Islamic Banks Research Articles

Digitalization and diversification strategies for effective bank liquidity management in emerging markets

The purpose of this study is to examine the impact of income, assets, and geographic diversity on bank liquidity in the Indonesian banking sector. This study uses purposive sampling and multiple regression analysis (MRA) to investigate the impact of digital banking on bank liquidity, as measured by the loan-to-deposit ratio (LDR) and liquidity ratio. The sample used is 87 banks in Indonesia, which include state-owned banks, commercial banks, regional development banks, and Islamic banks. The key findings of this study indicate that income and asset diversification significantly affect bank liquidity, with income diversification having a negative effect on the Loan-to-Deposit Ratio (LDR). The use of digital banking simplifies the relationship between diversification strategy and liquidity, thereby improving banks' ability to manage liquidity. However, despite digital integration, asset diversification continues to show an adverse correlation with liquidity, indicating limitations in its effectiveness. The study concludes that while digital banking enhances the effect of income diversification on liquidity management, it limits its effect on asset diversification. This suggests that digital utilization is a strategic resource for increasing liquidity, although it requires focused implementation. These findings offer important insights for bank management and policymakers in formulating digital transformation plans that enhance efficient cash management and financial stability, particularly in developing countries like Indonesia. Keywords: income diversification, asset diversification, digital banking, bank liquidity, financial stability.

Non-Shariah Compliance Risks (NCR) and the Danger of Potential Fraud in the Islamic Financial Institutions: A Conceptual Framework

This research paper is a conceptual study that aims to examine financial fraud and its relation to non-compliance to Shariah for the Islamic financial institution in Malaysia. The study is unique because it seeks to understand how deviations from Shariah guidelines could contribute to financial misconduct, examining the specific non-Shariah compliance risks that arise when the deviation of internal control fails to align with Islamic law. Utilizing quantitative methodology, this study adopts and adapts from an existing structured questionnaire survey to collect data. This study also employs Structural Equation Modelling (SEM) in its analysis of the data. The implication of this study for policymakers includes the development of an effective strategy for mitigating financial fraud and ensuring Shariah compliance, thus ensuring the integrity and reputation of the Islamic financial sectors. This will undoubtedly contribute to the stability of the economy.

Appraising the Determinants and Outcomes of Islamic Financial Literacy through the Lens of a Systematic Literature Review

This research illuminates the determinants and outcomes of Islamic financial literacy as scrutinized in prior investigations. A systematic literature review unfolded across the Scopus database from 2016 to 2023. This investigation encompasses 22 articles from the 40 scholarly works extracted from the Scopus database. The Journal of Islamic Accounting and Business Research emerges as the most prolific disseminator of insights into the determinants and outcomes of Islamic financial literacy, credited to its robust publication frequency throughout the year. The autonomous and reliant facets of Islamic financial literacy were predominantly studied, with emphasis not only on individual dynamics but also on business perspectives. The determinants instigating Islamic financial literacy congregate within the affective, conative, family influence, self-controlled, and demographic predictors. Conversely, the ramifications stemming from Islamic financial literacy manifest in cognitive, affective, and conative dimensions, leaving an indelible imprint on the business realm. Geographic focus reveals a concentration of prior investigation within Muslim-majority nations, predominantly Indonesia. Furthermore, the investigation discovers that past studies were mainly conducted in the context of Islamic banking. The evidence from the present study provides input to researchers in conducting further research on Islamic financial literacy.

