Performance Of Islamic Financial Institutions Research Articles

A Review on Islamic Corporate Governance and Performance of Islamic Financial Institutions In Nigeria

Islamic financial institutions are essential catalyst to economic growth in Nigeria and their performance assumed to be influenced by corporate governance practices. The purpose of this study is to review the role of Islamic corporate governance on the IFIs performance in Nigeria. Even though the relationships have produced significant scholarly impact, few studies have been conducted on IFIs performance in Nigeria. The content analysis was utilized. The findings of the study revealed that corporate governance is significant to IFIs’ performance in Nigeria. This study contributes to the existing literature on corporate governance practices and IFIs’ performance in Nigeria. Finally, the study’s implications for theory and practice, limitations, conclusion as well as the direction for future research are provided and discussed.

The impact of proximity within elite corporate networks on the Shariah governance-firm performance nexus: Evidence from the global Shariah elite

Research shows the importance of social networks in the generation of valuable firm resources through informational flows. We extend this conceptualization to Shariah governance and the global Shariah elite as embodied by the Shariah supervisory board. Utilizing a unique dataset of 140 Islamic financial institutions over 2011–2015, across 16 nations, we find that interlocking behavior amongst Shariah supervisory boards is time-invariant and network proximity has an inverted U-shaped curvilinear impact on the performance of Islamic financial institutions. Our findings extend the academic literature on SSB interlocking behavior by disentangling the impact of network proximity on the Shariah governance-firm performance nexus.

"Impact Measurement of Value-Based Intermediation Among Malaysian Islamic Financial Institutions "

There are still insufficient data concerning the impacts of Value-based Intermediation (VBI) performance output on sustainability although the Global Alliance for Banking on Values has been used to measure VBI performance of Islamic Financial Institutions (IFIs). Therefore, this study aimed to measure the impacts of VBI adoption among IFIs in Malaysia using the logic model approach. Data were extracted from IFIs’ annual reports published and the Association of Islamic Banking Institution Malaysia (AIBIM)’s report on VBI Implementation issued from 2017 to 2020. The results showed that VBI performance measures were different among Community of Practices (CoPs) according to their different levels of adoption. The levels of VBI adoption were more likely to persistently affect customers, communities, and the environment. The logic model approach clarified that VBI performance reports should not be one-fit-all as the adoption level varied among CoPs. The findings also indicated that VBI performance information in the CoPs’ annual reports might engage them with targeted customers, communities, and the environment, expecting to add new insights into the literature on performance measurement in the area of Islamic Finance. This could assist regulators and industry players in planning more strategic initiatives and provide clear guidelines for VBI adoption. Keywords: impact measurement, Islamic financial institution, performance measurement, value-based intermediation

Investigating the role of Financial Technology on the Performance of Islamic Financial Institutions

The purpose of this research is to investigate the significant part that Financial Innovation (FI) plays in maintaining the stability of Islamic financial institutions. The research philosophy of interpretivism serves as the basis for this body of work. To acquire information, interviews were conducted with various people. The method of purposive sampling was used by the researchers, and the samples were selected with the purpose of the study in mind. As a direct consequence of this, 10 industry professionals agreed to be interviewed for this research. In addition to having a thorough understanding of the fundamentals of Islamic financial innovation, these professionals have worked in the industry for a minimum of five years, making them exceptionally qualified. The researchers used the analytic software known as N-Vivo to do data analysis and interpretation. According to the results, the function of financial innovation in the present environment is crucial, and it has become a lifeline for Islamic financial institutions. In addition, the results of NVivo indicated that financial innovation in IFIs plays significant roles in the areas of digitalization, financial technology, financial inclusion, religiosity, as well as consumer and market acceptability

Sharia governance standards and the role of AAOIFI: a comprehensive literature review and future research agenda

