Asset diversification and bank performance: Evidence from three Asian countries with a dual banking system

Chen, Naiwei; Liang, Hsin-Yu; Yu, Min‐Teh

doi:10.1016/j.pacfin.2018.02.007

Cited by 55 publications

(54 citation statements)

References 39 publications

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“…This will decrease Islamic banks' probability to engage in a risky project that possibly leads more return to the bank. Islamic banks are not permitted to invest in high-risk financial products in order to comply with Islamic law (Chen, Liang, & Yu, 2018).…”

Section: Baseline Resultsmentioning

confidence: 99%

“…The next controls we use in this paper is total customer deposit to total liabilities ratio following Chen, Liang, & Yu (2018). We also use asset growth (GrTA it ) following Stiroh & Rumble (2006) and Chen, Liang, & Yu (2018). A positive sign from GrTA it is expected because banks that grow rapidly are more likely to have greater profitability ratio.…”

Section: Tastaftiyan Risfandymentioning

confidence: 99%

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Equity Financing and Islamic Banks’ Profitability: Evidence from the Biggest Muslim Country

Risfandy

2018

Jurnal Keuangan Dan Perbankan

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It was highlighted in the literature that Islamic banks' equity financing was very risky in practice. Theoretically, equity financing could boost Islamic banks' profitability because the riskier financial instrument was always associated with the greater return that could be created. Using a sample of nine Islamic banks in Indonesia from 2009m1 to 2014m12, interestingly we found that higher proportion of equity financing was significantly associated with lower Islamic banks' profitability. However, this negative relationship diminished in the case of large Islamic banks, implying that the negative effect of equity financing on Islamic banks' profitability was more prominent for small banks rather than for large banks. Our results were robust using various estimations. Although equity financing was a core of Islamic banks and could differ Islamic from conventional banks' activities but Islamic banks altogether with policymakers should evaluate this instrument for the sake of Islamic banks' profitability and its prospects in the future.

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Section: Baseline Resultsmentioning

confidence: 99%

Section: Tastaftiyan Risfandymentioning

confidence: 99%

Equity Financing and Islamic Banks’ Profitability: Evidence from the Biggest Muslim Country

Risfandy

2018

Jurnal Keuangan Dan Perbankan

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“…According to the Islamic Financial Services Board (2018), the total worth of the Islamic financial services industry slightly surpassed USD2 trillion. IBs and CBs coexist and function in a dual banking system in many countries (Chen et al, 2018;Ibrahim and Rizvi, 2018). With Saudi Arabia and Malaysia being the leading market players, IBs are also emerging in Europe and United States.…”

Section: Introductionmentioning

confidence: 99%

Financial Performance of Islamic and Conventional Banks in Malaysia: A Comparative Analysis

Sulub¹,

Salleh²

2019

IJMAR

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This paper analyses the financial performance of Islamic (IB) and conventional banks (CB) in Malaysia comparatively, within the scope of a dual setting arrangement in the Malaysian financial industry. Performance evaluation of both types of banks relies on ratio analyses which include Return on Equity (ROE), Return on Assets (ROA), Earnings per Share (EPS) and Debt Ratio. Data for this study covers four full-fledged IBs and four CBs in the period between 2012 and 2016. Based on statistical analysis (t-test and correlation analysis), the average of ROE was 6% for IBs and 14% for CBs. Results of t-test reveals that this higher performance of CBs is significant (t-test=1.957, p-value= 0.029). Furthermore, both ROA and EPS were significantly different between the two groups at p-value less than 1%. These results indicate that the Malaysian CBs performed better than IBs, at least for the banks included in this study. In terms of debt ratio, (the percentage of liabilities to total assets), IBs carry more debts than CBs. The risk of this higher debt is that the bank may be at risk of bankruptcy and may not be able to pay its obligations on time. The difference between the average debt of the two groups is significant at less than 5% (t-test= -2.251, p-value= 0.015). Therefore, not only is IBs’ performance inferior to CBs but their debt ratio is also higher. This research has implications for IBs; they should further improve their performance to become more competitive in the current environment for the financial industry. More importantly, IBs need to uphold Islamic ethics throughout their business operations to ensure that both the stated principles and subsequent objectives are achieved.

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“…Chen et al . () find evidence supporting diversification strategy for Islamic banks. Leon and Weill () investigate Islamic banking developments in relation to access to credit.…”

Section: Output–expert Judgementmentioning

confidence: 82%

Machine Learning and Expert Judgement: Analyzing Emerging Topics in Accounting and Finance Research in the Asia–Pacific

Cai

Linnenluecke

Marrone

et al. 2019

Abacus

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In this paper, we focus on the question to what extent machine learning (ML) tools can be used to support systematic literature reviews. We apply a ML approach for topic detection to analyze emerging topics in the literature-our context is accounting and finance research in the Asia-Pacific region. To evaluate the robustness of the approach, we compare findings from the automated ML approach with the results from a manual analysis of the literature. The automated approach uses a keyword algorithm detection mechanism whereby the manual analysis uses common techniques for qualitative data analysis, that is, triangulation between researchers (expert judgement). From our paper, we conclude that both methods have strengths and weaknesses. The automated analysis works well for large corpora of text and provides a very standardized and non-biased way of analyzing the literature. However, the human researcher is potentially better equipped to evaluate current issues and future trends in the literature. Overall, the best results might be achieved when a variety of tools are used together.

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Asset diversification and bank performance: Evidence from three Asian countries with a dual banking system

Cited by 55 publications

References 39 publications

Equity Financing and Islamic Banks’ Profitability: Evidence from the Biggest Muslim Country

Equity Financing and Islamic Banks’ Profitability: Evidence from the Biggest Muslim Country

Financial Performance of Islamic and Conventional Banks in Malaysia: A Comparative Analysis

Machine Learning and Expert Judgement: Analyzing Emerging Topics in Accounting and Finance Research in the Asia–Pacific

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