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The effects of conventional interest rates and rate of profit on funds deposited with Islamic banking system in Malaysia

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... The idea behind this approach is to describe depositors' behavior by analyzing the relationship between the third-party fund (volume and trend) and the bank's decision (profit-sharing margin or deposit rate) and banking performance (bank indicators). For example, an Islamic bank's deposit rate is often compared with a conventional bank's interest rate to analyze the switching pattern of the Islamic bank's depositor or displaced commercial risk (Haron and Ahmad, 2000;Meslier et al., 2017). ...
... In the Islamic bank context, the economic factors that significantly influence the customers' behavior are profit-sharing rates (Hoque et al., 2014;Nugraheni and Widyani, 2020). The rational customer of an Islamic bank is highly affected by the profit-sharing rate, which is similar to conventional bank depositors' behavior despite the inherent differences between the depository product of an Islamic bank versus a conventional bank (Haron and Ahmad, 2000). While the non-economic factor that influences the Muslim customers banking intention and behavior is brand (Ahmad et al., 2011) Despite being the largest Muslim country in the world, the Indonesian Islamic bank market share remains low. ...
... Hence, in general, the banks are suggested to apply the competitive price strategy and the non-price-competitive strategy (Scott, 1978). In Islamic banks, profit sharing reflects the price factor of the Islamic bank products (Haron and Ahmad, 2000). In addition to the rational factor such as price, Beckett et al. (2000) argue that brand becomes one of the essential subjective criteria for the customers to choose a financial product. ...
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Purpose The purpose of this study is to examine the impact of brand familiarity and profit-sharing rate on Muslim customers’ brand trust, perceived financial risk, perceived value and intention to invest in an Islamic bank. Design/methodology/approach A between-subjects experimental design was applied in the study. Six experiments involving two brand familiarity levels and three profit-sharing rates were conducted using a total of 217 samples. Randomization was applied in the study, which generated unequal sample sizes for each group of experiments. Findings The findings of this experimental study demonstrated that Muslim customers’ familiarity with the bank’s brand has a significant impact on their brand trust and intention to invest in an Islamic bank. The study also found that the profit-sharing rate has a significant impact on the perceived value both with and without interaction with brand familiarity. Research limitations/implications The current study applies an independent measured design or a between-subjects experimental design, that resulted in unequal sample sizes. In addition, the study also does not control for the types of bank accounts owned by respondents. The design may invite the presence of confounding variables that exist due to individual differences and environmental variables. Practical implications The results show that Islamic bank managers should care about the brand familiarity issue, which strongly influences customers’ brand trust and customer intention to invest in an Islamic bank. In addition, Islamic bank managers should pay attention to the profit-sharing rate given to customers, as it interacts with brand familiarity in influencing customers’ perceived value. Originality/value This study examined the impact of brand familiarity and profit-sharing rate on Muslim consumers’ brand trust, perceived risk, perceived value and intention to save in an Islamic bank. The paper provides a shred of empirical evidence to the theoretical relationship between the subjective and objective cues that influence the formation of customers’ trust, perceived financial risk, perceived value and intention in the Islamic bank context.
... In the USA, for example, many banks have increased interest rates to attract more customers' deposits (Gray, 2018). This phenomenon is aligned with the classical, neo-classical and contemporary economic theories, which state that interest rates determine the level of savings in the economy (Haron and Ahmad, 2000). ...
... Similar to conventional banks, Islamic banks rely on depositors' money as a major source of funds (Haron and Ahmad, 2000). However, the concept of interest or fees charged by the lender to the borrower is prohibited in Islam (Haron and Ahmad, 2000). ...
... Similar to conventional banks, Islamic banks rely on depositors' money as a major source of funds (Haron and Ahmad, 2000). However, the concept of interest or fees charged by the lender to the borrower is prohibited in Islam (Haron and Ahmad, 2000). According to Islamic principles, if a Muslim wants to use his money to make more money, then he should be willing to put his money at risk (Hossain, 2009). ...
Article
Purpose The purpose of this study is to examine the impacts of product knowledge, perceived quality, perceived risk and perceived value on customers’ intention to invest in Islamic Banks. This study specifically examines an Islamic bank’s term deposits. Design/methodology/approach Structural equation modeling was used to analyze the data collected from 217 customers of an Islamic bank in Indonesia using an online survey. Findings This study highlights the central and dual roles of perceived risk as both the independent and the intervening variable that mediates the relationship between product knowledge and Muslim customer intention to invest in an Islamic bank’s term deposits. Research limitations/implications This study only investigates term deposits as one type of investment in Islamic banks. This study contributes to the literature by examining the role of product knowledge, perceived quality, perceived risk and perceived value on Muslim customer intention to invest in Islamic term deposits. Practical implications The results of this study highlight the requirement for Islamic banks to educate customers to improve the depositors’ product knowledge because Muslim customers’ risk and value perception and intention are strongly influenced by product knowledge. Originality/value The investigation of perceived risk is particularly relevant for Islamic financial products because of the inherent nature of risk sharing in Islamic finance. This study investigates the role of product knowledge in influencing the Muslim customers’ perception of risk, quality, value and their intention to invest in Islamic bank term deposits. Ideally, the profit loss sharing concept (PLS) should be applied; however, in this context, revenue sharing is applied because of Indonesia’s central bank regulation.
... Due to the increased competition with conventional and other Islamic banks, the majority of IBs depend on their depositors' money (Haron & Ahmad, 2000). Several studies have identified that religion is not the sole reason for customers to deposit Islamic Banking and Finance Review Volume 8 Issue 1, Spring 2021 their money in IBs. ...
... Several studies have identified that religion is not the sole reason for customers to deposit Islamic Banking and Finance Review Volume 8 Issue 1, Spring 2021 their money in IBs. Contemporary studies highlight the fact that depositors compare the rate of return and the pattern of profit distribution for both conventional and Islamic banks before depositing their money in an IB, in addition to religious reasons (Philip, 1997;Haron & Ahmad, 2000;Ali et al., 2020). Therefore, IBs need to pay a competitive "rate of profit" to the depositors at par with the interest rate of conventional banks. ...
... Therefore, IBs need to pay a competitive "rate of profit" to the depositors at par with the interest rate of conventional banks. Moreover, if an IB fails to pay a comparable rate of return, the depositors tend to withdraw their money from that bank (Haron & Ahmad, 2000). In this context, IBs employ what is known as "profit distribution management" or PDM, defined as the discretion of IBs to pay deposit rates based on market rates (interest rates) and away from asset returns (Farook et al., 2012). ...
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This study aimed to ascertain the factors that affect the Profit Distribution Management (PDM) practices employed by Islamic banks (IBs) to retain their market share. It further analysed whether the presence of Islamic corporate governance can smoothen the profit sharing mechanism followed by the IBs. The study utilized the panel data analysis technique to analyse the data collected from 40 full-fledged IBs for the period 2010-2017 from three different regions, that is, South Asia, Middle East and South East Asia. The findings of the study support the premise that third party funds, asset composition, capital adequacy and market share all have a significant and positive impact on the PDM practices of IBs. Moreover, Islamic corporate governance strengthens the relationship between market share and the PDM practices of IBs. The results of this study have policy implications for the regulators of IBs and financial institutions as they provide insight into the factors that affect the PDM practices of IBs.
... The results of the analysis using VAR stated that there was a significant negative effect on Islamic bank profits (ROA) if there was a shock to conventional bank interest rates (SB). This condition was in line with the results of research by Haron and Ahmad (2000); Haron (2004), and Zainol andKassim (2012) which suggests that if the interest rate for conventional bank savings increases, Islamic bank customers would switch to conventional banks which were considered to provide greater profits, so that the bank's profits will increase, so that the profit of Islamic banks had decreased. These results indicated that not all Islamic bank consumers were loyal consumers, Islamic banking was required to act rationally, namely by setting a competitive profit sharing rate against conventional bank interest rates. ...
... Pengembangan perbankan syariah dalam lingkungan sistem perbankan ganda (dual banking system) tentunya tidak terlepas dari pengaruh bank konvensional (Zainol & Kassim, 2012). Kebijakan yang dilakukan oleh bank konvensional akan mempengaruhi kinerja bank syariah (Haron & Ahmad (2000); Haron (2004)). Persaingan antar bank juga mempengaruhi pilihan konsumen perbankan. ...
... Hasil ini semakin memperkuat pernyataan bahwa kenaikan tingkat suku bunga tabungan bank konvensional menyebabkan nasabah mengalihkan dananya ke bank konvensional sehingga dana di bank syariah menurun yang juga memengaruhi tingkat keuntungannya (ROA). Hal ini sejalan dengan penelitian Haron & Ahmad (2000) sebelumnya bahwa tidak semua konsumen bank syariah merupakan konsumen yang loyalis, mereka akan cenderung memilih menempatkan dananya pada bank yang memberikan keuntungan lebih besar, dengan tingkat suku bunga/tingkat bagi hasil terbesar. Sementara itu, model pada persamaan (6) menjelaskan bahwa tingkat suku bunga tabungan bank konvensional (SB t-1 ) serta ROA bank syariah periode sebelumnya (ROA t-1 ) merupakan model yang fit yang dapat menjelaskan SB t sebesar 89,79%. ...
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Perkembangan perbankan syariah di Indonesia sangat pesat beberapa tahun belakangan ini. Namun, market share perbankan syariah masih jauh di bawah harapan. Kajian-kajian teori sebelumnya menyatakan bahwa lingkungan persaingan antar bank, dalam hal ini bank konvensional dan bank syariah, sangat mempengaruhi kinerja bank syariah. Penelitian ini ingin mengetahui bagaimana pengaruh kebijakan bank konvensional yang digambarkan dengan tingkat suku bunga (SB) terhadap keuntungan bank syariah yang digambarkan dengan Return on Assets (ROA). Metode analisis yang digunakan adalah Vector Autoregressive (VAR) dengan tambahan analisis Impulse Response Function (IRF) dan Variance Decomposition Analysis (VDC). Hasil analisis menggunakan VAR (1) menyatakan bahwa terdapat pengaruh negatif signifikan pada ) jika terjadi shock pada tingkat suku bunga tabungan bank konvensional (SB). Kondisi ini sejalan dengan hasil penelitian Haron dan Ahmad (2000); Haron (2004), serta Zainol dan Kassim (2012) yang mengemukakan bahwa apabila tingkat suku bunga tabungan bank konvensional meningkat, maka nasabah bank syariah akan beralih ke bank kovensional yang dianggap memberikan keuntungan lebih besar, sehingga keuntungan bank syariah mengalami penurunan. Hasil ini menunjukkan bahwa tidak semua konsumen bank syariah merupakan konsumen yang loyalis, perbankan syariah dituntut bertindak rasional, yaitu dengan cara menetapkan tingkat bagi hasil yang kompetitif terhadap tingkat suku bunga bank konvensional.