PurposeThe purpose of this study is to investigate the role of Auditing and Accounting Organization for Islamic Financial Institution (AOIFI) governance disclosure on the performance of Islamic financial institutions (IFIs) through systematic literature review approach.Design/methodology/approachThis study is based on the review of literature related to the AAOIFI accounting standards downloaded from Scopus database. This study includes review of 126 research articles, 10 review papers, 9 book chapters and 5 conference papers related to different roles played by AAOIFI in providing standards for accounting, auditing, governance and ethics for global IFIs.FindingsThe findings of this study suggest that AAOIFI has played a critical role in developing the accounting standards for the IFIs and contributed positively to the overall growth of the Islamic finance industry.Practical implicationsAAOIFI has played a critical role in issuing and development of accounting and auditing standards and has contributed positively to the financial performance of IFIs. Research gaps are identified, and there is a need to work on these gaps.Originality/valueThis study will contribute to the understanding the role of AAOIFI in issuing and development of accounting and governance standards and future research agenda based on a thorough review of literature.

Keberadaan Ekosistem Ekonomi dan Keuangan Terhadap Pertumbuhan Pasar Modal Syariah di Indonesia

The existence of a good Islamic economic and financial ecosystem will grow the performance of Islamic financial institutions. Islamic capital market institutions that manage investment products are expected to be able to manage these assets in order to provide benefits in the form of a greater rate of return to investors. This study aims to analyze the existence of the Islamic economic and financial ecosystem in increasing the growth of the Islamic capital market in Indonesia. This qualitative descriptive study was written based on literacy studies. The conclusion of the study is that a good Islamic economic and financial ecosystem can grow the performance of capital market institutions in Indonesia in improving the welfare of investors

The trade-off between knowledge accumulation and independence: The case of the Shariah supervisory board within the Shariah governance and firm performance nexus

Adopting a resource dependence lens, this study examines the impact of the trade-off between knowledge accumulation and independence on the Shariah governance-firm performance nexus through a detailed examination of Shariah supervisory board tenure. Utilizing a unique, hand-collected dataset of 140 of the largest Islamic financial institutions over the period 2011–2015 and across 16 nations, we discover that Shariah supervisory board tenure is a positive, linear predictor of firm performance and that there is curvilinear relationship between tenure and the performance of Islamic financial institutions. Our findings provide novel contributions to the literature by disentangling the role and characteristics of the Shariah supervisory board and provide evidence for the existence of a trade-off between firm-based learning and independence of Shariah boards thus further highlighting the channels of transmission of these Shariah governance characterizations.

The effect of Islamic intellectual capital, corporate governance, and corporate social responsibility disclosure on maqashid sharia performance, with reputation as a moderating variable

This study aims to show that there is a positive relationship between Islamic intellectual capital, corporate governance, disclosure of corporate social responsibility on the performance of maqashid sharia, and this study wants to show that reputation strengthens this positive relationship. This study's sample consists of 33 annual reports from 11 Islamic banking companies in Indonesia for the 2016-2018 period, chosen using the purposive sampling method. This study was tested by using the Moderated Regression Analysis test. The results of this study indicate that Islamic intellectual capital, corporate governance, disclosure of corporate social responsibility have a negative effect on the performance of Islamic maqashid. The role of reputation can not increase the relationship of Islamic intellectual capital to the performance of maqashid sharia. Reputation also can not increase the relationship of disclosure of corporate social responsibility to the performance of maqashid sharia, but reputation has been proven to improve the relationship of corporate governance to the performance of maqashid sharia. The results of this study are input for the Financial Services Authority (OJK) and Bank Indonesia (BI) as regulators to monitor the performance of Islamic financial institutions in order to protect the public interest as a whole.

The Performance of Internal Shariah Auditor in Islamic Financial Institutions

Purpose –It is this study’s objective to examine the correlations between internal Shariah auditors’ independence, qualifications and performance in Islamic financial institutions (IFIs), conceptually.
 Design/methodology/approach – This paper is theoretical in its approach; whereby it also undertakes an extensive literature review. From a general agency theory, an Islamic agency theory is articulated and applied to ascertain the attributes of internal Shariah auditor performance revolving around the concept of independence and qualifications.
 Findings – Performance of internal Shariahauditing, as a mechanism of assuring Shariahcompliance by IFIs varies directly with the degree of independence and qualifications enjoyed by internal Shariah auditors themselves. The study finds that in evaluating the freedom and qualifications of FIs’internalShariah auditors, Islamic agency theory can potentially serve as the theoretical foundation in developing a multi-dimensional conceptual framework.
 Research Limitations/implications – Evidence is drawn strictly from secondary sources.
 Practical implications –To ensure that internal Shariahauditor is effectively performing, IFIs ought to improve the degree of independence and qualifications of their auditors.
 Originality/value –The studies on the performance of internal and external Shariahauditorsin conventional financial institutions have been extensively researched. However, research on the performance of IFIs’ internal Shariah audit is yet to be conducted extensively.

