Islamic Retail Banking Research Articles

Efficiency Strategy for Indonesian Islamic Commercial Banks During the Covid-19 Pandemic

Islamic Commercial Banks must be aware of their degree of efficiency to optimize each bank's potential and take advantage of every opportunity. For a bank to succeed, its operations must be efficient; if they are, the value of the business will rise. This investigation used 12 Islamic commercial banks as its subject to assess the level of efficacy of Islamic retail banks in Indonesia. The data analysis method in this study is the Data Envelopment Analysis (DEA) method using the Charnes Chooper and Rhoodes (CCR) model, specifically the Constant Return to Scale (CRS) approach. The two variables employed in this study were used as input and output variables. TPF, Assets, Operational Costs, and Non-Operational Costs are the input variables. The function of funding is the output variable—income from operations and non-operational sources. In addition, a SWOT analysis is conducted based on the findings of the DEA study to determine the strategies used during the Covid-19 pandemic. According to the Input and Output method, two banks have been inefficient for 4 years, and five have changed BUS efficiency from 2015 to 2018. BTPN Syariah, BJB Syariah, Bank Mega Syariah, Bank Syariah Bukopin, Bank Victoria Syariah, and Bank Panin Dubai Syariah are the five (five) banks in question. The average efficiency of Indonesia's Islamic Commercial Banks for that period, from 2015 to 2018, was 91%, which suggests that despite falling short of 100% (excellent).

Financial Sustainability Ratio (FSR) Pada BUS di Indonesia Tahun 2012-2018: Penggunaan Metode Maqashid Syariah Index (MSI)

Many methods can be used in measuring company finances, including Islamic Commercial Banks. Maqashid Sharia Index (MSI) is a measuring tool in calculating the Financial Sustainability Ratio (FSR). This study aims to measure the FSR of Islamic commercial banks using the MSI measuring instrument method. The results will see the extent to which MSI can calculate the FSR of Islamic retail banks. MSI also estimates how far MSI is connected to the FSR. The method used in this research is descriptive quantitative research. The data obtained is in the form of secondary data. The data is compiled based on the financial reports of BUS that are registered with the OJK from 2012 to 2020. Sampling was done using the purposive sampling technique. The data collection technique uses the documentation method. The analysis used includes regression test, partial test, ANOVA test, and coefficient of determination. The results showed that MSI has a positive effect on FSR. MSI also provided information that the FSR provided positive results for Islamic commercial banks by being aware of the ummah's problems.

An Empirical Investigation of the Regulatory and Non-Regulatory Challenges of the UK Islamic Retail Banking

The paper examines the regulatory and non-regulatory challenges facing the growth of Islamic retail banking in the UK. Our analyses reveal that policy-makers and regulators in the UK have taken many actions to encourage the growth of Islamic finance. However, despite the suitable regulatory environment, UK Islamic retail banks have so far failed to convince consumers of the credibility of their services due to the questionable structure of their products. Intriguingly, the current system of Shar¯ı‘ah assurance is perceived to have several weaknesses which could perhaps lead to ambiguity, confusion and loss of credibility in the eyes of consumers. Our findings also reveal several key religio-ethical considerations. In particular, we highlight that the future of UK Islamic retail banking is bleak unless these issues are urgently tackled by creating a more transparent Islamic banking system and improving the current structure of Shar¯ı‘ah-compliant products to preserve the expected ethical and societal legitimacy of Islamic banks.

