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Trisnaningtyas, Januari Pratama Nurratri. "THE IMPURITY OF SHARIAH BANKING IN INDONESIA." Journal of Sharia Economics 3, no. 1 (March 16, 2022): 1–12. http://dx.doi.org/10.22373/jose.v3i1.1453.
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The practice of Islamic banking should run accordingly with the rule of sharia. Islamic banking aimed to overcome conventional banking problems, which are often profit-driven and benefit only a particular party. In Indonesia, where the majority of the population is Muslims, Islamic banking runs together with conventional banking and creates a dual-banking system. This dual-banking system seems fair on the one hand. However, it causes challenges in terms of the pure practice of Islamic banking, on the other hand. This research analyses the implementation of Islamic banking in Indonesia within the dual-banking system through three main frameworks: the regulation of Islamic banking, Islamic banking’s product to compete with the conventional ones, and the government regulation regarding this matter. The research shows that Indonesia has not been able to implement Islamic banking in accordance with the sharia rules fully. Instead, some principles are adapted according to the dual-banking system and are aligned with the interest of various parties such as the government and central bank of Indonesia.
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Khan, Muhammad Saqib, Shaheera Munir, and Ammara Mujtaba. "THE ISLAMIC VS CONVENTIONAL BANKS: AN EVIDENCE ON THE ECONOMIC DEVELOPMENT." JUNE 02, no. 01 (June 30, 2021): 68–81. http://dx.doi.org/10.53664/jsrd/02-01-2021-07-68-81.
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This paper highlights how financial and conventional bank system contribute to economic growth. As the Islamic banking system is grounded on shariah’s laws and Usury/RIBA (interest) are prohibited in Islam so there will be no tax shield in this banking system and they have to pay more tax as compared to the conventional banking system. By analyzing their performance and using the gross value-added contribution of both banking systems was observed. Six banks are selected for this purpose of which 3 Islamic banks i.e. Dubai. It is quantitative research so different ratios are used to examine both banking system performance and gross value added to give us information that to what extend both banking systems are contributing to the economy. In an examination, it has been exposed that both banking systems are conducive much to economy as conventional banks are developed their infrastructure is bigger than Islamic banks where Islamic banks just start near past a few years back.
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Alshammari, Turki. "State ownership and bank performance: conventional vs Islamic banks." Journal of Islamic Accounting and Business Research 13, no. 1 (October 18, 2021): 141–56. http://dx.doi.org/10.1108/jiabr-06-2021-0161.
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Purpose This paper aims to examine the effect of state ownership on bank performance for all banks in the Gulf Cooperation Council (GCC) countries during the period 2003 – 2018, for two distinct banking systems: the conventional and the Islamic banking systems. Design/methodology/approach To achieve the goal of the study, this paper uses a mean t-test to examine the mean difference of the related variables for both banking systems, and a regression test (using the GMM method) to explore the effect of state ownership on bank performance. Findings The most important result of the analysis is that state ownership has a significantly positive influence on bank performance for conventional banks but not for Islamic banks, in the GCC area. Originality/value This study adds to the scarce related literature comparative empirical results with respect to the impact of ownership on the performance of two different banking systems: the conventional system and the Islamic banking system in the GCC area. This study is likely to have implications for policymakers in terms of developing rules relevant to the governance of GCC’s two banking systems that can help to support the stability of the whole banking sector.
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Veterina, Isbandini. "Granger Causality Analysis of Shariah Banking Deposit to Conventional Banking Deposit." Jurnal Ilmu Manajemen & Ekonomika 9, no. 1 (March 20, 2017): 1. http://dx.doi.org/10.35384/jime.v9i1.19.
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Countries with a dual banking system always question the independence of Islamic Bank on conventional bank. Although theoretically there are basic differences between Islamic bank with its profit loss sharing principle and the conventional bank with its interest rate system, but still, is the return that Islamic banks give to their customer is purely based on the bank’s performance? There is always a question that the Islamic Bank system are benchmarking their return rate against the conventional Bank’s interest system. This research purpose is to test the independence of Islamic commercial bank from conventional commercial bank in Indonesia. This research is benchmarking to earlier research by Chong and Liu. The parameters being estimated are time deposit interest rate in conventional commercial bank in Indonesia and profit loss sharing rate in mudharabha time deposit in Islamic Commercial bank in Indonesia. Granger Causality Test is used to test if the time deposit interest rate affects the profit loss sharing rate and vice versa. This research shows that the interest rate of time deposit in conventional commercial bank in Indonesia doesn't effect the profit loss sharing rate in mudharabah time deposit in Islamic commercial bank. On the other hand, the profit loss sharing rate in mudharabah time deposit also doesn’t effect the interest rate of time deposit in conventional commercial bank in Indonesia.
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Ali, Khurshid, Zeeshan Khan, and Abdullah Saleh. "Islamic Versus Conventional Banking: An Insight into the Malaysian Dual Banking System." Asian Journal of Economics and Empirical Research 3, no. 1 (March 1, 2016): 103–12. http://dx.doi.org/10.20448/journal.501/2016.3.1/501.1.103.112.
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Salman, Asma, and Huma Nawaz. "Islamic financial system and conventional banking: A comparison." Arab Economic and Business Journal 13, no. 2 (December 2018): 155–67. http://dx.doi.org/10.1016/j.aebj.2018.09.003.
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Lodhi, Suleman Aziz, and Rukhsana Kalim. "Strategic Directions for Developing an Islamic Banking System." Pakistan Development Review 44, no. 4II (December 1, 2005): 1003–20. http://dx.doi.org/10.30541/v44i4iipp.1003-1020.
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Islamic banking generally referred to as interest free banking has been gaining popularity in the recent past. The main pillar of Islamic finance is prohibition of interest. Unlike conventional banking where interest is an integral part of the banking system, Islamic banking avoids interest in all bank transactions [Samad and Hassan (1999)]. The banking system in Pakistan is undergoing a transition from conventional model of banking to the new concept of Islamic banking, based on principles of Islamic economics. The new system should not only eliminate interestbased transactions but also introduce the concept of “Zakah” a contribution to the poor [Molla, et al. (1988)]. The prohibition of Riba is based on the arguments of social justice and equality.
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Khattak, Mudeer Ahmed, Mohsin Ali, Baharom Abdul Hamid, and Muhammad Umar Islam. "COMPETITION, DIVERSIFICATION, AND STABILITY IN THE INDONESIAN BANKING SYSTEM." Buletin Ekonomi Moneter dan Perbankan 24 (March 8, 2021): 59–88. http://dx.doi.org/10.21098/bemp.v24i0.1481.
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We examine the impact of competition and portfolio diversification on banking stability for conventional and Islamic banks in Indonesia. We find that the Islamic banking sector is less stable, when compared to the conventional banking sector. Competition in the banking sector reduces stability, while diversification enhances it. We find that competition negatively impacts the Islamic banks, but diversification has no impact on these banks. An interesting finding is that competition and diversification complement each other in enhancing the stability of the Indonesian banking sector. These findings carry an important policy implication for the banking sector of Indonesia.