The relationship between zakat disclosures and Islamic banking performance: Evidence from Yemen

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.

Islamic banking’s contribution to the Malaysian real economy

PurposeMalaysia is one of the fastest-growing Asian economies with a properly designed and developed Islamic financial system. This unique feature of the Malaysian economy made it an important case study, and the purpose of this study is to assess for the dynamic contribution of Islamic finance to the growth of the real economy.Design/methodology/approachThe study uses a quarterly data set of 20 years analysed via the autoregressive distributive lag bounds test approach to cointegration.FindingsThe results in the short-run show a non-significant relationship between Islamic banking indices and the real economy. However, in the long-run, financing and deposits of Islamic banks are favourable and contribute significantly to the growth of the Malaysian economy. There was an accumulation of meaningful and wide-ranging investment over the period of the study and productivity of capital was also extra-efficient. The direction of causality is found to be bidirectional between Islamic banking deposits and Malaysian gross domestic product (GDP), but there is a weak causal effect from Islamic banking financing to GDP.Research limitations/implicationsMalaysia has a dual financial system (conventional and Islamic) and both can affect its real economy. This research is limited to Islamic banking’s effects on Malaysian economic growth. The research also limits the scope and coverage for 20 years, from 1998 to 2017 to cover the years for which data is available for all the variables used in the study.Practical implicationsThe results confirm that the Islamic banking sector in Malaysia is performing well in carrying out its major function of financial intermediation, which is the pooling and channelling of funds to productive investment activities. Consequently, the fact that Malaysia excels in Islamic finance is not a fluke. It is because of the effective performance of Islamic financial institutions in the country. Furthermore, Malaysian authorities are doing their level best in promoting Islamic financial activities.Originality/valueThe study fulfills the need to uncover the relationship between the Islamic financial system and the real economy in Malaysia. It differs from other studies as it uses the most recent available data, introduces new variables and identifies the channel by which Islamic banking development transmits growth.

Islamic financial institutions: Performance comparison with Canadian banks

The Canadian financial market is considered to be very conservative and has been using the same practices for a long time. The economies of some countries such as England have adopted a strategy of including Islamic finance in their market and this has produced very satisfactory results. Considering that Islamic finance has been growing in recent years, this type of practice could be relevant to the Canadian market. The objective of this article is to analyze whether the performance of Islamic financial institutions is comparable to traditional banks. A comparison of the efficiency of conventional and Islamic banks will be important to determine because they do not operate in the same way and their primary source of income is different. The results revealed that Islamic banks tended to perform better than conventional banks. Performance ratios were in most cases higher for Islamic banks. This observation was confirmed with the use of the data envelopment analysis (DEA) model, which measures efficiency and effectiveness at the bank level. The results show that although some Islamic banks had significantly fewer assets than conventional banks, they were still able to use resources more efficiently. This confirmed that Islamic finance is an option for Canada and that with government support it will be possible to have a stronger economy overall.

Has Technological Transformation Influenced Employees’ Performance During COVID-19? A Case of Islamic Financial Institutions of Selected Developing Economies

The technological development is an integral concern for organizational performance in the fields associated with the management sciences. This study intends to explore the relationship between technological transformation and employees’ performance of Islamic Financial Institutions (IFIs) during Covid-19 pandemic. Further, we analyzed the effect of training, supervisor support and incentives on this relationship considering them as moderating for this relationship.We have tested the hypotheses by means of the survey of 300 employees of IFIs from emerging economies of Malaysia, Indonesia, Pakistan, Bahrain, and Turkey. The Pearson correlation and multiple linear regression techniques are utilized to investigate the research problem. From the perspective of identity theory and social learning theory; it is found that the individuals relate themselves to organizational objectives and national goals. Further, they participate in the organizational and national development through technical innovation process if provided with supervisory support, training and incentives. Policy makers are recommended to deepen the technology-performance nexus for the sake of development in a Post-Covid World.

