Comparison of banking efficiency in Europe: Islamic versus conventional banks

Ahmad, Wahida; Luo, Robin H.

doi:10.1108/s1569-3767(2010)0000011016

Cited by 28 publications

(18 citation statements)

References 39 publications

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“…Some studies (two of which are in the GCC context) find that Islamic banks are significantly less efficient than conventional ones (Mokhtar et al 2007;Srairi 2010;Kamarudin et al 2014;Mobarek and Kalonov 2014), while other studies (two of which are in the GCC context) suggest that Islamic banks are significantly more efficient than conventional banks (Al-Jarrah and Molyneux 2006;Al-Muharrami 2008;Olson and Zoubi 2008). The vast majority of frontier studies, however, find no significant difference between the two bank types (El-Gamal and Inanoglu 2005;Grigorian and Manole 2005;Mokhtar et al 2006;Bader 2008;Mohamad et al 2008;Hassan et al 2009), or else the significance of the difference between the two bank systems is not tested (Hussein 2004;Al-Jarrah and Molyneux 2005;Ahmad and Luo 2010;Said 2012). However, caution is needed regarding some studies where either the sample size -particularly the number of Islamic banks -is small or a variety of countries with markedly economies has been utilised; thus, making the isolation of an "Islamic banking" effect difficult.…”

Section: Literature Reviewmentioning

confidence: 99%

Performance and productivity in Islamic and conventional banks: Evidence from the global financial crisis

et al. 2019

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We assess the performance and productivity of Islamic and conventional banks using financial ratios, a two-and a four-component meta-frontier Malmquist productivity index (MPI). We focus on the relatively homogenous GCC region over the 2006-2012 period that covers the global financial crisis. We find that Islamic banks exhibit worse cost and profit performance but are on a par with regards to revenue performance compared to the conventional ones. The components of the meta-frontier MPI suggest that the technology of conventional banks improves markedly in years leading to the financial crisis and declines thereafter. Islamic banks show a similar but more muted pattern. By contrast, the pronounced within-Islamic bank group variation in technical efficiency and technology suggest that Islamic banks are quite heterogeneous as a group. Overall, the MPI analysis suggests that the two bank types are more aligned following the global financial crisis. Policy implications are subsequently discussed.

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Section: Literature Reviewmentioning

confidence: 99%

Performance and productivity in Islamic and conventional banks: Evidence from the global financial crisis

et al. 2019

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“…(11) virtual communities Islamic banks have more focused on the redistribution of wealth by making investments that can enhance well-being and social justice among Islamic and developing countries (Johnes et al, 2014;Kumar et al, 2010;Ahmad and Luo, 2010). On the other hand, the prime objective of conventional banks is to earn profit without focusing on the welfare of social communities (Iqbal and Molyneux, 2016;Naeem, 2019b).…”

Section: Social Influencementioning

confidence: 99%

Developing the antecedents of social influence for Internet banking adoption through social networking platforms: evidence from conventional and Islamic banks

Naeem

2020

APJML

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PurposeThe purpose of this paper develops a conceptual model of social influence for Internet banking adoption (IBA) using social networking platforms (SNPs). It identifies the antecedents of social influence that can positively and negative influence the IBA among a targeted population of conventional and Islamic banks. Moreover, this paper contributes various factors to social influence theory with the purpose of enhancing its implication in the context of Internet banking uptake in developed and developing countries.Design/methodology/approachThis study uses a social constructivism approach to understand customer experiences, thoughts, knowledge, awareness and perceptions in relation to IBA. For this study, data were collected from 2030 respondents using semi-structured interviews and purposive sampling.FindingsSocial influence comprises customer recommendations, suggestions, ratings, reviews, experiences and thoughts regarding the IBA of Islamic and conventional banks. The findings reveal that social reviews, social experts, social consensus, social responsibility and social perceptions are the key antecedents of social influence that can enhance IBA of SNPs. The research finds that positive social reviews, expert support, consensus, social responsibility and social perceptions are significant in relation to conventional Internet banking. The respondents revealed serious concerns about the privacy of their personal and financial information especially in relation to Islamic banks.Research limitations/implicationsThe effective and well-organized use of SNPs can foster service reviews, word of mouth, higher levels of service awareness, interactive communication, social consensus and social trust to drive the adoption of Internet banking. This study proposes the conceptual model which has positive business implications and provides the banks direction to use the SNPs to their advantage to influxes their customers to adopt the use of Internet banking.Originality/valueMost previous studies have used technology acceptance model, theory of planned behavior and unified theory of acceptance and the use of technology theories in the adoption of technology and IBA. These theories have not fully illuminated the role of social content as a way to enhance or decrease the number of customers in conventional and Islamic banks. This study develops social influence theory by exploring several dimensions (i.e. social reviews, awareness, consensus, cooperation and experts support) in the context of IBA for users of SNPs. Social influence can create more reviews and can lead to more prepurchase information. It can drive customer inquiries and engagement and can inform purchase decisions for IBA. On the other hand, it can motivate existing customers of Islamic banks to use conventional banking services due to effective word of mouth.

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“…Fourth, we test whether oil price–bank risk nexus is different across conventional banks and Islamic banks. Islamic banks are driven by the principle of profit-sharing in Islamic Shariah law, making them different from traditional ones in terms of asset-liability structure, and thus the composition of NPLs (Ahmad and Luo, 2010; Ho, 2015; Hassan and Aliyu, 2018; AlAbbad et al , 2019). Results are displayed in Columns (7) and (8) of Table VII.…”

Section: Extended Regressionsmentioning

confidence: 99%

“…3. MENA countries are the region where Islamic banks and conventional banks coexist. Islamic banks are divergent from conventional banks in terms of the source and use of funds (Ahmad and Luo, 2010; Miah and Sharmeen, 2015; Hassan and Aliyu, 2018; AlAbbad et al , 2019). …”

Section: Notesmentioning

confidence: 99%

Oil prices and bank credit risk in MENA countries after the 2008 financial crisis

Wang

Luo

2020

IMEFM

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Purpose The purpose of this paper is to investigate the oil price–bank risk nexus by considering the heterogeneity of bank characters. Design/methodology/approach This paper empirically tests the effect of oil price movements on bank credit risk by using a sample of 279 banks in the Middle East and North Africa countries from 2011 to 2017. Findings Authors find robust evidence that the credit risk of bank loan portfolios is negatively associated with increased oil prices. The heterogeneity analysis indicates that the effect of asset quality improvement brought about by rising oil prices is more salient in conventional banks, and banks with small size, low liquidity and whose funding source relies on customers’ deposits. Practical implications The results favor the diversification of bank funding sources, the improvement of a country’s financial development, the adoption of explicit deposit insurance and macroprudential policies, such as countercyclical liquidity buffers, to weaken the adverse impact of oil prices declines. Originality/value The present paper enriches the literature of oil price–bank risk nexus by analyzing the heterogeneity of bank characters and advances our knowledge on the determined factors of bank riskiness and vulnerability.

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Comparison of banking efficiency in Europe: Islamic versus conventional banks

Cited by 28 publications

References 39 publications

Performance and productivity in Islamic and conventional banks: Evidence from the global financial crisis

Performance and productivity in Islamic and conventional banks: Evidence from the global financial crisis

Developing the antecedents of social influence for Internet banking adoption through social networking platforms: evidence from conventional and Islamic banks

Oil prices and bank credit risk in MENA countries after the 2008 financial crisis

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