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Irfan Nurfalah, Irfan Nurfalah. "Early Warning to Banking Crises in the Dual Financial System in Indonesia: The Markov Switching Approach." journal of king Abdulaziz University Islamic Economics 31, no. 2 (July 10, 2018): 133–56. http://dx.doi.org/10.4197/islec.31-2.10.
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This research aims at detecting early indicators that cause conventional banking and Islamic banking crises, identifying the longest crisis period for both types of banks, and comparing the stability between the two kinds of banks. The method used is the Markov Switching Vector Autoregressive (MS-VAR) approach. This study uses secondary data obtained from official sources and in monthly form from January 2004 to March 2017. The results show that Islamic banking is more stable against internal and external shocks than conventional banking. Z-score for Islamic banking is higher (11,933) than the Z-score for conventional banking (11,679). The longest crisis period for conventional banking was around April 2013 – March 2017 while for Islamic banking was around January 2008 – October 2008.
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Ben Mimoun, Mohamed. "Islamic banking and real performances in a dual banking system." International Journal of Islamic and Middle Eastern Finance and Management 12, no. 3 (July 15, 2019): 426–47. http://dx.doi.org/10.1108/imefm-07-2018-0223.
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Purpose There is a rich debate on the nature of Islamic banking (IB)–growth nexus and the direction of causality governing this nexus. This study aims to focus on this issue in the case of Saudi Arabia, the largest country-holder of Islamic Banks (IBs)’ assets worldwide. It assesses empirically the nature of dynamic interactions between IBs’ financing and the real performances in the non-oil private sector (investment and GDP) in the context of a dual banking system where IBs operate alongside their conventional counterparts. Design/methodology/approach This study employs the Bounds test in the context of reparametrized autoregression distribution lags (ARDL) models to analyse both long-run and short-run dynamics governing Islamic and conventional banks’ (CBs) financings on one hand and real investment and GDP in the private sector on the other hand over the 2007q1-2016q4 period. It also uses the Toda and Yamamoto (1995) augmented Granger-causality test to assess the direction of causality governing these dynamics. Findings The more important results are: there is a stable and significant long-run relationship between IBs’ financing and real performances in the private sector. This nexus is governed by the “feed-back hypothesis”, implying the validity of both the “supply-leading” and the “demand-following” hypotheses. In a dual banking system context, IBs exert two effects on the financing of their conventional counterparts: a negative “crowding-out” effect and a positive and “stimulating” effect which transmits through the “competition” channel. Finally, in the long-run, steady-state, real GDP is dissociated from CBs’ financing. Originality/value This paper highlights an issue that has not received the needed attention in the case of Saudi Arabia. It has also found novel results with important policy implications.
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Rahmatika, Arivatu Ni'mati, and Nurvita Putri Romadhani. "DUAL BANKING SYSTEM PASKA MERGER DI INDONESIA." DINAMIKA : Jurnal Kajian Pendidikan dan Keislaman 6, no. 1 (June 18, 2021): 77–90. http://dx.doi.org/10.32764/dinamika.v6i1.1416.
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This article explains that (1) The Post-Merger Dual Banking System is banking that has been implemented in Indonesia. Management of assets together with third party funds with large incomes that have been obtained from conventional banks and Islamic banks, third party funds that run accordance with funding and lending. Conventional banks and Islamic banks provide credit financing to MSMEs (Micro, Small and Medium Enterprises) and differentiate in operations between conventional banks and Islamic banks, (2) this study aims to determine the concept of managing and distributing funds in the dual banking system in Indonesia before and after the merger, (3) the method used is a qualitative method in the form of a library (library research), (4) the results of the study that between Islamic and post-merger conventional banks continue to operate credit funds to the public.
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Setiawan, Iwan. "Role of Islamic Banking and Conventional Against Poverty with The Dual Banking System." MIMBAR, Jurnal Sosial dan Pembangunan 32, no. 2 (December 20, 2016): 353. http://dx.doi.org/10.29313/mimbar.v32i2.1916.
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Quresh, Abdul Hafeez, and Kashif Ur Rehman . "A Comparison between Islamic Banking and Conventional Banking Sector in Pakistan." Information Management and Business Review 4, no. 4 (April 15, 2012): 195–204. http://dx.doi.org/10.22610/imbr.v4i4.980.
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The Islamic banking system is attaining enormous development. Several modern international conventional banks were also enchanting significant concern and starting Islamic banking branches in their organizations, which work in compliance with the specific Islamic Shariah principles in a number of states of Pakistan. The Islamic banking structure is bizarrely facing gigantic contest by the Islamic banking sector all over the world as well as from the well-known International commercial banks that hold out services and products of IB. It is an attempt for exploration and investigation of the extensive and essential factors, which persuade consumers to choose the Islamic banking or conventional banking and the function of demographic features, which track consumers to the assortment of IB or CB in Pakistan. Sample of 341 respondents has been used in this study mainly focused on non-probability convenience test tool. Pre-institute 5 point likert survey instrument ranging from 5 to 1 was applied to gather data. The conclusion reveals that there are countless factors other than religious perception like employee and customer interactions, convenience, reputation, financial benefits & services, and technology, which are fundamental for the consumers for the assortment of Islamic or conventional banking. The demographic characteristics of the respondents also have a significant impact. The authors expect that the crux of this study will explore new ways for the Islamic banking system to emphasis on specific emerging factors to enhance the efficiency and performance of the Islamic banking system in Pakistan. There will be enormous advantage for executives of IBs & CBs in developing marketing approach.
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Muhammad Nur Faaiz F. Achsani and Salina Kassim. "The Determinants of Credit Risk Under Dual Banking System: Indonesian Experience Based on Bank Specific Variables." AL-MUZARA'AH 9, no. 2 (December 30, 2021): 215–29. http://dx.doi.org/10.29244/jam.9.2.215-229.
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In Indonesian banking system, conventional banks are operating side by side with Islamic banking in a dual banking system. In terms of the credit risk determinants, Islamic banks should be affected by the different factors as conventional banks. However, the similarity of Islamic banks and the conventional bank in terms of contracts might lead to the opinion the same variables are affecting the performance of Islamic and conventional banks. The objective of the study is to examine and obtain an understanding on how the credit and financing in Indonesian dual banking system responses to changes in bank-specific variables. The main approach to fit the model used in this study is the dynamic panel data. Based on the result of the combined model, there are some independent variables that significantly affect credit risk. Profitability significantly affects credit risk with a negative relationship. While size significantly affects credit risk with a positive relationship. When it comes to the dummy variable, it can be said that the type of bank doesn’t play a significant role in determining the credit risk. In other word, there is no difference between Islamic bank and conventional banks in terms of credit risk. To analyze the crisis effect deeper, we compare the result of conventional banking model 2016-2020 and Islamic banking model 2016-2020. There is no independent variable that significantly affect the credit risk in the conventional banking model 2016-2020, three out of four independent variables affect credit risk significantly in the Islamic banking model 2016-2020. This is because conventional banks tend to play safe by avoiding the disbursement of credit and focusing on derivatives. However, this strategy is not suitable for Islamic banking as they are not allowed to do speculative activities. Islamic banking are still focusing on traditional banking activity.