... This can be easily explained by the utility maximization (cost minimization) premise, as depositors will choose the course of action that will maximize their well-being or satisfaction. Several questions that arise related to whether Islamic bank depositors are also motivated by a high rate of return, at least this is answered by the results of research by Gerrard and Cunningham (1997), Metawa and Almossawi (1998), Haron andAhmad (2000), andGhafur (2003). Gerrard and Cunningham (1997) find that in a non-Muslim majority country such as Singapore, Muslims still maintain their faith so they "will keep their deposits in Islamic banks. ...
... This can be easily explained by the utility maximization (cost minimization) premise, as depositors will choose the course of action that will maximize their well-being or satisfaction. Several questions that arise related to whether Islamic bank depositors are also motivated by a high rate of return, at least this is answered by the results of research by Gerrard and Cunningham (1997), Metawa and Almossawi (1998), Haron andAhmad (2000), andGhafur (2003). Gerrard and Cunningham (1997) find that in a non-Muslim majority country such as Singapore, Muslims still maintain their faith so they "will keep their deposits in Islamic banks. ...
... Then Haron and Ahmad (2000) argue that depositors are still motivated by returns. Using the Adaptive Expectation Model (AEM), they find that depositors are indeed motivated by returns in Malaysia. ...
Article
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Islamic bank products to raise public funds can be in the form of demand deposits (wadiah), savings (mudharabah), and deposits (mudharabah). One of the profit-sharing rates in Islamic banks comes from internal factors, namely Return on Assets, Capital Adequacy Ratio, Financing to Deposit Ratio, and Operational Expenses Operating Costs. This study will examine the effect of bank internal factors on mudharabah deposits of Islamic commercial banks using an econometric model, namely the error correction model. Findings. The results showed that the bank's internal variables had a significant effect on mudharabah deposits both in the short and long term. Variables Return on Assets, Capital Adequacy Ratio, and Operational Expenses Operational costs both short and long term have a negative effect on mudharabah deposits.
... A loyal customer of Sharia banking is relatively under-developed, so other significant customers may transfer their funds into deposits if the competitor provides a better compensation. Such phenomena create an intimate relation of conventional banking's interest rate with Sharia banking's total of deposits (Haron & Ahmad, 2000). Another argument suggests that Sharia banking does not affect the interest rate since sharia banking stability is. ...
... A loyal customer of Sharia banking is still in low margin, so they will transfer their fund to the conventional bank if such bank provides a more attractive interest rate. In some countries and certain period, the interest of convention bank and the compensation of Sharia banking has close relation (Haron & Ahmad, 2000). The result of this research can confirm previous researches stating that customers' loyal to Sharia banking will be maintained if the interest rate of conventional banking is lower or equal with the extent of the profit-sharing given by Sharia banking. ...
Article
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The research aims to evaluate customers’ loyalty to Sharia banking related to internal and external factors of the financial performance approach. A loyalty is depicted with Third-Party Savings deposited in Sharia banking. This study employed Autoregressive-Distributive Lag (ARDL) to explore the short period and the long period from variables’ relationships. The findings reveal that profit-sharing, administration fee, the interest rate of a conventional bank, inflation, and the total number of accounts (NOA) had significant effects on Third-Party Saving (TPS). They imply that the customer’s loyalty is internally established if there is a higher profit sharing in savings, lower administration fees, and total supplementary accounts. Yet, it is formed by external incentives, i.e., a lower interest rate of conventional banking and inflation.
... The second characteristic that distinct Islamic banking from conventional banking is the nature of relationship between customer and the bank (Khir et al. 2008). The next disparity is the disallowance of Riba (Haron & Ahmad 2000). The demonstration of a bank to get any advantages without bearing the risk of an exchange will be considered as Haram or denied in Islam (Haron & Ahmad, 2000). ...
... The next disparity is the disallowance of Riba (Haron & Ahmad 2000). The demonstration of a bank to get any advantages without bearing the risk of an exchange will be considered as Haram or denied in Islam (Haron & Ahmad, 2000). It is hard to get correct gures on the extent of the Islamic monetary part (Iqbal and Mirakhor 1999). ...
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Islamic banking is the most rising component in the economy for reasonable advancement of Pakistan tributary yet. Despite what might be expected, real impediments that interfere with the developments in Islamic money keeping are client information, political help, and advancement. The Islamic banking and money related segments proceed to develop, and ways incorporates the necessity to make new products. It isn't generally the absence of venture substitutes that urge associations to propose organized items. The examination incorporated the specimen of 100 individuals. Stratified-arbitrary testing method is utilized to deal with both public and private associations workers. A measurable tool named SPSS was utilized to separate the outcome which demonstrates that effect of customer knowledge, political support, and innovative advancement in development of Islamic money keep that might be conclusive. The reasonable advancement has three parts satisfaction incorporated the social equity, monetary soundness, and ecological trustworthiness by development of Islamic banking. It is inferred that Islamic bank could be worldview phenomenon in making the credit. However, national bank should make the product which can viably upgrade Islamic Banking. There is a strong microeconomics ground of Islamic financing for the economy wide conduct of good monetary issues and issues including the procedure structure. Islamic bank clients limit the dangers related with premium based obligation financing, and simple credit, which tormented regular banks amid the sub-prime home loan emergency. Conclusively, general monetary development of Islamic banking in Muslim nations will drive development of Islamic money related administrations, prompting further in Sharia-consistent system.
... al. (2015), Ferrouhi (2017), Morina and Osmani, (2019), Eriemo (2014), Pitonakova (2016) showed that interest rates has positive influence on customers deposits. On the other hand, research from Rachmawati and Syamsulhakim (2004), Haron and Ahmad (2000), Habib and Masih (2020), Kasri and Kassim (2009) shows that interest rates have a negative effect on customer deposits. Research by Siaw and Lawer (2000) shows that there is a negative effect of interest on customer deposits in the long term but no effect in the short term. ...
... Based on the results of the third hypothesis test, it can be stated that the interest rate has a negative effect on customer deposits. The results of this research are in line with the research results of Rachmawati and Syamsulhakim (2004), Haron & Ahmad (2000), Habib and Masih (2020), Siaw and Lawer (2000), Kasri and Kassim (2009) which show that the interest rate has a negative effect on customers deposits. If examined further, the cause is the increase in deposit interest due to the increase in the BI rate which also causes an increase in the interest rate for state debt securities. ...
Article
The customers deposits are a matter to be considered by the bank. With the tendency of this declining customer deposits raised the question, what factors have influenced the declining of the customer deposits. Looking at the previous research and facts in the field, it is assumed that the influencing factors are the people income, the state debt securities, the interest rates and the company size. This study aims to examine and analyze the effect of people income, state debt securities, interest rates and company size on customers deposits. This research method is a quantitative method. Further, the datas are analyzed by using multiple linear regression model. The population in this study are all the banks listed at the Indonesian Stock Exchange during the period of 2013-2019. Samples are taken by using purposive sampling, obtained 33 companies. The result of this research showed that people income, interest rates, state debt securities and company size have effect on customers deposits, so it is useful for banks to see the influence of each of the above factors that can affect changes in deposit funds in banks and to take policies based on the factors above. Keywords: people income, state debt securities, interest rate, company size, customers deposits ABSTRAK Simpanan nasabah merupakan hal yang harus diperhatikan oleh bank. Dengan kecenderungan menurunnya simpanan nasabah tersebut menimbulkan pertanyaan, faktor apa saja yang mempengaruhi penurunan simpanan nasabah tersebut. Melihat penelitian-penelitian sebelumnya dan fakta-fakta di lapangan, diduga bahwa faktor-faktor yang mempengaruhinya adalah pendapatan masyarakat, surat utang negara, tingkat suku bunga dan ukuran perusahaan. Penelitian ini bertujuan untuk menguji dan menganalisis pengaruh pendapatan masyarakat, surat utang negara, suku bunga dan ukuran perusahaan terhadap simpanan nasabah. Metode penelitian ini adalah metode kuantitatif. Selanjutnya data dianalisis dengan menggunakan model regresi linier berganda. Populasi dalam penelitian ini adalah seluruh bank yang terdaftar di Bursa Efek Indonesia selama periode 2013-2019. Sampel diambil dengan menggunakan purposive sampling, diperoleh 33 perusahaan. Hasil penelitian menunjukkan bahwa pendapatan masyarakat, suku bunga, surat utang negara dan ukuran perusahaan berpengaruh terhadap simpanan nasabah, sehingga berguna bagi bank untuk melihat pengaruh dari masing-masing faktor di atas yang dapat mempengaruhi perubahan dana simpanan pada bank, dan mengambil kebijakan berdasarkan faktor-faktor di atas. Kata kunci: pendapatan masyarakat; surat utang negara; tingkat bunga; ukuran perusahaan; simpanan pelanggan
... Building upon these notions, several studies conducted around the world have empirically investigated the impact of benchmarking interest on different aspects of Islamic banks [See for example, 25,31,36,[38][39][40][41]. However, an important concentration apparent within the extant literature is the overwhelming attention given to the effect of benchmarking interest rate on the deposits, profitability, risk profile, and stock prices of Islamic banks; whereas the financing side of Islamic banks remains relatively unexplored. ...
... Furthermore these results are also consistent with the previous studies that suggest the adverse effect of benchmarking interest rate on the performance of Islamic banking in various ways [See for example 25,31,36,[38][39][40][41]. These findings imply that Islamic banks have to confront several challenges in the current regulatory frameworks adopted by several central banks, primarily due to exposure to interest rates risk. ...
