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1
Adriansyah, Ahmad, Fathoni Zoebaedi, and Ramzi A. Zuhdi. "Does the Principle of Running a Business in Conventional Vs Sharia Become Differentiator? Study on Banking Industry in Indonesia 2009 - 2014." Jurnal Ilmu Manajemen & Ekonomika 8, no. 2 (June 30, 2016): 116. http://dx.doi.org/10.35384/jime.v8i2.10.
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Comparing to conventional bank, Islamic banking industry in Indonesia relatively still in the early development stage. Islamic bank is different with conventional bank, and therefore there is a special regulation for Islamic bank. Research conducted in 22 countries (including Indonesia), shows that Islamic banking and has differences with conventional banking in term of business orientation, efficiency, asset kuality and stability. But other research 13 countries (not including Indonesia), show that Islamic banking’s performance is lower than conventional banking (Ariss, 2010). Islamic banking in Indonesia has a unique characteristic. Most of Islamic banking in Indonesia is converted from conventional bank, owned by conventional bank or originated from a conventional bank. Some resource of Islamic bank comes from conventional banking even some of them still using resource from their conventional bank as their parent. This result raises a question, whether in the context of Islamic banking in Indonesia, its performance is significantly different from conventional banks. To answer the research questions above, we do a t-test on ROA and ROE Islamic banks and conventional banks from 2009-2014. The results showed that there was no significant difference between the financial performances of Islamic banks with conventional banks, except for 2014. In 2014 Islamic bank’s ROE is lower than conventional banks. This research opens the opportunity to study the factors that could cause a difference in the performance of Islamic banks vs conventional banks.
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Ismail, Naima, and Mohamad Sabri bin Haron. "Islamic Banks." INTERNATIONAL JOURNAL OF MANAGEMENT & INFORMATION TECHNOLOGY 10, no. 1 (June 25, 2014): 1754–61. http://dx.doi.org/10.24297/ijmit.v10i1.647.
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Islamic banks has development in many aspects in practical performance of banks function, this was a limited activity in service Banks and commercial processes. Later, it came to They possess financial power and ability to create Islamic loans. They possess financial power and ability to create Islamic loans. Economical union supported by banks is not restricted to a domestic sphere, but has expanded internationally as its operations enjoy fidelity and fulfillment between banking organizations in different countries. As banking systems Islamic banks had developed, they are no longer restricted to role of being financial and service organizations, but have become money market within public sector. Furthermore, they follow up monetary flows and banking securities, by playing positive role of providing the organized money market with enough information about commercial activities. In addition, as a financial mediator who has adequate statistics about other economical units, besides its main role in creating successful development plans and riskless investment.
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Mawardi, Wisnu, Mahfudz Mahfudz, Rio Dhani Laksana, and Intan Shaferi. "Risk Hazard of Banking in Emerging Countries." WSEAS TRANSACTIONS ON SYSTEMS 21 (December 31, 2022): 372–81. http://dx.doi.org/10.37394/23202.2022.21.41.
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The development of Islamic banking has been examined. Many researchers have been dedicated to researching how this growth generates microeconomic consequences on financial institution efficiency. This paper embodies a comprehensive analysis of Basel II standard implementation impacts gap in hazards between Islamic and conventional banks in Asia countries (Indonesia, Malaysia, Singapore, Thailand, and Philippines, Brunei Darussalam). Basel II requirements make contributions to expand the distance in hazard between conventional banks and Islamic Banks at the rate of the latter. Four arguments may be supplied to provide an explanation for why Basel II requirements can contribute to making Islamic banks exceptionally riskier than conventional banks. the connection between Islamic banking and hazard is conditional on the regulatory framework. A mapping descriptive examination analyzing the international locations of every form of bank and the 12 months of implementation of Basel II regulation. This method was utilized in the Basel II implementation in a few of the Asia nations of our pattern for the duration of the length of examination from 2015 to 2020. The treatment group consists of banks in nations with an implementation of Basel II for the precise year with a substantial 10%; those findings also are located whilst one by one thinking about small banks and massive banks, therefore, assisting the view that the connection between Islamic Banking And Hazard is conditional to the regulatory framework.
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Lakis, Vaclovas, and Daiva Baltušytė. "ISLAMIC BANKING AS AN ALTERNATIVE TO BANKS IN THE WESTERN COUNTRIES." Ekonomika 96, no. 3 (January 31, 2018): 73–89. http://dx.doi.org/10.15388/ekon.2017.3.11571.
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After the last banking crisis in the Western world, which provoked an economic recession in many countries, the attention to Islamic banking has increased. Islamic banking took a more important place in global banking, since the economic and financial crisis there was of smaller scope than in the banks of Western countries. The principles of Islamic banking are based on Shariah requirements, which emerged from the Koran. The most important fact is that Islamic banks cannot seek profit, which does not require any risk or efforts. They do not use any financial instruments, which are not covered by assets (derivatives). On the other hand, Islamic banks, while granting loans, assume all or a part of risk, if in the case of implementation of project some losses appear. They responsibly appreciate the possibility of granting the loans, the main goal of which is to finance projects and promote business development; they share the risk with the clients and value mutual cooperation. The goal of the article is to investigate the peculiarities of Islamic banking. The article investigates the formation of Islamic banking’s main characteristics and principles, its accounting peculiarities and the instruments that are applied. Research methods include the analysis of collected information, comparison, critical assessment and induction.
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Othman, Norfaizah, Mariani Abdul-Majid, and Aisyah Abdul-Rahman. "Determinants of Banking Crises in ASEAN Countries." Journal of International Commerce, Economics and Policy 09, no. 03 (October 2018): 1850009. http://dx.doi.org/10.1142/s1793993318500096.
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This paper attempts to estimate the determinants of crises on Islamic banking system during financial crises using early warning system (EWS) with particular focus on the element of profit–loss sharing. Profit–loss sharing has significant impact in reducing crisis probability experienced by the Islamic banking system. This suggests that profit–loss sharing may be considered as one of the risk mitigation techniques for bank to remain resilient during the crises. The results further show that full-fledged Islamic banks have higher chances of experiencing crises relative to the Islamic subsidiaries banks. In addition, economic freedom and overvaluation in the currency are more likely exposed to banks to the crises.
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Khasawneh, Ahmad Y. "Vulnerability and profitability of MENA banking system: Islamic versus commercial banks." International Journal of Islamic and Middle Eastern Finance and Management 9, no. 4 (November 14, 2016): 454–73. http://dx.doi.org/10.1108/imefm-09-2015-0106.
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Purpose This paper aims to compare Islamic and commercial banks in the region of Middle East and North Africa (MENA) in terms of profitability and stability. Design/methodology/approach The study combines both the descriptive and analytical approaches. It considers panel data sets and adopts panel data econometric techniques. Findings The determinants of banks profitability and stability are different according to bank’s type. The results show that Islamic banks are more profitable than commercial banks, while on the other hand, commercial banks are more stable than Islamic banks. It is also concluded that banks profitability and stability are determined through some bank’s characteristics variables and macroeconomic variables in addition to the financial crises. MENA commercial and Islamic banking was affected by the financial crises in terms of profitability and stability. Additionally, larger banks are more stable than smaller banks, and off-balance sheet activities increase banks’ vulnerability for both commercial and Islamic MENA banks. Research limitations/implications The most prominent limitation is the lack of data, as we had to exclude some variables because of missing observations. As a result, the authors could not use data envelopment approach and stochastic frontier approach to evaluate banks efficiency in MENA countries rather than the financial ratios. Practical implications Commercial banks need to enhance their capitalization to improve their profitability. Additionally, Islamic banks need to improve the risk assessment and adopt some of the available risk management tools. Moreover, the banking system should take advantage of relatively higher Islamic banks profitability and use the unexploited profit opportunities through spreading into those countries with limited availability, such as the North African countries. Originality/value This study address both banks profitability and stability in an emerging region that includes banks of different types (Islamic and commercial) which are located in different counties that allows accounting for operational and institutional differences.
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Nugrohowati, Rindang Nuri Isnaini, Muhammad Hamdan Syafieq Bin Ahmad, and Faaza Fakhrunnas. "Investigating The Determinants of Islamic Bank’s Profitability: A Cross Countries Analysis." Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan 23, no. 2 (December 31, 2022): 254–68. http://dx.doi.org/10.23917/jep.v23i2.20409.
