Management Of Islamic Banks Research Articles

The Effect of Wadiah Savings and Problem Financing (NPF) in the 'Precise Sharia Financing' Product on the Profitability Level of PT. Bank BTPN Syariah Tbk for the Period 2015 - 2023

This study aims to empirically examine the effect of wadi'ah savings and non-performing financing (NPF) on profitability (ROA) in the Precise Syariah Financing product at PT Bank BTPN Syariah during the period 2015 - 2023. Using an associative quantitative approach. The study conducted by researchers using secondary data derived from BTPN Syariah quarterly financial statements for the period 2015 - 2023. The data analysis technique used multiple linear regression analysis through Eviews 12 as a data processing tool. The study results showed that an increase in wadi'ah savings significantly positively contributed to an increase in ROA, while an increase in NPF had a significant negative effect. The regression model developed was able to explain 71.15% of ROA variability. This finding explains that an increase in wadi'ah savings tends to increase profitability, while an increase in NPF tends to decrease the level of profitability of BTPN Syariah. The implication is that banking management needs to focus on managing the increase in wadi'ah savings and improving the quality of financing to increase profitability. This study provides important insights for Islamic banking management in optimizing financial performance, especially in the context of the Tepat Pembiayaan Syariah product and contributes to the literature on factors affecting the profitability of Islamic banks in Indonesia. This study contributes to the Islamic banking literature, but has limitations in terms of the research period and variables used. Future research is expected to expand the scope of variables and periods in the study to obtain generalized results.

ANALISIS FATWA DSN MUI NO: 123/DSN-MUI/XI/2018 TERHADAP PENGGUNAAN DANA TBDSP DI BTPN SYARIAH PERIODE TAHUN 2020-2023

Bank Tabungan Pensiunan Negara (BTPN) also develops BTPN with Sharia principles. Islamic banking management also has funds that cannot be recognized as income (TBDSP), the TBDSP funds are used for community social activities. In receiving and distributing TBDSP funds to Sharia Banks, the National Sharia Board (DSN) of the Indonesian Ulema Council (MUI) issued Fatwa Number 123/DSN-MUI/XI/2018. The purpose of this article is to analyze the implementation of Fatwa DSN MUI No. 123/DSN-MUI/XI/2018 against the use of TBDSP funds. This research uses qualitative methods with a literature study approach. The data used was obtained from BTPN Syariah's annual performance report for the 2020-2023 period, the website of the Indonesian Ulema Council (MUI), the website of the Financial Services Authority (OJK) and the Central Statistics Agency (BPS). As a result of this research, BTPN Syariah has implemented fatwa DSN MUI Number 123/DSN-MUI/XI/2018 in managing TBDSP funds for the 2020-2023 period by using these funds for social activities. In distributing TBDSP funds, BTPN Syariah helps communities affected by Covid 19 and assists the government in the recovery and empowerment of MSMEs after Covid 19. This implementation is that the use of TBDSP funds by BTPN Syariah does not contradict sharia principles, as stipulated in Fatwa DSN MUI Number 123/DSN-MUI/XI/2018.

Bibliometric analysis of service quality and customer satisfaction in Islamic banking: a roadmap for future research

Purpose This study aims to conduct a comprehensive bibliometric analysis, assessing studies related to service quality and customer satisfaction in Islamic banking. Design/methodology/approach Using a bibliometric approach, this research draws from literature samples retrieved in April 2023 from the SCOPUS database. The sample encompasses 138 articles published between 1999 and 2023, adhering to specific selection criteria. Analytical tools such as R program, VOSviewer and Microsoft Excel were used to categorise the data into three primary domains: productivity, citation patterns and network analysis. These categories further include the identification of research flows and prospective areas for further investigation. Findings The results indicate a substantial surge in publications between 2011 and 2022 involving 372 authors. This study identifies the primary contributors in terms of countries, affiliations, publications, sources and researchers. Seven distinct clusters emerged from the 138 papers, encompassing customer attitude, comparison studies, digital banking, customer loyalty, customer trust, consumer determinants and service quality. Additionally, the study outlines a future research agenda, posing specific research questions. Research limitations/implications Recognising the limitations inherent in focusing solely on Scopus-indexed publications, future studies may benefit from incorporating various databases, such as the Web of Science, for a more expansive exploration of study units. A systematic review of articles on a specific topic could also enhance the comprehensiveness of the study. Practical implications This investigation empowers Islamic bank managers to devise targeted marketing plans, differentiating themselves from competitors. By implementing relevant improvements in operational and service processes, managers can enhance the customer experience, fostering a lasting competitive advantage. For academics, this study lays a robust foundation for further research, encouraging the development of a comprehensive conceptual model and empirical testing. The identification of current research gaps enables researchers to focus on areas that remain underexplored. Originality/value This study not only illuminates critical gaps in existing research but also proposes a research agenda to guide future researchers in remaining pertinent, particularly within the context of Islamic banking marketing.