Article
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Despite a direct ban on charging interest, interest-based benchmarks are used as a pricing reference by a majority of Islamic banks, due in part to the absence of stable and widely- published alternatives. Benchmarking interest rate exposes Islamic banks to the problems of conventional banks, particularly the interest rate risk. Against this backdrop, the present study empirically examines the dynamic linkage between the interest rate volatility and the financing of Islamic banks. The empirical analysis is carried using evidence from the Islamic banking industry of Pakistan during the time period 2006–2020. The multivariate Johansen and Jusiles Co-integration test and Vector Error Correction Model (VECM) are used as the baseline econometric models. Moreover, the DCC-GARCH model is employed for robustness and ensuring the consistency of results. The results indicate that a significant long-term and short-term relationship exists between the interest rate volatility and the financing of Islamic banking industry providing significant evidence for co-movements and convergence. These findings suggest that paradoxical as it may seem, the financing of Islamic banks operating within a dual banking system is subject to interest rate risk, mainly due to benchmarking interest rate, which in-turn makes Islamic banks vulnerable to the rate of return risk and withdrawal risk. Moreover, corporate financing, in particular, is more vulnerable to interest rate risk.
... They discovered that there is a general lack of awareness among people which hinders them to choose Islamic banks. To support the argument i.e. awareness has an impact on the selection of an Islamic bank; a study has been conducted by (Ahmad &Haron, 2000) which states that degree of knowledge of Islamic bank products/services, marketing strategies and service quality have contributed to increase the market share. ...
... Additional researches conducted by (Ahmad &Haron, 2000), (Bley & Kuehn, 2004) and (Worthington, 2005) supported the idea that people's strong religious association has been considered the most essential factor of choosing an Islamic banking system as Muslims consider Islamic banking as an ethical banking system that is operated as Riba-free banking which is strongly prohibited in Islamic Shari'ah. (Dusuki& Abdullah, 2007)Also found out by their research that most of the customers regarded religious orientation as the most essential element while dealing with Islamic banking system. ...
Article
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Islamic banking products and services are gaining popularity among the Muslim countries across theglobe due to its wider product coverage and ability to traverse the global economic melt-down. However, theobjective of this paper is to explore the key aspects which effects the perception of customers towards Islamicbanks in Lasanod, Somalia. To achieve this goal, the researchers selected for the investigation. A structured questionnaire was designed to know the perception of customers towards Islamic banking. A questionnaire wasdistributed among 40 respondents including staff of the Islamic banks, teachers and students. The Spearman Correlation technique was used to identify the relationship among major influencing factors. The results revealedthat all the factors which research chosen are top influencing factors. Based on the results, mostly respondents arewilling to deal with an Islamic bank due to religious Oriented. Keywords: Perception, Islamic banking, Customers
... It is therefore necessary to go back to more recent times to perceive the emergence of Islamic finance as a system characterized by moral principles that it imposed on carrying out financial activities. In fact, the development of the modern Islamic financial system is usually associated with the founding of the Mitcham Saving Banks in Egypt in 1963 (Haron & Ahmad, 2000), when "Islamic Accounting" was born out of the post-colonial period (Napier, 2009). The Islamic finance owes its rapid growth to the founding of the Dubai Islamic Bank in 1975. ...
Article
Introduction: The study compares two banking systems that have marked and mark the current system in Europe and the Middle East. The Monti di Pietà of 1500 and the Islamic banks which have developed several key features of the past, present the pillars of the Neo-Aristotelian concept of common good. Aim of the work: The study aims to identify the historical, cultural, and accounting factors, similarities, and ethical principles of the two models to identify key elements supporting the common good concept. Methodological approach: This study adopts a historiographical approach that delves into the relationship between narrative, interpretive, and explanatory history, in which it argues that the historical narrative involves elements of interpretation and explanation. Furthermore, a considerable importance is given to the banking environment's political, religious, and regulatory aspects. Main findings: The analysis conducted traces ethical, cultural, and religious components , highlighting many aspects that confirm the starting theory and enrich its conception through financial models that are apparently distant from each other. The study highlights how reciprocity, solidarity, and support for the social fabric of growth have joint agreements and aspects characterizing the two models.
... Literature indicated that there is lack of communication with customers and insufficient effort to build relationship by Islamic banks and also lack of service, product and marketing inconsistencies (Dar, 2004;Karbhari et al., 2004;Al Zaabi, 2007;Hassan, 2007;Haron and Ahmad, 2000;Hamid and Nordin, 2001;Maran et al., 2010). Furthermore, homogenous Islamic financial brands and monotonous loyalty marketing made it difficult to differentiate between Islamic and conventional financial strategies (Kahf, 2004). ...
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Islamic banking emerged rapidly to fulfil the financial needs of Muslim consumers, by using different viable modes of Islamic financing. These tools of financing were designed to avoid risk-free return, unjustified increase of money on money and uncertainty. To make these tool authentic, in all Islamic bank, Shariah board members are the pillar of the management structure. The presence of renowned scholars in a bank actually helps to increase the worth of a Shariah financial brand as they are the one who oversee and supervise the activities of banks. However, it is noticed that confusion and misperception exist generally about Islamic banks due to lack of devising authentic products, modes of structure and operational default. To identify the customer perception about Shariah scholars, Online Survey was conducted. In total 92 respondents participated. With that, 14 top Islamic bank websites (Bahrain, Lebanon, Nigeria, Saudi Arabia, Srilanka, Indonesia, Bangladesh, UAE, Pakistan, Malaysia, Kuwait, Jordan, Eygpt, Oman) was observed to figure how they have given importance and exposure to the Shariah board members. The findings suggested that web-marketing could highlight the role of Shariah scholars so that both users and non-users of Islamic banks were able to learn more about the machinery of Islamic financial products. In addition, Shariah board scholars should consciously reconsider and review their past and present approaches so as to perform better in the future.
... Savings and income percapita are positively related (Agrawal 2001). Deposit in the system of Islamic banking system and profit rate are significantly related in the same direction but interest rate and Islamic banking are oppositely related in Malaysia (Haron and Ahmad 2000). Loayza and Shankar (2000) tried to find out the relationship among savings, real interest rate, per capita income, financial development, inflation and the dependency ratio, the share of agriculture in GDP etc. ...
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This study aims to explore the association between managerial disclosure beliefs and companies’ nature in disclosing information to the market. It conveys a cognitional aspect that holds beliefs underlying the performance of behaviors. Therefore, managerial disclosure beliefs are related to voluntary disclosure practices of a firm. Managerial disclosure beliefs are measured through a survey (Stratified Random Sampling) of 73 companies’ (enlisted in Dhaka Stock Exchange -DSE) CEOs with a questionnaire of 27 belief statements. Voluntary disclosures of companies are measured from annual reports (2016-2017) of the selected companies. Factor analysis is performed to reduce 27 belief statements (independent variables) to a manageable number of variables (factors). Then regression analysis is applied to investigate influential factors affecting voluntary disclosure. The results show that managerial disclosure beliefs predict more than 55 percent of the variation in the volume of both earnings and strategy disclosures. Specially, CEOs of companies who believe that disclosure of self-report, bad news, reduction of investor’s information gathering cost or reduction cost of raising capital have certain benefits disclose more than other companies. Further, CEOs of companies who believe that disclosing information to market (for example, analysts’ forecast, warning about bad news etc.) would affect market less likely to disclose information than those CEOs who do not believe. However, low disclosure companies were found to have CEOs who believe that the forecast disclosure exceeds competitive costs, forecast disclosure harm to managerial reputation, forecast disclosure exceeds union costs and strategy disclosure exceeds union costs. These results reflect the importance of managerial disclosure beliefs in explaining and predicting the nature of voluntary disclosure among companies. Keywords: Managerial Beliefs, Earnings Disclosure, Strategy Disclosure, Factor Analysis, Regression Analysis.
... Statistically, the research result indicated that interest rate had no effect on the amount of mudarabah savings deposit. This means an increase in the interest rate will have no effect whatsoever since sharia banks have this quality of being based on interestfree transactions as a manifestation of trust that there are factors which dominate Muslim's economic behavior in the form of knowledge and concept of faith that affect their perception and decisions (Haron & Ahmad, 2000). Another study found the reason why bank interest has no effect, i.e. ...
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Penelitian ini bertujuan untuk mengetahui pengaruh tingkat suku bunga bank umum, nilai tukar rupiah, bagi hasil deposito Bank Umum Syariah dan jumlah Kantor Cabang Pembantu (KCP) terhadap jumlah simpanan deposito mudharabah pada Bank Umum Syariah di Indonesia. Pendekatan dalam penelitian ini adalah kuantitatif asosiatif yang menggunakan metode Analisis Regresi Linier Berganda dengan pengujian sampel yang digunakan berasal dari 12 bank yang berada di Indonesia berdasarkan laporan bulanan Bank Umum Syariah mencakup tahun 2017 hingga 2021. Hasil penelitian menunjukkan bahwa, tingkat suku bunga bank umum tidak berpengaruh secara parsial terhadap jumlah simpanan deposito mudharabah bank umum syariah, nilai tukar rupiah, bagi hasil deposito dan jumlah Kantor Cabang Pembantu (KCP) berpengaruh secara parsial terhadap jumlah simpanan deposito mudharabah Bank Umum Syariah, tingkat suku bunga bank umum, nilai tukar rupiah, bagi hasil deposito Bank Umum Syariah dan jumlah Kantor Cabang Pembantu (KCP) berpengaruh secara simultan terhadap jumlah simpanan deposito mudharabah pada Bank Umum Syariah.
... He found an increasing trend in overall risk for Islamic banks and a decline in for conventional banks, which is due to a creeping credit risk to Islamic banks. Haron and Ahmad (2008) identified that although mechanism of sharing profits and dividend does not differ much from conventional banks but there are chances of getting return while placing deposits with Islamic banks. This fact cannot be denied that Islamic financial institutions do have the potency to grow but they have a number of trials encountering them. ...
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The literature reveals that most of the comparative studies have been conducted in the field of conventional versus Islamic banks while as much focus has not been paid to analyze comparative performance of Islamic banks across the countries and literature is scant in this area. This study appraises and analyses comparatively the riskiness and solvency of selected Malaysian and Pakistani Islamic banks during 2006 to 2011. Data have been obtained from secondary sources of annual audited financial reports of various banks under stud that has been analyzed through mean, standard deviation, coefficient of variation and t-test. The empirical findings demonstrate that solvency has gradually condensed and Malaysian Islamic banks are more vulnerable to financial risk as financial leverage has moved upward. The Malaysian Islamic banks (MIB) have fairly attracted deposits compared to Pakistani Islamic banks (PIB), resultantly they are more exposed to default risk. It is concluded that Malaysian Islamic banks are more risky and less solvent compared to Pakistani Islamic banks which are less risky and more solvent. The study is a valuable addition to literature and it signals policy makers devise policies to remain productive.