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Johora, Fatema Tuz. "A Comparative Performance Analysis of Conventional Banking and Islamic Banking in Bangladesh." Asian Accounting and Auditing Advancement 6, no. 1 (December 31, 2015): 59–71. http://dx.doi.org/10.18034/4ajournal.v6i1.36.
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Commercial banks can be said to be the major contributor to the financial market mechanism in Bangladesh. Two forms of commercial banking systems are functioning here: the conventional banking system and the Islamic banking system. The two banking systems differentiate each other according to their compliance with different norms, values, beliefs, and religious views while conducting business. Conventional banks follow borrowing and lending mechanisms while Islamic banks follow trading and investment mechanisms. Conventional banks provide and receive interest while receiving deposits and providing loans respectively. However, Islamic banks neither pay nor accept interest since it is prohibited in Islam. Rather they do business on the profit and loss sharing concept. The purpose of this experiential study is to compare the performance of both the banking streams and to discover the superiority of any one or at least to find out which one is performing better than the other in which area(s). For the intended performance comparison, all the public limited conventional commercial banks and all the (except one) Islamic commercial banks have been included in the calculation of financial ratios for the years 2007 to 2011. The researcher has calculated six profitability ratios including Return on Equity (ROE), Return on Assets (ROA), Net Interest Margin (NIM), Cost to Income Ratio (COINR), Net Profit Margin (NPM), and Earning Per Shares (EPS); four liquidity ratios containing Liquid Assets to Customer Deposits & Short Term Funds Ratio (LdCDSF), Loans to Deposits (LTD), Loans to Deposits & Borrowing (LTD&B) and Loans to Assets (LTA); four credit risk ratios comprising Capital to Assets Ratio, Common Equity to Assets Ratio (EQTA), Total Equity to Loan Ratio (EQL) and Non-Performing Loans to Loans (NPL). In addition to ratio calculation, the solvency of both the banking streams has also been calculated using a model called Bank-o-meter. The analysis concludes that conventional banks are dominating in profitability and liquidity whereas Islamic banks are leading in credit risk management and solvency maintenance.
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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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Mustafa, Omer Allagabo Omer. "History of Banking in Sudan (Conventional and Islamic): A Critical Review (1903-2019)." International Finance and Banking 8, no. 1 (June 10, 2021): 29. http://dx.doi.org/10.5296/ifb.v8i1.18740.
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This paper critically reviews the developmental stages of banking (Conventional and Islamic) in Sudan throughout the last 115 years (1903-2019). Historical and descriptive-analytical approaches were used. Historical data collected from the annual reports of The Central Bank of Sudan and relevant studies were used to describe and compare stages during that period. The results indicated that political instability and ideology changes of the state (e.g., Colonialism, independence and democracy, socialism and Islamic) systems played a significant role in the formation of stages of development of Sudan’s banking systems (e.g., conventional, Islamic, dual system). Moreover, the implementation of the Islamic Sharia Law in 1983 was the original basis for the augmentation of the Islamization of the country’s banking system, particularly as it pertained to the prohibition of charging interest. Under the Comprehensive Peace Agreement (CPA: 2005-2010), the conventional banking (interest rate) in Southern Sudan was restored, whereas the Islamic approach continued in the north. Notwithstanding, all banks were managed by one central bank in the north namely The Central Bank of Sudan. The study highlights the relationship between factors affecting political stability and the growth of stability and the banking system.
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Mahmudah, Nurul, and Muhammad Yusuf Putra. "Eklektisisme Hukum Perikatan Nasional (Potensi, Kelemahan, Peluang, dan Ancaman Implikasinya bagi Dinamika Ekonomi Syariah di Indonesia)." Nizham Journal of Islamic Studies 8, no. 02 (December 3, 2020): 234. http://dx.doi.org/10.32332/nizham.v8i02.2711.
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This paper discusses the existence of a sharia system in banking that collaborates with the conventional banking system that has long been implemented in Indonesia. In this collaboration, it is believed that it will create positive and negative effects on the regulatory side or its rationalization for the dynamics of Islamic Economics in Indonesia. This paper uses library research with a qualitative approach with a descriptive nature that tends to use analysis. In this approach, the subject's perspective is emphasized, namely the process and meaning of the research carried out. The results of this paper are that the legal eclecticism of national engagement here has potential advantages, weaknesses, opportunities and threats for the sharia system and conventional systems in banking itself. In the positive side, there are regulations and ease of access to favorable bank itself, while the negative can be seen from the decline in public confidence in the system of sharia in banking due to the mixing of the system both the system then the conventional banking and sharia considered only different in name only.
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Noviasari, Anisa. "EFEKTIFITAS MEKANISME TRANSMISI KEBIJAKAN MONETER GANDA DI INDONESIA." Media Ekonomi 20, no. 3 (November 3, 2017): 23. http://dx.doi.org/10.25105/me.v20i3.786.
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<p>Indonesia is a country that has dual banking system, conventional banking and Islamic banking. Bank Indonesia as the monetary authority, should conduct monetary policy in conventional and Islamic monetary policy to effectively influence the overall macroeconomic situation. This thesis aims to investigate transmission mechanism of dual monetary system from conventional and Islamic policy rates to inflation using VAR methods. The data used in this research is the Consumer Price Index, total loans conventional bank, total financing Islamic bank, conventional bank lending rates, Rate of Profit Sharing Islamic Banking interbank offered rate data conventional bank, interbank offered profit sharing data, Bank Indonesia Certificate rate convensional bank, Bank Indonesia Certificate profit sharing Islamic bank in Indonesia period 2005:01-2012:11. Results of analysis of this study suggest that the monetary policy to ‘reducing inflation’ with Islamic patterns more effectively than with conventional pattern. In a dual monetary system, an alternative approach to monetary policy can be conducted using a quantitative approach that is not contrary to conventional and Shariah.<br />Keyword: Monetary Transmission Mechanism, The Interest Rate Pass Throught, Conventional Banking, Islamic Banking.</p>
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Miftah Idris. "PERJANJIAN KREDIT KONVENSIONAL DAN AKAD PEMBIAYAAN SYARIAH DALAM SISTEM PERBANKAN." Madani Legal Review 1, no. 1 (June 15, 2017): 29–51. http://dx.doi.org/10.31850/malrev.v1i1.27.
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In distribution of fund, the system adopted by conventional banking and Islamic banking is almost the same in distributing the fund with the provision of credit and of financing by banks to their customers. There is specifically legal basis of contract (aqad) that distinguishes where conventional banking is based on the contract law in Burgerlijk Wetboek and Islamic banking is based on aqad law stipulated in Islamic Sharia (Islamic Law). Problems studied in this research is how the credit contract in the conventional banking and how aqad financing in islamic banking are actually. To know the problem, it will be used descriptive study using secondary data as the data source of this research and then analyzed qualitatively. Thus concluded that the credit contract is a beginning process between the creditor and debtor which are applied in the conventional banking system in its efforts to develop funds collected and also to utilize the funds with the best. But Islamic banking financing adheresses to the profit and loss sharing system that has a unity concept in facing of risk and benefit and also existed justice in bussiness is the basic principle of Islamic banking system.