Economic freedom and its subcomponents: effects on Islamic bank performance

PurposeThis paper aims to examine the profitability of Islamic banks benefits from economic freedom and its subcomponents.Design/methodology/approachThis study uses a sample of 41 Islamic banks from the Organization of Islamic Cooperation (OIC) Countries selected from 2010–2020. It conducts an empirical approach based on the System Generalized Method of Moments (SGMM).FindingsOverall, economic freedom has a substantial impact on the profitability of Islamic banks. We then investigate the relationship between the subcomponents of economic freedom and the profitability of Islamic banks. The study’s breakdown components suggest that financial and investment freedoms are favorable indicators, while business and monetary freedoms have a negative effect.Practical implicationsThis research can serve as a guideline for Islamic bank management in terms of maintaining performance. The results of this study provide policy implications for the government to offer friendly regulations for economic actors to engage in financial transactions by looking at the economic freedom sub-component.Originality/valueTo the best of the authors' knowledge, the study of the role of economic freedom in Islamic banking performance is limited, particularly in the context of OIC Countries.

The Moderating Role of Merger on the Switching Intention to Use Islamic Bank: The Case of Indonesia

Objective –Since February 2021, the government decided to merge 3 Islamic banks to increase Islamic bank markets. This policy raises pros and cons in society. This research analyses the mediating role of mergers on the switching intention to use Islamic banks.Design/Methodology –This research is a quantitative study using the Structural Equation Model Partial Least Square (SEM-PLS). A total of 108 respondents' data were analyzed. The data was collected through an online survey utilizing social media which was shared directly with respondents in the city of Surabaya. The respondents' criteria were selected using purposive sampling techniques.Results –The moderating effects showed that the merger was a poor moderator of the reality between attitude, subjective norms, and perceived behavioral control on the switching intention to use Islamic banks. However, the direct effects showed a significant relationship between mergers and switching intention. Besides, this study shows that attitude, subjective norm, and perceived behavioral control have a significant influence on switching intention. Subjective norm is the most dominant factor.Research limitation/implication – This study uses limited variables and was carried out shortly after the merger of Islamic banks. However, this study provides a comprehensive analysis related to the relationship between mergers and switching intention. The implications of this research urge the government as a policymaker to do its best to increase public awareness of Islamic banks. Islamic bank managers must conduct massive socialization by utilizing various existing technologies and media to reach all levels of society to use Islamic banking services.Contribution – This study emphasizes the significance influence of subjective norm and switching intention. Thus, the government and Islamic banks must intensify socialization of Islamic bank to encourage Islamic bank users.Novelty/Originality –This study complements the literature by analysing the impact of Islamic bank mergers with switching intention to use Islamic banks as far as the authors' knowledge of merger research is still limited to analysing the performance of Islamic banks after the merger.

The Moderation Effect of Islamic Corporate Governance on Fraud Financial Statement Detection Using Fraud Hexagon

Purpose: Given that Islamic corporate governance serves as a moderating variable, this study aims to examine the impact of the hexagon theory on fraudulent financial statements.Method: This study employed a quantitative methodology and garnered secondary data on Islamic commercial banks in Southeast Asia. Purposive sampling was carried out to collect data from 18 companies during five years (2017–2022), yielding 90 observations. The data analysis method employed Warp-PLS software version 8.0 and partial least square structural equation modeling (PLS-SEM).Findings: Study results demonstrate that financial stability significantly worsens the performance of fraudulent financial statements. Related party transactions, external auditors, director changes, C.E.O. education, company existence, and political connections did not affect governance, moderate the significant positive influence of financial stability, related party transactions, company existence, and political connections on fraudulent financial statements. Meanwhile, good oversight, external auditors, director changes, and C.E.O. education did not moderate the impact of misleading financial statements.Originality/Value: This research contributites significantly to the Islamic banking management. The Islamic corporate governance mechanism forms the process and structure of the entity’s supervisory, monitoring and advisory functions. The presentation of financial statements is carried out in an accountable and transparent manner based on Sharia principles, which can reduce the practice of financial statement fraud, so stakeholders will be more confident in investing.