Improving Amniotic Fluid Index with L-Arginine Supplementation

Background: Oligohydramnios, characterized by a low Amniotic Fluid Index (AFI), is associated with adverse pregnancy outcomes, including fetal growth restriction, preterm labor, and low birth weight. Effective interventions for improving AFI are critical, particularly in resource-limited settings. L-Arginine, a nitric oxide precursor, has shown promise in enhancing uteroplacental circulation and increasing AFI. This study aimed to evaluate the efficacy of L-Arginine supplementation in improving AFI and associated maternal and neonatal outcomes in pregnant women with oligohydramnios in Bangladesh. Methods: This study was conducted at Islami Bank Hospital over one year (July 2023 to June 2024), involving 90 pregnant women diagnosed with oligohydramnios. Participants received daily L-Arginine supplementation, and AFI was measured before and after the intervention. Maternal and neonatal outcomes, including gestational age at delivery, birth weight, and neonatal intensive care unit (NICU) admissions, were recorded. Statistical analysis was performed using paired t-tests, with p < 0.05 considered statistically significant. Results: The mean AFI increased significantly from 5.4 cm (SD ±1.7) before the intervention to 8.6 cm (SD ±2.1) after supplementation, with a mean difference of 3.2 cm (p < 0.001). Low birth weight was observed in 20% of the neonates, while 17.78% required NICU admission. There was a notable improvement in neonatal outcomes with L-Arginine supplementation. Conclusion: L-Arginine supplementation significantly improved AFI and neonatal outcomes, making it a viable intervention for managing oligohydramnios in pregnant women. Further research is recommended to confirm these findings in larger populations.

A Group of Banking Services in Islamic Banks: A Sharia and Economic Study

The banking sector is one of the most important economic sectors in all countries. It represents the backbone of economic life, as it acts as a mediator between savers and investors and provides them with many banking services to meet the requirements of the economic process. This study aimed to define the concept of financial services provided by Islamic banks, their characteristics, and their most key features, while addressing the level of quality of banking services and the extent to which they meet the desires of customers. This study was divided into two sections: Section One: The concept, characteristics, and features of banking services. Section Two: Banking services provided by Islamic banks.

Financial literacy in Saudi Arabian MSMES: Insights from Islamic banks’ customers

This paper investigates the influence of financial knowledge, financial attitude, financial skills, and financial behavior on the financial literacy of Saudi Arabian MSMEs. The sample is 341 MSMEs that are clients of Islamic banking institutions. The paper employs the PLS-SEM method to analyze the collected data. The findings reveal statistically significant and strong positive correlations (p < 0.05) between financial knowledge, financial skills, financial behavior, and financial literacy. This implies that MSMEs with a strong foundation in financial knowledge, proficient skills, and positive financial behaviors tend to exhibit higher levels of financial literacy. Among the variables studied, financial knowledge exerted the strongest influence on financial literacy. This shows the importance of enhancing financial knowledge among MSME owners and managers to improve their overall financial literacy. Interestingly, the study did not identify a statistically significant relationship between financial attitude and financial literacy. This suggests that simply possessing a positive attitude toward finance may not necessarily translate into higher levels of financial literacy without complementary knowledge, skills, and behaviors. By prioritizing these areas, policymakers and Islamic banking institutions can contribute to improving financial literacy levels among Saudi Arabian MSMEs, ultimately fostering their growth, performance, and resilience.

Pricing Methods for Islamic Banking Services between Cost, Market and Value Based Strategies

Pricing Methods for Islamic Banking Services between Cost, Market and Value Based Strategies

Implementation of Technology in Cash Waqf: A Structured Literature Review

This structured literature review focuses on the implementation of technology in the context of cash waqf. The issue under consideration pertains to the necessity of conducting a thorough evaluation and integration of current scholarly investigations on the utilization of technology in the context of cash waqf. To address this, a systematic approach is employed, involving the collection and synthesis of relevant articles obtained from three databases (SCOPUS, ECONBIZ, and Mendeley). The findings of this study demonstrate the diverse methods in which technology is being incorporated into the cash waqf sector, encompassing digital platforms that facilitate donations as well as the utilization of cutting-edge financial instruments such as blockchain. The synthesis of the existing literature highlights the potential of technology to bring about significant improvements in the efficiency, transparency, and scope of cash waqf programs. In summary, this comprehensive analysis sheds light on the dynamic progression of cash waqf by examining its relationship with technology. It provides valuable perspectives on present patterns and potential avenues for further investigation and advancement in the crucial convergence of Islamic finance and contemporary technology.

