Purpose -The purpose of this paper is to propose the development of return forecasting model for mudharabah time deposit product in Islamic bank based on artificial neural networks (ANNs). Design/methodology/approach -The analysis consists of two main elements. First element is the identification and selection of significant macroeconomic variables that determine return volatility of mudharabah time deposit in Indonesian Islamic bank industry. Second element is the implementation of appropriate ANNs model according to neural networks properties, and model evaluation based on simulated return predictions of mudharabah time deposit product in Bank Syariah Mandiri (RR-BSM). Findings -It is shown that monthly changes of return can be predicted quite well. The model provides a satisfactory result in forecasting RR-BSM for 12 months ahead with 95.22 per cent accuracy. These results suggest that the ANNs can be applied as an adequate tool to help depositors in predicting future return of mudharabah time deposit product. Originality/value -There is believed to be no other empirical study of Islamic banks that exclusively examines the utilization of ANNs to forecast time deposit return as well as return from other investment instruments.
This research proposes a development of Early Warning System (EWS) model towards the financial performance of Islamic bank using financial ratios and macroeconomic indicators. The result of this paper is ready-to-use algorithm for the issue that needs to be solved shortly using machine learning technique which is not widely applied in Islamic banking. The research was conducted in three stages using Artificial Neural Networks (ANNs) technique: the selection of variables that significantly affect financial performance, developing an algorithm as a predictor and testing the predictor algorithm using out of sample data. Finally, the research concludes that the proposed model results in 100% accuracy for predicting Islamic bank’s financial conditions for the next two consecutive months.
The position of the insured credit life insurance in the bank that handles the insurance company as the insurer and the banking company as the policy holder, which provides credit and terms that require a balanced and direct relationship. This is important, because the different interests of this large industry are related to the insured. For this reason, the insured credit life insurance company needs legal protection with special arrangements, which are based on existing norms. In addition, the interests of the two industries as insurers and policyholders need synergy. interest in credit management for each.
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