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Sukmana, Raditya, and Mansor H. Ibrahim. "Restructuring and Bank Performance in Dual Banking System." Signifikan: Jurnal Ilmu Ekonomi 10, no. 2 (July 23, 2021): 223–47. http://dx.doi.org/10.15408/sjie.v10i2.20740.
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While extensive study deals with bank competition and performance relationship, this study pioneers in focusing the existence Islamic bank in the presence of well established conventional banking system in Malaysia. This paper assesses the impact of changing competition landscape and Islamic bank penetration on bank risk, profitability and capitalization. This study utilizes an unbalanced panel dataset consisting of 37 commercial banks over the period 1997 to 2015. the paper uses a panel VAR methodology to discern the interactions between bank competition and Islamic banking presence on one hand and bank performance on the other hand.Findings: We find evidence supportive of both competition – stability and competition – fragility views for conventional banks. The results suggest that bank competition improves conventional bank risk and, at the same time, lower profitability and capital holdings. As for Islamic banks, competition seems to robustly influence only bank profitability. Finally, we note that increasing Islamic bank penetration improves the risk profile of conventional banks and, as expected, reduces their market power. These results bear important implications on the design of competition policies in a dual banking system as well as on the development of the Islamic banking sector.JEL Classification: C23, G21, G28How to Cite:Sukmana, R., & Ibrahim, M. H.. (2021). Restructuring and Bank Performance in Dual Banking System. Signifikan: Jurnal Ilmu Ekonomi, 10 (2), 223-247. https://doi.org/10.15408/sjie.v10i2.20740.
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Kazi, Mohammed Imran. "Islamic Banking, A Potential Banking System for India." Shanlax International Journal of Arts, Science and Humanities 8, S1-Feb (February 6, 2021): 196–201. http://dx.doi.org/10.34293/sijash.v8is1-feb.3952.
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Islamic banking is one of the fastest developing banking systems in the financial sector, with vast opportunities worldwide. Islamic banking operates by focussing on complete transparency, ethical investment avenues, co-operative businesses, risk sharing that attract not only the followers of Islam but people from other faiths also. Considering the growth Internationally–Islamic banking has become one of the fastest-growing segments in the International markets as well as Capital markets. With around 195 million Muslims approximately, India’s Muslim population is about the world’s third-largest and the world’s largest Muslim-minority population. India is home to 10.3% of the world’s Muslim population. Islamic banking system operates strictly by the Shariah laws which prohibit collection or payment of Interest, known as “Riba”. The Islamic banking system also prohibits investments in businesses or ventures that are considered Unlawful or Haraam. Risk bearing is one of the most basic principles based on which the Islamic banking system works, which relates to trading rather than risk transfer as in the case of conventional banking. The research papers aim at explaining the services of Islamic banking and various principles of Islamic banking. The research also intends to put forward the benefits and drawbacks of Islamic banking in the Indian context.
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Pambuko, Zulfikar Bagus, Nur Ichsan, and MB Hendrie Anto. "Islamic Banks’ Financial Stability and Its Determinants: a Comparison Study With Conventional Banks in Indonesia." IQTISHADIA 11, no. 2 (September 27, 2018): 371. http://dx.doi.org/10.21043/iqtishadia.v11i2.3346.
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<p><em>The research aimed to analyze the stability of Islamic banking industry and its determinants in Indonesia. The same analysis was also done to the conventional banking industry as Indonesia practices dual banking systems. Using monthly data on Indonesian Banking Statistics for 2008-2013, this research implemented the Banking Stability Index (BSI) model for predicting the bank's stability. The analysis began with measuring BSI then using VECM to examine the effect of variables on BSI. </em><em>The result showed that the BSI of both banking system was exhibiting the moderate level of stability though Islamic banking is </em><em>more stable and safe way of financing</em><em> than conventional banking. The shocks of inflation, exchange rate, efficiency, income diversity, liquidity, and Industrial Production Index responded positively by Islamic Bank' stability, while interest rate and market share responded negatively. In another hand, conventional bank' stability responded positively the shock of the exchange rate, income diversity, interest rate, liquidity, and market share, while other variables responded negatively. The results of shocking variables strongly indicated that the conventional banking is more vulnerable than Islamic banking. Islamic banking looked tend to the shock resistance and less volatile. This conclusion, however, might be still questioned as the BSI was not designed specifically for Islamic banking. </em><em>Therefore, constructing an Islamic BSI (under Islamic banking characters) was important to measure the banking stability more appropriate and to develop a proper early warning system for Islamic banking industry.</em></p>
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Varga, József, and Gyöngyi Bánkuti. "Ranking methodology for Islamic banking sectors – modification of the conventional CAMELS method." Banks and Bank Systems 16, no. 1 (February 16, 2021): 36–51. http://dx.doi.org/10.21511/bbs.16(1).2021.04.
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The state of banking systems is an important issue. The purpose of this paper was to test whether the well-known CAMELS microeconomic methodology, generally used for ranking banks, is applicable to evaluating Islamic banking systems. The hypothesis was tested by implementing a method for a particular case, public, free data – from 2013 till the first quarter of 2018 – on Islamic banking systems from the “Islamic Financial Services Board” (IFBS) database. As expected, modifications were necessary. First, because of the lack of data (in Islamic databases, no data refer to the management (“M”)), and second, to avoid the subjectivity of the five-degree method and to reach more sensibility. Thus, a hundred-level (standardized) rating system was introduced – “CAELS 100”, where “100” refers to the levels. The other part of the methodology – creating a simple average of the (now level 100) rating of raw indicators to get the letters of CA(M)ELS in the relevant period – remained unchanged. After the data cleaning, only six countries (Bahrain, Egypt, Kuwait, Oman, Turkey, and the United Arab Emirates) were able to participate in the analysis.The result showed that Egypt, Turkey and Kuwait were the best ones respectively. Thus, it was concluded that this “CAELS 100” methodology is suitable for evaluating Islamic banking systems. AcknowledgmentThe research was supported by the project “Intelligent specialization program at Kaposvár University”, No. EFOP-3.6.1-16-2016-00007.
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Al-Hasni, Fariz. "MURABAHAH IN ISLAMIC BANKING SYSTEM." Mu'amalat: Jurnal Kajian Hukum Ekonomi Syariah 11, no. 1 (June 26, 2019): 69–88. http://dx.doi.org/10.20414/mu.v11i1.2037.
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Islamic bank products have similarities but are not the same as conventional bank products because they have a ban on usury, gharar, and maysir. Therefore, approval and financing products such as working capital and investment in the form of sale and purchase agreements in Islamic banks must be avoided. sale and purchase agreement that has been discussed by Islamic scholars of muamalah is very much Islamic. The amount can reach dozens if not reached. Even so, of these many forms, there are three types of buying and selling that have been developed as the main support in working capital and investment financing in Islamic banking, namely, bai'al-murabahah, bai 'as-salam, and bai' al-istishna '.