Does financial expertise influence Islamic bank risk-taking?

PurposeThis study investigated how the financial expertise of the board of directors, risk management committee (RMC), audit committee (AC) and Shariá Supervisory Board (SSB) influences the risk-taking of Islamic banks.Design/methodology/approachThe study utilized unbalanced panel data for a sample of 43 full-fledged Islamic banks from 15 countries over 12 years (2010–2021). We employed feasible generalized least squares (FGLS) and heteroskedastic panels corrected standard errors (HPCSE) regression regressions as the primary estimation methods and used a two-step system generalized method of moments (GMM) estimator for robustness checks.FindingsThe results indicate that board financial expertise decreases insolvency and credit risks. Similarly, AC financial expertise and SSB financial expertise reduce insolvency and portfolio risks but increase credit risk. In contrast, RMC financial expertise raises insolvency risk. The remaining relationships are statistically insignificant.Research limitations/implicationsDue to the lack of disclosure regarding the educational and professional background of the board and committee members in the annual reports of some Islamic banks, this research used a sample of only 43 full-fledged Islamic banks operating in fifteen countries from 2010 to 2021.Practical implicationsThe findings can assist both local and international regulators in revising corporate governance codes and risk management guidelines in such a way as to ensure that the financial experts appointed to the board, AC, RMC and SSB, are capable of controlling excessive risk-taking behavior in Islamic banks.Originality/valueThis study contributes to the literature by providing comprehensive empirical evidence that corporate governance financial expertise influences the risk-taking behavior of Islamic banks.

Socialization on the Role of Islamic Banking in Encouraging the Progress and Development of MSMEs

Micro, Small, and Medium Enterprises (MSMEs) play a vital role in the Indonesian economy, contributing significantly to economic growth, employment, and poverty alleviation. However, limited access to financing sources that suit their needs is a significant obstacle for MSMEs in developing their businesses. This research explores the role of Islamic banking as an alternative solution in supporting the development of MSMEs. Through community service activities at SMA 1 Sidue, we delivered material on Islamic banking and developing MSMEs to 100 student participants. An interactive lecture method was used to improve understanding, followed by a discussion session to encourage active participation of the participants. The evaluation results showed an increase in students' understanding of Islamic banking, including financing products that comply with Sharia principles and the challenges and opportunities faced by MSMEs. This activity is expected to educate MSME players on the benefits of Islamic banking and strengthen their capacity to access more ethical financing. Thus, Islamic banking can be a strategic partner for MSMEs, assisting them in sustainable business growth and development.

Historical Trajectories and Modern Dynamics of Islamic Financial Law in Central Asia

Abstract This paper examines the historical development and contemporary landscape of Islamic financial law in Central Asia. Rooted in Sharia principles such as avoiding riba (usury), gharar (uncertainty), and maysir (gambling), Islamic finance has evolved into a sophisticated framework that promotes equity, transparency, and social welfare. In Central Asia, a predominantly Muslim region shaped by diverse cultural influences, Islamic financial jurisprudence reflects a unique blend of traditional practices and modern regulations. The growth of Islamic finance in this region is driven by increasing awareness, regulatory support, and integration with global markets. Key principles like the prohibition of interest, risk-sharing, and asset-backed financing underpin the operations of Islamic financial institutions. Case studies from Kazakhstan, Uzbekistan, and Tajikistan illustrate successful implementation strategies. The paper concludes by emphasizing the potential for Islamic finance to drive sustainable economic development in Central Asia and the need for ongoing research, collaboration, and policy support to navigate the complex dynamics of this evolving field.