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The measurement of bank profitability has an essential role in the banking sector’s success and is an indicator for predicting financial distress. This study aims to look at the determinants of the profitability of Islamic banks by including the bank’s internal and macroeconomic variables. The study focuses on Islamic banking in 10 countries with the most prominent Islamic finance sector during the 4th quarterly data period from 2016 to the 4th quarter of 2021. The data analysis method in this study uses panel data fixed effect model analysis. The results showed that the bank’s internal variables, namely bank size, capital adequacy, liquidity, and banking stability, are important factors that affect profitability. Interesting findings show that increased financial inclusion variables and labor productivity can encourage high profitability growth. Meanwhile, GDP and inflation also affect banking performance from the macro sector. The study implies that Islamic bank needs to manage the internal financial condition properly to achieve and maintain the performance. In addition, to increase the performance the bank needs to heighten the human resources capacity while the financial authorities are required to issue the policies to support the development of Islamic banks.
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Kasri, Rahmatina A., and Nur Iman. "Analisis Persaingan Perbankan Syariah Indonesia: Aplikasi Model Panzar-Rosse." Jurnal Ekonomi dan Pembangunan Indonesia 11, no. 1 (July 1, 2010): 1–20. http://dx.doi.org/10.21002/jepi.v11i1.178.
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Indonesia is among the few countries that adopts dual banking system where Islamic banks run in parallel and compete with conventional banks. Although under such a system banking competition would be expected to be high, data tend to show the opposite case, as three Islamics banks acquired 65 percent of market share in Indonesia. This study, therefore, attempts to determine the degree of banking competition in Indonesia by employing the Panzar-Rosse Model for 2003-2008 period. The study also analyses the competitive behaviors of Islamic banks and compares it with those of its conventional counterparts. The estimated model suggests that monopolistic competition exists in the overall banking industry—the degree is even slightly higher for Islamic banking, where the market is characterized by aggressive competition for funding, quality human resources, and financing. Such competition occurs due to, among others, small market size, low consumer base, lack of product variations, and lack of competent human resources. These should be a major concern for all Islamics banking stakeholders for developing a better Islamic banking industry, particularly in Indonesia.
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Lone, Fayaz Ahmad, and Ulfat Rashid Bhat. "Does the tag “Islamic” help in customer satisfaction in dual banking sector?" Journal of Islamic Marketing 10, no. 1 (March 4, 2019): 138–49. http://dx.doi.org/10.1108/jima-11-2016-0084.
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Purpose The purpose of this paper is to find out the importance of the tag “Islamic” in the title of banks. This will help to determine the future strategy of Islamic banks, while expanding to the countries where Islamic banking is seen as a religious banking and not an as an alternative approach to the conventional banking. Design/methodology/approach Adopting convenience sampling, a total of 596 customers of both Islamic and conventional banks were surveyed from four regions of Saudi Arabia (Makkah, Madinah, Riyadh and Dammam) using a self-structured questionnaire on a five-point Likert scale. Findings The results concede that Islamic banks without the tag “Islamic” and conventional banks have same customer satisfaction. There are some factors other than the tag “Islamic” which are driving customers towards Islamic banking. Those factors include physical aspects of the bank, level of satisfaction with the services, dealing and attendance by the staff and safety and security of the bank. Besides, the application of fundamental principles of Islamic banking works as a key motivation for customer satisfaction with Islamic banking. Practical implications Applying the tag “Islamic” is not as important as implementing the principles of Islamic banking. Islamic banks can survive and compete well even without using the “Islamic” tag if they implement the prime principles of Islamic banking and work on improving the factors highlighted by this study. This study can prove to be helpful in the expansion of Islamic banking in the countries where religious banking is not generally preferred by customers. Originality/value This is the first study to find out the customer satisfaction in a dual banking system (comprising of conventional banks and Islamic banks that do not use the tag “Islamic”), thereby filling the existing gap in the Islamic banking literature.
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GUNPUTH, Rajendra Parsad. "Micro-Credit in Conventional Banking: Would Islamic Banking be the Golden Age for Entrepreneurs? -The Mauritius Case Study." Journal of Social and Development Sciences 5, no. 1 (March 30, 2014): 14–25. http://dx.doi.org/10.22610/jsds.v5i1.801.
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The broad aim of this paper is to make an analogy between conventional banks and Islamic banking in micro-credit and the incentives they may provide for entrepreneurs and small and medium enterprises (SMEs) in a Mauritian perspective? Indeed, in Mauritius traditional or conventional banks are more and more reluctant to give loans to entrepreneurs who are considered as high risk investors (their fragile entrepreneurs may collapse unexpectedly) despite they create jobs and employment. In contrast, in most Islamic countries Islamic banks allow businessmen and investors among others to have loans without interest (or riba) according to sha’ria compliants and tailor made Islamic contracts (mudabara and musarakha) to support their innovations and proposals. Despite Islamic banking is at its burgeoning state it has expanded considerably in most Islamic and Arab countries. Would Islamic banks uproot conventional banks irrespective it is in Islamic countries or Western countries? This paper therefore adds to an already abundant literature on the subject-matter but it enlightens a central issue: would Islamic banking, sha’ria law and Islamic economies be the golden age for entrepreneurs and SMEs in Mauritius and worldwide?
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Stoika, Viktoriia. "Integration of Islamic banking in the national banking sector: foreign experience." SHS Web of Conferences 65 (2019): 09004. http://dx.doi.org/10.1051/shsconf/20196509004.
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The rules of banking management in Muslim countries are based on the Sharia Law, that is, a set of rules and laws relating to the management of the economy, social, political and cultural aspects of Islamic society. Sharia Law also prohibits the conclusion of immoral transactions and endorses social justice, which is ensured through the distribution of risks and returns, and the implementation of social investment. In the context of economic globalization, this phenomenon is already quite distinguished and is considered a worthy competitor to the traditional banking system. Features of Islamic banking institutions activities become their advantages in comparison with traditional banking institutions. That is why Islamic banks have become active participants in the global financial market, despite the specific nature of their operations and the difficulties of their adaptation to international practice. Islamic banking has spread not only in the developed countries of Western Europe, but also in Central Asia. The study of the process of Islamic banks activities in the financial markets of such countries as Great Britain, Germany, Kazakhstan and Uzbekistan allows us to identify two forms of their functioning: establishment of Islamic windows by banking institutions of these countries and direct entry of banks that originate from Islamic countries. The experience of the above-mentioned countries regarding the integration of Islamic banking into the national financial sector has shown, first of all, the need to develop an appropriate regulatory framework, to form an appropriate infrastructure, to conduct awareness-raising activities, to strengthen international cooperation with investor countries.
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Hossain, Basharat. "Islamization of Monetary Policy of 27 OIC Muslim Countries in Asia: The Successes, The Barriers and The Future Directions." Global Review of Islamic Economics and Business 7, no. 2 (January 3, 2020): 091. http://dx.doi.org/10.14421/grieb.2019.072-04.
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The Islamization of banking, monetary policy, and the financial system began in 1975 after the setup of the Islamic development bank (IDB). Firstly, this paper discusses a concise framework of Islamic monetary policy. Then it presents the success and obstacles of the Islamization process of the monetary policy among the 27 OIC member Muslim countries in Asia and provides future directions to enhance the Islamization process. This paper employed secondary data and used the three criteria to measure the Islamization process: 1) Islamization of commercial banking; 2) making Islamic banking guidelines & regulations; 3) innovation and starting the Islamic monetary policy instruments. This paper finds that more than 154 Islamic commercial banks are operating under the Conventional monetary policy in 23 countries with very few Islamic monetary tools. On the contrary, Iran follows full-pledged Islamic monetary policy with 30 Islamic commercial banks. More precisely, in these countries, only 17% of total banks are Islamic bank, whereas 83% are still interest-based banks. Regrettably, two countries (Turkmenistan and Uzbekistan) do not have any tools of Islamic monetary policy. This paper also finds that though 64% of Islamic banks were established during 1970-2000 periods in 27 countries, only 25% of countries prepared Islamic banking regulation at this period. On the other hand, 75% of Islamic banking regulations were made during 2000-2015 periods. Most common Islamic monetary instruments are project-based Sukuk, project-based debt instruments, etc. Finally, this paper recommends six steps to enhance the Islamization process.
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Alshammari, Turki. "Performance differences between Islamic and conventional banking forms." Banks and Bank Systems 12, no. 3 (October 30, 2017): 237–46. http://dx.doi.org/10.21511/bbs.12(3-1).2017.08.
