Application of Theory Reasoned Action in Intention to Use Islamic Banking in Indonesia. This paper investigates the constructs of Theory of Reasoned Action (TRA), and Theory of Planned Behavior (TPB) (attitude, subjective norm, religion, knowledge, pricing, and government support) on customer behavioral intention and Islamic banking selection. This research using Partial Least Square Structural Equation Modeling with variables such as: attitude, subject norm, religion, knowledge and government support, and pricing. The result shows that attitude, subject norm, religion, knowledge and government support are statistically significant effect on intention to select Islamic bank in Indonesia. Pricing however is not significant. The results imply that Indonesian Islamic banks should strategize ways to develop positive attitude and reference amongst their customers through greater dissemination of knowledge about Islamic banking while emphasizing on the religious compliance.

This paper presents fresh findings about key determinants of credit risk of commercial banks in emerging economy banking systems compared with developed economies. Australia, France, Japan and the US represent developed economies; emerging economies are India, Korea, Malaysia, Mexico and Thailand. Credit risk theories and empirical literature suggest eight credit risk determinants. We find anywhere from two to four factors are alone significantly correlated with credit risk of any one banking system. Regulatory capital is significant for banking systems that offer multi products; management quality is critical in the cases of loan-dominant banks in emerging economies. Contrary to theory or studies, we find leverage is not correlated with credit risk in our test period. Data transformations and statistical corrections ensured these results are reliable: Model robustness was tested using AIC. The model developed here could be applied to test more emerging economy banking systems to generalize our findings to other economies.

Restructuring and rationalisation of Malaysian banking in 2000 and the subsequent policy of deregulation and liberalisation adopted by Bank Negara Malaysia (BNM) have resulted in a significant transformation of Malaysian banking. Banks are now poised to play a pivotal role in the economic transformation of the economy as envisaged in the Financial Sector Blue Print 2011–20 of BNM. Using the data envelopment analysis technique, the technical efficiency of 19 commercial banks (8 domestic banks and 11 foreign banks) operating in Malaysia during 2005–12 is evaluated. Then, using bootstrap‐corrected efficiency scores, the drivers of bank efficiency were estimated using the Tobit regression approach. Results clearly show that three large domestic banks are not only more efficient than their counterparts, but are also more efficient than the foreign banks. Bank size and return on assets are found to be the significant drivers of technical efficiency of Malaysian banks. Capital adequacy and the advances to deposit ratio also have a role in driving technical efficiency. The results also indicate that banks that are more effective in managing credit risk, as reflected in a lower level of non‐performing assets as a percentage of total assets, and have lower levels of personnel expenses to total assets, are more efficient. The findings have significant implications at the individual bank level and also at the policy level.

The article investigates the efficiency of the Islamic banking sectors in 25 countries during the period 1992–2009 consisting of 78 Islamic banks. The efficiency estimates of individual banks are evaluated using the non-parametric Data Envelopment Analysis (DEA) method. The empirical findings seem to suggest that the World Islamic banks have exhibited high pure technical efficiency. During the period of study we find that pure technical inefficiency has greater influence in determining the total technical inefficiency of the World Islamic banking sectors. Second, further analysis into the investigation of the World Islamic banking sector efficiency is suggested to consider specific factors that contribute to high-income countries leading efficiency over the years compared to banks operated in medium- and low-income countries. Based on Table 3, it is consistently stated that most of the efficient banks over the years were from high-income countries. We find a positive relationship between bank efficiency and loan intensity, size, capitalization and profitability. Empirical results show that technically more efficient banks are those that have higher market share and a low non-performing loan ratio. A multivariate analysis based on the Tobit model reinforces these findings.

This paper is about factors affecting credit risk of Islamic banks in the Gulf Cooperation Council countries using website data covering 25 Islamic banks over 2006 to 2010. This study uses non-performing loans as a proxy for credit risk, which is the dependent variable with three macro-economic, and six firm-specific independent variables. We find income is significantly negatively related to credit risk, which is consistent with findings in other countries about credit risk. Some firm-specific variables such as leverage, liquidity are also relevant variables for credit risk, which results are also consistent with bank behaviour reported in other studies. Credit risk is also broadly affected by both macro and firm-specific factors as found in other regions. Inflation and interest rates do not appear to be relevant. These results would suggest non-performing loan is broadly correlated with factors identified in other studies of banks.