CONCEPTUALISING ISLAMIC CREDIT CARDS BASED ON MUSHĀRAKA MUTANĀQISA

The purpose of this paper is to conceptualise an Islamic credit card (or mushārakacard) based on the Islamic principles of mushāraka mutanāqisa. A qualitativemethodology was employed, with qualitative content analysis used on AAOIFI Shari’aStandard (SS) No. 12 “Sharikah (Musharaka) and Modern Corporations” to derivekey rulings and controls for mushāraka mutanāqisa, which were then used toconceptualise an Islamic credit card based on mushāraka mutanāqisa. Theoretically,it should be possible to develop an Islamic credit card based on the Islamic rulings ofmushāraka mutanāqisa. The concept provided in this paper could be adopted as apilot project by Islamic retail banks. Evidence suggests that a new revised standardfor credit cards (included within AAOIFI Shari’a Standard (SS) No. 2) was underconstruction while this research was being undertaken. Therefore, it was not possibleto review what perhaps may be relevant information for conceptualising a new Islamiccredit card. The research intends to fill the gap by qualitatively conceptualising anIslamic credit card based on a mushāraka mutanāqisa in an in-depth manner,especially with the use of AAOIFI as a base for the conceptual analysis.

The Future of Islamic Finance after the Corona Crisis

There is much literature on the consequences of the corona crisis for the financial system, but usually without a distinction between conventional and Islamic finance. This research focusses on behavioral changes and market developments in the financial and real economy that will impact Islamic finance differently than conventional finance due to its conceptual peculiarities and prevailing practices. Particular attention is given to the real estate and construction sector, the universe of Sharīʿah compliant stocks, and the consumer finance of Islamic retail banks. Through these channels, “the world” will have an impact on the future of Islamic finance. But the corona crisis has also reinforced calls for more responsible finance, and promotors of Islamic finance emphasize the ideal of risk-sharing as well as the distinct instruments of Islamic social finance for poverty alleviation and social cohesion. Particular attention is given to innovations in equity-like financing, green and socially responsible ṣukūk, digital approaches for Islamic microfinance, and the broader usage for Islamic social finance instruments (zakāt, qarḍ Hasan, [cash] waqf, sadaqat). Through these channels, a revised future Islamic finance may have an impact on the world.

Analysing Product Utilization by Islamic Retail Banks: The Case of Bahrain Islamic Bank and Kuwait Finance House-Bahrain

Having its total assets to be estimated at USD 2.05 trillion as of 2017, the Islamic financial industry seems to have experienced a tremendous growth within a short span of time. The Kingdom of Bahrain has arguably been considered as one of the global Islamic financial hubs. Yet, a review of literature suggests that contemporary Islamic finance researches that use this jurisdiction as a case study seems to be minimal, indicating an existence of an imperative research gap. The purpose of this research was to partially fill this gap by analysing the main Islamic financial products utilized in the Islamic retail banking industry in the Kingdom of Bahrain, including the reasons for its utilization. This research qualitatively and empirically analysed the utilization of Islamic financial products by two Islamic retail banks in the Kingdom of Bahrain, namely Bahrain Islamic Bank and Kuwait Finance House-Bahrain. The findings indicate that murābaha, tawarruq, and ijāra muntahia bil tamlik are the main Islamic financial products utilized for financing purposes, while mudhāraba is the main concept utilized for the establishment of savings/investment accounts.

Using a panel data approach to determining the key factors of Islamic banks’ profitability in Bahrain

This study examines the effect of bank-specific and macroeconomic key determinants of Islamic retail banks profitability in Bahrain. It used panel data of six Islamic retail banks from 2013 to 2019...