... In recent past, due to the rapid growth of Islamic banking, the viability of Islamic banking system has so long been one of the most discussed topics among researchers. Over the last two decades, an important and renowned set of authors and researchers inducted the pioneer contribution to the literature and provided many theoretical and empirical arguments regarding MP shocks (interest rate changes) and Islamic bank deposits (Haron & Ahmad 2000;Rachmawati & Syamsulhakim 2004;Kasri & Kassim 2009;Zainol & Kassim 2010;Sukmana & Kassim 2010;Affandi & Tamanni 2010;Abduh et al. 2011;Ergec & Arslan 2013;Hassan & Makinde 2016;Nazib & Masih 2017;Arshad & Nurfadilah 2017;Aysan et al. 2018). ...
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This study empirically analyzes the MPTM through bank' balance sheet in Pakistan for the period of 2008-2018. The data set consists of 22 conventional banks and 18 Islamic banks (5 full-fledged and 13 Islamic windows of conventional banks) of Pakistan. The study employs the robust two-step system-Generalized Method of Moments is applied for estimation and confirms the presence of balance sheet channel in Pakistan. The study also finds that responses of Islamic banking operations to monetary policy shocks are not different from their conventional peers because both banking systems use Karachi Interbank offered rate (KIBOR) as a benchmark for their products. The results also highlight the sensitivity of banking operations (conventional vs Islamic) to monetary policy shocks are quite different, mainly due to the difference in their nature of contracts. This study is equally beneficial for academicians and practitioners to consider the nature of both banking systems in same economy. Our findings indicate that, policy makers need to consider the nature of both banking system (conventional vs Islamic) to maintain deposits and credit supply in an economy. ABSTRAK Kajian ini secara empirikal menganalisis MPTM melalui kunci kira-kira bank di Pakistan untuk tempoh 2008-2018. Set data terdiri daripada 22 bank konvensional dan 18 bank Islam (5 bank penuh dan 13 bank jendela Islamik) Pakistan. Kajian ini menggunakan Kaedah Momen Teritlak-sistem langkah dua untuk membuat anggaran dan mengesahkan kehadiran saluran kunci kira-kira di Pakistan. Kajian itu juga mendapati bahawa tindak balas operasi perbankan Islam terhadap kejutan dasar monetari tidak berbeza dengan rakan konvensional mereka kerana kedua-dua sistem perbankan menggunakan kadar tawaran Karachi Interbank (KIBOR) sebagai penanda aras untuk produk mereka. Hasilnya juga menyerlahkan sensitiviti operasi perbankan (konvensional vs Islam) kepada kejutan dasar monetari agak berbeza, terutamanya disebabkan oleh perbezaan sifat kontrak mereka. Kajian ini juga memberi manfaat kepada ahli akademik dan pengamal perbankan untuk mempertimbangkan sifat kedua-dua sistem perbankan dalam ekonomi yang sama. Penemuan kami menunjukkan bahawa, pembuat dasar perlu mempertimbangkan sifat kedua-dua sistem perbankan (konvensional vs Islam) untuk mengekalkan deposit dan bekalan kredit dalam ekonomi. Kata kunci: Dasar monetari; saluran kunci kira-kira; bank Islam; bank konvensional; mekanisme penghantaran dasar monetari.
... By confirming the validity of the wavelet-based causality relationship in the long-run, the strength and the direction of wavelet correlations significantly vary as the time scale increases. Our unconditional and wavelet-based results corroborate the findings of Haron and Ahmad (2000) for a negative and the empirical findings of Zainol and Kassim (2010), Tekin et al. (2017), and Samad (2018) for a statistically significant and strong positive connection between deposit and profit-sharing rates. Besides, the result for the positive linkages is partly in line with Ajmi et al. (2014), who state that evidence of co-movement reduces the benefits of portfolio diversification with Sharia-based markets in the short-and long-run. ...
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This paper empirically investigates whether profit-sharing rates in Islamic banks follow rates of the conventional banks in Turkey over the sample period March 2001 to June 2019 through employing both standard econometric and wavelet approaches. We identify both unidirectional and bidirectional causality between the monthly observations at different time scales. Moreover, the direction of the relationship considerably varies and displays coefficient sign reversal over wavelet scales. Overall, our findings suggest that the rates of return in both banking sectors are not independent of each other and, therefore, have important implications regarding financial stability and risk management.
... (Nizar & Marzouki , 2015), have concluded that religion influences the attitude of customers towards Islamic banking. (Haron & Ahmad, 2000), found that the extent of knowledge on Islamic banking products and services, the marketing strategies of Islamic banks and the quality of services all contribute to the growth of Islamic banking. To clearly understand the variable awareness, research was conducted by (Ahmad, Saif, & Safwan, 2010), who stated the importance of service quality in terms of awareness. ...
Thesis
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From a very humble beginning after its revival in 1963, modern Islamic banking has grown from a mere complement to a more viable and competitive form of financial intermediation in the world. Currently, many Muslim and non-Muslim countries practice Islamic banking. Several Muslim majority countries have had remarkable growth and patronage for Islamic banking. The Gambia is a Muslim majority country with 96.1 percent of the population being Muslims. The only Islamic bank in The Gambia (AGIB bank) started operation since 1997. However, available statistics from the Central Bank of The Gambia indicated that Islamic banking assets accounted for only 5.3 percent of the total banking assets in The Gambia as at the end of December 2019. Hence, the primary purpose of the research is to analyze the perception of The Gambian public towards Islamic banking. In doing so, the research examined the level of awareness, understanding, and willingness to patronize Islamic banking products as well as evaluate the bank selection criteria. The research used a quantitative methodology with descriptive-cum-exploratory research design. The total respondents for the research were 459 and tools such as SPSS version 25 and Microsoft Excel 2010 were used for Analysis. Statistical techniques such as Pearson Correlation and Multiple Regression were used to analyze the data. Findings indicated that the perception of The Gambian public towards Islamic banking is generally positive. Equally, the level of awareness about the existence of Islamic banking in The Gambia was found to be high, although the understanding of Islamic banking products and principles were very poor. The study found that The Gambian public is very willing to patronize Islamic banking, however, religion although important but is not the main push factor for the patronage of Islamic banking in The Gambia. Results of statistical analysis indicated that two of the independent variables (awareness and understanding) were not statistically significant at five percent in influencing public perception towards Islamic banking in The Gambia. Meanwhile, independent variables such as bank selection criteria and willing to patronize variables were statistically significant at five percent in influencing public perception towards Islamic banking in The Gambia.
... The Islamic finance industry has become a prominent sector and is one of the fastest growing components of financial developments over the last decade in the global financial system. Based on the study by Haron and Ahmad (2000), since the establishment of the first Malaysian Islamic bank in 1963, the number of Islamic banks have increased significantly and have shown tremendous growth over the years. The Malaysian International Islamic Financial Centre (MIFC) 2015 reported that "the current value of the Islamic finance assets, (led by the Islamic banking sector and the global sukuk market) is estimated to be more than $2 trillion (representing a compounded average growth rate of 17.3%). ...
Article
The development of Islamic finance is governed by Islamic laws (Shariah). The main principles that regulate all forms of transactions in Islamic banking activities include the prohibition of interest or usury (riba),the use of excessive risk (gharar), and gambling (maysir). The Islamic finance industry has become a prominent sector and is one of the fastest growing components of financial developments over the last decade in the global financial system. The availability of large numbers of Islamic finance products will increase significantlyas there have been a growing demand throughout the world, especially in OIC participating countries. Hence, the objective of this study is to identify the important factors that enhances financial development in the selected OIC countries (Malaysia, Indonesia, Jordan, Kuwait, Saudi Arabia, Sudan and Yemen). Three indicators of financial development were used; Islamic finance, broad money and liquid liabilities. The data used in this study is the panel data from the year 1990 to 2012 which were obtained from the International Monetary Fund, Islamic Banks and Financial Institutions Information (IBIS), and World Bank databases. This study employed pooled OLS, fixed and random effect model. The results indicate that there are significant relationships between Islamic finance and financial development. Specifically, this study found that liquid liabilities and Islamic finance are two factors that have significantly influenced financial development in the OIC countries. Furthermore, the findings suggest that the OIC governments are required to develop policies that would integrate Islamic finance into their financial system. These policies should be centred around regulatory framework and supervisory role to utilize Islamic finance for greater economic growth. Keywords: Islamic finance; financial development; OIC countries; pooled OLS, fixed effect; random effect
... The same above results were reached previously by Haron and Ahmad (2000). Their study established evidence regarding the relationship between the amount of deposits placed in the Islamic banking system in Malaysia and returns given to these deposits. ...
... Islamic banks should exist due to the spiritual and economic reasons where banks should present products and services of high quality as religious conviction is not exclusive attracting factor for consumers 16,23,27,[33][34][35]. One class of Muslim depositors comprises those Muslims who firmly follow rules and regulations of Islam and prefer sharia compliant banking while the rest of depositors are those Muslims who prefer these banks due to service quality, high profit on their savings and location of banks 11,15,17,23,26,34,36,37. Depositors in Islamic banks may open three types of accounts where current and saving accounts promise payment of a minimal value against the deposited amount to the customers where profits are not warrantied, while, the investment accounts opened in Islamic banks promises sharing profits and losses with no warranty regarding primary amount or pre-determined profits 38 Across all developing nations people invest their saving funds because of profits and losses of the banks 2, 7, 38, 41. ...
Article
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Banks play pivotal role in financial affairs of individuals, groups, organizations and nations. Banking services may influence their all stakeholders in multifaceted ways. This paper sought to analyze and compare financial performance of three Islamic banks: Meezan Bank Limited (MB), Bank Islami Pakistan Limited (BI) and Dubai Islamic Bank Pakistan Limited through application of liquidity, profitability and activity ratios. It employed quantitative research to empirically analyze financial performance of the banks. Q-Q Plots and ANOVA were used to check data normality and analyze data respectively. The findings show that there is a lack of significant difference in financial performance of the banks in the period of the study. Nevertheless, significant difference is found in equity ratios of the banks. Due to insignificance of entire results except for return on equity, Least Significant Difference (LSD) method is applied to know that return on equity ratio of which bank in the sample is more (less) significant. This study has recommended numerous managerial and strategic level interventions as well as scholarly endorsements for better financial achievement of Islamic banks.