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This paper strives to recognize the possible performance differences between the two popular banking forms in the Gulf Cooperation Council (GCC) countries. Applying different methodologies on the data that span the period 2003–2015, this study docu¬ments significant differences with respect to the period, countries, and performance measures. Specifically, conventional banks in GCC countries outperform their Islamic counterparts in profitability. Also, bank specific factors such as liquidity, capital ad¬equacy, bank size and growth all affect the profitability. In addition, GCC conventional and Islamic banks were isolated from the 2008 subprime crisis even though their prof¬itability seems to be decayed differently over the period of the economic downturn.
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Zolota, Aida. "PREJUDICES ABOUT ISLAMIC BANKING." Knowledge International Journal 28, no. 5 (December 10, 2018): 1633–39. http://dx.doi.org/10.35120/kij28051633a.
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Islamic banking has been intensively developed over the past fifty years, although Islam has existed since the 7th century. It is a banking model that operates in accordance with Sharia regulations. Islamic banks, globally, have a growing share of assets and more and more clients. They operate in Muslim-majority countries, but also in non-Muslim Majority countries. It is well-known (and most often confusing to people who do not know enough about the way these banks operate) that Islamic banks are strictly forbidden to charge interest, however, doing business in accordance with Sharia regulations has some other specificities, but also some other prohibitions. In spite of obstacles and prejudices, Islamic banking is intensively developing. Some of the most famous products/services of Islamic banks are: musharaka, mudaraba, murabaha and ijara. Bearing in mind the intensive development of Islamic banking and finance, the need for global reporting on the situation and developments in this area has arisen. Such a report has been published by the Islamic Bankers Association since 2010. The report is named Global Report on Islamic Finance (GIFR) and is published annually. Every year, the report has a specific topic that is in the focus of the report and the current information on the situation and prospects of Islamic banking and finance. What progress has been made in the development of Islamic banking and finance, and what is the current situation and role of Islamic banking and finance today, perhaps the best shows the topic that is in the focus of the GIFR 2018, which is: Global Islamic Economy and Islamic Finance. There are also so-called Islamic Indices. During the last global financial crisis, banks operating in accordance with Islamic regulations (sharia) have shown better resilience than conventional banks, and because of that they attracted the attention of the global financial community. However, the prejudices about Islamic banks and Islamic banking are still present. This was also confirmed by the research done in Bosnia and Herzegovina. The subject of this paper is prejudices about Islamic banking, and the aim of the paper is to explain the basics of Islamic banking and point out the prejudices that exist about Islamic banking in Bosnia and Herzegovina. Business in accordance with Sharia regulations (banking products / services) has been present in Bosnia and Herzegovina for 15 years. A simple random sample was selected for the survey, and the data was collected through a questionnaire. The results of the survey show that the population is still insufficiently educated about Islamic banking and that there are prejudices.
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Mazurina, Tatyana, and Shukrullokhon Sharipov. "Stability, efficiency and financial risks of islamic banks in conditions of instability of global financial system." Upravlenie 7, no. 1 (May 7, 2019): 105–13. http://dx.doi.org/10.26425/2309-3633-2019-1-105-113.
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In modern conditions of implementation Islamic model of banking, the issues of increasing efficiency of its activities and ensuring the long-term stability of Islamic banks come to the fore. Article analyzes the activities of Islamic banks in the post-crisis period, both in the global Islamic banking sector as a whole, and in the context of individual countries in which Islamic banks are predominantly or significantly represented, as well as financial risks that pose a threat of losses for Islamic banks. It has been concluded that the Islamic financial system is becoming one of the most important components of the international financial system, and Islamic banks within the global financial system are becoming more recognized and competitive, as they demonstrate a sufficiently high efficiency and stability of activity, a positive trend of development. Analysis found that Islamic banking has demonstrated its reliability and stability in the post-crisis period and continues to be a viable and effective mechanism of financial intermediation in the conditions of global financial system instability. The differences in the functioning and performance of Islamic banks in different countries within a single consolidated Islamic banking system have been revealed, a comparative analysis effectiveness of banking sectors a number of Muslim countries has been given, the directions of development of Islamic banking in them have been shown. Conclusions have been drawn on the need for Islamic banks to introduce effective mechanisms for monitoring and managing financial and investment risks in order to increase their ability to withstand adverse external factors, since in the future, despite the positive trends in the activities of Islamic banks, there are potential financial risks due to the growth of their current costs associated with the possibility of potential deterioration in the quality of assets and reduction in the level of profit.
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Jan, Amin, Maran Marimuthu, Muhammad Pisol bin Mohd @ Mat Isa, and Muhammad Kashif Shad. "Bankruptcy Forecasting and Economic Sustainability Profile of the Market Leading Islamic Banking Countries." International Journal of Asian Business and Information Management 10, no. 2 (April 2019): 73–90. http://dx.doi.org/10.4018/ijabim.2019040104.
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This study used bankruptcy forecasting as a proxy for measuring economic sustainability profile of the Islamic banks in the market leading Islamic banking countries. The countries are Malaysia, Saudi Arabia, Iran, UAE and Kuwait. A sample of 29 Islamic banks with a post-crisis period data from 2009-2013 was collected for empirical testing. Results indicated that Saudi Arabian Islamic banks recorded the most minimal bankruptcy rate of 29 percent, followed by UAE with 31 percent, Kuwait with 48 percent, Malaysia with 55 percent and Iran with 68 percent respectively. The results further indicated that profitability, liquidity, insolvency, and productivity ratios have a significant positive impact on bankruptcy profile of the selected Islamic banks. This study lends credence to multiple stakeholders for taking appropriate measures regarding the deteriorating economic sustainability of the Islamic banks in the market leading Islamic banking countries. It also urges to develop a separate Shariah-based sustainability measurement framework for the Islamic banks.
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Saadaoui, Zied, and Hichem Hamza. "Lending cyclicality in dual banking system: empirical evidence from GCC countries." Journal of Islamic Accounting and Business Research 11, no. 9 (November 11, 2020): 2113–35. http://dx.doi.org/10.1108/jiabr-03-2020-0082.
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Purpose The purpose of this paper is to check if there is a procyclical lending behaviour in dual banking systems of the Golf Cooperation Council (GCC) countries. The study also tries to control for the role of Islamic banks in amplifying or mitigating the procyclicality of dual banking systems. Design/methodology/approach Estimation of a dynamic panel model using annual observations on a sample of 81 banks based in the GCC countries between 2005 and 2018. The study uses two business cycle indicators as dependent variables, namely, output gap and oil price gap. Findings The system generalilzed method of moments (GMM) estimator and robustness checks confirm the procyclical lending pattern of dual banking systems in the GCC. Estimation outputs also indicate that this procyclicality is more pronounced during economic slowdowns. However, it is found that Islamic banks’ lending is less procyclical, giving support for the stability view of Islamic banking systems. The authors think that the implementation and conduct of macroprudential policies are very challenging for banking authorities when Islamic banks and conventional banks operate under the same regulatory framework. Research limitations/implications The research paper may suffer from some limitations. Indeed, exploring panel data instead of country-case data may lead to a problem of heterogeneity that may underpin the credibility of the econometrical estimations. To deal with this problem by introducing a set of bank-specific and time-specific dummies. Furthermore, small N samples (N = number of individuals) may affect the reliability of the tests for the validity of instruments and autocorrelation used under the GMM estimator, leading to inefficient results. Consequently, the number of selected banks is extended as much as possible (81 banks), becoming important comparing to the time dimension of the panel. Practical implications Policymakers and regulators are incited to embed the perspectives of Islamic finance regarding lending cyclicality in dual banking systems, which promote the efficiency of resource allocation to the financing of assets and by consequence enabling financial stability. The stability view of the Islamic banking system could prompt policymakers and regulators to encourage the implementation and development of Islamic banks. Originality/value The present paper tries to overcome the lack of empirical studies on the procyclicality of dual banking. The study contributes to this novel literature in two ways. First, it focuses exclusively on GCC banking systems. In fact, compared to other emerging markets, business cycles characterizing GCC are specific because of the role played by the oil and gas revenues in the economic growth and financial system is crucial. Second, this paper brings into evidence the procyclicality of GCC banking systems also when the oil price is taken as a business cycle indicator.
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Terzi, Chokri, and Anis El Ammari. "Measuring the Financial Performance of Islamic Banks in Selected Countries." Journal of Finance & Corporate Governance 2, no. 1 (June 30, 2018): 7–20. http://dx.doi.org/10.54960/jfcg.v2i1.15.