Assessing The Factors of Cybersecurity Awareness in the Banking Sector

The purpose of this paper is to identify the factors of cybersecurity awareness in the banking sector. Literature shows several gaps that both top management and cybersecurity professionals must close to construct a successful digital institution in the conviction- and assurance-based economy. These gaps indicate four factors, top management commitment and support; budgeting; cybersecurity compliance; and cybersecurity culture. Methodology: A quantitative approach is used with questionnaire analysis. A total of 109 Information Technology (IT) employees completed a self-administrated survey from six Bahraini Islamic retail banks and five Bahraini conventional commercial retail banks. Descriptive analysis with percentage and a simple mean-based ranking of indicators used to analyze the data. Findings reveal the highest mean is 4.28 for security compliance. The lowest mean for Cybersecurity Culture at 4.24 concludes that all the factors are significant for cybersecurity awareness. Respondents strongly agreed with the necessity of these factors in the banking sector. The research limitation due to the insufficient information in the literature regarding the proposed combination of factors recommended. Practical implications for policymakers and cybersecurity specialists: This study provides a vital factor that may help improve policies or guidelines for successful cybersecurity awareness in organizations. To recognize cyber threats, cyber-attacks impact, and how to diminish cyber risk and avoid cyber-crime penetrating their cyberspace. Originality/value fills a gap in the literature to construct a successful digital institution in the conviction- and assurance-based economy. This study helps managers direct and proceed with their daily activities, where maintaining the cybersecurity component is significant. A cybersecurity component is a defense and safeguards the firm’s financial information, intellectual properties, and reputation against unauthorized parties. Moreover, the cybersecurity component concerns the organization and the public individuals exposed to cyber threats through their electronic digital media such as smartphones, personal computers, and Internet protocol systems. However, there is insufficient literature on the proposed combination of factors recommended as factors relating to cybersecurity awareness in the banking sector.

Awareness and Attitudes of Employees towards Islamic Banking Products in Bahrain

Abstract This study aims to analyze the employees’ awareness and attitudes towards the Islamic banking products. Each of the contructs; awareness and attitude are derived from theories and previous researches. Based on the descriptive analysis of 102 responded questionnaires from employees who are currently working in five Islamic retail banks in Bahrain, the study concluded that 56% of respondents are aware as well as have a positive attitude towards Islamic banking products and services. It also found that there are statistically significant differences in the awareness and attitudes towards Islamic banks’ products and services when they are grouped according to gender and education level while age and income both have insignificant differences. The findings invariably convey the standard of employees’ awareness and attitude towards the Islamic banking products and services in Bahrain. This information will be useful for further evaluating and benchmarking the competitiveness of employees in Islamic Banking and Financial Institutions.

Comparative Performance Evaluation of Selected Commercial Banks in Kingdom of Bahrain Using CAMELS Method

The aim of this paper is to analyse the financial efficiency of selected commercial banks in kingdom of Bahrain. Bahrain which is considered as the financial hub of Middle East, play significant role in the economic activities in the Mena Region. Financial sector play a significant role in Bahrain as 16% of the GDP of Bahrain originates from financial sector. The financial efficiency of banks under study is measured by CAMELS analysis. There are 4 retail conventional banks that used as samples in this research out of the 28 conventional and Islamic retail banks in the country. Results show that National Bank of Bahrain, the government bank in the country, has attained highest efficiency compared to its peers in the market.

Determinants of customer relationship marketing success in Islamic retail banking

Muslims and non-Muslims alike are increasingly turning to Islamic banks as alternative to interest-centric conventional banks. Islamic banks exist and operate in accordance with Shariah principles enshrined in the Holy Quran. For Islamic retail banking to thrive and survive in today’s competitive banking and financial services industry occasioned by a number of conventional banks opening up Islamic windows, Islamic bank managers must aggressively adopt good customer relationship marketing. Given that the recent global financial crisis had little or no impact on Islamic banks throughout the world, Muslims and non-Muslims demand for Islamic banks’ products and services are on the rise. This acknowledged evidence presents a significant opportunity for Islamic banks to compete and remain successful. To do just that mandates Islamic banks to focus on utilising effective customer relationship marketing strategies to acquire and retain customers. Using a decision support model, this paper seeks to quantify the d...

Soft law, self-regulation and cultural sensitivity: The case of regulating Islamic banking in the UK

The Islamic banking sector has grown significantly over the last three decades and reached many international financial markets. As their name suggests Islamic banks are governed by the rules of Islamic law (Sharia). The Sharia compliance requirement has its implication on the nature of Islamic banks’ operations. The prohibition of interest prevents Islamic banks from using conventional financial products. Instead, Islamic financial products are based on the principle of profit-loss sharing. Therefore, the Islamic feature of these banks has brought certain regulatory challenges. This article is concerned with the UK Islamic retail banking market and it focuses on the role of soft law and self-regulation in minimising these regulatory challenges.