Reconceptualization of Ideal Islamic Bankers in The Sharia Framework (An Effort to Create a Sharia Compliance Ecosystem)

Islamic bankers have a central position and an essential role in the implementation of Sharia principles in Islamic banking practices because Islamic bankers are parties directly related to the operational implementation of Sharia contracts. This research attempted to reconceptualize the figure of the Islamic banker with the formulation of the ideal Islamic banker within the framework of Sharia norms. This research was qualitative research that applied a literature study. Referring to the Hadith of the Prophet, Atsar Umar bin Khattab and Qaul Abu Laits, which serve as the foundation for the formulation of the ideal Islamic banker in the ideas of banking jurisprudence related to Islamic Human Resources Management, Islamic bank management must consider the relevance of education in selecting employees as an application of the Islamic recruitment model. Furthermore, the ideal Islamic banker will be realized through Islamic training, which forms ways of thinking, competence, character, and work motivation within the Sharia framework. The results indicated that Islamic bankers had adequate knowledge of Sharia and enthusiasm and commitment, which was vital in implementing all Sharia provisions in banking transactions to create a Sharia compliance ecosystem in Islamic banking.

Shariah governance and Islamic banks: a systematic literature review

Purpose The purpose of this paper is to provide a systematic literature review on Shariah governance and Islamic banks. Design/methodology/approach The literature was searched from Scopus and Web of Science using various queries related to Shariah governance and Islamic banks. Through a screening process, 93 articles were considered fit for the systematic literature review. Findings The paper provides a systematic review based on different themes, including measurement of Shariah governance in Islamic banks, disclosure of Shariah governance and its determinants, the impact of Shariah governance on performance, risk management and other outcomes of Islamic banks. Finally, issues and challenges of Shariah governance in Islamic banks are discussed, followed by conclusions and recommendations related to future research. Originality/value This study is the first of its kind, to the authors’ knowledge, to provide a comprehensive systematic literature on Shariah governance and Islamic banks by exploring different themes and highlighting multiple future avenues of research.

Analisis Pengaruh Tingkat Suku Bunga Terhadap Dana Nasabah di Bank Syariah

This research aims to analyze the influence of interest rates on customer funds in Islamic banks and identify strategies that can be implemented by Islamic banks to maintain and increase customer trust and loyalty. This research uses a qualitative approach, by collecting data through in-depth interviews with customers and managers of Islamic banks as well as analysis of related literature. The research results show that changes in conventional interest rates can influence customers' decisions in depositing or withdrawing their funds at Islamic banks. To overcome this, Islamic banks need to develop investment portfolio diversification strategies, including products that provide protection against inflation such as real assets. In addition, Islamic banks must improve transparency, staff professionalism and customer service quality. Education and effective communication regarding the benefits and advantages of sharia products are also important to build customer trust and loyalty. The practical implications of this research include developing competitive products, increasing the use of digital technology for customer service, and regularly evaluating and adjusting strategies to respond to market changes. By implementing these measures, Islamic banks can increase their competitiveness, maintain customer loyalty, and achieve sustainable growth.

National culture and Islamic bank risk-taking in the Middle East and Asian countries

ABSTRACT This study investigates the influence of the national culture on risk-taking in Islamic banks. The sample comprises 60 Islamic banks in the Middle East, Southeast Asia, and South Asia from 2011 to 2019. Using the random effects generalized least squares model, we find that national culture influences risk-taking in Islamic banks, especially in the power distance dimension. Low power distance incentivizes greater risk. In low power distance countries, Islamic banks tend to adopt a more aggressive approach to their decisions because of the trust and authority of shareholders and depositors, resulting in excessive risk-taking. The findings have implications for regulators and Islamic bank managers to consider national cultural elements when developing bank risk management policies.