The effects of diversity and inclusion on ESG performance: A comparison between Islamic and conventional banks

This study analyzes the effects of diversity, inclusion, and people development (DIP) on environmental, social, and governance (ESG) performance in Islamic and conventional banks from 2015 to 2022. Using data from Refinitiv database, it reveals that a more diverse and inclusive workplace is found to have better overall ESG performance and both pillars (environmental and social performance). This positive and significant association is more pronounced in Islamic banks than in its conventional counterpart. However, no significant effect was found on governance performance. These findings are robust to several sensitivity analyses based on some alternative measures. To the best of the authors’ knowledge, this is the first empirical study investigating the effects of diversity, inclusion, and people development on ESG performance, using multi-country data on Islamic and conventional banks.

PENGARUH KECUKUPAN MODAL, PROFITABILITAS, DAN EFISIENSI TERHADAP ZAKAT PERUSAHAAN DENGAN UKURAN PERUSAHAAN SEBAGAI VARIABEL MODERATING

This research is motivated by the lack of financial performance discipline in paying zakat in Islamic banking. Not all Islamic banks in Indonesia fulfill their obligations in issuing corporate zakat. This is judged by the very essential position of Islamic banking, and is a good example for companies in issuing zakat in order to help the welfare of the community. The purpose of this study is to examine the effect of financial performance ratios, namely capital as proxied by Capital Adequacy Ratio (CAR), profitability as proxied by Return Of Assets (ROA), efficiency as proxied by Expenses/Operational Income to Islamic banking zakat. The approach in this study uses quantitative methods, with this type of research using associative. The sampling technique used purposive sampling, with secondary data. The data source uses the company's annual report recorded at the Financial Services Authority for the 2011-2020 period. The analytical methods used in this study include (1) Descriptive Statistics, (2) Test Models; (3) Classical Assumption Test, (4) Hypothesis Testing; (5) Moderation Regression Analysis. The analytical tool used in this research is EViews 10. The results showed that (1) CAR had no significant effect on corporate zakat (2) ROA had a significant effect on corporate zakat (3) BOPO had no significant effect on corporate zakat (4) company size was unable to moderate CAR on corporate zakat (5) company size unable to moderate ROA on corporate zakat; (6) the size of the company is able to moderate the BOPO against corporate zakat.

The Effect of Murabahah, Mudharabah and Musharakah Financing on Profitability in Sharia Commercial Banks

Financing is an important activity for Islamic banks. Islamic banks, which have a function as an intermediary institution, are obliged to carry out operational activities effectively and efficiently in order to generate maximum profits. This study aims to determine the influence of Murabahah, Mudharabah, and Musharakah Financing on profitability in Sharia Commercial Banks in Indonesia. The analysis method used is the panel data regression method with the selected model being the Fixed Effect Model. The population in this study is all Sharia Commercial Banks in Indonesia registered with the FSA for the 2019-2021 period as many as 14 Islamic banks. The determination of the number of samples was carried out using the Purposive Sampling technique and was determined as many as 9 samples of Islamic banks. The results of the t-test show that partially Murabahah Financing and Musharakah Financing do not have a significant effect on profitability, while Mudharabah Financing has a negative and significant effect on profitability. The results of Test F show that simultaneously Murabahah, Mudharabah, and Musharakah Financing has a significant effect on profitability in Sharia Commercial Banks in Indonesia registered with the Financial Services Authority for the 2019-2021 period.

Market Share Perbankan Syariah Di Indonesia: Makro Ekonomi Dan Financial Performance

This study aimed to know the influence of macroeconomic factors (inflation, Bi Rate) and Financial Performance (ROA, CAR, FDR) onthe market share of Islamic banking in Indonesia. This study is quantitative with an explanatory approach. The population in this study consisted of 14 Islamic Commercial Banks. The sample consisted of 6Islamic Commercial Banks registered with the Financial Services Authority (OJK) and Bank Indonesia. The sample was taken using a purposive sampling technique. The data analysis used panel data regression with Eviews 9. The results show that partially inflation, Bi Rate, FDR variables had a significant negative effect on the market share. ROA and CAR variables have no significant effect on the market share. In addition, simultaneously the variables of Inflation, Bi Rate, ROA, CAR, FDR have a significant effect on market share.

