An Empirical Literature Survey of Islamic Banking

Hassan, M. Kabir; Aliyu, Sirajo

doi:10.2139/ssrn.2980516

Cited by 3 publications

(3 citation statements)

References 183 publications

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“…Finally, a series of papers deals with quantitative easing of MP and its impact on economic activities, stability of money demand in Islamic and non-Islamic economic systems, and how IBs can contribute to financial stability and economic growth (Ashraf et al , 2017; Hassan and Aliyu, 2018; Hassan et al , 2013; Hassan and Al-Dayel, 1998/1999).…”

Section: Literature Reviewmentioning

confidence: 99%

Qard-al-Hasan-based monetary policy and the role of the central bank as the lender of last resort

Selim

Hassan

2020

JIABR

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Purpose This paper aims to examine how a central bank (CB) can act as a lender of last resort (LOLR) for both Islamic and conventional interest-based banks by pursuing a Qard-al-Hasan (QH)-based monetary policy (MP). Design/methodology/approach The role of the CB as LOLR under QH-based MP and its effects on major macroeconomic variables, including deposits, loan creation and aggregate expenditures, are examined on theoretical grounds by using the aggregate output and aggregate expenditure model under the framework of Islamic MP. Findings When the CB acts as LOLR by pursuing QH-based MP, it automatically empowers Islamic banks (IBs) by providing access to borrowing funds from the CB on a QH basis. As a result, IBs will not be required to hold billions of dollars as liquid assets against liquidity risks. Thus, the lending capacity of IBs will increase and deposit expansion, loan creation and aggregate expenditures in the economy will all expand. This will in turn increase real GDP and employment while reducing the unemployment rate. Originality/value This is the first paper to analyze CBs acting as LOLR for both IBs and conventional interest-based banks by pursuing a QH-based MP, thus providing equal opportunities and equal access to borrowing facilities from the CB, along with equal partnership and fair competition for all and absolutely no discrimination to anyone. The LOLR service to all banks under QH-based MP will unveil a new horizon of opportunities where all financial institutions are expected to thrive. IBs will escape the constraints of the constant fear of liquidity risks and find a level-playing field.

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Section: Literature Reviewmentioning

confidence: 99%

Qard-al-Hasan-based monetary policy and the role of the central bank as the lender of last resort

Selim

Hassan

2020

JIABR

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“…Yet in Western countries it has also appeared in the recent years (Casper and Allali, 2017). In particular, in the wake of the financial crisis with a transition to sustainability and the fact that during the financial crisis Islamic banks performed better than traditional banks (Parashar, 2010), Islamic finance has attracted considerable attention as a substitute for conventional finance in the industry and among researchers (Farhoush and Schmidt, 2011;Hassan and Sirajo, 2017). Furthermore, with a growing rate of 8,3% in 2018 according the Islamic Financial Services Board Industry Stability Report (2018) the sector is showing future potential.…”

Section: Introductionmentioning

confidence: 99%

“…According these the principles and characteristics of Islamic banking are the prohibition of interest, the prohibition of speculation, the prohibition of involvement with goods and services which are in any point of their supply chain connected with anything forbidden by Islam (haram) and the optional existence of a Sharia board as a guide for the sharia-compliance (Ecke, 2012;Rahman, 2012;Samad, 2004). To apply these principles operations are based on the profit-loss sharing paradigm with the aim to promote social justice and wealth distribution (Hassan and Sirajo, 2017). The Shariah compliance of Islamic banks is ensured by advisory boards called Shariah boards.…”

Section: Introductionmentioning

confidence: 99%

Does Islamic banking have a future in Germany Survey on German Muslims perceptions

Çatak¹,

Arslan²

2020

Pressacademia

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Purpose-Islamic banking is a new concept in Germany. Islamic banks in Germany aspire being the hub for Islamic finance in Europe and see their potential in the growing Muslim population. This paper aims to contribute to the limited literature from the target group's perspective, to analyze their perceptions and to test whether the promised potential exists in reality.Methodology-An online survey with questions developed according to the characteristics of awareness, relative advantage, complexity, uncertainty and promotion was conducted to Muslims living in Germany. Findings-The results show that there is awareness but little knowledge towards Islamic banking and its' concepts due to insufficient communication. The main reason attracting to Islamic banking is religion. In this regard peer groups play an important role. Furthermore, the findings indicate future potential for Islamic banking Germany. Conclusion-In general there is a positive perception towards Islamic banking. Islamic banks have a rich customer portfolio and have the potential to increase their market share in Germany by offering suitable products and providing easy access to these products.

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Continued discussion on conventional versus Islamic banks: combining financial ratios and efficiency

Haque

Tausif

Anis

2020

Banks and Bank Systems

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Two different types of banking systems, Islamic and conventional, dominate the banking structure in Saudi Arabia. The purpose of this paper is to contribute to the ongoing debate as to which of the two is better. Using data for the period 2014–2018, the study compares Islamic and conventional banks. It combines traditional financial ratios, Return on Assets (ROA) and Return on Equity (ROE), with Data Envelopment Analysis (DEA) to perform a comprehensive analysis. In terms of ROA, the performance of conventional banks is better than that of Islamic banks, but in terms of ROE, vice versa. DEA results show that conventional banks are more efficient than Islamic banks. In fact, in terms of ROA and ROE, Al Rajhi Bank, an Islamic bank, is the best performer. But in terms of efficiency scores from DEA, Al Rajhi ranks seventh among all banks, while NCB, a conventional bank, ranks first. Issuing shares and utilizing funds in profitable options, such as loans and advances to increase net income, are the policy recommendations for Islamic banks to further improve. In addition, as the study finds no correlation between the ratio and efficiency scores, it proposes to use a combined measure of ratio analysis and efficiency analysis for a comprehensive assessment of bank performance.

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An Empirical Literature Survey of Islamic Banking

Cited by 3 publications

References 183 publications

Qard-al-Hasan-based monetary policy and the role of the central bank as the lender of last resort

Qard-al-Hasan-based monetary policy and the role of the central bank as the lender of last resort

Does Islamic banking have a future in Germany Survey on German Muslims perceptions

Continued discussion on conventional versus Islamic banks: combining financial ratios and efficiency

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