impact of Liquidity, Credit, and Financial Leverage Risks on Financial Performance of Islamic Banks: A Case of Sudanese Banking Sector

Mennawi, Ahmed Nourrein Ahmed

doi:10.30560/rfm.v2n2p59

Cited by 7 publications

(7 citation statements)

References 16 publications

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“…The model for this study followed Mennawi (2020), and the relationship between credit risk and financial performance of Islamic banks is specified as follows.…”

Section: Methodsmentioning

confidence: 99%

Murabaha-Related Credit Risk and Financial Performance of Islamic Banks in Africa

2021

ijibfr

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The uniqueness of Murabaha (cost-plus) financing has suggested another theoretical relationship between credit risk and the financial performance of banks. While studies from Asian countries supported this assertion, empirical analyses from Africa reported conventional findings on the credit risk effect on performance. These conflicting reports were partly due to the exclusion of factors specific to Murabaha financing in past studies in Africa. This study was conducted to assess the effect of credit risk on the financial performance of Islamic banks in Africa. Data were collected from annual reports of the selected Islamic banks for nine years from 2012 to 2020. A fixed-effect regression model was estimated after conducting the preliminary tests of Breusch Pagan Lagrange Multiplier (BP/LM) and Hausman. The study found that non-performing Murabaha (0.0220) and provision for impairment of Murabaha financing (0.3506) have positive effects on return on assets. The results were found to be significant at a 5% level of significance. Based on this finding, it was concluded that credit risk exposure that arises from Murabaha (transactions) financing tends to improve the financial performance of the banks. Therefore, the study recommends that Islamic banks increase their financing of Murabaha transactions to boost their profitability and compensate for high credit risk exposure.

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“…The model for this study followed Mennawi (2020), and the relationship between credit risk and financial performance of Islamic banks is specified as follows.…”

Section: Methodsmentioning

confidence: 99%

Murabaha-Related Credit Risk and Financial Performance of Islamic Banks in Africa

2021

ijibfr

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“…The study's model was based on Mennawi (2020), the association among credit risk and Islamic banking sector on profitability (ROE) performance has been determined as follows.…”

Section: Methodsmentioning

confidence: 99%

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

Iqbal,

Fikri,

Ahmi

2023

JAEBS

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The most significant and theoretical link between credit risk and Islamic banks' profitability ratio (ROE) has been determined due to the special nature of Musharakah (cost-in-low) financing. This study aims to determine how credit risk affects Islamic banks' profitability ratio (ROE). Data was obtained from (2018-2022), from the yearly reports of selected Islamic banks in Pakistan. The data analysis found that measures for the end of Musharakah size financing (MSF) (0.0220) and Musharakah Non-Performing ratio (MNPR) (0.03706) significantly impact return on equity. Study results show a strong and positive correlation between ROE and the Musharakah Non-Performing Ratio (MNPR). Based on the findings, it was concluded that the economic support of Musharakah (diminishing) generally increases the return on equity (ROE) of Islamic banks. Therefore, this research suggests Islamic banks need to increase their support for Musharakah (diminishing) to overcome the high credit risk exposure. Based on the findings of this study, Islamic banks can design and implement policies to reduce credit risks while improving their financial performance. Furthermore, this research can help Islamic banks improve their profitability ratio by reducing credit risk.

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“…Moreover, Islamic banks were less affected during the financial crisis than conventional banks (Kassim et al 2010). This study will examine the most threatening risk to the profitability of Islamic banks, because mismanagement of risks may have a negative or unfavorable impact on their profitability (Mennawi. 2020).…”

Section: Introductionmentioning

confidence: 99%

The Impact Of Insolvency Risk On Profitability Of Banking System

2024

qas

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Banks play an important role in the development and prosperity of countries' economies. We cannot carry out daily transactions, whether individual or business, without their presence. The purpose of current study is to investigate whether a relationship exists between insolvency risk and Islamic banks' profitability in the MENA region. Previous researchers covered this risk individually, however, in this study the risk is taken into consideration including the deposit ratio which are the control variables in this study. For this purpose, data were obtained from 12 MENA countries covering 20 Islamic banks as panel data over ten years period from 2011 till 2020. The fixed effect models were relied upon to analysis data. In the study, the results of two profitability measures (ROA and ROE) were discussed to explain how they are distinct from each other using insolvency risk as independent variable. The results show that insolvency risk has insignificant effect on the profitability of Islamic banks measured by ROA and ROE, regarding control variable, the outcome demonstrate that deposit ratio has insignificant effect on ROA and ROE.

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The The Impact of Liquidity, Credit, and Financial Leverage Risks on Financial Performance of Islamic Banks: A Case of Sudanese Banking Sector

Cited by 7 publications

References 16 publications

Murabaha-Related Credit Risk and Financial Performance of Islamic Banks in Africa

Murabaha-Related Credit Risk and Financial Performance of Islamic Banks in Africa

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

The Impact Of Insolvency Risk On Profitability Of Banking System

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