GPT Technology and Systemic Transformations in Issuance and Drafting of Fatwas in Islamic Finance

GPT Technology and Systemic Transformations in Issuance and Drafting of Fatwas in Islamic Finance

Oil Shocks and the Islamic Financial Market: Evidence from a Causality-in-Quantile Approach

This study examines the nonlinear relationship between Islamic finance and oil shocks. Nonlinearity is viewed from the prism of nonparametric causality-in-quantile, and oil price is decomposed into demand, supply, and risk. Using a dataset for ten sectoral Islamic finance stocks, we show that causality between the variables of interest is heterogeneous across (i) measures of shocks (i.e., demand, supply, or risk), (ii) types of the sector (i.e., the ten sectors), (iii) state of the market (bear, normal, bull) and (iv) model specifications (mean vs. variance equation) Policy implications of the results are discussed.

Securing Halal Integrity Resilience of Halal Meat Ecosystem for Society 5.0 Needs through IR4.0 Technologies

Malaysia maintains its leading position in Islamic finance, halal food, Muslim-friendly tourism, media, recreation, pharmaceuticals, and cosmetics for a decade, showcasing its commitment to the halal industry. The global halal meat market, driven by a significant portion of the population, is projected to reach USD 375.05 billion by 2030, with a 7.1% annual growth rate. Halal is viewed as a new standard for achieving various Sustainable Development Goals (SDGs), including health, economic growth, responsible consumption, and environmental sustainability. To stay competitive, halal supply chains must embrace advanced Industrial Revolution 4.0 (IR4.0) technologies like the Internet of Everything (IoE) for future readiness. IoE enhances connectivity, intelligence, and decision-making, empowering halal stakeholders to navigate present and future challenges and serve Society 5.0 while ensuring the sustainability of their enterprises in alignment with Maqasid al-Syariah.

SUSTAINABLE ISLAMIC FINANCE: BIBLIOMETRIC AND VISUALIZED ANALYSIS OF CURRENT EMPIRICAL RESEARCH

This study aims to develop the research gap in sustainable Islamic Finance using a bibliometric analysis of recent empirical research outputs in the area, which comprises publications in scholarly journal articles and book chapters. Data were collected from Scopus for the period 1997 – 2022. This study analyses 285 Scopus scientific documents using Vosviewer, RStudio and Biblioshiny for bibliometric tools to process scientific documents extracted from various sources. Our study shows that the most prominent word in the Scopus scientific papers on Sustainable Islamic Finance is Islamic finance, followed by sustainable development, finance, banking, and investments. The keywords that Scopus scientific documents use little on the topic are ethical investing, climate change, Islamic social finance, waqf, zakat, takaful, green sukuk, and microfinance. There is a clear gap in knowledge around Islamic financial instruments in research that follow our findings and would benefit from further research.

Assessing the Economic Contributions of Islamic and Conventional Banks in Asian OIC Countries

This study explores the differential impacts of Islamic and conventional banks on economic growth within Asian member countries of the Organization of Islamic Cooperation (OIC). Utilizing a dataset of 1,846 observations from eight OIC countries, panel regression techniques are employed to assess the effects of these banking models on key economic growth indicators: GDP growth and GDP per capita growth. The analysis reveals that Islamic banks have a significantly greater positive impact on both GDP growth and GDP per capita growth compared to conventional banks. The findings highlight that Islamic banking principles, such as risk-sharing and asset-backed financing, contribute to a more stable and inclusive financial environment, enhancing overall economic development. The results underscore the importance of promoting Islamic banking alongside conventional banking to foster sustainable economic growth. Policymakers and financial regulators should consider incorporating the strengths of Islamic banking into regulatory frameworks to improve financial stability and resilience. Future research should investigate the long-term impacts of Islamic and conventional banking on economic growth across different regions and economic conditions, as well as the interplay between regulatory environments and financial sector performance.