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The object of this paper is to study the theory of the finance and the Islamic banks through their concepts and logics of functioning. We focus on the analysis of the banking performances, in particular in terms of profitability which has a big interest to allow the banks to arrest the factors which act on their profitability and of offering them so better control levers of action, control and forecast. What requires a definition of the internal and external determiners of the profitability of Islamic banks? We suggest approaching this question from the specification and from the estimation of a model which integrates at once organizational, exogenous and macro-financial measurable aspects. The empirical analysis was focused on the determiners of the Islamic banking performance. Our study which concerned 10 Islamic banks in 10 various countries showed essentially that the profitability of asset constitutes the main explanatory variable of the banking performance. The performance is positively correlated with CTA and negatively with ASITA. Concerning the externals factors, the profitability is weakly explained by the rates of inflation and growth.
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Gharbi, Leila, and Halioui Khamoussi. "Fair value and banking contagion." Journal of Islamic Accounting and Business Research 7, no. 3 (June 13, 2016): 215–36. http://dx.doi.org/10.1108/jiabr-12-2014-0042.
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Purpose This paper aims to explore empirically the impact of fair value accounting on banking contagion in a comparative context between Islamic banks and conventional banks. Design/methodology/approach The analysis of the impact of fair value changes on banking contagion is carried out through a panel data model. This study covers 20 Islamic banks and 40 conventional banks operating in the Gulf Cooperation Council (GCC) countries during nine years from 2003 to 2011. Findings Empirical evidence shows that there is a significant change in dynamic volatility in GCC banking sector because of financial crisis 2008. However, results fail to confirm the hypothesis that fair value accounting is significantly associated with an increase of banking contagion for both Islamic and conventional banks operating in GCC countries. Originality/value The outcome of this study provides some insights for academicians, accountants as well as regulators in terms of enhancing the effectiveness of accounting practices.
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Alaeddin, Omar, Ahmed Khattak, and Moutaz Abojeib. "EVALUATING STABILITY IN DUAL BANKING SYSTEM: COMPARISON BETWEEN CONVENTIONAL AND ISLAMIC BANKS IN MALAYSIA." Humanities & Social Sciences Reviews 7, no. 2 (August 20, 2019): 510–18. http://dx.doi.org/10.18510/hssr.2019.7260.
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Purpose of Study: This paper aims to explore whether Islamic banks are more stable when compared with conventional banks in a dual banking system.
Methodology: This research employs Pooled OLS methodology for 42 banks, including 27 conventional banks and 15 Islamic banks, for the period of 2005-2016.
Results: The study suggests that Islamic banks are less stable compared to conventional banks in overall banking sector. Furthermore, it is found that big Islamic banks are less stable than big conventional banks and small Islamic banks are less stable than small conventional banks. The results disapprove of the widespread belief that Islamic banks are more stable and more resilient to adverse shocks in the financial crisis. Moreover, while investigating the shift in overall level of banking stability with respect to financial crises, regardless of bank type and bank size, it is observed that the overall banking stability is enhanced after the financial crises. This is intriguing and a sigh of relief for policy makers and regulators in the country.
Implications/Applications: This research is of contribution to policy makers and central banks in the countries with highly dual banking environment and for the central banks striving to become International Islamic financial hub.
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Ayu Yunanda, Rochania, Mohammad Ali Tareq, Akbariah Binti Mahdzir, and Faried Kurnia Rahman. "NATIONAL CULTURE AND TRANSPARENCY: EVIDENCE FROM ISLAMIC BANKS." Journal on Innovation and Sustainability. RISUS ISSN 2179-3565 10, no. 1 (March 12, 2019): 101–9. http://dx.doi.org/10.24212/2179-3565.2019v10i1p101-109.
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The purpose of this paper is to investigate the effects of predominant cultural values on banking disclosure. On one hand, Islamic banks have practiced Islamic principles which are universal for all countries. Islamic banks are expected to provide transparent information especially in terms of social and Shariah(Islamic) compliant information as Islamic banks claim themselves to have social objectives as the prime consideration. Islamic banks also have Shariah supervisory body to ensure that the banking activities and business operations are in line with Islamic requirements. On the other hand, Hofstede‘s cultural dimensions and Gray‘s hypotheses have rendered remarkable contributions in financial and accounting practices among different nations. Examining 45 Islamic banks in 11 Moslem majority countries, this paper focuses on four particular cultural dimensions namely individualism/collectivism, masculinity/femininity, uncertainty avoidance, and power distance and whether these dimensions have an impact on transparency. This study found that two out of four national cultures still have significant effect on the transparency level in Moslem majority countries.
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Musleh Alsartawi, Abdalmuttaleb. "Performance of Islamic banks." ISRA International Journal of Islamic Finance 11, no. 2 (December 9, 2019): 303–21. http://dx.doi.org/10.1108/ijif-05-2018-0054.
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Purpose This paper aims to investigate the relationship between the composition of Sharīʿah supervisory boards (independence and frequency of meetings) and the performance of Islamic banks in the Gulf Cooperation Council (GCC) countries. Design/methodology/approach The study developed a multiple linear regression model, and data were collected from the annual reports of 48 standalone Islamic banks listed in the GCC countries covering the period between 2013 and 2017. Findings The results showed a statistically significant and negative relationship between the composition of the Sharīʿah supervisory boards and the performance of Islamic banks. Research limitations/implications As the current study used only one indicator, that is Return on Assets to measure performance, it is recommended to expand the framework of this study, through the addition of market-based performance indicators such as Tobin’s Q. Practical implications This study recommends the GCC countries to follow a more proactive Sharīʿah governance model to strengthen their frameworks from both regulatory and non-regulatory aspects. Originality/value The study contributes to the Sharīʿah governance and Islamic banking literature relating to the GCC countries as previous studies gave no attention to the composition of Sharīʿah supervisory boards.
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Faisal Jamal, Khurram. "Relationship Analysis of Islamic Banking between Malaysia and Pakistan." Journal of Management Info 5, no. 4 (December 31, 2018): 1–6. http://dx.doi.org/10.31580/jmi.v5i4.114.
Full textAbstract:
Islamic banking is basically a system of financial intermediation, its primary objective is to avoid receipt and payment of interest. Islam does not only prohibit dealing with interest but also with liquor, pork, gambling, pornography and any other thing which are considered haram according to Shariah. The objectives of the research is to study and describe the Islamic financing techniques used by Islamic banking institutions in Malaysia and Pakistan. For this research seven variables Promotion, Product, Preference, Knowledge, Performance, Problem and Infrastructure was taken. Qualitative technique was used to answer the research objective. The findings of research indicate that lack of awareness of Islamic banking is very high in Pakistan as compared to Malaysia. A few promotions were used by Islamic banks in Pakistan while in Malaysia customers are knowledgeable about Islamic banking because banks promote them aggressively. There is a need of government and education sector support to promote Islamic banking in both countries. The study also found that Islamic banks in Malaysia have large range of products as compared to Pakistan. The practitioners from both countries are agreed at this point that BBA, Ijarah and Murabaha are more profitable and less risky than Musharaka and Mudaraba. The Islamic banking products are almost used for same purposes in both countries while some differences are also exists.
Keywords: Islamic Finance, Comparative Study, Malaysia, Pakistan
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Hussain, Khalid, and Malik Muhammad. "Performance of Islamic and Conventional Banks: The Impact of Basel III." Journal of Islamic Business and Management (JIBM) 12, no. 01 (June 30, 2022): 32–48. http://dx.doi.org/10.26501/jibm/2022.1201-004.
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Purpose: To overcome the deficiencies of the Basel II and to respond the great depression of 2008, Basel III is designed to lower the default risk of banks. However, the unique business model and capital structure of Islamic banks is ignored at this point. A common banking regulation for two different types of banks may have a different impact on the profitability and cost efficiency of these banking types. In this regard, we address the question of the relative performance of both banking types in response to Basel III standards. Methodology: The study utilizes data of 79 banks, both Islamic and conventional, for the period of 2005 to 2019 from 10 different countries. For estimation, the study uses fixed-effect regression analysis. Findings: We find a positive impact of Basel III regulations on profitability and cost efficiency of the Islamic banks and a negative impact on conventional banks. The findings indicate that the favorable impact of Basel III on Islamic banks reduces the performance gap between both types of banks. Originality/Significance: This is perhaps the first paper which empirically explores the impact of Basel III regulations on the comparative performance of both types of banks. Policy Implications: The declining profitability and cost efficiency of conventional banks draw the attention of global and local banking regulators. Basel Committee on Banking Supervision (BCBS) and central banks of the countries with dual banking models should address this negative effect of the implementation of Basel III on conventional banks.