... The research showed us that the growth of three-month term deposit rate of conventional banks affected the profit distribution. This is consistent with previous research by Haron and Ahmad (2000) that profit motif is a primary factor that encourages customers of Islamic banks in Malaysia to deposit their fund. Also it's consistent with research by Mawardi (2005) that the one-month term deposit rate in conventional banks affected the profit distribution. ...
Thesis
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... tingkat suku bunga konvensional.Mengacu pada penelitan sebelumnya yag dilakukan olehYuksel dkk. (2017), yang berpandangan bahwa tidak ada perbedaan antara imbal hasil deposito mudharabah maupun dengan suku bunga deposito konvensional.Ada banyak penelitian yang mengkaji hubungan kausalitas antara tingkat bunga dengan tingkat bagi hasil bank syariah.Haron dan Ahmad (2000) dengan menggunakanAdaptive Expectation Modelmenyimpulkan bahwa ada hubungan negatif antara tingkat suku bunga bank konvensional dan tingkat keuntungan bank syariah di Malaysia pada periode1984 -1998. Sejalan dengan itu, studiLatiff dan Halid (2012) dengan pendekatan Autoregressive Distributed Lag/ARDLmenemukan hasil yang sama bahwa dida ...
Conference Paper
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Abstrak This study aims to examine the causality relationship between (i) Return on Deposits of Conventional Banks (RODC, interest rates) and Return on Deposits of Islamic Banks (RODI, profit rates); (ii) RODC and inflation rates; (iii) RODI and inflation rates. Monthly time series data of these variables were collected covering the period of 2009-2016. The causality test conducted by employing Yamamoto's Method. The result of this research showed that only three causality relations are found, 3-Month, and 24-Month Deposit of Conventional Bank cause inflation, and 3-Month Deposit of Islamic Bank causes 3-Month Deposit of Conventional Bank. Pendahuluan Otoritas Jasa Keuangan (OJK) menyebutkan pertumbuhan dana deposito pada bank konvensional meningkat 50% dari jumlah Rp. 1.069.811 milyar pada tahun 2010 menjadi Rp. 2.160.714 milyar padatahun 2016. Sementara pada bank syariah, produk deposito syariahmengalami pertumbuhan yang menggembirakan. Tercatat pada tahun 2010 jumlah deposito, yang menggunakan akad non profit sharing dan profit sharing, yaitu sebesar Rp. 44.072milyar tumbuh sebesar 82% pada tahun 2016 menjadi Rp. 240.974 milyar (OJK, 2016). Sementara secara prosentase pertumbuhannya mengalami fluktuasi, mengingat motif nasabah dalam deposito adalah untuk berinvestasi, sehingga Ojeaga dkk. (2013), Mashamba dkk.(2014) dan Boadi (2015) menjelaskan bahwa tingkat suku bunga menjadi pertimbangan nasabah dalam menempatkan dananya pada produk deposito. Tahun 2012 hingga tahun 2014 pertumbuhan deposito konvensional tercatat tumbuh 11%, 14% dan 17%, akan tetapi turun menjadi 4% pada tahun 2015 dan naik lagi menjadi 6% pada tahun 2016. Begitupun pada deposito mudharabah tercatat prosentase
... Hence, consumers of IBs' financial products are influenced by factors other than profit when choosing and remaining loyal to their banks (Fianto et al., 2020;Javed et al., 2020;Raza et al., 2020). They may not be affected directly by the traditional economic theory of profit maximization (Haron and Ahmad, 2000;Sukmana and Yusof, 2005). Al-Tamimi et al. (2009) found that consumers prefer Islamic banks as they associate them with positive religious attributes. ...
Article
Purpose As the popularity of Islamic banking and financial instruments continues to rise globally, a recurring empirical question is what specifically makes consumers choose Islamic banking. This paper aims to investigate the determinants of bank type selection, especially in culturally diverse settings where the Islamic banking sector is well-established. It further examines whether consumers’ gender/religion influences their choices. One intuitive prediction is that Muslim consumers opt for Islamic banking products as “ethical” because of conviction-related reasons. However, the reality is not necessarily straightforward. Design/methodology/approach This paper uses structural equation modeling to examine data collected from a survey questionnaire of 790 respondents in an emerging market setting. Further analysis is made based on gender and religion to remove related bias. Findings Results suggest that overall consumer awareness significantly affects the selection of Islamic banking products. The positive effect of awareness is more significant for Muslim consumers relative to non-Muslims. Interestingly, social stimuli and bank attributes have an insignificant effect on the banking choices of both Muslims and non-Muslims. Practical implications Results suggest that Islamic banks’ marketing managers should adopt differentiated strategies for men and women, focusing on the core benefits of the service or personal interactions with consumers, respectively, along with a focus on different aspects of personal service for each gender. Awareness should be enhanced by adopting informative and effective marketing strategies to attract and retain consumers in the competitive bank environment. Islamic banks (IB) should pay attention to the religious effect without considering it as the sole variable motivating potential customers. They should design segmented and customized marketing strategies based on gender-religion market segmentation to suit different groups’ needs. Originality/value The findings fill a gap in the literature and provide Islamic bankers with insights to help design and articulate their business strategies to appeal to consumers in a multicultural context. Examining an integral part of gender and religion mitigates biased estimates due to the omission of variables. The study contributes to the existing literature on customer preferences for IB with a relatively large, new data set.
... The main differences are that Islamic banks pay their clients in shares of profits or losses, and Sharia law governs how they conduct business (Dar & Presley, 2000). Haron and Ahmad (2000) looked at how conventional interest rates and profits affected money deposited with Islamic banks in Malaysia. The findings demonstrate how individual saving habits in Islamic banking are influenced by interest rates and the rate of profit on monies deposited with Islamic banking systems. ...
Article
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In this study, the selection criterion for Islamic banking in Nigeria was examined. Thus, the study investigates whether variables like; rate of return, Islamic teaching, bank's reputation and service quality account for why customers patronize Islamic bank (Jaiz bank) in Nigeria. The general behavior of customers towards Islamic banking in Nigeria was also investigated. A survey research design was adopted and all the customers of Jaiz bank branch in Herwa Gana Ward, Commercial Area of Gombe Local Government Area constitute the population of the study. A suitable sample of 60 respondents was the study's focus. The respondents were chosen using a convenient sampling strategy. 52 of the 60 administered surveys were deemed to be valid. The data were examined using simple percentages, descriptive statistics, correlation, and regression. It was discovered that in Nigeria, customers' attitudes toward Islamic banking are significantly influenced by the rate of return, Islamic principles, and bank reputation. In order to draw in more clients, the study advises Jaiz Bank to build upon its positive reputation and enhance the quality of its services. They can also promote the religious traditions in their advertisements to attract customers who are motivated to benefit from interest free banking services.
... The same above results were reached previously by Haron and Ahmad (2000). Their study established evidence regarding the relationship between the amount of deposits placed in the Islamic banking system in Malaysia and returns given to these deposits. ...
Article
Purpose-This study aims to investigate the performance differences of Islamic and traditional banks in Egypt by using financial ratios. Design/methodology/approach-This study analyzed 2 Islamic and 9 traditional banks for the periods of 2002-2010. Descriptive statistics and paired sample T-test were performed. Secondary data was obtained from the annual financial reports of the banks for the period under the study. Findings-The performance of the Egyptian traditional banks shows supremacy and dominance over the performance of the Egyptian Interest free banks. The capital adequacy ratios, profitability level, quality of management, and liquidity proved to be significantly better for traditional banks. While the results of the study concerning the quality of assets showed no significant difference between Islamic and traditional banks.
... This conclusion is consistent with the hypothesis that has been constructed by the authors that the level of profit sharing has a positive influence on the amount of savings mudharabah where the increase in profit sharing rate to attract customers to keep their funds in Islamic banks thus affecting the amount of savings mudharabah.The influence of the level for the results of a significant amount of savings mudharabah indicate that the level of revenue sharing has the most influence on the amount of savings mudharabah. This shows that the profit motive is still one of the main motives for customers to keep their funds in Islamic banks so that the higher the level of revenue sharing, the higher the amount of savings mudharabah.Conclusions are also described by Haron and Norafifah (2000) which states that the rate of profit-sharing savings positive effect on the amount of savings deposits in Islamic banks. It is also strengthened by the results of research Andriyanti and Wasilah (2010), which explains that the level of revenue sharing has a positive and significant relationship to the mudaraba deposits. ...
Article
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Mudharabah deposit is one of main fund resource of sharia bank, teherefore the growth must be maintained. This research is aimed to find whether there are influences of profit-sharing rate of mudharabah saving, interest rate of saving in conventional bank, growth rate of Jakarta Islamic Index (JII), and Gross Domestic Product (GDP) to the amount of mudharabah saving in sharia banks. The sharia banks which are used in this research are all of sharia commercial bank in Indonesia.The method of this research is Ordinary Least Square (OLS) with quarterly panel data from 2006 to 2015 of the twelve sharia banks which are observed. The approach model which is used in this research is Fixed Effect Model. The result of this research showed that profit-sharing rate of mudharabah saving, interest rate of saving, growth rate of Jakarta Islamic Index (JII), and Gross Domestic Product (GDP) have significant influences to the amount of mudharabah saving in sharia banks. Profit-sharing rate of mudharabah saving, growth rate of Jakarta Islamic Index (JII), and Gross Domestic Product (GDP) have positive influences to the amount of mudharabah saving, Meanwhile, interest rate of saving in conventional bank has a negative influence to the amount of mudharabah saving.
... However, findings from previous studies have indicated that Islamic banks' depositors are guided by economic motives (Haron and Ahmad 2000). Lower rates of profit and loss sharing paid to depositors are associated with lower levels of deposits. ...
Article
The number of studies examining the intermediation costs of Islamic banking remains limited. This paper aims to benchmark the intermediation costs of Islamic and conventional banks as measured by net profit or net interest margin. The question to be answered is whether the level of net margin is higher or lower in Islamic than in conventional banking. This paper relies on the system generalized method of moments (GMM) panel regression, in which net margin is treated as a function of “pure spread” determinants, bank-specific variables not formally seen as “pure spread” determinants, and macroeconomic conditions. The sample includes unbalanced panel data from 12 Islamic and 97 conventional banks in Indonesia over 2004-2018. The results indicate no strong evidence that the level of net margin in Islamic banking differs from that in conventional banking. The difference between net margins in the two banking systems is at best not robust. It is subject to the inclusion of different control variables, the composition of the sample, and, most importantly, outliers. Both anecdotal beliefs saying that Islamic banking is more costly and an opposing claim that Islamic banking brings about a promise for lower intermediation costs should not be taken for granted.