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Ahmed, Muhammad Mushtaq, Javed Khan, and Fazl e Haq. "Paradigm Shift from Conventional to Islamic Banking System: A Case of the Conversion of Taqwa Islamic Banking in Pakistan." Global Regional Review III, no. I (December 31, 2018): 321–32. http://dx.doi.org/10.31703/grr.2018(iii-i).23.
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The paradigm shift in banking industry from conventional to Islamic system of banking has been evident in previous decade. Conventional institutions are also either setting-up Islamic subsidiaries or converting conventional set-up into Islamic. The bank of Punjab started Taqwa Islamic Banking-(TIB) by converting its 1st branch into Islamic banking in 2012. In 2014, the bank completed one of the largest conversion project by converting 24 conventional into Islamic banking. In this paper, the regulatory guidelines of SBP in respect to conversion is discussed and procedure adopted by the bank of Punjab-TIB- is studied and analyzed. Practical complications and key problems faced by BOP-TIB and its possible solution is also presented. The study will provide a clear view of the conversion and the method adopted by BOPTIB. The study will further guide institutions intends to adopt conversion of its business from conventional model into Islamic model.
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BASIR, Cik. "Sharia Principles in the Material Law of the National Banking Legal System." International Journal of Environmental, Sustainability, and Social Science 4, no. 3 (June 4, 2023): 842–46. http://dx.doi.org/10.38142/ijesss.v4i3.571.
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The national banking legal system uses two operational principles, namely conventional and sharia. Sharia banking was born and based on the Islamic legal system. Islamic banks in Indonesia have only been operating for about 25 years. This is still relatively new compared to conventional banks which have been used for more than a century. Various regulations were made to support the development of Islamic banks. This paper will examine the scope of the national banking legal system and the implementation of sharia principles in the material law of the national banking legal system. From the results of the study it was concluded that: (1) The legal system of Islamic banking in Indonesia consists of three components of the legal system, namely legal substance (material law and formal law), structure, in the form of institutions that support Islamic banking, and culture, both corporate culture , as well as the culture of society. This is in accordance with the elements of the legal system put forward by L. Friedman. (2) The implementation of sharia principles in material law within the scope of the national banking legal system has been embodied in laws and regulations in the banking sector which contain sharia principles. Hierarchically starting from the constitution, namely the 1945 Constitution, Government Regulations, Financial Services Authority Regulations, National Economic Law Compilation and DSN-MUI Fatwas. However, in a number of regulatory matters (material law) Islamic banking is still the same as conventional banks.
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Ali, Muhammad Uzair, Gong Zhimin, Muhammad Rizwanullah, Xiong Wu, and Itbar Khan. "A Survey of “Knowledge, Attitudes & Practices” of Islamic Banking Clients: An Evidence from FATA and PATA, Pakistan." Risk and Financial Management 2, no. 1 (May 29, 2020): p40. http://dx.doi.org/10.30560/rfm.v2n1p40.
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Islamic banking & Finance and conventional banking are described as having the "same purpose but the essence and operations of Islamic banking are in accordance with Shariah law and have same "basic objectives" as other business and financial entities, i.e. "maximization of shareholder wealth". The speedy development of an Islamic banking system may improve financial insertion by providing an alternative to faith sensitive Muslims who are willingly excluded themselves from the system of conventional finance due to the nature of interest based. In Pakistan, the Islamic banking system eroding the growth of conventional banking so it’s worthy to explore the effect of religious belief the occurrence of a financial exclusion. The target population is from FATA and PATA maintain accounts at Islamic banks and conventional banks and a sample size of one hundred and fifty customers were picked up. The methodology focuses on the KAP Model (knowledge, attitude, practices), which indicates if attitude influences the association among “knowledge and practice” of an “Islamic banking”. Looking into KAP Analysis survey, through study result we find out that knowledge about Islamic banking and practices of Islamic banking are closely related. People having information about Islamic Banking and Products are more inclined towards Islamic Banking and people who don’t have much information are less interested in Islamic banking and Islamic products. KAP survey suggested that customers of conventional and Islamic banks are driven by the same motivating factors that have impact on their attitude. However, there have some likable factors that could be valued by “Islamic bank account holders only such as “variety of products & services, reliability, confidence in bank’s management, reputation and most important compliance with the Shariah rules in finance & investment.”. Low-cost services are some factors result in non-Muslims prefer Islamic Banking over the conventional banking.
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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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Abdel Megeid, Nevine Sobhy. "Liquidity risk management: conventional versus Islamic banking system in Egypt." Journal of Islamic Accounting and Business Research 8, no. 1 (February 13, 2017): 100–128. http://dx.doi.org/10.1108/jiabr-05-2014-0018.
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Purpose This research aims to analyze and compare the effectiveness of liquidity risk management of Islamic and conventional banking in Egypt to ascertain which of the two banking systems are performing better. Design/methodology/approach A sample of six conventional banks (CBs) and two Islamic banks (IBs) in Egypt was selected. Using the liquidity ratios, the investigation involves analyzing the financial statements for the period of 2004-2011. The data were obtained from Bank scope database. Findings The research found that in Egypt, CBs perform better in terms of liquidity risk management than IBs. The liquidity risk management significant differences between IBs and CBs could be attributed more cash availability to CBs than to IBs, in addition, Egyptian Central Bank regulations on capital and liquidity requirements for IBs disconcert IBs’ performance. Practical implications This research facilitates the bankers, academician, scholars and bankers to have an alluded picture about Egyptian banking developments in liquidity risk management. The results can be used by bankers’ policy decision-makers to improve and enhance their consideration for liquidity risk management. Originality/value This research covers a period and a country that compares CBs’ and IBs’ liquidity risk management. Its value is attributed to the increasing differentiation between CBs and IBs.
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Lekpek, Ahmedin. "Deposit insurance: Conventional and Shariah approach." Zbornik radova Pravnog fakulteta Nis 61, no. 97 (2022): 137–52. http://dx.doi.org/10.5937/zrpfn1-41837.
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Deposit insurance has become an integral element of the modern banking system, which contributes to the safety of depositors and the business stability of banks. This paper analyzes the conventional and Shariah approach to deposit insurance. The paper aims to consider the features of the conventional and Shariah approach to deposit insurance, including their similarities and differences. Based on the analysis of the mentioned approaches and considering their functions in the banking system, it can be concluded that the Islamic deposit insurance model, created in accordance with Shariah principles, and the conventional deposit insurance model do not differ significantly. The difference is primarily reflected in the fact that the conventional insurance model contains certain Shariah-prohibited elements, which come to the fore in financing the deposit insurance system and investing available surplus funds.
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Ibrahim, Mansor H., and Siong Hook Law. "FINANCIAL INTERMEDIATION COSTS IN A DUAL BANKING SYSTEM: THE ROLE OF ISLAMIC BANKING." Buletin Ekonomi Moneter dan Perbankan 22, no. 4 (January 17, 2020): 531–52. http://dx.doi.org/10.21098/bemp.v22i4.1236.
