Interest rate volatility and financing of Islamic banks

Nouman, Muhammad; Hashim, Maria; Trifan, Vanina Adoriana; Spînu, Adina Eleonora; Siddiqi, Muhammad Fahad; Khan, Farman Ullah

doi:10.1371/journal.pone.0268906

Cited by 7 publications

(4 citation statements)

References 62 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The results of this segment supported the earlier findings in another study (Yusof et al , 2018), which depicts the influence of interest rates in benchmarking Islamic banks’ financing. Recent findings on the decoupling hypothesis between interest rates and Islamic banks’ financing also exhibit the influence of the conventional interest rate in providing finances (Nouman et al , 2022). Therefore, regulators and Sharia advisory councils must provide other insights to strengthen the decoupling trend between interest and financing of Islamic banks.…”

Section: Resultsmentioning

confidence: 99%

Interest rates and Islamic commercial property financing: can there be a possible solution?

Harun

Yusof

Wahab

et al. 2023

JIABR

View full text Add to dashboard Cite

Purpose This study aims to investigate the dynamic interaction between interest rates and commercial property financing offered by Islamic banks in Malaysia. Design/methodology/approach The authors use the autoregressive distributed lag (ARDL) cointegration methodology to analyse the short- and long-run effect of the interest rates and rental rates on commercial property financing of Islamic banks in Malaysia between 2010: Q1 and 2018: Q2. Findings The findings reveal that changes in interest rates affect Islamic commercial property financing. This indicates that Islamic banks still rely on interest rates as a benchmark without fully implementing Islamic rental rates. This corroborates the subsequent finding, where overnight policy rates influence commercial property financing. Research limitations/implications Despite the authors’ attempt to provide insights into Islamic commercial property financing, the study is limited to secondary data; further research can use survey information to obtain other details that are not included in this study. Similarly, this study does not cover the operation and financial lease debate in Musharakah Mutanaqisah. Future studies can examine the challenges faced by the financial institution towards implementing rental rates in other emerging and developing countries using a different methodology. Originality/value This study is the first to investigate the dynamic changes in overnight policy rates, average lending rates and rental rates on Islamic commercial property financing in Malaysia using ARDL techniques. The authors uncover the research and institutional implications of Islamic commercial property financing rates and provide policy and future research directions coupled with the proposed modified rental rate to be developed.

show abstract

Section: Resultsmentioning

confidence: 99%

Interest rates and Islamic commercial property financing: can there be a possible solution?

Harun

Yusof

Wahab

et al. 2023

JIABR

View full text Add to dashboard Cite

show abstract

“…However, while Islamic banks are prohibited from charging interest, they often use interest-based benchmarks as a reference for pricing. This exposes them to interest rate risk, which can negatively impact their financing instruments, including mortgage products with murabaha contracts (Seho et al, 2020;Nouman et al, 2022). Islamic banks also face competition from conventional banks that offer interest-based mortgages.…”

Section: Discussionmentioning

confidence: 99%

Analysis of Customer Intention in Home Ownership Credit Products (KPR) Using Murabahah Contracts at BSI KCP Ciputat

Muhammad Faiq Abdullah Syafie

2023

IMR

View full text Add to dashboard Cite

The aim of this research is to analyze the influence of Sharia KPR characteristics, price levels and financing procedures on customer interest in Home Ownership Credit (KPR) products at Bank Syariah Indonesia (BSI) KCP Ciputat. This research method uses a quantitative approach by conducting a survey of 120 active customers of Bank Syariah Indonesia (BSI) KCP Ciputat. This research uses structural equation analysis (SEM-PLS) to evaluate the relationship between constructs. Next, the data was processed using SMARTPLS 4 software. The results or findings based on the results of the analysis that have been carried out can be concluded that there are two significant variables, namely 1) the price level variable 2) the financing procedure variable. These two variables have a significant effect on interest. On the other hand, the characteristics of Sharia KPR do not have a significant effect on customer interest in KPR products using murabahah contracts at Bank Syariah Indonesia (BSI) KCP Ciputat.

show abstract

“…Based on this explanation, interest rates affect bank credit growth (Rahmananingtyas 2022;Tanjung et al, 2022). The findings Nouman et al (2022) describe a positive relationship between variables because interest rates are considered a stable alternative and rising interest rates can spur a bank to make profits. H7: Interest Rates has a significant positive effect on the Islamic banking financing…”

Section: Interest Ratesmentioning

confidence: 98%

Integration of financing and macroeconomic shock in Islamic banking in Indonesia

Rahmayanti,

Batin,

Suryati

et al. 2024

Asian. J. Islam. Manag.

View full text Add to dashboard Cite

Purpose – This study analyzes the relationship between Islamic banking financing and macroeconomic variables as well as its response to key economic variables.Methodology – The research design uses quantitative analysis with Islamic banking panel data for the period 2019-2022 with monthly data, and the study used the Vector Error Correction Model (VECM).Findings – Non Performing Financing (NPF) and Inflation negatively impact Islamic banking financing. Meanwhile, Third Party Funds (Dana Pihak Ketiga, DPK), Net Operating Margin (NOM), Return on Assets (ROA), Equivalent Rate of Musyarakah (ERPMUSY), and BI rates have a positive direction of significance for Islamic banking financing. In the Granger causality test, the interaction between the variables was unidirectional. While Islamic banking financing responds to shocks, many financings respond negatively to the shocks that occur.Implications – Islamic Financing responds significantly in a negative direction as a result of the shocks that occur in each variable and based on long-term estimates. Therefore, Islamic banking needs to supervise and resolve the internal influence of each bank, as well as the macro influence that can be felt in the long term on Islamic banking financing.Originality – This research integrates Islamic banking finance in Indonesia and examines how internal and macro variables can influence the financing disbursed to Islamic banking in Indonesia. This study also examines shocks between variables and tests the Granger causality between variables. Islamic banking needs to pay attention to many factors to minimize bad financing or lack of interest in applying for financing.

show abstract

Interest rate volatility and financing of Islamic banks

Cited by 7 publications

References 62 publications

Interest rates and Islamic commercial property financing: can there be a possible solution?

Interest rates and Islamic commercial property financing: can there be a possible solution?

Analysis of Customer Intention in Home Ownership Credit Products (KPR) Using Murabahah Contracts at BSI KCP Ciputat

Integration of financing and macroeconomic shock in Islamic banking in Indonesia

Contact Info

Product

Resources

About