The Influence of Product Diversification, Service Quality, and Risk Management of Islamic Banks on Money Market Stability in Indonesia

This study investigates the effect of Product Diversification, Risk Management, and Service Quality of Islamic banks on Money Market Stability in Indonesia. Using quantitative analysis based on Structural Equation Modeling with Partial Least Squares (SEM-PLS), data were collected through a survey of Islamic bank customers. The results reveal significant positive relationships between Product Diversification, Risk Management, Service Quality, and Money Market Stability. Product Diversification positively influences Service Quality and Risk Management, while Service Quality and Risk Management, in turn, positively impact Money Market Stability. The findings underscore the importance of adopting comprehensive strategies to enhance the stability of the money market in Indonesia's Islamic banking sector. These insights have implications for practitioners, policymakers, and researchers aiming to promote financial stability and inclusivity in Islamic finance.

Antecedents of Murabaha home financing among Muslim household – an integrated framework

PurposeThough Murabaha financing experienced substantial growth in several majority-Muslim countries, its market share in the Moroccan banking industry is still very narrow than other conventional banks’ instruments. The current research investigated the ability of an extended theory of planned behavior (TPB) framework to explain the main drivers of attitude and intention to use Murabaha financing among Moroccan households. The moderating effect of Islamic religiosity was also scrutinized.Design/methodology/approachData were collected via a survey of 512 Moroccan consumers and analyzed using the partial least squares (PLS) technique.FindingsFirst, attitude toward Islamic banking products is a key predictor of consumer intention to use Murabaha financing. At the same time, consumers’ attitudes are influenced by Islamic financial literacy, subjective norms, behavioral control and profit and loss sharing. Islamic religiosity was also found to positively moderate the link between attitudes towards Islamic banking (IB) and intention to use Murabaha financing, e.g. positive attitudes toward IB are more likely to convert into an intention to use Murabaha financing among Muslim consumers with higher levels of religiosity.Managerial implicationsTo boost consumers’ intention to use Murabaha financing, Islamic bank managers should consider further investment in advertising to enhance consumers’ awareness about IB products. Islamic banks should also consider digital and social media marketing to increase consumers’ awareness about the products and spread a positive e-WOM with regards to their products. Our findings emphasize the importance of Islamic religiosity in shaping Muslim consumers’ intentions to use Murabaha financing. Islamic banks ought to make sure that Murabaha financing contracts are strictly adherent to and compliant with Shari’ah principles. They should also train their frontline employees on Islamic financing activities so that they can effectively respond to the queries and questions of Murabaha potential consumers.Originality/valueThe study findings contribute to the IB literature by demystifying the key factors shaping Muslim consumers’ intentions to use Murabaha financing. The study also extends the literature by emphasizing Islamic religiosity as a basis for Muslim consumers’ behavior in the context of IB. To the best of our knowledge, this study is among the first to empirically investigate Muslim consumers’ intention to use Murabaha financing in North Africa and the Arab countries.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-10-2022-0680

The influence of transformational leadership on organizational performance and knowledge management capability

PurposeKnowledge management is a common practice in organizations, with empirical evidence suggesting that organizations value the breadth of their knowledge capabilities. This study investigated transformational leadership styles and their influence on knowledge management practices and organizational performance.Design/methodology/approachA quantitative survey was conducted, and data from 270 managers of Islamic banks in the United Arab Emirates were analyzed.FindingsTransformational leadership (TL) considerably affects organizational performance and knowledge management capabilities (KMC).Originality/valueThis study offers critical insights into adopting knowledge management practices and discusses the theoretical and managerial implications of its findings. Furthermore, it elucidates the crucial impact of transformational leadership on organizational performance and KMC.