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This paper empirically analyses the role of Islamic banking in financial intermediation costs as measured by net interest margins for a leading dual banking country, Malaysia. Controlling for theoretically motivated determinants of the margins, the paper compares the interest/financing margins of conventional and Islamic banks and examines the impacts of Islamic banking presence on bank margins. The analysis provides evidence of the higher margins of Islamic banks compared to those of conventional banks. Further, the difference in bank margins between the two types of banks can be attributed to differences in market power, operating costs, and diversification. Finally, Islamic banking presence or penetration, as represented by the ratio of Islamic financing to aggregate bank credit/financing and, alternatively, the share of Islamic banking assets, is robustly associated with lower bank margins, on average. These results bear important implications for the development of the Islamic banking industry and in fostering the efficient allocation of financial resources by the banking system.
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Shofiana, Gabrielia Febrianty, Abd Shomad, and Rahadi Wasi Bintoro. "Transformation of Banking Law in Indonesia." Jurnal Dinamika Hukum 19, no. 2 (December 22, 2019): 429. http://dx.doi.org/10.20884/1.jdh.2019.19.2.2523.
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Globalization development through the market economy system has created injustice for humankind,encouraging Muslims to implement the Sharia in their economic activities. The rapid growth of shariaeconomy in Indonesia, ultimately affects the financial industry, including the banking that implicatesregulation and organizational structure causing two banking systems, namely conventional banking andsharia banking. Based on the description, this paper discusses the national banking law that applies two rulesof law in Indonesia. To address these legal issues, conceptual approach, statutory approach and historicalapproach are used. Based on the analysis, since the enactment of Law Number 21 Year 2008 on Sharia Banking,the existence of sharia banking is getting stronger. Therefore, in Indonesia there is a dual bank system in onerule, namely banking law. Both banks are responsible to bank Indonesia as national central bank.Conventional banks may conduct business activities based on sharia principles, but not so for sharia banks.Keyword: conventional bank, sharia bank, sharia principles
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Shah, Sayyed Sadaqat Hussain, Ștefan Cristian Gherghina, Rui Miguel Dantas, Saliha Rafaqat, Anabela Batista Correia, and Mário Nuno Mata. "The Impact of COVID-19 Pandemic on Islamic and Conventional Banks’ Profitability." Economies 11, no. 4 (March 24, 2023): 104. http://dx.doi.org/10.3390/economies11040104.
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The banking sector has a significant impact on a nation’s financial stability and economic development. As one of the fundamental components of the financial sector, banks offer services that are essential for the expansion of the markets. The stability of the financial system is significantly impacted by the efficiency of the banking sector. COVID-19 has had a tremendous effect on the economy. This pandemic cannot be disregarded, considering how widespread it has been and how many people it has affected globally. Both society and the global economy have undergone profound change. Hence, it is critical to ascertain how severely the outbreak has impacted the banking system. To assess the potential impact of pandemic, the current study examined conventional and Islamic banking. This study also investigates how COVID-19’s moderating effect influences the banking system. Financial statements from 10 conventional banks and 5 Islamic banks in Pakistan are the sources of this study’s sample data. COVID-19 is a moderator in this study. The empirical estimations by means of the fixed-effects approach suggests that the moderator has a large impact on bank profitability. In addition, COVID-19 appears to have a stronger influence on the Islamic banking system.
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Lee, Siew Peng, and Mansor Isa. "Determinants of bank margins in a dual banking system." Managerial Finance 43, no. 6 (June 12, 2017): 630–45. http://dx.doi.org/10.1108/mf-07-2016-0189.
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Purpose The purpose of this paper is to determine of bank margins for conventional and Islamic banks in the dual banking system in Malaysia. Design/methodology/approach The study uses unbalanced panel data for 20 conventional banks and 16 Islamic banks over the period 2008-2014. The dynamic two-step GMM estimator technique introduced by Arellano and Bond (1991) is applied. Findings The results suggest that there are significant similarities with minor differences in terms of factors determining bank margins between conventional and Islamic banks in Malaysia. The margins for conventional banks are influenced by operating costs, efficiency, credit risk, degree of risk aversion, market share, size of operation, implicit interest payments and funding costs. For Islamic banks, the margin determinants are found to be operating costs, efficiency, credit risk, market share and implicit interest payments. This means that more factors influence the margins in conventional banks compared to Islamic banks. Although bank diversification activities have increased in recent years, their impact on bank margins is minimal. Practical implications The results suggest that improving operational costs, operational efficiency and credit risk management, and minimising implicit interest payments would be the best strategy to enhance the bank margins for both conventional and Islamic banks. The results also have important policy implications on the necessity to expand the size of Islamic banking in Malaysia. Originality/value There are relatively few studies concerning determinants of bank margins in emerging markets. The present study adds to the literature by presenting evidence from Malaysia, an emerging market with a dual banking system. This allows us to explore the similarities and differences between conventional and Islamic banks in Malaysia in respect of determinants of the margins.
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Dhanda, Upasana, and Monika Sehrawat. "ISLAMIC BANKING IN INDIA: AN ALTERNATIVE BANKING SYSTEM." International Journal of Research -GRANTHAALAYAH 3, no. 12 (December 31, 2015): 171–80. http://dx.doi.org/10.29121/granthaalayah.v3.i12.2015.2902.
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The Banking system in India and all over the world is based on the interest system. Interest bearing money is almost like the law of nature where money generates money. However, an alternative banking system called Islamic banking which prohibits charging of interest and is based on profit/loss sharing system became popular in many countries. Global Islamic banking assets attained compounded annual growth rate (CAGR) of around 17% from 2009 to 2013 according to the World Islamic Banking Competitiveness Report 2014-2015.
The Indian Banking system has undergone many changes in the recent past with deregulation of banking system paving way for new banks in India. However, Islamic banking which has emerged as a global phenomenon lately has not evolved as a full-fledged system in India though is it operative through the NBFC route. The research paper tries to explain the concept of Islamic banking and discusses the various financial products offered by the Islamic banks. It weighs the various pros and cons of Islamic banking in India. SWOT analysis and Porter’s Five Forces Model are used to provide a thorough analysis of feasibility and scope of Islamic banking in India.
The paper reveals that India has a great potential for Islamic banking provided necessary changes in the regulations and guidelines are made to evolve it has an alternative system of banking. The law makers should view it from an economic point of view rather than a religious view for its successful implementation and for the welfare and upliftment of financially excluded sections of society that do not participate in conventional banking due to their religious beliefs.
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Zuraidah, Zuraidah. "The Comparative Analysis of Islamic and Conventional Monetary Financial System." Maliki Islamic Economics Journal 2, no. 1 (June 30, 2022): 1–11. http://dx.doi.org/10.18860/miec.v2i1.16600.
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This article aims to analyze the uniqueness of Islamic financial instruments compared to conventional financial instruments and to find out what distinguishes the Islamic monetary framework from the standard monetary framework. The advantages and disadvantages of Islamic and traditional monetary frameworks are also discussed in this paper. This paper uses a writing concentrate approach by collecting information from the analytical writing in question. The side effects of the review suggest that the Islamic Monetary Framework is developing rapidly, playing its part in allocating assets and working on the turn of financial events, and implementing Islamic banking. The results also show that the advantages of Islamic finance can survive despite different monetary emergencies. The progress of Indonesian Islamic Banking evidences it compared to traditional banks.
