Islamic banks – Jurnal Pengurusan

Viability Assessment of Bank-associated Crowdfunding Platform: A Viable System Model Approach

asriwn — Thu, 09 Oct 2025 02:01:35 +0000

This study examines the viability of a bank-associated crowdfunding platform, specifically a form of equity crowdfunding. It diagnoses the platform’s operation and information flow as a complex organization involving multiple agencies, employing the Viable System Model (VSM) framework as a diagnostic tool to assess operations, identify problems, and evaluate viability. Interviews were conducted with small and medium enterprises (SMEs) as platform users, the platform managers, and the banker. The findings demonstrate that the platform possesses elements of viability but lacks a dedicated unit to perform intelligence functions – specifically, the collection of information from the environment for integration into the system. While some information flows from the system to the environment, they are limited. Additionally, there is an absence of information flow between intelligence and control, between intelligence and policymaking, and vice versa. The results also highlight the central role of Islamic banks within the platform. This study contributes to the literature by developing a diagnostic framework that integrates the principles of VSM with those of crowdfunding platforms. The findings highlight the need to institute an integrated platform intelligence function and to ensure effective information flows among system functions in managing environmental variety.

Intermediary Role Performance Analysis of Malaysian Islamic and Conventional Banks

syazwinaramjan — Wed, 12 Oct 2022 05:21:16 +0000

The objective of this paper is to investigate the effect of bank specific characteristics and macroeconomics variables on bank margin (NIM) which reflects the intermediary role of Islamic and conventional banks in Malaysia for the period of 2006 to 2014. By using static panel analysis, the results show that management efficiency is positively related to the bank margin for both Islamic and conventional banks. For Islamic banks, bank size and liquidity ratio have significant negative relationship on bank margin. The default risk is positively related to bank margin for Islamic banks. As for conventional bank, the non interest to total asset ratio has significant positive relationship on bank margin. Therefore, the results show that there are similarities and differences in terms of determinant factors that affect the bank margin between Islamic banks and conventional banks. These empirical results suggest an important policy on issues pertaining to how Islamic and conventional banks have to adjust the changes in the banking environment. The conventional banks have more comparative advantages specifically on management efficiency as its intermediary role performance is also not affected by size.

An Analysis of Shari’ah Audit Practices in Islamic Banks in Malaysia

Faris A181711 — Wed, 12 Oct 2022 01:25:07 +0000

According to the Shari’ah Governance Framework (Bank Negara Malaysia 2011), each Islamic bank and Islamic financial institution in Malaysia is required to establish the Shari’ah audit function. The Shari’ah audit function, according to the Framework, is instituted in order to provide reasonable assurance and to ensure an effective internal control system for Shari’ah compliance. A review of the literature on this topic shows a lack of empirical studies that explain the Shari’ah audit practices in Islamic banks. This study examines the extent of Shari’ah audit practices in Islamic banks in Malaysia. The study employs survey questionnaires which were distributed to the Heads of Shari’ah audit, internal Shari’ah auditors, Shari’ah executives and members of the Shari’ah Committee of 16 Islamic banks in Malaysia. The study used the Exposure Draft of Internal Shari’ah Audit Framework (ISAF) issued by the International Shari’ah Research Academy (ISRA) as a benchmark to measure the extent of Shari’ah audit practices. The results of the study indicate that the majority of the Islamic banks have properly established the audit objectives, the governance structure, the competency requirements, the audit process, and the reporting requirements as part of their Shari’ah audit practices. However, some Islamic banks have not clearly spelled out the audit scope and the audit charter. The study also found that internal auditors, Shari’ah executives and members of the Shari’ah Committee mostly agreed on the importance of developing a proper structure for the Shari’ah audit function. In conclusion, the reasonably good Shari’ah audit practices present in Islamic banks are commendable and indicate a positive development in enhancing the integrity and the accountability of Islamic banks, especially in Malaysia.

Islamic Banks vs Conventional Banks in Indonesia: An Analysis on Financial Performances

Amirulilul — Tue, 11 Oct 2022 07:45:37 +0000

Islamic banks in Indonesia havebeen in existence for more than two decades. Substantial development has taken place in this largest Muslim country. Regulator, academicians, and practitioners have been providing significant support with the objective of improving the performance of the Islamic banking. Hence, it is timely to assess whether its performance differs than that of the conventional banks. This paper aims to describe and critically evaluate and compare the financial performance of Islamic banks to that of conventional banks. Data of Capital Adequacy Ratio (CAR), Return on Asset (ROA), Operational Cost/ Operational Revenue (BOPO), Non-Performing Loan (NPL) /Non Performing Financing (NPF) and Loan Deposit Ratio (LDR)/ Financing Deposit Ratio (FDR) for Islamic and conventional banks are examined. The analysis of monthly data covers the period from January 2004 to July 2014 (127 observations). Paired sampled t-test was adopted to see whether there are significant differences in the financial ratios between both banks. This study found that CAR, ROA, BOPO and NPL of conventional banks are significantly higher than that of Islamic banks but not FDR. Based on the result of capital adequacy, the findings suggest that Islamic banks need to have more capital to face the involved risk as that of conventional banks. Conventional banks need to function them selves as financial intermediaries to support the real sector as that of Islamic banks.

