The bank lending channel in the Malaysian Islamic and conventional banking system

Caporale, Guglielmo Maria; Çatık, Abdurrahman Nazif; Helmi, Mohamad Husam; Ali, Faek Menla; Tajik, Mohammad

doi:10.1016/j.gfj.2019.100478

Cited by 32 publications

(33 citation statements)

References 40 publications

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“…Conventional bank liquidity results in a decline in national financial stability, particularly in high-income countries, while the creation of Islamic bank liquidity does not. Caporale et al (2019) analyzing bank loan disbursement from monetary policy in Malaysia, the result is that Islamic finance is less responsive than conventional credit to interest rate shocks in high and low growth regimes. Further analysis shows that the sensitivity of Islamic credit and conventional credit to interest rate shocks converged after 2002.…”

Section: Previous Researchmentioning

confidence: 99%

Indonesian Islamic Banks and Financial Stability: An Empirical Analysis

Maritsa

Widarjono

2021

EkBis

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Islamic banking in Indonesia is very vulnerable to volatility in their business processes due to its small market share. Compared to conventional banks, seen from their financial performance, Islamic banks have a worse performance because of lower profit (ROA). This study examines the stability of Islamic banking in Indonesia. Stability is measured using the Z Score. The data in this study are aggregate data for Islamic commercial banks. The data used are monthly data from January 2015 to December 2019. This study uses the ARDL (Autoregressive Distributed Lag) method. The results of this study are that all independent variables OER, NPF, inflation, IPI, exchange rates have an effect on the stability of Islamic banking, except FDR. Lower efficiency and problematic financing increases the stability of Islamic banking. Meanwhile, macroeconomic factors, inflation and exchange rates, have a negative effect on the stability of Islamic banking. The economic downturn due to inflation and rupiah depreciation will increase the instability of Islamic banks.

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Section: Previous Researchmentioning

confidence: 99%

Indonesian Islamic Banks and Financial Stability: An Empirical Analysis

Maritsa

Widarjono

2021

EkBis

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“…Malaysia is one of the countries that has experienced an increasing presence of IBs in its banking system. In 2016, more than $2.6 trillion were invested in Sharia -compliant assets (Caporale et al , 2019). The market share of Islamic banking assets has increased to 26.5% in 2018 (IFSB, 2019).…”

Section: Introductionmentioning

confidence: 99%

The capital structure decision of Islamic and conventional banks: empirical evidence from Malaysia

Guizani

Ajmi

2021

APJBA

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PurposeThe purpose of this paper is to investigate how Islamic banks (IBs) and conventional banks (CBs) in Malaysia choose their capital structure and what are the most significant factors that affect their decisions regarding their capital structure.Design/methodology/approachThis study applies the autoregressive distributed lag (ARDL) approach for a sample of 54 Banks listed on Malaysian stock market over the period 2010–2018.FindingsThe study findings show that the capital structure of IBs appears to be driven by similar factors to those previously found in the corporate finance literature. They also provide evidence of the existence of a long-run and short-run relationship between leverage and its main determinants for Islamic and CBs. However, the results show that various independent variables on the capital structure do exhibit different effects (in magnitude of the coefficient) among Islamic and CBs. Moreover, we find that IBs slowly adjust their capital structure toward the desired leverage ratio than CBs.Research limitations/implicationsThis research contributes to the theory in re-validating capital structure theories on IBs. It helps understand the capital structure of IBs in comparison with CBs. If in conventional finance, the standard presiding decisions of an economic agent is optimizing the risk-return ratio, this standard is not the only or the primary decision criterion in the Islamic finance context where spiritual and theological considerations are taken into consideration.Practical implicationsThis research can contribute to managers in understanding the choice of capital structure for IBs within the bound of Sharia requirement. Such an understanding provides managers with applied knowledge of determining their appropriate capital structure to compete locally and globally in which IBs operate.Originality/valueThis paper offers some insights on the determinants of capital structure by investigating Islamic and CBs. It explores the implication of relevant Islamic principles on capital structure. Moreover, it analyses the determinants of capital structure using ARDL method that permits to identify the short-run and long-run relationships between capital structure and its main determinants.

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“…One of the monetary policies that policymakers, entrepreneurs, and investors often focus on is the interest rate (Alaoui & Jusoh, 2019;Caporale et al, 2020). Fluctuations in interest rates will get a different response for each investor.…”

Section: H3: Inflation Affects Non-performing Financingmentioning

confidence: 99%

Examining the Effect of Economic Collison

Fadila

Pangestuti

2022

IJFBS

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This study will examine the impact of economic collision on the non-performing financing in sharia bank in Indonesia. The current study adopts VAR/VECM method to examine inter variables correlation by testing an economic factors, including 1) Real GDP Growth, 2) Exchange Rate, 3) Inflation, 4) Interest Rate, and 5) IDX Composite. A total NPF of 14 Islamic Banks and 20 Sharia Business Units were selected as data samples from 2006 to 2020. The findings indicate that inflation positively impacts NPF in the short run and delivers the biggest shock to NPF. The result states that Inflation, Exchange rate, and Interest rate are the dominant factors to shock NPF in Islamic Banks. From the analysis results, the economic variables, i.e., GDP, exchange rates, inflation, interest rates, and the IDX Composite, provide a stable long-term relationship and, in the short term, adjust to each other to achieve a new balance in the long term.

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The bank lending channel in the Malaysian Islamic and conventional banking system

Cited by 32 publications

References 40 publications

Indonesian Islamic Banks and Financial Stability: An Empirical Analysis

Indonesian Islamic Banks and Financial Stability: An Empirical Analysis

The capital structure decision of Islamic and conventional banks: empirical evidence from Malaysia

Examining the Effect of Economic Collison

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