... Our study also reports a positive and significant association between bank selection criteria and the adoption of IB, but only for Muslim customers. These results support the results reported by Haron and Ahmad (2000), who find that Malaysian bank customers attribute much importance to fast and reliable service, the speed of transaction, and friendly personnel. Marimuthu et al. (2010) find that "cost/benefit" and "convenience" ranked among the top factors cited by Malaysian customers when choosing a bank. ...
Article
This study provides an overview of the incentives for Muslims and non-Muslims to adopt Islamic Banking (IB) products in non-Muslim developing country. Data is collected from a sample of 1,128 Mauritians. Religion is found to have a significant influence on the intention to adopt IB products. Our results support the prediction of the theory of reasoned action as an individual is more likely to adopt IB product if he/she understands the relevant concepts and terminologies. The adoption of IB products for Muslim customers is significantly associated with bank selection criteria. Further, we provide evidence of a home country bias related to a set of financial products, as well as tactics successful in overcoming the costs of the liability of foreignness in incentivizing cultural “out-groups” to adopt IB products. Our study contributes to the literature on the motivation of individuals to adopt IB products, which is highly relevant for Islamic banks worldwide that seek to offer similar products and attract new customers. We provide implications for bank marketing managers facing the challenge of increasing adoption of new financial services and products in markets where customers may not be aware of the associated benefits due to cultural, religious, or ethnic barriers.
... The clients of the IBS do not have a precise understanding regarding its return on their investment previous to the actual return been gained. The initial stage on the topic of the formation of the Islamic banking system was taken in 1963 when "The Mit-Ghamr Savings Bank" was founded in Egypt that was, in reality, the fundamental Islamic fiscal scheme tested (Haron, S. and Ahmad, N., 2000). On the other hand that was not effective due to the good marketing and management plan. ...
Conference Paper
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The idea of Islamic banking is not a new one. The popularity of Islamic banking is growing day by day in various Islamic and non-Islamic countries. The conventional banking industry is a well-established competitor for the Islamic banking industry. Now for this rivalry, Islamic banking industry must consider their customer's approach, satisfaction and awareness level towards it. In this descriptive research study, a sample of Islamic bank account users from different regions of Ampara was studied, to analyze the customer's satisfaction, awareness level towards the Islamic banking industry and to investigate the relationship between the satisfaction, awareness of customers and different demographic variables. A total of 130 customers' data were collected and required statistical analyses were performed using SPSS software. The study results exposed that the trend of the customer in the sense of age, the majority of the customer are in the age of 21 to 40 years and only 30% of the customers were educated in undergraduate and postgraduate levels. And also most of the customers were of the middle-income level. 57% of them have an account in other conventional banks also. The results recommend that overall Islamic banking system customers are mostly satisfied with the Islamic banking services been provided to them and the banking efficiency in their transactions. There is high possible in the victory of the Islamic banking industry if the Islamic banking industry spread out their network with customer demanded product.
... The last Hypothesis that combined the above three relates to the type of customers and their investment objective. Based on utility maximization theory, Haron and Ahmad (2000b) argue that deposits in Islamic banks are driven by the profit motive and are negatively affected by the conventional bank rates. Similarly, based on the substitution effect, while pious Muslim customers remain loyal to Islamic banks, increases in conventional base lending rates deterred profit-motivated customers from opting for Islamic financing, and vice versa (Kader & Leong, 2009). ...
Article
The dependence of Islamic bank rates on the conventional bank rate violates the religiosity principle and the fundamentals of an efficient market due to the possibility of arbitrage profit from the rate differences. This study tests such dependency in a dual banking system by considering monthly data from January 2009 to April 2018 on Malaysia banks using several ARDL tests, supplemented by robustness tests using a 12-month correlation of the rolling standard deviation and causality models based on the Toda-Yamamoto approach to investigate the short- and long-run dependency of rates. The study finds that Malaysia's Islamic bank deposit and financing rates are influenced by both the conventional and Bank Negara Malaysia's policy rates. Results imply that Islamic banks do serve profit-driven customers. We suggest that Islamic banks are forced to benchmark their rates to conventional rates because of the trade-off between religious and economic fundamentals by profit-driven customers. The study demonstrates that the question of Islamic legitimacy of Islamic banks needs to be addressed considering the correct profiling of the customer-base and the regulatory environment in which Islamic banks operate in. We discuss implications for Islamic rate-setting behavior in the presence of monetary shocks in a dual banking system.
... proposing similar returns to their depositors. This lead them to propose similar rates to their customers in the long-run (Haron and Ahmad, 2000;Chong and Liu, 2009;Ergeç and Arslan, 2013;Ito, 2013;Demiralp andDemiralp, 2015, Aysan et. al, 2017;. ...
Article
Religious beliefs are accepted to be one of the main motivations for financial actions. The economic theory fails to provide an adequate foundation to study the link between religiosity and economic behavior. A number of empirical studies discusses the role of religion on the financial behavior of economic agents yet more research needs to be conducted. This study provides a brief review on how religiosity might affect financial behavior by the inclusion of recent studies. In addition to the empirical research that is based on European countries, we discuss the differences in different geographies and finance schemes. We also debate the potential factors that affect differing behavioral aspects with respect to religiosity.
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The main purpose of this study is to examine the determinants of deposit withdrawal behavior amongst profit-sharing deposit account holders. Based on the Push-Pull-Mooring theory, a qualitative study was conducted, with fifteen personal interviews undertaken with profit-sharing investment depositors selected from three participatory banks using a purposive sampling technique. Assessment of the predictive factors determining deposit withdrawal behavior resulted in three categories. The push factors were found to be, in order of decreasing frequency: (1) Sharia non-compliance risk, (2) lower rate of return, (3) deposit guarantee scheme and (4) customer relationship quality failure. The push factors were labeled as (a) conventional term deposit attractiveness, (b) conventional banks history and (c) number of branches. The mooring factors were found to be: (i) religiosity, (ii) switching costs, (iii) third party influence and (iv) involuntary switching factors. This study has limitations that should be considered for future research. First and foremost, all interviewees were selected by the banks’ managers. Moreover, they were identified as individual depositors; thus, they displayed opinions, which may differ from those of corporate depositors. Despite the discussed limitations, the findings generated from this study have important implications for researchers, financial marketing managers as well as the policy makers and regulators. In terms of contribution to the body of knowledge, the study aimed to investigate the predictive factors of deposit withdrawal behavior in another context, that of Morocco, which has not yet been explored in the literature. In addition, the findings of this study are critical to financial marketing managers for strategic marketing programs as it stresses the importance of satisfaction dimensions within a dual banking system, as is the case in Morocco. Furthermore, this study provides great indications to the policy makers and regulators on the perception of the Moroccan investment account depositors, in order to develop policies that could improve the participatory banking system in Morocco.
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The purpose of this research is to know whether the internal factors of Islamic Banks (profit sharing and bonus and promotion cost), and external factor of Islamic Banks (inflation) have significant effect, both simultaneously and partially, to the amount of third-party’s funds Islamic Bank in 1st quarterly of 2010 – 1st quarterly of 2015 period. The method used in this research is quantitative method and also using the secondary data which obtained from financial reports and other reports started from in 1st quarterly of 2010 – 1st quarterly of 2015. The population is Islamic Banks in Indonesia. The choosing of sample was done with using sampling purposive method and there are 6 Islamic Banks that comply with the specified sample criteria. Analysis technique used is multiple linier regression analysis of panel data.
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Identifying, ranking, exhuming and classifying the relations among the critical resemblances between Islamic and conventional banking is aim of this study. It also discusses the structure of these resemblances and devises valuable guidelines for discerners. It follows qualitative paradigm of research philosophy and overall design consists of review of literature, data collection and analysis. Literature review is used to prepare a list of resemblances, Interpretive Structural Modelling (ISM) is employed for ranking, exhuming and modeling the relationships among resemblances, whereas, cross impact matrix multiplication applied to classification (MICMAC) for substantiating the results of ISM by classifying factors into independent, dependent, linkage and autonomous clusters. Through the discourse of literature review a list of eighteen critical resemblances has been prepared. Results of ISM show that resemblance in rating system and resemblance in public perception occupy highest rank therefore are least critical, whereas, resemblance in settlement of cost of funds and similar employee qualification occupy bottom of the model therefore are the most critical. MICMAC analysis validates the results of ISM. This study is helpful to discerners who want to understand differences and similarities between two paradigms of banking. It is equally useful for regulators, management, employees, customers, researchers, religious scholars and society at large being an original attempt by the authors substantiated by real time survey data collected from experts on the issue.
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The main purpose of this study is to examine potential predictors of profit rates and dee-posit rates and to examine whether these rates are affected by identical factors. This paper empirically addresses tree-based machine learning algorithms (e.g., boosting, bagging, random forest). The empirical findings of the study demonstrate participation banks' profit rates to be more influenced by industrial production due to these banks being in contact more with real economic activity. As expected , however, domestic and global interest rates appear to have great significance in how deposit banks set their rates. This study contributes to the literature in two ways. First, it determines the potential predictors of profit rates and deposit rates in a data-rich environment. Second, the study uses random forest, bagging, and boosting algorithms as methodological tools and benefits from the apparent advantages these algorithms have empirically.
Article
Purpose: The banking industry is crucial to economic growth. It's one of India's fastest-growing sectors, with a massive network of bank branches offering financial services. The study is being undertaken to find out the profitability of banks with respect to the deposits and advances, interest received and expended by Canara Bank (Public sector) and Karnataka Bank (Private sector). The study was undertaken by considering the deposits and advances of the two banks over 5 years. Methodology: The foundation of qualitative research is secondary data. Annual reports, manuals, previous bank records, and balance sheets are used to collect data. Focus group contacts with the manager and the staff are conducted to obtain in-depth data. Findings: The study indicated that advances and deposits had a favorable and considerable influence on the net profits earned by banks. Originality: The study highlights the effects of deposits and advances on the profitability of the banks. Paper type: Case study
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This study analyzed consumer loyalty with Islamic banks and ordinary banks in Pakistan. The historical backdrop of regular banks in Pakistan is superior to that of Islamic banks. The improvement of an Islamic financial framework in Pakistan is at an untimely stage. In Pakistan, not many banks offer clean Islamic financial administrations to their clients. This concentrate likewise analyzes consumer loyalty with the administrations of traditional banks as well as Islamic banks. Our objective region is the Pakistani financial area, and the information comes from interviews with five Islamic banks and five ordinary banks in Pakistan. The aftereffect of this exploration showed that the clients of the two banks were from Islamic banks or traditional banks were happy with the offices given by the banks, notwithstanding, the clients of regular banks were happier with Islamic banks. Hypothetically, current investigations supplement the writing on the above viewpoints and connection them to consumer loyalty. Simultaneously, it causes to notice the factors that are fundamental for the advancement of Pakistan's Islamic financial framework. The discoveries likewise give important data and direction to Islamic banks to plan creative item advancement procedures and publicizing approaches to hold existing clients and draw in possible clients. This study extends the extent of the accessible writing on Islamic banking; However, it doesn't address the situation of the ordinary financial area.