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Sukardi, Didik. "SYARI'AH BANKING LEGAL SYSTEM IN INDONESIA." International Journal of Law Reconstruction 2, no. 1 (March 1, 2018): 1. http://dx.doi.org/10.26532/ijlr.v2i1.2621.
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Socio-anthropological and emotional, Islamic law is very close to the people of Indonesia are Muslim majority, but it has historically Islamic law was known long before the colonists into Indonesia. Fatwa Majelis Ulama Indonesia or MUI on bank interest is haram has pushed aside the curtain of public oppression to liberation syari'ah, and gave birth to the implementation of the dual banking system in Indonesia, namely the operation of conventional banks and banks of the syari'ah, which is welcomed by the people of Islam in Indonesia
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M. Husni Ingratubun. "APPLICATION OF THE INTEREST SYSTEM IN CONVENTIONAL BANKS AND ITS RELATION TO ISLAMIC LAW REGARDING USURY." Awang Long Law Review 5, no. 1 (November 30, 2022): 373–78. http://dx.doi.org/10.56301/awl.v5i1.654.
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Conventional banking operations benefit mainly from the difference between the deposit interest given to customers and the interest or credit loans given. In contrast, in Islamic Banks, the profits they get are not from interest but through profit sharing. The main difference between conventional banks and Islamic banking is the prohibition of Riba (interest) in Islamic banking. Under Sharia banking, bank interest is prohibited while trading is permitted by Allah. Riba is defined as Ziyadah (additional cost). Riba is an additional fee, both in trade transactions and loans that are illegal or contrary to the principles of Muamalah in Islam.
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Et.al, Jude N. Owuamanam. "An Enhanced Model For E-Service Quality of Mobile Banking." Turkish Journal of Computer and Mathematics Education (TURCOMAT) 12, no. 3 (April 10, 2021): 2094–99. http://dx.doi.org/10.17762/turcomat.v12i3.1150.
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The increasing growth in mobile device users and the rapid drop in conventional and mobile data charges have given way for a provision of banking services and mobile banking to be precise. Banks are now extending their services from traditional means of banking to a self-service system. Recently, mobile banking has been growing exponentially, but there is still a lack of confidence by the users because of low e-service quality of mobile banking. Researchers have done many works on mobile banking but were focused more on adoption and user intentions which contributes to the marketing and promotion of mobile banking. Mobile banking has some specific characteristic which makes it different from other web-based e-services. So the previous studies lack specific in-depth mobile banking e-service quality, such as failure to define the e-service quality of mobile banking and identification of mobile banking dimensions. This study identified mobile banking's dimensions and attributes that received less attention and suggested an improved model for mobile banking's electronic service quality.
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Kusumawardani, Annisa, and Insiyatul Iftitah. "CONCEPT ANALYSIS AND FINANCIAL PERFORMANCE IN CONVENTIONAL AND ISLAMIC BANKS ON PERIODE 2016-2020." JEM17: Jurnal Ekonomi Manajemen 7, no. 1 (May 6, 2022): 101–18. http://dx.doi.org/10.30996/jem17.v7i1.6508.
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Banking is one of the essential elements of economic sustainability. Indonesia has two banking systems: banking with conventional principles and banking with sharia principles. Differences in the regulation of the system can affect the results of the bank's performance. So, it is necessary to analyze the comparison of bank performance to determine the significance of the differences. This research aims to present the findings of a financial performance analysis carried out on Islamic and conventional banks' financial statements in 2016-2020. This study analyzes by looking at financial performance ratios consisting of Capital Adequacy Ratio (CAR), Return on Assets (ROA), Return on Equity (ROE), Operating Costs, and Operating Income (BOPO), and Financing Deposit Ratio (FDR). ) using SPSS. 36. The results obtained are significant differences between CAR, ROA, ROE, BOPO, and FDR of conventional and Islamic banks. Islamic banks' CAR, ROE, BOPO, and FDR values are better than conventional banks, while conventional banks' ROA is better than Islamic banks.
Keywords: Conventional Banks, Financial Performance, Islamic Banks
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Ullah, Rafi, Mehwish Iftikhar, Muhammad Umer Shahid, and Muhammad Hamza Shahab. "Customer Satisfaction Level in Islamic Banking and conventional Banking (A Case of Pakistan)." Journal of Management Info 3, no. 1 (March 1, 2016): 9–20. http://dx.doi.org/10.31580/jmi.v9i1.50.
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The main purpose of this research study was to identify the level of customer’s satisfaction by using the products and services of both Islamic and conventional banks in Pakistan. Furthermore, this research study determined the customer’s satisfaction level in banking in terms of; internet banking, management interaction and the banking environment, service quality in term of SERVQUAL model, ATM facilities, privacy and security The main objective of the study was to investigate the following main points.(1) Customer`s satisfaction level in Islamic and conventional banks. (2) Why customers prefer to choose Islamic banking system in Pakistan? (3) Why customers prefer to choose conventional banking system in Pakistan? It is therefore, a critical literature has been carried out which investigated the real factors through which customer satisfaction take place in banking sector. The closed ended questionnaire has been used in this research study in order to collect research data. To analyze the collected data, cross tabulations and charts have also been used which showed the satisfaction level of the customers of Islamic and conventional banks and also to differentiate between the participant`s responses of Islamic and conventional banks. A large number of factors have been observed from the research study analysis which illustrated that, in Pakistan, customers are more satisfied from the products and services of conventional banks rather than that of Islamic banks. However, in Pakistan, the customer satisfaction in all financial institutions is not as good as according to the standard. In addition, the banking sector is trying to improve all of their products and services and want to make them according to the international standard. But due to various factors such as; the political instability and religious norms, the banking sector is still far behind.
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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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Rhanoui, Salma, and Khalid Belkhoutout. "Operational Risk in Both Conventional and Islamic Banking Perceptions: Differences and Similarities." European Scientific Journal, ESJ 14, no. 13 (May 31, 2018): 110. http://dx.doi.org/10.19044/esj.2018.v14n13p110.
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While risks in conventional banks have been meticulously discussed in the literature, they remain a fresh research area in Islamic banks. In this context, operational risk has long been considered a simple part of “other” risks outside the dominion of credit risk and market risk, before it made its way to the forefront of banking. In fact, with the rise and enlargement of the Islamic banking industry and its unique contractual features and legal environment, operational risk has become more wide-ranging in Islamic banks compared to conventional banks. In this sense, the following work aims to provide a comparison of operational risk perceptions in both conventional and Islamic banks, with the objective of determining the fundamental similarities and differences of this risk within each system, which can be seen as a boosting step meant to help creating a good risk management tactics in both banks. This work showed a difference regarding the two definitions of operational risk. It also demonstrated that the conventionnal and Islamic banking systems are similar while presenting some differences in terms of components and factors of opeational risk.
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Choiriyah, Choiriyah, Saprida Saprida, and Emilia Sari. "Development of Sharia Banking System In Indonesia." Mizan: Journal of Islamic Law 5, no. 1 (June 18, 2021): 17. http://dx.doi.org/10.32507/mizan.v5i1.923.