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Faizulayev, Alimshan, Isah Wada, Asset Sadvakasovna Kyzdarbekova, and Indira Parmankulova. "What drives the banking competition in Islamic finance oriented countries? Islamic vs conventional banks." Journal of Islamic Accounting and Business Research 12, no. 4 (June 10, 2021): 457–72. http://dx.doi.org/10.1108/jiabr-06-2020-0173.
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Purpose This study aims to examine the dynamics of banking competition between Islamic banks (IBs) and conventional banks (CBs) in emerging finance-oriented Islamic economies, also known as the QISMUT + 3 (i.e. Qatar, Indonesia, Saudi Arabia, Malaysia, the United Arab Emirates, Turkey, Bahrein, Kuwait and Pakistan). The main aim was to conduct a comparative market power analysis between IBs and CBs in the 2006–2015 period. Design/methodology/approach The study used bank-specific and macro-economic variables available in the Orbis Bank Focus and the World Bank databases. The study applied a dynamic approach to detect endogeneity problems and unobserved heterogeneity using the two-step system GMM estimate. Findings The research shows that market power persists in both types of banks over time. It also demonstrates that capital adequacy does not explain the market power of banking in the studied countries. Unlike IBs, the scale of banking does not influence the market power CBs. Corruption undermines competition in the conventional banking system. However, because of the ideological orientation of IBs, corruption does not affect their competitiveness. IBs outperform CBs in QISMUT + 3 countries in terms of banking competitiveness. They also have higher persistency of market power in the region. Practical implications This study is a very beneficial source of information that can provide effective guidelines for efficient productivity and improved competitiveness of IBs and CBs in finance-oriented Islamic countries. Originality/value The study is the first to compare the market power of IBs and CBs in this country classification. In addition, the study examined a large number of IBs and CBs to carry out this research.
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Faisal, Khuram. "Relationship Analysis of Islamic Banking between Malaysia and Pakistan." Journal of Economic Info 5, no. 2 (October 1, 2018): 7–12. http://dx.doi.org/10.31580/jei.v5i2.112.
Full textAbstract:
Islamic banking is basically a system of financial intermediation, its primary objective is to avoid receipt and payment of interest. Islam does not only prohibit dealing with interest but also with liquor, pork, gambling, pornography and any other thing which are considered haram according to Shariah. The objectives of the research is to study and describe the Islamic financing techniques used by Islamic banking institutions in Malaysia and Pakistan. For this research seven variables Promotion, Product, Preference, Knowledge, Performance, Problem and Infrastructure was taken. Qualitative technique was used to answer the research objective. The findings of research indicate that lack of awareness of Islamic banking is very high in Pakistan as compared to Malaysia. A few promotions were used by Islamic banks in Pakistan while in Malaysia customers are knowledgeable about Islamic banking because banks promote them aggressively. There is a need of government and education sector support to promote Islamic banking in both countries. The study also found that Islamic banks in Malaysia have large range of products as compared to Pakistan. The practitioners from both countries are agreed at this point that BBA, Ijarah and Murabaha are more profitable and less risky than Musharaka and Mudaraba. The Islamic banking products are almost used for same purposes in both countries while some differences are also exists.
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Ousama, A. A., Helmi Hammami, and Mustafa Abdulkarim. "The association between intellectual capital and financial performance in the Islamic banking industry." International Journal of Islamic and Middle Eastern Finance and Management 13, no. 1 (November 21, 2019): 75–93. http://dx.doi.org/10.1108/imefm-05-2016-0073.
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Purpose The purpose of this study is to empirically investigate the impact of intellectual capital (IC) on the financial performance of Islamic banks operating in the Gulf Cooperation Council (GCC) countries. Design/methodology/approach The study measures IC by the value added intellectual coefficient model. A regression analysis was used to assess the impact of IC on financial performance. The research sample consisted of Islamic banks operating in the GCC countries during the years 2011, 2012 and 2013. Data originated from the annual reports of Islamic banks. Findings The results support the thesis that IC has a positive impact on the financial performance of Islamic banks. Even though the average IC is lower than that reported in other studies, the positive effect on financial performance is obvious. The findings also show that human capital (HC) is higher than capital employed (CE) and structural capital (SC). The study reveals that SC has an insignificant impact on the financial performance of the Islamic banks compared to CE and HC. Practical implications The findings provide empirical evidence that IC affects the Islamic banks’ financial performance. It helps Islamic banks in the GCC countries to understand how to use their IC efficiently, especially SC as it is yet to be used efficiently. Also, the findings benefit the relevant authorities (e.g. legislators and central banks) who could use them to emphasise strategic policy reforms whenever required. Originality/value The current research adds to the empirical studies in the GCC countries as it views the region as a collective as opposed to individual countries. It also extends the IC and performance measurement literature of Islamic banks in the GCC countries. Moreover, the current study enriches the limited literature on IC in the context of Islamic banking.
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Ibrahim, Mansor. "CAPITAL REGULATION AND ISLAMIC BANKING PERFORMANCE: A PANEL EVIDENCE." Buletin Ekonomi Moneter dan Perbankan 22, no. 1 (April 30, 2019): 47–68. http://dx.doi.org/10.21098/bemp.v22i1.1029.
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This paper empirically assesses the relation between bank performance and capital regulation for Islamic banks from 13 countries and evaluates whether the relation varies with bank size, capital, and liquidity. We find small Islamic banks to be less stable and less profitable; they also cut lending growth as capital regulation becomes more stringent. The stability and lending growth of big Islamic banks are, however, directly related to capital regulation. Further, capital regulation adversely affects the profitability of Islamic banks with low liquidity and high capital holdings. While capital regulation is needed, it should not be adopted in a blanket manner for all Islamic banks.
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Buallay, Amina. "Intellectual capital and performance of Islamic and conventional banking." Journal of Management Development 38, no. 7 (August 12, 2019): 518–37. http://dx.doi.org/10.1108/jmd-01-2019-0020.
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Purpose Intellectual capital (IC) is considered as a lifeblood of the high-tech and knowledge-based sectors. Therefore, there is a great need to highlight the importance of IC in the banking sector. Since the banking sector in the gulf countries is mainly based on Islamic and conventional banking, the purpose of this paper is to provide a comparative empirical analysis between IC efficiency in Islamic and conventional banks, and its impacts on a bank’s operational, financial and market performance. Design/methodology/approach This study examined 59 banks for five years to end up with 295 observations. The independent variable is the modified value added IC components; the dependent variables are performance indicators (return on assets, return on equity and Tobin’s Q). Two control variables are utilized in this study: bank-specific and macroeconomic. Findings The findings deduced from the empirical results demonstrate that there is a positive relationship between IC efficiency and financial performance (ROE) and market performance (TQ) in Islamic banks. However, in conventional banks, there is a positive relationship between IC and operational performance (ROE) and financial performance (ROE). Originality/value The results of this study can be used to present a successful model for the Islamic and conventional banks to concentrate more on the role of IC in enhancing the bank’s performance. In addition, the results of this study may provide a wake-up call for Islamic banks to examine the reasons for the imperfect relationship between the IC and asset efficiency (ROA), as well as for conventional banks to examine the reasons for an imperfect relationship between the IC and market value (TQ).
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Dimov, S., and V. Smirnov. "Risk Management in Dual Banking Systems: Islamic Ethical and Conventional Banking." Review of Business and Economics Studies 7, no. 4 (February 10, 2020): 6–12. http://dx.doi.org/10.26794/2308-944x-2019-7-4-6-12.
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The author makes comments on the state of the problem in part of the English-speaking scientific thought. The authors present a comparative analysis of risk management conducted in countries where the dual banking system is practised — Islamic (ethical) banking and conventional (western) banking. The study showed that a risk profile of an Islamic bank is not significantly different from the one of the conventional banks in practices. In the beginning, they point out the central thesis and prospects for the development of conventional and Islamic banking. The central part of the comments begins with the historical aspect of the comparison. According to him, despite the differences, they are based on the priority of financial and human values. Further, the authors carefully discuss the risk profile of Islamic banks and the unique risks facing Islamic banks. It was confronted with conventional risk management of banks based on the Basel Committee on Banking Supervision (BCBS). Today, the regulation applies to credit risk, market risk, operational risk and liquidity risk (Basel II and Basel III). After all, the author reaches two essential conclusions for his research.