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Theoretically, Islamic banks should not be exposed to the risk of interest rate fluctuations. Indeed, in the literature, Islamic finance is considered a finance without interest that stands out from conventional finance by means of profit sharing and losses. In practice, although Islamic banking products are not directly based on interest, several studies mentioned in this article have shown that these banks are not completely immune to this kind of risk. Moreover, unlike conventional banks, Islamic banks do not have the same flexibility to cover this risk since they do not use interest. So, the assessment of the level of exposure to interest risks and understanding its determinants is essential for studying the appropriate hedging strategies and the guarantee of stability of Islamic banks.
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This study aims to determine the development of third-party funds of Islamic Banking in Indonesia. This study uses time series data Q1 2008 to Q4 2012. The analysis tool used is multiple regression. Based on the survey results revealed that conventional banking interest rate (r), the equivalent rate (ER), Economic Growth (PE) and Growth Outlet (PO) are jointly very significant effect on Islamic Banking Deposits While partially known that conventional banking interest rate (r) significantly affects deposits, equivalent rate (ER) was not statistically significant effect, Economic Growth (PE) no statistically significant effect and Growth Outlet (PO) statistically significant effect on Deposits Islamic Banking. Keywords:interest rate, outlet, equivalent rate Abstrak Penelitian ini bertujuan untuk mengetahui perkembangan penghimpunan Dana Pihak Ketiga (DPK) Perbankan Syariah di Indonesia. Penelitian ini menggunakan data time series triwulan 1 tahun 2008 sampai dengan triwulan 4 tahun 2012. Alat analisis yang digunakan adalah regresi berganda. Berdasarkan hasil analisis diketahui bahwa Suku Bunga perbankan konvensional (r), Equivalen rate (ER), Pertumbuhan Ekonomi (PE) dan Pertumbuhan Outlet (PO)secara bersama-sama berpengaruh sangat nyata terhadap DPK Perbankan Syariah. Sementara secara parsial diketahui bahwa Suku bunga Perbankan konvensional (r) berpengaruh signifikan terhadap DPK, Equivalen rate (ER) tidak berpengaruh signifikan secara statistik, Pertumbuhan Ekonomi (PE) tidak berpengaruh signifikan secara statistik dan Pertumbuhan Outlet (PO) berpengaruh signifikan secara statistik terhadap DPK Perbankan Syariah. Kata Kunci: tingkat bunga, outlet, equivalent rate
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From a theoretical point of view in the Islamic financial framework, trust is supposed to provide the economic glue that enables social financial cohesion and be the cornerstone of all transactions that need to be fair and equitable. The two parties involved in the contractual agreement must act with good intention in order to avoid exploitation in the exchange transaction and improve their mutual welfare. In fact, the contractor loves to his partner that which he loves for himself. Unfortunately, in practice this situation is not always true, because Islamic finance isn't merely reserved to muslims and also among muslims there could be who isn't behaving in accordance with the Islamic teaching all the time, and have different interests. This situation can get worse, especially in PLS contracting with risk sharing, when there's a presence of asymmetry of information and non observability, which makes pareto-optimal risk sharing prevented, due to the lack of proper incentives and high monitoring costs not allowing suitable decisions taking. Abstract-1 From a theoretical point of view in the Islamic financial framework, trust is supposed to provide the economic glue that enables social financial cohesion and be the cornerstone of all transactions that need to be fair and equitable. The two parties involved in the contractual agreement must act with good intention in order to avoid exploitation in the exchange transaction and improve their mutual welfare. In fact, the contractor loves to his partner that which he loves for himself 2
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This study aimed to ascertain the factors that affect the Profit Distribution Management (PDM) practices employed by Islamic banks (IBs) to retain their market share. It further analysed whether the presence of Islamic corporate governance can smoothen the profit sharing mechanism followed by the IBs. The study utilized the panel data analysis technique to analyse the data collected from 40 full-fledged IBs for the period 2010-2017 from three different regions, that is, South Asia, Middle East and South East Asia. The findings of the study support the premise that third party funds, asset composition, capital adequacy and market share all have a significant and positive impact on the PDM practices of IBs. Moreover, Islamic corporate governance strengthens the relationship between market share and the PDM practices of IBs. The results of this study have policy implications for the regulators of IBs and financial institutions as they provide insight into the factors that affect the PDM practices of IBs.
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This study aims to investigate the impact of customer knowledge, political support, and innovative advancement on the development of Islamic bank. There is a strong microeconomics ground of Islamic financing for the economy-wide conduct of good monetary issues, and issues including the procedure structure. Islamic bank clients limit the dangers related to premium-based obligation financing, and simple credit, which tormented regular banks amid the sub-prime home loan emergency. In short, when there will be sufficient knowledge and information about the Islamic banking services and products, then it will help to develop the Islamic banking system, and similar is the case for advanced innovations. Meanwhile, strong political support can also play an influential role in the development of the Islamic banking system. This study collects the data through self-administered survey from managers of Islamic banks located in the Lahore region. The results of regression analysis are obtained through SPSS. The findings revealed that customer knowledge, innovations, and political support positively and significantly influence the growth of Islamic banks in Pakistan. In other words, good knowledge, innovations, and political support can result in more Islamic banking system development. Conclusively, general monetary development of Islamic banking in Muslim nations will drive the development of Islamic money-related administrations, prompting further in Sharia-consistent system.
Article
Amaç – Katılım bankalarının uyguladığı fon kullandırma yöntemleri içerisinde murabaha’nın payı %90’ı aşmaktadır. Söz konusu yöntemle ilgili olarak en çok yapılan tartışma ise bu bankaların fon kullandırmada uyguladıkları vade farkının geleneksel bankaların uyguladığı faiz oranıyla hemen hemen aynı seviyelerde olduğu ve aynı yönde seyrettiğidir. Bu bağlamda çalışmamızda hem bu iddianın ekonometrik olarak test edilmesi hem de bu olgudan hareketle murabaha yönteminin faizli kredi benzeri olduğu iddialarına ilişkin bir değerlendirme ve öneri yapılması amaçlanmıştır. Yöntem – Bu amaçla katılım bankaları ortalama 1, 3, 6 ve 12 ay vadeli kar payı oranları, geleneksel bankalar 1, 3, 6 ve 12 ay vadeli ağırlıklı ortalama mevduat faizi oranları, TÜFE ve USD/TL döviz kuru arasındaki ilişki yapısal kırılmaları dikkate alan tek kırılmalı eşbütünleşme ve Fourier Granger nedensellik analizleriyle test edilmiştir. Analiz için kullanılan veri seti Ocak 2003 ile Ocak 2018 dönemini kapsayan aylık verilerden oluşmaktadır. Bulgular – Seriler arasında eşbütünleşme ilişkisi olmadığı gözlenmiştir. 1, 3, 6, 12 ay vadeli mevduat faizi oranlarından 1, 3, 6, 12 ay vadeli kar payı oranlarına doğru aynı vadelerde tek yönlü nedensellik ilişkisinin olduğu ve USD/TL döviz kuru ile TÜFE’den kar payı oranlarına doğru nedensellik ilişkisi olmadığı görülmüştür. Tartışma – Katılım bankalarının faiz riskine maruz kaldığı, bu riske karşı önlem alması gerektiği ve faizden kaçınmak isteyen katılım bankalarındaki mevduat sahiplerinin de karar verirken TÜFE ve USD/TL döviz kuru makroekonomik değişkenlerinden ziyade faizi göz önünde bulundurması gerektiği belirtilebilir. Çalışmada, katılım bankaları vade farklarının geleneksel bankaların faiz oranlarıyla aynı yönde hareket etmesi ve hemen hemen aynı olması ile ilgili bir değerlendirme de yapılmıştır. Konuyla ilgilenenlerin çoğu ‘murabaha’ yönteminin aslında faizsizlik iddiasına uymadığını ileri sürmektedir. Çalışmada ise bu olguya ters yönden de bakılabileceği, dolayısıyla devletin sıkı düzenlemeleri ve denetimi altında çalışan geleneksel bankalardaki mevduat ve kredi faizinin riba olup olmadığının tartışılması gerektiği belirtilmiştir.