The Model of Social Responsibility of Islamic Banks

Islamic banks, in addition to their "specialized duties", also have "social responsibilities". In economic and managerial literature, this is interpreted as "Corporate Social Responsibility" (CSR), which is a set of benevolent duties arising from the divine and voluntary will that has been determined in the structure of serving the Islamic and human community for Islamic banks. In the Islamic perspective, the responsibility of banks goes beyond the level of shareholder profitability and encompasses the realm of public interest and welfare. Welfare includes both worldly interests and salvation in the hereafter. The origin of these "social responsibilities" is the will of God, from which only wise matters arise. This research aims to present a "model of social responsibility" for Islamic banks. The proposed model consists of structures and variables: the "independent variable" such as governance of ethical and religious values, institutional factors, and economic motivations; the "moderating variable" such as education and awareness of Islamic bank managers, technological and technical factors, compliance with regulations and laws of the Islamic government, the proximity of Islamic banks' location, and convenience for customers; and the "mediating variable" such as market factors (banking products and services), media coverage (advertising), economic-political factors (economic institutions), cultural-social factors (effective cultural-social institutions), international factors (civil society institutions). The "dependent variable" is the social responsibility of Islamic banks. Data analysis was performed using both quantitative and qualitative methods, and the study population is Afghan banks. For fitting the conceptual model of research and investigating the main hypotheses of the research, the structural equation modeling (SEM) method by software (SMART PLS3) has been used, and the research findings indicate that there is a significant relationship between all research variables.

Organisational growth and decline in Indonesian Islamic banks

Purpose This study aims to investigate the growth of Indonesian Islamic banks and explores organisational growth determinants from different perspectives, namely, organisational climate, intellectual capital (IC) and organisational service orientation. The study also attempts to develop a model to measure the growth of Islamic banks and uncovers the root causes of the stagnancy in Indonesian Islamic banking. Design/methodology/approach The study used survey questionnaires distributed to Islamic bank managers, who were considered representative experts in the field of Islamic banking. The data collected were analysed using the Statistical Package for Social Sciences (SPSS Version 21.0), and two analyses were performed with different strategies to build the regression model, namely, multiple linear regression and automatic linear regression. Findings The study found that IC significantly affected Islamic banks’ growth in Indonesia; however, organisational climate and service orientation did not predict such growth. Concerning service orientation as a mediating model, climate or IC had no indirect effect on growth. Research limitations/implications This study’s results contribute to fill the gap by analysing the growth of Islamic banks. Hence, the study results will be especially practical and helpful for Islamic bank managers and policymakers to help develop mechanisms for Islamic banks in Indonesia. Originality/value By combining the aspects of organisational climate, IC and service orientation from earlier studies and categorising them by organisational growth, together with a comprehensive literature review, the study proposes a model specific to Islamic banks. It also offers new insight and discussion for determining organisational growth in Indonesian Islamic banks.

Accounting background and cross-membership effects on investment efficiency in Islamic banks: a study of Islamic Supervisory Board members

Purpose This study aims to examine the joint effect of accounting background and cross-membership of Islamic Supervisory Board (ISB) members on bank investment efficiency. Design/methodology/approach This study uses data collected from 36 Islamic banks across 15 countries globally, spanning the period from 2012 to 2021. This research uses an ordinary least squares regression and a comprehensive set of endogeneity and robustness tests. Findings The findings show a negative relationship between the accounting background of ISB members and investment efficiency. However, when ISB members with accounting backgrounds also have ISB cross-memberships, the banks exhibit high investment efficiency. These results suggest that ISB cross-membership plays a crucial role in facilitating Islamic banks’ access to timely information on investment opportunities. This enables ISB members with accounting expertise to thoroughly assess the benefits and risks associated with their investment prospects. These findings imply that ISB members with accounting backgrounds and cross-memberships have greater motivation and thoughtful considerations for making better investment decisions. Consequently, Islamic banks are better positioned to undertake high profitable investment projects, which enhance their investment efficiency. Practical implications The current study holds immense value for Islamic bank management in their selection of ISB members who possess an accounting background and cross-membership. Originality/value This study delves into a comprehensive investigation of the proficiency, underlying principles and unique characteristics exhibited by ISB members with an accounting background. Moreover, this study acknowledges the burgeoning global prominence of Islamic banks.