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Kamarudin, Fakarudin, Chiun Zack Hue, Fadzlan Sufian, and Nazratul Aina Mohamad Anwar. "Does productivity of Islamic banks endure progress or regress?" Humanomics 33, no. 1 (February 13, 2017): 84–118. http://dx.doi.org/10.1108/h-08-2016-0059.
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Purpose This paper aims to explore the level of productivity of Islamic banks specifically in selected Southeast Asian Countries from the period 2006 to 2014. Besides, this study also investigates the potential determinants of bank-specific characteristics and macroeconomic conditions that may influence the productivity of banking sector. Design/methodology/approach The present study gathers data on the 29 Islamic banks from Southeast Asian countries, namely, Brunei, Indonesia and Malaysia. The productivity level of the Islamic banks is evaluated using the data envelopment analysis-based Malmquist productivity index method. The authors then used a panel regression analysis framework based on the ordinary least square to identify potential determinants. Findings The domestic and foreign Islamic banks have exhibited progress in total factor productivity change solely attributed to the increase in efficiency change (EFFCH) which were mainly managerial rather than scale related. Foreign-owned banks have been slightly more productive compared to their domestic-owned bank counterparts, attributed to a higher EFFCH but insignificantly different. Furthermore, capitalisation, liquidity and world financial crisis determinants have significantly influenced productivity level of Islamic banks. Originality/value The study on the productivity of Islamic banking is still in its formative stage. To date, very limited study has been conducted to examine the productivity level in Southeast Asian, which is a strong regional hub for Islamic banking. This study intends to fill the gaps with a specific focus on the productivity level, specifically narrowing down to Southeast Asian countries in the domestic and foreign Islamic banking sector.
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Alshater, Muneer Maher, Ashraf Khan, Mohammad Kabir Hassan, and Andrea Paltrinieri. "Islamic Banking: Past, Present and Future." Journal of College of Sharia & Islamic Studies 41, no. 1 (December 2022): 193–221. http://dx.doi.org/10.29117/jcsis.2023.0351.
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Purpose: The Islamic banking literature has been growing rapidly in the last decade. The aim of this study is to carry out a retrospective hybrid review to reveal this literature’s influential scientific actors (countries, institutions, journals, authors and documents), identify and discuss its most important streams, and finally, present a future research agenda. Methodology: We use a bibliometric approach, performing a review and objective analysis of 1,304 articles dealing with Islamic banking published during 1983–2021. We apply citation, keyword, and coauthorship analysis, as well as bibliographic coupling via VOSviewer software and Biblioshiny (an R package). Findings: We identify the influential aspects in the literature and discuss four important research streams: (1) overview, growth, and legal framework of Islamic banks; (2) Islamic banks’ performance and risk management practices; (3) customer and marketing perspectives of Islamic banking; and (4) the dynamics of efficiency in Islamic banks. Originality: This is one of the first studies to apply state-of-the-art methodology to review the literature related to Islamic banking and to highlight the dynamics of Islamic banks while presenting an extensive future research agenda.
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Al-Harbi, Ahmad. "THE EFFECT OF CONVERSION OF CONVENTIONAL BANKS TO ISLAMIC BANKS: EVIDENCE FROM GCC COUNTRIES." International Journal of Islamic Business 5, no. 1 (June 30, 2020): 1–35. http://dx.doi.org/10.32890/ijib2022.5.1.1.
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The conversion from conventional to Islamic banking is one of the important topics in the Islamic finance industry due to non-existence of comprehensive framework for the conversion process contributing to several problems for the converted banks. Thus, the main purpose of this paper is to investigate the effect of conversion from conventional to Islamic banking on the converted banks’ operations. In addition, this paper will shed some light on the motivation behind the conversion and the process of conversion as well as providing answers to some of the problems that could hinder the conversion process. The analytical method used is ratio analysis (t-test) on the data extracted from BankScope database of five banks operating in the Gulf Cooperation Council (GCC) countries. The findings show that conversion helped to improve the performance and financial position of the converted banks, leading to sharp increases in assets, deposits, equity, and net income. Despite these benefits, however, the converted banks' profitability, efficiency, asset quality, liquidity, and risk indicators do not improve. This dichotomy may be due in part to the management’s inability to utilize the banks’ funds more efficiently to bring performance in line with increases in assets, deposits, equity, and net income. The findings indicate that the conversion methods play an important role in the conversion process because choosing the wrong method could slow or rescind the conversion. Thus, this study suggests that the conversion method and banks' management competencies must be taken into account prior to conversion.
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Hayuningtyas, Faizah Diah, Tiara Meilan Putri, Fatimah Nafisati Nugraheni, and Ira Hapsari. "The Influence of Expert Systems on Customer Satisfaction of Islamic Banks." Proceedings Series on Social Sciences & Humanities 7 (August 24, 2022): 42–45. http://dx.doi.org/10.30595/pssh.v7i.470.
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This study discusses the Islamic banking industry, especially in Muslim countries, especially in Indonesia in order to improve the quality of Islamic banks by using an expert system. The use of expert systems in Islamic banks is a new thing so that it can be an innovation and a positive impact on the quality of Islamic banks. The development of Islamic banks is increasing along with the community's need for products, systems and services from Islamic banks, especially expert systems. An expert system is an information system from the knowledge of an expert that is used to assist non-experts in a particular field. Expert systems that can be used in Islamic banking such as the Decision Support System (DSS). Expert systems are useful for making decisions accurately and quickly compared to conventional systems. Expert systems in Islamic banking are new and have not been implemented. This refers to several conventional banks that use expert systems in their operations. The method used in this study is a quantitative approach and descriptive method with data collection techniques and data analysis techniques. The use of expert systems in banking greatly affects the level of efficiency of the information systems used, such as supporting decision-making to improve information systems in Islamic banks. Therefore, the use of expert systems in Islamic banking needs to be developed to improve the quality of transactions and reduce the error rate in the existing information systems in Islamic banking.
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Prasetiyo, Luhur. "Perkembangan Bank Syariah PAsca UU 21 Tahun 2008." Al-Tahrir: Jurnal Pemikiran Islam 12, no. 1 (May 1, 2012): 43. http://dx.doi.org/10.21154/al-tahrir.v12i1.46.
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<em>Islamic banking system still grows continuously over time in various countries, including Indonesia. Although it was a bit late, if it was compared to another, Islamic banking system began to develop in Indonesia in the early 1990’s. At that time, Islamic banking, however, was still running with its all characteristics based on the rule without adequate law. Islamic banking began to be recognized legally as the legalization of UU Perbankan 1992, and it was followed by its deregulation in 1998, and Islamic banking in Indonesia finally got its full legality after legalization of UU Perbankan Syariah in 2008. UU Perbankan Syariah as a new law certainly has significance for the development of Islamic banking in Indonesia. Based on the BI statistics, Islamic banks, especially Bank Umum Syariah after legalization of UU Perbankan Syariah, has been growing significantly, among in the number of banks, total assets, and total financing. Unfortunately, the growth of PLS (profit and loss sharing) doesn’t occupy a significant position in total financing of Islamic banks, whereas PLS is core system in Islamic banking.</em>
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Heykal, Mohamad. "Analisis Tingkat Pemahaman KPR Syariah pada Bank Syariah di Indonesia: Studi Pendahuluan." Binus Business Review 5, no. 2 (November 28, 2014): 519. http://dx.doi.org/10.21512/bbr.v5i2.1010.
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Sharia banking has been growing in many countries since the birth of post-neo revivalist movement in the mid-20th century. The development of Indonesian sharia banking began with a workshop related with interests and banking held by MUI in Cisarua on 18th to 20th of August 1990. Since 1992 to 2013 it has been established 11 sharia commercial banks and 24 sharia conventional banks that open sharia business units and 156 Islamic Financing Bank. In terms of existing office, Islamic banks in Indonesia have reached 1737 bank offices and also Islamic bank units. Moreover, the market share of Islamic banking has almost reached 5% of the total market share banking in Indonesia. Islamic banking also has a mortgage product that is essentially different from the existing mortgage in the conventional banking. It is expected that the Islamic mortgage product will result a profit. The product is a product released for customers who require financing from Islamicbank to have a house. This early study used literature review method and secondary data. This study built an analysis of the mortgage program issued by Islamic banks in Indonesia. Research concludes that the notion of Islamic banking on mortgage product, especially Islamic financing mortgage, from the internal party has not well distributed yet.
