Dependency of Islamic bank rates on conventional rates in a dual banking system: A trade-off between religious and economic fundamentals

Saeed, Shifa Mohamed; Abdeljawad, Islam; Hassan, M. Kabir; Rashid, Mamunur

doi:10.1016/j.iref.2021.09.013

Cited by 31 publications

(34 citation statements)

References 57 publications

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“…(2021) find connectedness between the Sharia-compliant interbank rates and the corresponding conventional interbank offer rates for Gulf Cooperation Council (GCC) countries and Malaysia. Saeed et al. (2021) show that the markets for Islamic investment deposits and conventional fixed deposits are not perfectly segregated.…”

Section: Literature Reviewmentioning

confidence: 96%

“…Cihak and Hesse (2010) observe that Islamic finance sets profit margins based on a reference rate of return linked to international benchmarks. Mohd and Azha (2019) , Nechi and Smaoui (2019) and Saeed et al. (2021) find connectedness between the Sharia-compliant interbank rates and the corresponding conventional interbank offer rates for Gulf Cooperation Council (GCC) countries and Malaysia.…”

Section: Literature Reviewmentioning

confidence: 99%

“…To reach the full-fledged Islamic stage, Islamic banks may need to learn traditional banking from the centuries-long existing conventional banks by imitating their practices. Saeed et al. (2021) argue that Islamic banks are forced to benchmark their rates to conventional rates because they face profit-driven customers influenced by rational motivations and economic considerations.…”

Section: Literature Reviewmentioning

confidence: 99%

“…By taking a cue from this proposition, higher religiosity is associated with lower risk because religiousness is a social mechanism, which moderates individuals' behaviours, social interactions and economic decisions ( Li et al., 2013 ). The degree of religiosity among customers makes them less sensitive to competition, superseding their rationality-based profit maximisation motives ( Saeed et al., 2021 ). Adhikari and Agrawal (2016) show that local beliefs and religiosity disincentive US banks' managers to take on more risks.…”

Section: Literature Reviewmentioning

confidence: 99%

See 3 more Smart Citations

Does Islamicity matter for the stability of Islamic banks in dual banking systems?

Bakhouche

Ghak

Al-Shiab

2022

Heliyon

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Section: Literature Reviewmentioning

confidence: 96%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

See 2 more Smart Citations

Does Islamicity matter for the stability of Islamic banks in dual banking systems?

Bakhouche

Ghak

Al-Shiab

2022

Heliyon

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“…For example, the United Kingdom is the first western country to implement Shariah bonds. This was then followed by Germany who began launching Shariah Bank for the first time in 2016 (Saeed et al, 2021). Following this, Japan is seriously looking to consider implementing Shariah products.…”

Section: Introductionmentioning

confidence: 99%

The Legal Reform Policy on the Shariah Supervisory Board Role’s in Indonesian Shariah Banks

Triasari

Zwart

2021

BESTUUR

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<p>As Muslim majority country, Indonesia experiences the mushrooming of banks based on Islamic values (called shariah banking). The existence of sharia banking is followed by legal policies intended to support the progress of the business sector, including regulations regarding the Sharia Advisory Board, but the question is whether the policy is effective in the development of sharia banking in Indonesia. Adherent to that context, this study aims to examine the issues faced by the Sharia Supervisory Board in Indonesia. This article argues that there are at least fifth substantial problems related to the policies of the Sharia Supervisory Board in Indonesia, namely: (1) not all Shariah Supervisory Boards in Islamic business units have supported by a strong legal basis on which their operations are inducted to; (2) members of the Shariah Supervisory Board are appointed mostly based on their charisma and popularity in society, not of their knowledge and experience in related field; (3)ideally Shariah Supervisory Board must have recognized the banking system before becoming Shariah Supervisory Board, but the basic knowledge is not easy to understand when entering on technical issues; (4) many Shariah Supervisory Boards are not focused on shariah banks supervision duty because of their multi profession; (5) lack of advice related to product innovation and social needs issues</p>

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Competition, stability, and institutional environment: The case of dual banking economies

Azmi¹,

Anwer

Ali

et al. 2022

Int. J Fin Econ

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We measure the impact of competition and institutional quality on stability for dual banking economies. Our sample comprises 492 banks (109 Islamic and 383 conventional banks) from 17 countries with dual‐banking systems. The sample period is from 2005 to 2020. The estimations are performed using Two Step System Generalized Method of Moments approach. Our findings reveal heterogeneous effect of competition on stability. We found the evidence of competition‐stability paradigm in case of full sample as well as for Islamic banks. There is no effect of competition on the stability of conventional banks. Furthermore, there is no evidence of size effect in the competition‐stability results. The impact of legal institution is insignificant. We also observe that better quality of political and the economic institutions increases the bank stability. We attribute these findings to the conjecture that better political and/or legal institutions improve bank stability by reducing information asymmetry and adverse selection. Finally, we find the evidence that political, legal and economic dimensions of institutions have differential effect on competition‐stability relationship. The findings are robust to alternative definitions of competition, stability and different methodological approaches.

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Dependency of Islamic bank rates on conventional rates in a dual banking system: A trade-off between religious and economic fundamentals

Cited by 31 publications

References 57 publications

Does Islamicity matter for the stability of Islamic banks in dual banking systems?

Does Islamicity matter for the stability of Islamic banks in dual banking systems?

The Legal Reform Policy on the Shariah Supervisory Board Role’s in Indonesian Shariah Banks

Competition, stability, and institutional environment: The case of dual banking economies

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