Pengaruh Intellectual Capital terhadap Kinerja Keuangan pada Bank Syariah di Malaysia Tahun 2019-2022

This study aims to investigate the effect of Intellectual Capital on the financial performance of Islamic banks in Malaysia during the period 2019-2022. This research method uses a quantitative approach by collecting data from the annual financial statements of Islamic banks in Malaysia during the study period. Intellectual Capital is measured by Capital Employed Efficiency, Human Capital Efficiency and Structural Capital Efficiency. Financial performance is measured by ROA (Return on Assets). The data analysis technique uses Partial Least Square (PLS). The sample was selected based on purposive sampling and there were 13 Islamic Banks for 4 years. The results showed that intellectual capital has a positive and significant effect on financial performance. This finding indicates that the management and development of intellectual capital, such as efficient use of capital, improving employee skills, and strengthening organizational infrastructure, contribute positively to the financial performance of Islamic banks in Malaysia. The practical implication of this study is that the management of Islamic banks should pay special attention to the management of their intellectual capital as part of the strategy to improve ROA. Investment in intellectual capital development can generate long-term benefits for Islamic banks, especially in the face of intensifying competition in the banking industry.

Sharia Board Characteristics, Macroeconomic Factors, and Non-performing Financing of Indonesian Islamic banks

This study examines the impact of Islamic board characteristics (SB) and macroeconomic factors on the Non-performing financing (NPF) of Islamic commercial banks (ICB). The sample of this study consisted of 14 ICBs in Indonesia from 2010 to 2021. In this study, data estimation used a one-step GMM System model. SB features such as SB Size and SB Woman were found to have a detrimental impact on NPF. GDP per capita, for example, negatively affects NPF, while inflation has a positive impact. However, this study could not show the impact of SB characteristics such as expertise and proximity of SB to NPF. The study also found that macroeconomic factors such as annual open unemployment and interest rates showed an insignificant negative influence on NFP. The findings of this study help regulators, investors, and management of Islamic banks better understand the impact of SB characteristics and macroeconomic factors on Non-performing financing (NPF) of Islamic banks, especially in the context of ICB in Indonesia. In addition, it is expected to inspire similar research in the future.

FOSTERING CUSTOMER LOYALTY AMONG MUSLIM CLIENTS: STRATEGIES FOR ISLAMIC BANKS

This research examines the influence of service quality, corporate image, customer satisfaction, and customer engagement on loyalty in Islamic banks. The study was conducted by distributing questionnaires to 500 randomly selected West Sumatra, Indonesia respondents. This research uses Structural Equation Model Analysis. The findings of this study show that service quality and company image significantly affect customer satisfaction at Islamic banks. It is indicated that service quality and company image significantly and positively impact customer engagement. It is found that all determinant factors, directly and indirectly, affect customer loyalty to Islamic banks. From the results of this study, it is expected that Islamic bank executives must identify the elements that influence customer loyalty because these factors directly or indirectly affect the customer loyalty variable. The results of this study can be used as a consideration for Islamic bank managers in developing marketing strategies because they are closely related to the marketing performance managers need to control the service performance of Islamic banks. Theoretically, this research is also a new reference for researchers studying Islamic banks. Further researchers can adapt the model and variable indicators in this study, which can be applied further.

Ownership structure, board characteristics, and performance of Indonesian Islamic rural banks

PurposeThis study aims to examine the influence of ownership structure and board characteristics on the performance of Indonesian Islamic rural banks (IRB) using the system generalized method of moment model.Design/methodology/approachThis research uses Indonesian IRB unbalanced annual panel data from 2016 to 2022. IRB performance is measured by return on assets (ROA), return on equity (ROE) and nonperforming financing (NPF). The ownership structure is represented by controlling shareholders, ownership of the board of directors (BD) and ownership of the board of commissioners (BC). Meanwhile, board characteristics are represented by the size of the BC, the proportion of female board directors and female president directors.FindingsThe results show that the ownership structure and board characteristics play an important role in improving the IRB’s performance. Technically, the results show that the size of the BC and the ownership of the BD increase all IRB performance measures. Female president directors and controlling shareholders improve IRB’s performance as measured by ROA and ROE. Women’s boards of directors improve IRB performance as measured by NPF. Meanwhile, the ownership of the BC does not show its effect on all IRB performance measures.Research limitations/implicationsThis study fills a literature gap on the influence of ownership structure and board characteristics on IRB Indonesia’s performance. In addition, it adds understanding and insight for Islamic bank regulators, management and IRB depositors in Indonesia.Originality/valueTo the best of the authors’ knowledge, this study is one of the first to provide an empirical survey on the influence of controlling shareholders and board characteristics on IRB performance, particularly in Indonesia.