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Said, Ali. "The Influence of Oil Prices on Islamic Banking Efficiency Scores during the Financial Crisis: Evidence from the MENA Area." International Journal of Finance & Banking Studies (2147-4486) 4, no. 3 (January 21, 2016): 35. http://dx.doi.org/10.20525/.v4i3.223.
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<p><em>The present paper measured the influence of the oil prices on the Islamic banking efficiencies scores during the financial crisis of 2008-2009. The study showed that there is no a direct relationship between the oil prices and the efficiencies scores of Islamic banks in the MENA area. Furthermore, the study demonstrated that Islamic banks in the GCC area showed a higher mean in pure technical efficiency compared to Islamic banks in the North African and other MENA. Islamic banks in other MENA countries and North Africa considered to be technically inefficient. The inefficiencies were due to the underdeveloped banking system and the lack of experiences in those countries to allocate resources between the bank inputs and outputs. </em></p>
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Awwad, Bahaa Sobhi AbdeLatif. "Market power and performance: An Islamic banking perspective." Corporate Ownership and Control 15, no. 3-1 (2018): 163–71. http://dx.doi.org/10.22495/cocv15i3c1p2.
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This study aims to test the theories of market power and its role in interpreting the performance of Islamic banks in the GCC countries. Based on data from 22 Islamic banks for the period 2012-2017, using standard models, market power theories were unable to explain the returns of Islamic banks in the Gulf. Accordingly, these results deny the existence of an impact of monopoly in the structure of the Islamic banking sector in the performance of this sector, as well as the impact of traditional efficiency in its performance.
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Suryani, Suryani. "Sistem Perbankan Islam di Indonesia: Sejarah dan Prospek Pengembangan." Muqtasid: Jurnal Ekonomi dan Perbankan Syariah 3, no. 1 (July 1, 2012): 111. http://dx.doi.org/10.18326/muqtasid.v3i1.111-131.
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Islamic banking or sharia banking is a new phenomenon in the modern worldeconomy, its emergence as the intense efforts made by Islamic scholars in the development of Islamic economics in which it will be able to replace theconventional economic system based on the interest to the interest-freesystem. That’s why sharia banking system apply an interest-free system inoperation. Therefore, the closest term to define sharia banking is a bank that operates based on Islamic sharia principles, by reference to the Al-Quran and Sunnah as the basis or the legal and operational basis. Islamic banks were originally developed from the response of some economists and practitioners of Islamic banking that seek to accommodate pressure from various parties who want to make available services of the financial transactions carried out in line with moral values and principles of Islamic sharia. On his journey, sharia-based banking system is increasingly popular not only in Islamic countries but also western countries, characterized by increasingly the number of banks that implement this concept
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Asutay, Mehmet, Yusuf Ayturk, and Ercument Aksak. "The effects of regulation and supervision on the risk-taking behaviour of Islamic banks." Journal of Islamic Accounting and Business Research 11, no. 9 (August 14, 2020): 1953–67. http://dx.doi.org/10.1108/jiabr-12-2019-0222.
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Purpose This study examines the impact of the regulatory and supervisory environment on the risk-taking behaviour of Islamic banks. The impact of the heterogeneous nature of the banking environment in the sampled countries is also considered. Design/methodology/approach A dynamic panel data analysis with system GMM estimators was used with a sample consisting of 120 Islamic banks from 21 countries for the period 2000-2013. Findings The results demonstrate that main regulation and supervision proxies have significant negative effects on risk levels of Islamic banks, which implies that further restricted regulatory and supervisory environment can lower risk levels of Islamic banks. In addition, the Islamic banks operating under the dual banking system seem to prefer to take a lower risk. Furthermore, the results identify that a stable political environment encourages Islamic banks to take higher risks in their operations. Originality/value In addition to examining the common factors, the empirical analysis in this study is extended to the investigation of the effects of several political indicators on risk-taking behaviour of Islamic banks, which should be considered as an important contribution.
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Rehman, Nadeem Ur, and Kiran fatima. "Is Digital Financial Inclusion Valuable to Banks' Profitability and Long-Term Economic Development? Developing Asia Indications." Scandic Journal Of Advanced Research And Reviews 2, no. 3 (June 13, 2022): 039–69. http://dx.doi.org/10.55966/sjarr.2022.2.3.0042.
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he current study was an attempt to examine and ensure the existence of relationship between digital financial inclusion and banks economic stability and the importance of DFI for banking organizations of Asian countries. The current study incorporated data from six different countries and sixty-five banks primarily Islamic banks, as Islamic banking system has proved itself reliable in the times of DFC of 2007-09 and their contribution to improve and stable the global economy during and after the financial crises of 2007-09 and Covid-19.
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Budimir, Nemanja. "Islamsko bankarstvo i modeli financiranja u poslovanju islamske banke." Oeconomica Jadertina 6, no. 2 (November 12, 2017): 65. http://dx.doi.org/10.15291/oec.1344.
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Islamic banking is now a widespread notion in both Islamic countries and the West. It denotes a bank form and finances that seek to provide services to clients without interest. Proponents of Islamic banking say that the main objective is the "fish", which is prohibited by Islamic law. This attitude toward interest contributed to the unification of several Islamic schools, with the aim of finding ways for the development of an alternative banking system that would be compatible with the rules of Islamic Laws, and in particular to the rules relating to the prohibition of interest. Since the mid-1970s, the number of Islamic banks is on the rise. Islamic banks are not only based in countries where Islam is the prevalent religion, such as Egypt, Jordan, Sudan, Bahrain, Kuwait, United Arab Emirates, Tunisia, Mauritania and Malaysia, but also in countries such as the UK, Germany and the Philippines where Islam is a minority religion. The International Islamic Bank, the Islamic Development Bank, whose shareholders are members of the Islamic Conference Organization are acting as sponsors for Islamic banking and finance throughout the Islamic world.
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Mai, Xuan Thi Thanh, Ha Thi Nhu Nguyen, Thanh Ngo, Tu D. Q. Le, and Lien Phuong Nguyen. "Efficiency of the Islamic Banking Sector: Evidence from Two-Stage DEA Double Frontiers Analysis." International Journal of Financial Studies 11, no. 1 (February 14, 2023): 32. http://dx.doi.org/10.3390/ijfs11010032.
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This paper examines the multi-dimensional efficiency of the Islamic banking sector and its determinants, including the impacts of the COVID-19 pandemic. To do that, we use a novel approach of two-stage data envelopment analysis (DEA) double frontiers to evaluate the overall efficiency of 79 Islamic banks across 16 countries (2005–2020). In the first-stage analysis, we found that the Islamic banking sector experienced an increasing trend in its efficiency and performance, even during the recent pandemic, although it varied across banks and countries. Our empirical results of the second-stage analysis further showed that economic development can help countries both withstand the recent pandemic and improve the efficiency and performance of their (Islamic) banking system. This, in turn, could help speed up the recovery process of the global economy. Since there is evidence that the Islamic banking sector is resilient to the COVID-19 pandemic, it is expected that this sector will be a driving force of such recovery.
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Ben Slimen, Rihab, Fethi Belhaj, Manel Hadriche, and Mohamed Ghroubi. "BANKING EFFICIENCY: A COMPARATIVE STUDY BETWEEN ISLAMIC AND CONVENTIONAL BANKS IN GCC COUNTRIES." Copernican Journal of Finance & Accounting 11, no. 1 (June 20, 2022): 89–106. http://dx.doi.org/10.12775/cjfa.2022.005.
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This research aims at comparing the efficiency of Islamic and conventional banks operating in the GCC countries from 2006 to 2015 for a sample of 51 conventional and 48 Islamic banks using stochastic frontier analysis and the CIR ratio. The results show that Islamic banks are less efficient in terms of cost than conventional banks, and that this result remains valid even during the 2008 crisis period and even after controlling for bank-specific variables. Regarding the determinants of bank efficiency, empirical results show that capital adequacy and size positively affect bank efficiency as measured by the stochastic frontier analysis. Results also indicate that productive assets are negatively related to efficiency as measured by the CIR ratio. This study provides new insights in terms of financial efficiency of the banking system. Findings could help Islamic and conventional banks to increase their efficiency and their performance and improve the service provided to customers.