Assessing the Revenue Efficiency of Domestic and Foreign Islamic Banks: Empirical Evidence from Malaysia

sufizulkarnain01 — Sun, 09 Oct 2022 16:13:02 +0000

The present paper provides new empirical evidence regarding revenue efficiency in the Malaysian Islamic banking sector during the period from 2006 to 2010. The sample is comprised of 17 domestic and foreign Islamic banks. The Data Envelopment Analysis (DEA) method is employed to compute the revenue efficiency levels. The results indicate that the domestic Islamic banks exhibit lower revenue efficiency levels compared to foreign counterparts. In addition, the empirical findings suggest that the foreign Islamic banks exhibit higher efficiency levels for all three efficiency measures and are consistent with the global advantage theory. In essence, revenue efficiency seems to play the main role in lower or higher profit efficiency levels. The findings of the present study are expected to be relevant to regulators and policymakers, the Islamic banking industry and investors; and contribute significantly to existing knowledge on the operating performance of the Malaysian Islamic banking sector

Determinants of Ethical Identity Disclosure in Islamic Banks: An Analysis of Practices in Bahrain and Malaysia

amrularshad — Sun, 09 Oct 2022 13:31:33 +0000

Islamic banks are banks that are set up to operate within the Islamic business framework that is more equitable and based on socio-economic welfare of the society and the people. In Islamic law on commercial transactions and other related contractual activities (the framework), transparency and adequate disclosure are the fundamental determinants of a successful and peaceful relationship between the contracting parties. This is because the stakeholders of Islamic banks believed that the prescriptions of the framework would be the key determinants of the bank’s Ethical Identity Disclosures (EID). This study aimed at exploring and identifying the practical determinants of EID in Islamic banks. Disclosure information in annual reports (from 2007 to 2011) of 21 Islamic banks operating in Bahrain and Malaysia was gathered and analysed using Ethical Identity Index (EII) and Multiple Regression Analysis (MRA) models. The results of EII and MRA on nine ethical disclosure dimensions consisting of 80 constructs and 4 assumed determinants of EID among Islamic banks indicated that EID of both countries is low and that independent directors do not affect the level of social disclosure. However, board size, Shari’ah supervisory Board and investment account holders can significantly influence the disclosure level in Islamic banks. Hence, we conclude that our findings are in conflict with main theories such as agency theory, however supports institutional theory.

Determinants of Bank Performance: Conventional versus Islamic

SITI HASLINA TON ZAINAL ABIDIN — Sat, 08 Oct 2022 20:47:04 +0000

Using CAMELS rating to measure bank performance, the present study compares the performance estimates for Islamic banks with conventional banks operating in Malaysia from 2008 to 2011. The present study further identifies the determinants affecting the performance of conventional and Islamic banks in Malaysia. Using a sample of 19 conventional banks and 16 Islamic banks, the results indicate that the levels of composite performance achieved by both conventional and Islamic banks in Malaysia are very similar. Furthermore, it is observed that the performance of conventional banks will improve following the reduction of operational costs, while the performance of Islamic banks will improve following the reduction of bank size and an increment of credit risk.

The Mudharabah Deposit Rate Behaviour in Relation to the Conventional Deposit Rate

syazahzwni — Sat, 08 Oct 2022 17:49:09 +0000

This study examines the relationship between the conventional and mudharabah deposit rates of Malaysian banks in two separate periods – between January 1996 and September 2004, and between October 2004 and June 2011 – which signify the implementation of a framework for calculating the Islamic bank deposit rate and the profit equalization reserve (PER). Employing the autoregressive distributed lagged (ARDL) approach, this study finds the two rates to be cointegrated in the first period similar to previous findings. However, for the second period, there is largely no evidence of a long-term relationship. The significance of this finding is that in the second period, when Islamic banks employ a regulated PER as a displacement risk mitigating mechanism, Islamic banks do not benchmark against conventional rates. They possibly engage in income smoothing for economic efficiency or for signalling purposes. An important policy implication is that PER and any type of reserve to smooth income, that is regulated, may be prescribed as it may have a positive behavioural effect.

Board Size, Chief Risk Officer and Risk-taking in Islamic Banks: Role of Shariah Supervisory Board

syafiqahazieati — Sat, 08 Oct 2022 04:37:37 +0000

This paper aims to examine the moderating effect of Shariah Supervisory Boards (SSBs) on the relationship between board size, Chief Risk Officer (CRO), and risk-taking of 24 Islamic banks (IBs) in Malaysia, Indonesia and Brunei from 2010 to 2015. This approach integrates the arguments of agency theory and resource dependence theory. The results of panel regression indicate that the appointment of a CRO as an executive board member reduces credit risk, implying that the appointment of a CRO as a risk expert in IBs enhances the management of risk and monitoring of risk-taking activities. Further, larger board is likely to reduce insolvency risk when an SSB has higher percentage of members with supervisory Shariah experience. Next, this study observes that larger SSB size and a higher percentage of members with Shariah supervision experience moderate the relationship between the CRO and insolvency risk. Overall, this study highlights the important role of board size, CRO and SSB in the risk-taking of Islamic banks, which have received little attention in the extant literature