Applicability of Reliability Model for Improving the Performance of Islamic Financial Institutions in Financing Decision by Mousharakah and Moudarabah Contracts

To offer alternatives to improve the performance of Islamic financial institutions (IFIs), we try in this paper to examine the applicability of the reliability model, as a tool to help decision. We opted for the investment by Mousharakah contracts and Moudarabah contracts because of their resemblance to venture capital, where the reliability model was mentioned. To do this, we developed a documentary research which allowed us, on the one hand, to dissect the notions of decision and performance and to confirm a possible nexus among the two, and on the other hand, to justify the use of this model. Then, we set up the theoretical framework of the model for a potential application to our case study. Then, and after confirming this relationship, we were interested in the case of investment by the Mousharakah and Moudarabah contracts, given their similarity to other financing methods, namely venture capital, where the reliability model was mentioned as a decision support tool. All in all, we can find that this approach will probably create an investigative implement to aid investment choice and decision for IFIs in the future. The developed model constitutes an analytical decision-making aid tool for Islamic financial institutions in the future for Traders and investors.

"Shariah Disclosure and the Performance of Islamic Financial Institutions"

Manuscript Type: Research PaperResearch Aims: This study aims to shed light on the relationship between Shariah disclosure and the performance (social performance and firm value) of listed Islamic financial institutions in the Gulf Cooperation Council (GCC) countries.Design/Methodology/Approach: A checklist based on Islamic standard setters that was based on previous disclosure studies is developed to gauge the level of Shariah disclosures. Data are gathered from the annual reports of the Islamic Financial Institutions (IFIs) in the GCC for the year ending 2017.Research Findings: The findings show a negative and significant relationship between Shariah disclosure and social performance; they also show a positive and insignificant relationship with Tobin’s Q. This outcome could be attributed to the corporate social responsibility (CSR) activities which create financial burdens for the IFIs. With high levels of disclosure, there is a trade-off between the two.Theoretical Contributions/Originality: This paper contributes to literature by developing a new disclosure index based on the Shariah perspective in relation to CSR engagement of the IFIs. The findings are noteworthy to the IFIs since CSR practices need to be entrenched into the working practices. They are also expected to generate positive contributions to the social good of the Islamic society, thereby fulfilling justice and equality in lieu of the Islamic concepts.Practitioner/ Policy Implications: From a more practical perspective, this study is useful to regulators and policy makers who wish to incorporate CSR into their Shariah-compliant policies. Based on the findings, it is vital that CSR standards be implemented as a mandatory policy for the IFIs. Doing so would enhance their social performance, thus enhancing a higher level of Shariah disclosures.Research Limitations: The findings are limited to the context of Shariah disclosure and the GCC listed firms. The sources of data used for this study are also confined to the annual reports and the websites of the IFIs. In this regard, the outcome may not be applicable to all markets.Keywords: GCC Countries, Islamic Financial Institutions, Shariah Disclosure, Shariah Governance, Shariah Supervisory Board, Social Performance,JEL Classification: G280, G380, M140, Z120.

The Determinants of Islamic Social Reporting Disclosure in Indonesia

Objective - The purpose of this research is to identify the relationship between corporate performance, Good Corporate Governance (GCG), and corporate characteristics on Islamic Social Reporting disclosure in Indonesia. Methodology/Technique - A quantitative approach is applied in this research. The sample of this study consists of companies that were consistently listed on the Jakarta Islamic Index (JII) from 2012 to 2017. A purposive sampling method with certain criteria was employed to produce a total of 72 samplings. Partial Least Square (PLS) was also used to analyse the data. Findings - The results of this research indicate that corporate performance has a positive and significant effect on ISR disclosure, GCG has a positive and significant effect on ISR disclosure, and corporate characteristics have a negative and insignificant effect on ISR disclosure. Novelty - Islamic Social Reporting is the answer and solution to the needs of the interested parties concerned with the company's financial statements. ISR becomes a very important thing for the reputation and performance of Islamic financial institutions. Islamic financial institutions that succeed in revealing their ISR value will be perceived as a reliable entity by the Muslim community in channelling their fund. Type of Paper Empirical Keywords: Islamic Social Reporting; Corporate Performance; Good Corporate Governance; Corporate Characteristics. JEL Classification: M40, M41, M49. DOI: 10.35609/afr.2019.4.1(2)