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Nakhavali, Miad. "Overview of Islamic Financial System and its Efficiency." European Scientific Journal, ESJ 13, no. 19 (July 31, 2017): 108. http://dx.doi.org/10.19044/esj.2017.v13n19p108.
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This essay attempts to discuss the principles of Islamic financial system based on Sharia law and its efficiency in the real world. It is achieved by overlooking different methods of Islamic financial and banking system. The focus of the essay is on the examination of Islamic financial system and its approaches in the Islamic countries, especially those shariabased law countries. Sharia law is based on the Holy Book of Muslims Quran and on the traditional teaching of Prophet Muhamad in the so called Sunnah. Even the most restricted Islamic banks are using conventional banking methods under the cover of Islamic slogans. Despite these methods, the share of Islamic banks when compared with conventional ones is extremely low. The other inefficacy of Islamic banks involves reducing customer’s freedom by prohibiting all interest-methods and giving them some dictated options only.
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Chamberlain, Trevor, Sutan Hidayat, and Abdul Rahman Khokhar. "Credit risk in Islamic banking: evidence from the GCC." Journal of Islamic Accounting and Business Research 11, no. 5 (January 11, 2020): 1055–81. http://dx.doi.org/10.1108/jiabr-09-2017-0133.
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Purpose This study aims to investigate the differences in the credit profiles of Islamic and conventional banks in the Gulf Cooperation Council (GCC) region and attempts to identify the factors responsible for those differences. Design/methodology/approach Financial data sourced from the Bankscope database for a sample of 25 Islamic and 56 conventional banks headquartered in the GCC region between 1987 and 2014 are used. The credit risk of Islamic versus conventional banks is compared using a variety of univariate (mean difference test and correlation analysis) and multivariate tests (pooled ordinary least squares (OLS) regressions with robust standard errors and year fixed effects, regressions with interaction variables and logistic regressions). Findings Pooled OLS regressions find that Islamic banks have lower credit risk than conventional banks. Robustness checks using logistic functions and interaction variables confirm this result. Using multiple econometric specifications, we also find that higher capitalization, greater liquidity and cost inefficiency contribute to the lower risk profile of Islamic banks. Research limitations/implications The study is unable to disaggregate data for banks offering both Islamic and conventional banking services and hence does not include conventional banks with Islamic windows. In addition, there are differences across countries even within the GCC region as to what is considered Sharia’h-compliant and what is not. Practical implications The results are of potential interest to not only researchers, but also market participants, regulators and legislators. The methods used in this study could be extended to other two-tiered banking systems and, in the case of Islamic and conventional banking, to other markets. Originality/value The authors use a unique sample of banks headquartered in the GCC countries, whose banking markets are similar, if not homogeneous, thus excluding operations of multinational banks. By focusing on the Gulf region, differences in the credit profiles of Islamic and conventional banks can be examined without the confounding effects of unobserved factors like culture, accounting regime or regulatory environment.
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Al Arif, M. Nur Rianto. "Spin-off and market share in the Indonesian Islamic banking industry: a difference in difference analysis." Management & Marketing 12, no. 4 (December 20, 2017): 540–51. http://dx.doi.org/10.1515/mmcks-2017-0032.
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Abstract According to The Act No. 21 of 2008 concerning Islamic Banking in Indonesia, the conventional banks are obligated to spun-off their Islamic business units after achieving a certain set of requirements. The spin-off requirements are: (i) reach 50% market share asset of its parents; or (ii) 15 years after the implementation of the Islamic Banking Act. This study emphasizes the impact of Islamic banks' spin-off on market share. The method used in this study is a difference in difference analysis. This technique is a quasi-experiment separate into two groups, such as the treatment groups (four spin-offs' banks) and control group (two fullfledged Islamic banks). This study used quarterly data from 2005 until 2016. The results show that, first, there is a difference in the Islamic banks' market share between pre- and post-spinoff. Second, there is a difference in the market share of spin-offs' banks between pre- and postspin- off. Third, there are there external factors that can affect the Islamic banks' market share, i.e., inflation rate, interest rate, and economic growth rate. The paper is a useful source of information that may provide relevant guidelines in helping the future development of spin-off activity in Islamic banking industry. The finding could be helpful for policymakers to create a supporting strategy to accelerate the development of Islamic banking industry. This result also could be of use for Islamic banking industries in other countries.
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Muzaffar Asad, Dr, Israr Ahmad, Syed Hussain Haider, and Dr Rabia Salman. "A Crital Review of Islamic and Conventional Banking in Digital Era: A Case of Pakistan." International Journal of Engineering & Technology 7, no. 4.7 (September 27, 2018): 57. http://dx.doi.org/10.14419/ijet.v7i4.7.20382.
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Islamic banking is growing at a fast pace in economies which are considered as the champions of entrepreneurship and counter interest-based monetary system. Currently, Islamic banks have touched $1 trillion and is rising around at 20% yearly. However, this rapid growth is not limited to the Muslim countries but commodities of Islamic institutions are obtaining reputation in non-Muslim countries. The purpose of this study is to understand the main differences in Islamic and conventional banking in Pakistan on the basis of cost and benefit analysis, comparison of lending structure, and comparison of risk management especially in the context of current digital era. The methodology followed in the paper is based on the review of literature and particularly the banking practices in Pakistan. In this study, it has been analyzed that how a system made by Muslim economists long ago has become a powerful reality. This study inspects the upright addendum of Islamic banking and compare it to conventional banking. Effects of the inspection are positive as the productivity and success of Islamic banks is better than that of non-Islamic banks even in current digital economies. It is useful for the practitioners and policy makers to seek guidance for strengthening of the system.
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Elmawazini, Khaled, Khiyar Abdullah Khiyar, and Asiye Aydilek. "Types of banking institutions and economic growth." International Journal of Islamic and Middle Eastern Finance and Management 13, no. 4 (July 1, 2020): 553–78. http://dx.doi.org/10.1108/imefm-09-2018-0304.
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Purpose This paper aims to compare the effects of Islamic and commercial banks on economic growth among the Gulf Cooperation Council (GCC) countries during 2001–2009 (before and during the financial crisis) and 2010–2017 (after the financial crisis). Design/methodology/approach The authors use a cross-sectionally correlated and timewise autoregressive (CCTA) model. The authors also extend the theoretical endogenous growth model developed by Pagano (1993) by introducing the developments in Islamic and commercial financial markets. Findings The authors find that Islamic banks fueled economic growth more than conventional banks before and after the financial crisis. The authors conclude that finance is a major determinant of economic growth, but finance does not follow economic growth. The results show that the ethical principles of Islamic finance can positively affect economic growth. Originality/value The authors contribute to the empirical literature first by examining feedback causality and cointegration between the banking sector and economic growth by examining the impact of the interaction between the banking sector and rule of law on economic growth in the GCC countries instead of a single country, second by providing both of the theoretical and empirical analysis and third by distinguishing between Islamic and conventional banks.
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Alemu, Aye Mengistu. "Factors Influencing Consumers’ Financial Transactions in Islamic Banks Compared with Conventional Banks: Empirical Evidence from Selected Middle-East Countries with a Dual Banking System." African and Asian Studies 11, no. 4 (2012): 444–65. http://dx.doi.org/10.1163/15692108-12341241.
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Abstract Despite various evidences that show Islamic banking has gained popularity even by non-Muslim consumers and businesses in many parts of the world, there is still a general misconception that consumer’s choice for Islamic banking is only influenced by religious obligations and thus it is just a Muslim-only affair. Yet, our knowledge of consumer motivations for choosing Islamic versus conventional banking services is modest and the research to date is limited and ambiguous on these key issues. Therefore, this study conducts a two-step empirical analyses and first identifies the factors influencing customer’s decision whether to choose Islamic or conventional banking using Linear Probability Model (LPM) and Tobit estimation method, and as a second step, it investigates the main attributing factors to consumers overall level of satisfaction with the services provided by Islamic banks compared to conventional banks using ordinal-logistic regression model. The study was based on a randomly selected 322 bank customers from Bahrain, Jordan, and UAE. The study confirms that although religious factors such as Shari’a compliance are important, other non-religious factors including better quality of services and information disclosure are also playing crucial roles for the growing consumers’ demand for Islamic banking. Nevertheless; factors such as better rate of return, accessibility to credit, and SMS banking are found to be the main significant determinants of consumers’ choice and satisfaction with the services provided by conventional banks. Overall, the recent experience especially after the financial crisis of 2008 demonstrates that Islamic banking system can be part of the solution since it is mainly based on stronger regulatory system.