A cross-country analysis on diversification, Sukuk investment, and the performance of Islamic banking systems under the COVID-19 pandemic

Le, Tu; Ho, Tin H.; Nguyen, Dat T.; Ngo, Tuan

doi:10.1016/j.heliyon.2022.e09106

Cited by 32 publications

(32 citation statements)

References 50 publications

(61 reference statements)

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“…Following Azmi et al. (2021) and Le et al. (2022a), the system generalized method of moments (GMM) is used in this study to provide consistent and efficient estimates of parameters.…”

Section: Methodsmentioning

confidence: 99%

“…In response, the authorities across the globe took several policy measures, notably community lockdown, social distancing measures, business closing. This will affect households' income, firms' operations and profits, thus affecting their ability to pay their debts (Elnahass et al, 2021;Le et al, 2022a).…”

Section: Jedmentioning

confidence: 99%

“…This will affect households’ income, firms’ operations and profits, thus affecting their ability to pay their debts (Elnahass et al. , 2021; Le et al. , 2022a).…”

Section: Empirical Findingsmentioning

confidence: 99%

See 2 more Smart Citations

The environment, social and governance (ESG) activities and profitability under COVID-19: evidence from the global banking sector

Yuen

Ngo

et al. 2022

JED

Self Cite

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PurposeThis study investigated the impacts of the environment, social and governance (ESG) and its components on global bank profitability considering the COVID-19 outbreak.Design/methodology/approachThis study used a system generalized method of moments (GMM) proposed by Arellano and Bover (1995) to investigate the relationship between ESG and bank profitability using an unbalanced sample of 487 banks from 51 countries from 2006 to 2021.FindingsThe findings generally found that ESG activities may reduce bank profitability, thus supporting the trade-off hypothesis that adopting ESG standards could increase bank costs while lowering profitability. In addition, there is a U-shaped relationship between ESG and bank profitability, suggesting that ESG activities can help improve bank performance in the long term. Such effect is the first time observed in the global banking sector. This study’s results are robust across different models and settings (e.g. developed vs developing countries, different levels of profitability, and samples with vs without US banks).Practical implicationsThis study provides empirical evidence to support the sustainable development policy which is implemented by many countries. It also provides empirical incentives for bank managers to be more ESG-oriented in their activities.Originality/valueThis study provides a better understanding of the roles of ESG activity and its components in the global banking system, considering the recent crises.

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“…Following Azmi et al. (2021) and Le et al. (2022a), the system generalized method of moments (GMM) is used in this study to provide consistent and efficient estimates of parameters.…”

Section: Methodsmentioning

confidence: 99%

Section: Jedmentioning

confidence: 99%

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The environment, social and governance (ESG) activities and profitability under COVID-19: evidence from the global banking sector

Yuen

Ngo

et al. 2022

JED

Self Cite

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“…The impact of return on financial performance on Islamic banking profitability was studied by Le et al (2022). The result of this study is that banking profitability has decreased during the COVID-19 pandemic than before.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 96%

Indonesian Islamic banks: A review of the financial state before and after the COVID-19 pandemic

Lantara

Junaidi²,

Rauf

et al. 2022

Banks and Bank Systems

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Banking plays an important role in business and economic growth. However, since a couple decades ago, there have been issues with efficiency and performance. This paper aims to examine Indonesia’s Islamic banking performance through non-parametric production efficiency analysis before and after the COVID-19 pandemic, 2010–2021. This study differentiated between different dimensions of Indonesia’s Islamic banks (IIB) finance and non-finance aspects, as well as investigated the relationships between these dimensions of finance, including assets, deposits, equity, financing, and income, and non-financial variables, namely employees and offices. Non-parametric analysis, with the input-oriented variable constant return to scale (CRS) and returns to scale (VRS) models as a framework, data envelopment analysis (DEA) is used to calculate the IIB of overall, pure, and scale efficiency. However, the resources of technology IIB management are lacking, as well as macroeconomic and environmental effects. This study found that IIB operational needs to enhance investment in technology beyond the office. This means that the number of offices has a smaller impact on enhancing deposits and revenue. Technology investment has a crucial role in enhancing IIB equity, income, and innovation service. As a result, IIB managers and policymakers must improve their efficiency scores in order to increase competition and innovation. Furthermore, IIB needs to increase and spend their assets and experience to enhance technology, which significantly affects efficiency.

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“…Undoubtedly, the Covid-19 Pandemic has impacted all aspects of life in developed and developing countries, including the banking sector and Islamic banking (El-Chaarani et al, 2022). Moreover, the Islamic banking system across the country suffers the COVID-19 shock (Le et al, 2022). In Indonesia, the pandemic affected companies' financial stability, particularly those listed on the Jakarta Islamic Index (Trisnowati et al, 2021).…”

Section: Introductionmentioning

confidence: 99%

Are Islamic Banks Still Sound Amidst Pandemic?

Canggih

Nurafini²,

Suryaningsih³

et al. 2022

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The paper aims to check whether Islamic banks in Indonesia remain sound amid the Covid-19 Pandemic by comparing the soundness levels of Islamic commercial banks before and during the Covid-19 Pandemic. This research used a quantitative approach with the non-parametric Wilcoxon Signed-Rank Test to compare bank soundness before and during the Covid-19 Pandemic. The bank's resilience was measured using the Risk-Based Bank Rating (RBBR), e.g., Non-Performing Finance (NPF), Finance to Deposit Ratio (FDR), Capital Adequacy Ratio (CAR), and Net Operating Margin (NOM). The study exempted aspects of Good Corporate Governance since it is qualitative. The study used quarterly data in 2018-2019 (before the pandemic) and 2020-2021 (during the pandemic). The results showed a significant difference between CAR before and during the Covid-19 Pandemic. Meanwhile, NPF, FDR, ROA, and NOM showed no significant differences before and during the Covid-19 Pandemic. Based on the results, it can be concluded that the Covid-19 Pandemic generally does not affect the Islamic banks' soundness level, except for capital. It showed that the Islamic Bank proved to be resilient against crises. The study adds literature on the resilience of Islamic banks, particularly during the Covid-19 Pandemic, and validates the RBBR measurement to analyze the bank's soundness. In addition, the results of this study are also expected to be a consideration for policymakers to design the right policies for optimizing Islamic banks to thrive and support post-pandemic recovery.

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A cross-country analysis on diversification, Sukuk investment, and the performance of Islamic banking systems under the COVID-19 pandemic

Cited by 32 publications

References 50 publications

The environment, social and governance (ESG) activities and profitability under COVID-19: evidence from the global banking sector

The environment, social and governance (ESG) activities and profitability under COVID-19: evidence from the global banking sector

Indonesian Islamic banks: A review of the financial state before and after the COVID-19 pandemic

Are Islamic Banks Still Sound Amidst Pandemic?

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