SHARIA GOVERNANCE DAN KINERJA LEMBAGA KEUANGAN SYARIAH: FIRM SIZE SEBAGAI PEMODERASI

Islamic Banking has astrategic rolein improving the welfare of the people , through theintermediation process of lending and funding distribution activities and the provision of other financial services, based on the principles of sharia. The study looked at the relationship between the application of the principles of Shari'ah governance and performance of Islamic financia linstitutions in Riau. In this study, the performance of Islamic banking financial institutions measuredusing the Balanced Scorecard. The research was conducted on Islamic banking institutions in Riau, both Islamic Banks (BUS) and Sharia (UUS) successfully collected the data by 35 respondents. This study shows that sharia governance is able to influence the performance of sharia financial institutions in Riau Province as evidenced by a coefficient of 5.008 with a significance level of 0.000 much smaller than the value of α (0.05). The results of this next study indicate that sharia governance is not able to influence the performance of Islamic financial institutions in Riau Province after being moderated by firm size as evidenced by a coefficient of -1.933 with a significance level of 0.071 greater than the value of α (0.05).

Information Disclosure and Transparency, Islamic Work Ethics and Performance of Islamic Financial Institutions in Nigeria

Information Disclosure and Transparency, Islamic Work Ethics and Performance of Islamic Financial Institutions in Nigeria

The Moderating Effect of Islamic Work Ethics on the Relationship Between Corporate Governance and Performance of Islamic Financial Institutions in Nigeria: A Proposed Framework

Although the important influence of IFIs on economic growth is acknowledged, yet the contribution of Nigeria’s IFIs shows a gross underperformance. In addition, the practice of Islamic Finance is increasingly being viewed as not only serving as alternative for the Muslims but successful business practices around the world. Previous literature reveals that theoretical contributions in the area remained limited in the Nigerian, therefore, there is a need for more studies on corporate governance in the context of IFIs, especially in Nigeria, where IFI are considered as important financial institutions to the Muslims. Moreover, studies in Nigeria revealed absence of comprehensive framework for the Islamic finance industry. On the other hand, poor Islamic Work Ethics conquers a central position for the low performance of Nigerian IFIs. The paper presents a theoretical framework on the moderating effect of Islamic Work Ethics on the relationship between Islamic corporate Governance practices and the performance of Islamic Financial Institutions (IFIs) in Nigeria. If validated, the model would have policy implications to IFIs and other stakeholders in decision making.

The Impact of Corporate Governance Index and Earnings Management on Firms’ Performance: A Comparative Study on the Islamic Versus Conventional Financial Institutions in Pakistan

This study investigates the impact of corporate governance index and earnings management on firms’ performance and makes a comparative analysis of the selected Islamic and conventional financial institutions in Pakistan for the period of 2005-2015. Data of 20 KSE listed Islamic financial institutions (i.e., a few Islamic banks and mostly mud.¯arabah companies), and 35 KSE listed conventional financial institutions (i.e., conventional banks, mutual funds, insurance companies, and investment companies) have been used for analysis. The fixed effect model and random effect model have been used for analysis. The study finds that the corporate governance structure of conventional financial institutions is sound as compared to Islamic financial institutions. The study also concluded that the manipulation for earnings management is less in Islamic financial institutions as compared to conventional financial institutions in Pakistan. Therefore, it does not affect firm’s performance of Islamic financial institutions whereas the results of conventional financial institutions indicate that the manipulation of earnings management has an impact on their performance. Results of this study suggest that compliance with corporate governance practices is equally significant for both Islamic and conventional financial institutions.