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Makale Kategorisi: Araştırma Makalesi Amaç-Katılım bankalarının uyguladığı fon kullandırma yöntemleri içerisinde murabaha'nın payı %90'ı aşmaktadır. Söz konusu yöntemle ilgili olarak en çok yapılan tartışma ise bu bankaların fon kullandırmada uyguladıkları vade farkının geleneksel bankaların uyguladığı faiz oranıyla hemen hemen aynı seviyelerde olduğu ve aynı yönde seyrettiğidir. Bu bağlamda çalışmamızda hem bu iddianın ekonometrik olarak test edilmesi hem de bu olgudan hareketle murabaha yönteminin faizli kredi benzeri olduğu iddialarına ilişkin bir değerlendirme ve öneri yapılması amaçlanmıştır. Yöntem-Bu amaçla katılım bankaları ortalama 1, 3, 6 ve 12 ay vadeli kar payı oranları, geleneksel bankalar 1, 3, 6 ve 12 ay vadeli ağırlıklı ortalama mevduat faizi oranları, TÜFE ve USD/TL döviz kuru arasındaki ilişki yapısal kırılmaları dikkate alan tek kırılmalı eşbütünleşme ve Fourier Granger nedensellik analizleriyle test edilmiştir. Analiz için kullanılan veri seti Ocak 2003 ile Ocak 2018 dönemini kapsayan aylık verilerden oluşmaktadır. Bulgular-Seriler arasında eşbütünleşme ilişkisi olmadığı gözlenmiştir. 1, 3, 6, 12 ay vadeli mevduat faizi oranlarından 1, 3, 6, 12 ay vadeli kar payı oranlarına doğru aynı vadelerde tek yönlü nedensellik ilişkisinin olduğu ve USD/TL döviz kuru ile TÜFE'den kar payı oranlarına doğru nedensellik ilişkisi olmadığı görülmüştür. Tartışma-Katılım bankalarının faiz riskine maruz kaldığı, bu riske karşı önlem alması gerektiği ve faizden kaçınmak isteyen katılım bankalarındaki mevduat sahiplerinin de karar verirken TÜFE ve USD/TL döviz kuru makroekonomik değişkenlerinden ziyade faizi göz önünde bulundurması gerektiği belirtilebilir. Çalışmada, katılım bankaları vade farklarının geleneksel bankaların faiz oranlarıyla aynı yönde hareket etmesi ve hemen hemen aynı olması ile ilgili bir değerlendirme de yapılmıştır. Konuyla ilgilenenlerin çoğu 'murabaha' yönteminin aslında faizsizlik iddiasına uymadığını ileri sürmektedir. Çalışmada ise bu olguya ters yönden de bakılabileceği, dolayısıyla devletin sıkı düzenlemeleri ve denetimi altında çalışan geleneksel bankalardaki mevduat ve kredi faizinin riba olup olmadığının tartışılması gerektiği belirtilmiştir. Article Classification: Research Article Purpose-The share of murabaha among the funding methods applied by participation banks exceeds 90%. The most common discussion regarding the method in question is that the maturity difference applied by these banks in the use of funds is almost at the same level with the interest rate applied by traditional banks and it is in the same direction. In this context, in this study, it was aimed to test this claim econometrically and to make an evaluation and suggestion regarding the claims that the murabaha method is like a loan with interest, based on this fact. Design/Methodology/Approach-The relationship between profit share rates and deposit interest rates, the CPI and the USD / TL exchange rate has been tested with single-break cointegration and Fourier Granger causality analyzes considering structural breaks. For this purpose, participation banks average 1, 3, 6 and 12-month dividend rates, traditional banks 1, 3, 6 and 12-month maturity weighted average deposit rates, the relationship between CPI and USD / TL exchange rate has been tested with single-break cointegration and Fourier Granger causality analyzes considering structural breaks. The data set used for the analysis consists of monthly data covering the Findings-It was determined that there was no cointegration relationship. It is determined, that there is one way casuality relationship from deposit interest rates in 1, 3, 6, 12 month(s) maturities to profit share rates in 1, 3, 6, 12 month(s) maturities in each maturity levels and there is no causal relationship between USD / TL exchange rate and CPI to profit share rates.
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Financial institutions, especially the banking sector plays a crucial role in models of economic growth. It is an essential component of investments; bank Profit/Loss, banks deposits, banks advances and Interest Earning have considerable effect on economic activity and long-term economic growth. The view that, strong financial sector performance has the key to economic growth was reflected in the development strategies and plans in many countries. In Ethiopia, the development of the financial sector is limited, the contribution to GDP is also very low, and most of the banks attention to is on similar services and commercial activities in the domestic banking areas rather than diversified and international banking services. After selection of the study variables the researchers were described the economic growth function of the nation using the GDP Model to show the contribution of deposits, investments, advances, profitability and interest earning on GDP. This study is important to the practitioners, policy makers, and potential researchers by providing recommendable solutions those mitigate the obstacles in banking sector and providing conducive financial and economic theories and models important for the banking institutions and other concerned parties. The general objective of this study is to evaluate the contribution of the banking sector for the growth of GDP of the nation, more specifically it evaluate or measure the contribution of deposits, investments, advances, profitability, and interest earning on GDP of the nation. The appropriate research design adopted for this study was descriptive. From the total of 19 private and public banks in Ethiopia 5 banks were purposely selected (1 public and 4 private) for this study. Secondary sources of data were used for the analysis. All secondary data were collected from the different official publications of respected banks, annual reports and National bank of Ethiopia for five years (2009-2013 GC). The collected data were analyzed with the use of the SPSS (statistical package for the social sciences) program 20v. The percentage, mean, standard deviation, coefficient of variation, correlation and multiple regressions were utilized. The finding shows that Deposit, Investment, Advances, profitability, and Interest earned by Banks have significant effect on the GDP growth of the Nation. The percentage share to GDP in the sector was increased from time to time with an average of 22%, 11%, 18%, 0.86%, and 1.2% respectively.
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Describes a study designed to investigate the banking behavior of Islamic bank customers in the state of Bahrain. The study sample comprised 300 customers. A comprehensive profile analysis and a series of chi-square tests were conducted to reveal key characteristics and patterns: the majority of Islamic bank customers are well educated; approximately 80 per cent are between 25-50 years of age; more than 50 per cent of the surveyed customers have maintained their current banking relationship with Islamic banks for more than six years; customers’ awareness and usage rates are quite high for savings accounts, current accounts, investment accounts and automated teller machines; customers were found to be most satisfied with the products/services they use most, with the investment accounts receiving the highest satisfaction score; Islamic bank employees received the highest satisfaction score among the elements of the service delivery system; the two most important bank selection criteria were adherence to the Islamic principles, followed by the rate of return.
Book
This book was originally published by Macmillan in 1936. It was voted the top Academic Book that Shaped Modern Britain by Academic Book Week (UK) in 2017, and in 2011 was placed on Time Magazine's top 100 non-fiction books written in English since 1923. Reissued with a fresh Introduction by the Nobel-prize winner Paul Krugman and a new Afterword by Keynes’ biographer Robert Skidelsky, this important work is made available to a new generation. The General Theory of Employment, Interest and Money transformed economics and changed the face of modern macroeconomics. Keynes’ argument is based on the idea that the level of employment is not determined by the price of labour, but by the spending of money. It gave way to an entirely new approach where employment, inflation and the market economy are concerned. Highly provocative at its time of publication, this book and Keynes’ theories continue to remain the subject of much support and praise, criticism and debate. Economists at any stage in their career will enjoy revisiting this treatise and observing the relevance of Keynes’ work in today’s contemporary climate.
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A fiercer level of competition is becoming the most influential factor in the structure and activities of the banking system around the globe. Banks are competing not only with themselves, but also with other financial institutions within the financial industry. In a plural society such as in Malaysia, the competition is becoming fiercer with the existence of the Islamic bank, which was established specifically to cater for the needs of the Muslim population in the country. To attract more customers, both conventional and Islamic banks should have information on factors used by customers in selecting their banks. Investigates how Muslims and non-Muslims select their banks and what services they use frequently. Results show that there are many similarities between Muslims and non-Muslims in their selection of banks and utilization of services.
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The attitudes of bank customers towards Islamic banks are discussed, together with the perceived unique characteristics of Islamic banks by their customers, and the importance of selected patronage factors in choosing conventional and Islamic banks. It is concluded that in considering motives responsible for selecting Islamic banks as depository institutions, religious motives did not stand out as being the only significant ones; bank customers are profit motivated; the evidence generated in the study did not find an important consideration of the new branches' role in increasing the utilisation of services provided by Islamic banks; peer group influence plays an important role in selecting Islamic banks as depository institutions; and there is a high degree of awareness on the part of bank customers of the advantage of the profit-loss-sharing modes of investment and of the economic and social development role of the Islamic banking system.
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Establishes that, in Singapore, which has a minority of Muslims in its population, both Muslims and non-Muslims are generally unaware of the culture of Islamic banking. Also the two separate groups have different attitudes towards the Islamic banking movement, with the degree of difference depending on the nature of the respective matter put to them. For example, when asked what they would do if an Islamic bank did not make sufficient profits to make a distribution in any one year, 62.1 per cent of Muslims said they would keep their deposits within the Islamic banking movement, while 66.5 per cent of non-Muslims said they would withdraw their deposits. In relation to bank selection criteria, there was general accord as between Muslims and non-Muslims on the rating of the various criteria. Five significant differences were noted, the most relating to “being paid higher interest on savings”. The desire to be paid higher interest was far stronger with non-Muslims.
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Uses logit, probit and discriminant analysis to test for structural differences between the financial characteristics of interest-free banks and conventional banks. The analysis extends to various financial dimensions which evaluate performance, namely: liquidity, leverage, credit risk, profitability and efficiency. Covers 15 interest-free banks and 15 conventional banks. The statistical evidence suggests that the two groups of banks may be differentiated in terms of liquidity, leverage and credit risk, but not in terms of profitability and efficiency.
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In recent years and especially since the onset of the current depression, the economics profession and the lay public have heard a great deal about the sharp conflict between “monetarists and Keynesians” or between “monetarists and fiscalists.” The difference between the two “schools” is generally held to center on whether the money supply or fiscal variables are the major determinants of aggregate economic activity, and hence the most appropriate tool of stabilization policies.
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This paper contributes empirically to our understanding of informed traders. It analyzes traders' characteristics in a foreign exchange electronic limit order market via anonymous trader identities. We use six indicators of informed trading in a cross-sectional multivariate approach to identify traders with high price impact. More information is conveyed by those traders' trades which--simultaneously--use medium-sized orders (practice stealth trading), have large trading volume, are located in a financial center, trade early in the trading session, at times of wide spreads and when the order book is thin.
Distribution Effects and The Aggregate Consumption Function
  • Quarterly Bank Negara Malaysia
  • Kuala Bulletins
  • Lumpur
Bank Negara Malaysia, Quarterly Bulletins, Kuala Lumpur, various issues Blinder, A.S. (1975), 'Distribution Effects and The Aggregate Consumption Function,' Journal of Political Economy, June, pp. 447-75.
Margin Analysis for Consumer Deposit Interest Rate Policy
  • Robert O Edmister
Edmister, Robert. O. (1982), "Margin Analysis for Consumer Deposit Interest Rate Policy." Journal of Bank Research, Autumn 1982, pp. 179-84.
The Effects of Rates of Profit on Islamic Bank's Deposits: A Note
  • S Haron
  • B Shanmugam
Haron, S., and Shanmugam, B. (1995), 'The Effects of Rates of Profit on Islamic Bank's Deposits: A Note.' Journal of Islamic Banking and Finance, Vol 12, No 2, pp. 18-28.
Profit-Sharing: Questions that Need to be Answered
  • S Haron
Haron, S. (1997), 'Profit-Sharing: Questions that Need to be Answered.' New Horizon, February, pp. 10-12.
Commercial Bank Management
  • Peter Rose
Rose, Peter. S (1991), Commercial Bank Management, Richard D. Irwin Inc., United State of America.