Islamic Banks and the Global Financial Crisis of 2007-09: An Assessment

Uppal, Jamshed Y.; Mangla, Inayat Ullah

doi:10.58886/jfi.v8i1.2350

Cited by 3 publications

(5 citation statements)

References 4 publications

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“…The easing of monetary policy leads to lower bank financing during the crisis. Therefore, the result obtained is consistent with Uppal and Mangla (2010) indicating that the Islamic banks in the country were not immune from the ravages of the global financial crisis. One of the reasons that might contribute to this finding is due to the Islamic bank financing which is still relying on interest rate as monetary policy indicator.…”

Section: Resultssupporting

confidence: 86%

“…In parallel with other studies, Zuriyati and Roziani (2014) found that GFC has not affected the bank financing in Islamic banks. Nonetheless, Uppal and Mangla (2010) reveal a contrary result. They examined the experience of Islamic banks of two countries (Pakistan and Malaysia) and found that the Islamic banks in the country "were not immune from the ravages of the global financial crisis" to the financial crisis.…”

Section: Literature Reviewmentioning

confidence: 85%

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Islamic Bank Financing, Financial Crisis and Monetary Policy in Malaysia: An Interaction in the Long Run Equilibrium

Zainuri

Majid

2017

ijib

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Global Financial Crisis (GFC) in 2007-2010 has given a big impact to the financial institution and banking institutions worldwide. A wide array of GFC impact is experienced by the operating and financial performance in banking institutions. Islamic banks however have raised the public interest to be relatively unaffected by the GFC. There are studies which found that GFC has less effect to Islamic banking system. In fact it is claimed to be â€œimmune from the ravages of the GFCâ€. The question arises whether the claim is also true in the case of the Islamic bank financing. Thus, this study attempts to assess the reaction of Islamic bank financing to the Global Financial Crisis (GFC) through the monetary policy action taken by the government in Malaysia. Using the time series data the investigation will benefit from the quarterly data spanning from 1995 to 2013. A model is constructed and focusing on the interaction term of monetary policy and global financial crisis. In analyzing the impact and a long run relationship between variables, Johansenâ€™s co-integration test is applied. Finding shows that Islamic bank financing and the interaction term of global financial crisis are co-integrated and, hence, a long-run equilibrium relationship exists between them. This finding also implies despite the prior claims that Islamic bank financing is unharmed with the Global Financial Crisis (GFC), the reaction of Islamic bank financing in Malaysia is sensitive towards the global financial crisis but through monetary policy action taken by the government.

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Section: Resultssupporting

confidence: 86%

Section: Literature Reviewmentioning

confidence: 85%

Islamic Bank Financing, Financial Crisis and Monetary Policy in Malaysia: An Interaction in the Long Run Equilibrium

Zainuri

Majid

2017

ijib

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“…According to their findings, Islamic funds show a clear preference for small caps. Uppal and Mangla (2010) provides empirical evidence that the view that Islamic banks are inherently safe is not sustainable in the light of their experience during the Great Financial Crisis (GFC). Additionally, Uppal and Mangla (2010) shows that the actual lending practices of Islamic banks are predominantly based on mark-ups, thus implicitly carry interest.…”

Section: Failure To Develop Risk Sharing Productsmentioning

confidence: 99%

“…Uppal and Mangla (2010) provides empirical evidence that the view that Islamic banks are inherently safe is not sustainable in the light of their experience during the Great Financial Crisis (GFC). Additionally, Uppal and Mangla (2010) shows that the actual lending practices of Islamic banks are predominantly based on mark-ups, thus implicitly carry interest. The study finds that the Islamic banking industry seems to have fallen short of the Islamic ideals, and their practices have moved away in substance from their brand-image towards a convergence to the conventional banking.…”

Section: Failure To Develop Risk Sharing Productsmentioning

confidence: 99%

Religion and Ethics-Based Economic and Financial Systems: A Survey of Insights into Islamic Economics and Finance

Ahmed

2015

JFI

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This article examines the foundations of Islamic economic thought and its implications for a financial system as developed by its key proponent, Sayyid Abul Ala Mawdūdī, and his disciples. A critical analysis of the ideology follows this examination. We explore the reasons for it not finding general support in the mainstream academic circles, and for not leading to meaningful and innovative financial products or economic programs. Our analysis and the extant empirical evidence support the idea that the Islamic economics’ framework needs major revisions. It appears from our survey and analysis of the recent literature that Islamic economics and finance is still a work in progress and has a long way to go before it can offer a viable market-consistent alternative to the modern banking and financial system.

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“…These risks came to surface in the aftermath of the Global Financial Crisis. It has been shown that not only the Islamic banks were not immune from the ravages of the GFC, but were also adversely affected by it to a greater extent than were the conventional banks; Uppal and Mangla (2010b). Though, IBs were not directly impacted by the GFC in its initial phase, the banks experienced the after-shocks of the GFC transmitted through indirect channels.…”

Section: Post Gfc Challenges and Strategic Implicationsmentioning

confidence: 99%

Islamic Banking and Finance Revisited after Forty Years: Some Global Challenges

Uppal

Mangla

2014

JFI

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After experiencing phenomenal growth over the last forty years, the Islamic banking and finance industry (IBF) faces some difficult challenges which are addressed in this paper. We argue that the industry has moved away from pursuing ideals conveyed by its brand-name products towards a convergence to the conventional banking and discuss the reasons behind this trend. We suggest that the dictates of the economic and financial theory might be at conflict with the IBF market niche strategy. Additionally, we highlight operational challenges facing the industry in deploying risk management techniques and regulatory compliance.

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Islamic Banks and the Global Financial Crisis of 2007-09: An Assessment

Cited by 3 publications

References 4 publications

Islamic Bank Financing, Financial Crisis and Monetary Policy in Malaysia: An Interaction in the Long Run Equilibrium

Islamic Bank Financing, Financial Crisis and Monetary Policy in Malaysia: An Interaction in the Long Run Equilibrium

Religion and Ethics-Based Economic and Financial Systems: A Survey of Insights into Islamic Economics and Finance

Islamic Banking and Finance Revisited after Forty Years: Some Global Challenges

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