Abstract
This paper aims to analyze the link between the disclosure of zakat information and the performance of Islamic financial institutions in Yemen. Panel data of three Islamic banks working in Yemen were used. The study used a 16-item disclosure index to measure zakat disclosure information, and the financial performance of banks was calculated using two proxies, such as return on assets (ROA) and return on equity (ROE). Based on secondary data, this study used correlation matrix, descriptive analysis and regression analysis. ROA results revealed that zakat data and the age of a bank significantly affected financial results calculated by ROA, while the size of Islamic banks had an insignificant influence of banking performance. Zakat information and the size of Islamic banks have a positive effect on bank performance, while the age of the bank negatively influences the performance of banks. The results concerning ROE indicated that zakat data and the age of a bank have a strong and significant influence on the performance of banks, determined by ROA, while the size of a bank has a negative and insignificant effect on the performance of banks, determined by ROE.
Highlights
Islamic financial institutions are considered one of the fastest-growing technologies and have received universal recognition as a result of this evolution (Abdou et al, 2014)
This paper aims to analyze the correlation between the disclosure of zakat information and Islamic banks’ performance in Yemen
The results with respect to return on assets (ROA) reveal that zakat data and bank age have a constructive impact on financial performance calculated by ROA, while the size of Islamic banks has a insignificant influence of firms’ performance
Summary
Islamic financial institutions are considered one of the fastest-growing technologies and have received universal recognition as a result of this evolution (Abdou et al, 2014). Britain has announced plans to turn London into the world Centre of Islamic finance” (Kerr, 2007), and BNP Paribas, international banks like Citigroup, Hong Kong and Shanghai Banking Corporation (HSBC) and others are growing into this fresh sector segment. UK, France, China, Singapore, and many other countries have developed special regulations to facilitate the working of Islamic banking (Nazim Ali, 2008).
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