Islamic Retail Banking Adoption in Malaysia: The Moderating Effect of Religion and Region

Islamic Retail Banking Adoption in Malaysia: The Moderating Effect of Religion and Region

The Determinants Of Islamic Retail Banking Adoption In Malaysia

This study aims to examine the factors affecting the adoption of Islamic retail banking (IRB) products and services among the banking customers of Malaysia. The market share of Islamic retail banking remains low despite being in operation for the past 28 years. Therefore, an empirical analysis was conducted to study the usage of Islamic retail banking products and services between the urban and rural banking customers of Malaysia. Comparisons were also made on the usage of Islamic deposits and financing schemes between the Muslim and non-Muslim customers. The findings of the study revealed, relative advantage, promotional efforts, complexity, compatibility and awareness on attributes of Islamic retail banking as the significant determinants of the usage of Islamic retail banking products and services. Thus, the findings of this study serves as a valuable guideline to the banking sector and policy makers to devise appropriate marketing strategies to promote Islamic retail banking products and services aggressively among the banking customers of Malaysia.

Determinants of growth of Islamic Retail Bank in Pakistan

Purpose: to explore the determinants of growth of Islamic retail banking in Pakistan, and is tested in Pakistan . Design/methodology/approach: The quantitative methodology is adopted for completion of this paper, through three-fold approach. In first method, growth of Islamic banks is compared with conventional banks through financial statements key statistics for a period of recent three (3) years; in second method an instrument is used through customers of Islamic retail banks and their perspective is assessed; and in third methodology, another instrument is used through bankers of Islamic retail banks. Findings: Our findings include good bank spread, customers’ perspective of good returns on deposits and better services, part from religious cause of trend for Islamic retail bank; banks’ perspective of better Islamic alternate to retail banking needs. Research limitations/implications: Study is conducted in Pakistan only. It may expand by including more variables into research. Practical implications: Practical implication of this paper may relate to the policy makers in Islamic banks for development of products as per customer needs and demands. Originality/value: To devise better policy related to growth and expansion of Islamic banking in emerging economy.

Customers’ Perception on Islamic Retail Banking: A Comparative Analysis between the Urban and Rural Regions of Malaysia

Islamic banking was launched in Malaysia nearly three decades now, back in 1983. However, the market shareof Islamic retail banking (IRB) still seemed to be relatively low. Therefore, the main aim of the present study isto analyze the difference in the awareness, perception, and preferences on IRB between the urban and ruralbanking customers of Malaysia. Hence, a comparative analysis was conducted based on 537 respondentsrepresenting both urban and rural regions of Malaysia. Results revealed that there is a significant difference interms of awareness and on perceived complexity, uncertainty, and observablity. There also seem to be somevariations for returns, loan repayment period, service charges, and overdraft facilities. Thus, the findings wouldbe useful for the banking sector in understanding the customer perception and preferences concerning IRB, andto promote it strategically, and for the relevant authorities, in promoting specific regulations and policies thatenhance the market share of IRB.

Challenges and opportunities for Islamic retail banking in the European context: Lessons to be learnt from a British–German comparison

This article explores the key determinants of Islamic retail banking (IRB) in the European context in order to identify major challenges and opportunities for the European IRB market. This investigation is of relevance, as Islamic banking, that is the Shari’ah (Islamic law) compliant way of banking, is on the rise. During the past three decades the industry expanded with double-digit growth rates and there are now more than 300 Islamic financial institutions operating in over 50 countries worldwide.1 As Islamic banking was initially developed in recognition of the need of ordinary Muslims for borrowing and lending, the most prevailing activity of Islamic banking in the predominantly Muslim societies of the Gulf and the Far East is retail banking.2,3 Yet, in most of Europe IRB services offered to the general public are still rare.4 This appears to be a missed business opportunity as Europe’s Muslim community of about 50 million5 clearly outnumbers the total population of the Arab states in the Persian Gulf region of about 36.2 million.6