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Banking in Indonesia now increasingly enlivened by the presence of Islamic banks, which offer financial and investment products in a different way compared to conventional banks. Although it is still considered a newbie, Islamic banking is developing quite rapidly. Understandably, Indonesia is the largest Muslim country in the world and it is clear that banks that use Islamic law and principles will be more desirable. Even conventional banks in Indonesia are now following the trend by establishing Islamic institutions or Islamic business units themselves. This is done to attract more customers who are interested in the benefits of Islamic banks.Keywords: Development; System; Islamic Banking AbstrakPerbankan di Indonesia kini semakin meningkat berkat hadirnya bank syariah yang menawarkan produk keuangan dan investasi dengan cara yang berbeda dibandingkan dengan bank konvensional. Meski masih tergolong newbie, perbankan syariah berkembang cukup pesat. Maklum, Indonesia adalah negara Muslim terbesar di dunia dan jelas bank yang menggunakan hukum dan prinsip Islam akan lebih diminati. Bahkan bank konvensional di Indonesia pun kini mengikuti tren dengan mendirikan lembaga syariah atau unit usaha syariah sendiri. Hal ini dilakukan untuk menarik lebih banyak nasabah yang tertarik dengan keunggulan bank syariah.Kata Kunci: Pengembangan, Sistem, Perbankan Syariah
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Yunita, Patria. "Dual Banking System Stability Index in the Shadow of COVID-19 Pandemic." International Journal of Islamic Economics and Finance (IJIEF) 5, no. 1 (January 29, 2022): 151–76. http://dx.doi.org/10.18196/ijief.v5i1.11837.
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The financial system is categorized as stable if there is no excessive volatility from financial pressures or crises. The IMF indicates that the crisis is not only related to one element but more than two or three elements of the crisis. The banking system's stability is measured by the banking stability index, gauging the effectiveness of monetary policy and financial risk. This study aims to measure the stability of the Indonesian banking system in the dual banking system model. The indicator to measure banking stability used the Z-score statistic based on fluctuations of Return on Assets for each type of bank. The Markov Switching Vector Autoregressive (MSVAR) model method was used to analyze the volatility of banking stability. Independent variables used included credit risk (NPL), Loan to Deposit Ratio, Liquidity Risk, Net Interest Margin, Capital Adequacy Ratio, Money Market Rate, Inflation, Gross Domestic Product, Federal Reserve rate, and Exchange Rate. The results of the regime switch analysis concluded that Indonesia's banking stability experienced a structural break due to the effects of the pandemic in April 2020. Based on the average Z-score value, the Islamic banking stability index was higher than conventional banking. In other words, Islamic banking was more stable than the conventional banking system. The Islamic banking stability index (iZscore) was significantly influenced by the level of Net Operating Margin, Financing to deposit ratio, Potential Loss Profit Sharing, Islamic Money Market Rate, and Exchange Rate. However, non-performing financing did not affect Islamic banking stability since the profit-sharing system implemented by Islamic banking stability was more influenced by the ratio of potential loss and profit-sharing system.
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Ahmad Al-Smadi, Ayman Abdal-Majeed, Mahmoud Khalid Almsafir, and Muzamri Bin Mukthar. "Global Financial Crisis of Islamic and Conventional Banking in Middle East – A Case Study in Turkey." International Journal of Economics and Finance 9, no. 8 (July 30, 2017): 239. http://dx.doi.org/10.5539/ijef.v9n8p239.
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The financial tools all over the world become extremely decisive in these days. The main goal of this paper is to measure then to discuss the impact of performance of conventional and Islamic banking in Turkey during the financial crisis. some variables such as profitability, liquidity, operational efficiency and business growth are used as a measuring factor to determine the performance for both financial models. The period of study is taken during the financial crisis in 1997 and during the global financial crisis in 2007. The comparison in this study is made between the performances of Islamic banking and conventional banking in Turkey.Some secondary data had examines in this study which was drown from the annual report from one of Turkey bank since 2002 until 2013. SPSS (Statistical Package for the Social Sciences) “18.0” has been used to compare between Islamic finance model and other model. The findings of this paper shows that Islamic financial system is performing superior than conventional financial system for the period of this study. Hence, it can be concluded that the system of Islamic banking is able to sustain and compete with the conventional banking system especially during any financial crisis.
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Idris, Zainab. "Challenges Faced in Full Establishment of Islamic Banking System in Nigeria." International Journal of Islamic Business & Management 1, no. 1 (October 4, 2017): 1–6. http://dx.doi.org/10.46281/ijibm.v1i1.44.
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Islamic banking in Nigeria is still at its infant stage and surrounded by a lot of challenges and set bank. It is important to note that despite the huge number of Muslims population in the country, little progress has been made in ensuring its full take off and operationalization. The paper there examines the challenges Islamic banking is faced with in Nigeria. Through review of past studies, the paper the paper identify factors like; Problem of Competition with dominant conventional banks, Problem of Competition with dominant conventional banks, Double taxation and others as the major challenges of Islamic banking in Nigeria. However the paper, the paper recommends that Islamic banking and finance in Nigeria offers a huge investment opportunity for both domestic and foreign investors what is most needed to achieve this, is for all stakeholders to collaborate in a way that a structured, functional and sustainable Islamic banking model will be formulated and communicated widely so as to gain general acceptability. Furthermore, the paper will serve as a guide to investors by pointing the problems the Islamic banking sector is facing in Nigeria.
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Ahmad Zolkifli, Norazwa, Zanita Ismail, and Nurul Syamshida Mokhtar. "Credit Risk and Operational Risk Determinants of Conventional and Islamic Banking in Malaysia and Bahrain." Asia Proceedings of Social Sciences 7, no. 1 (January 31, 2021): 30–33. http://dx.doi.org/10.31580/apss.v7i1.1742.
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The focus of this study on both Islamic and conventional banks is to consider the unique duality banking system in the countries. Data is obtained from annual reports and websites of selected banks. Financial statements for 10 years beginning from 2009 until 2018 were used for extracting data for analyzing the credit and operational risk using E-view software. Furthermore, panel data analysis were used in combination with time series and cross section. The findings reveal that the determinants of credit risk and operational risk are difference between banking in Malaysia and Bahrain. The banking system will have a solid risk management system that will assist Malaysia and Bahrain to develop a strong economy as well as the possible adoption of risk management by the international banking system.
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Musad Alanazi, Eid Sharidah, and Fayaz Ahmad Lone. "Social Satisfaction towards Islamic Banking in Saudi Arabia: A Survey." Asian Social Science 12, no. 1 (December 21, 2015): 182. http://dx.doi.org/10.5539/ass.v12n1p182.
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<p>Islamic Banking in Saudi Arabia is emerging because of the social implications prevailing in this banking system. Saudi Arabia has both conventional and Islamic banks, but many banks have shifted from conventional to Islamic in the last few years. The present study was conducted to analyze the perception of Saudi society towards Islamic banking as far as its ‘shariah’ rules are concerned. The study aims at measuring to what extent society is satisfied with this banking system and what is their perception towards working of this banking? Based on the findings, some important suggestions have been mentioned at the end.</p>