Comparative Analysis of Islamic and Conventional Banks Capital Structure Determinants (original) (raw)
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Determinant of Islamic Banks on the World Capital Structure
IQTISHODUNA: Jurnal Ekonomi Islam, 2022
Economic competition is increasing nationally and even globally. This encourages leaders of the banking industry to develop strategies, achieve the vision and mission, then make policies and activity programs that support banking achievements. Generally, there are various factors that can affect the capital structure; including bank size, profitability and asset growth. The purpose of the study is to determine the influence of bank size, profitability and asset growth on the capital structure of Islamic banking in the world partially and simultaneously. Sample of this studi is 18 Islamic banks in the world has gain by purposive sampling method. The results represent that bank size and asset growth had a significant positive effect on the capital structure. ROA had a significant negative effect on the capital structure then ROE and PER did not have a significant effect on the capital structure of Islamic banks in the world. Simultaneously, bank size, ROA, ROE, PER and asset growth have a significant effect on the capital structure of Islamic banks in the world.
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Management Science Letters, 2019
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Capital structure of Islamic banks: a critical review of theoretical and empirical research
Qualitative Research in Financial Markets
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The relationship between capital structure and performance of Islamic banks
Journal of Islamic Accounting and Business Research, 2014
Purpose– This paper aims to examine the effect of capital structure on Islamic banks’ (IBs) performance to provide guidance to finance managers for raising capital funds. As newcomers to the markets, IBs are facing a trade-off. They can either use high capital ratios which increase the soundness and safety of the bank and lower the required return by investors, or depend on deposits and Islamic bonds which are considered cheaper sources of funds due to their tax rebate. An IB’s management must carefully decide the appropriate mix of debt and equity, i.e. capital structure, to maximize the value of the bank.Design/methodology/approach– Using a sample of 85 IBs covering banking systems in 19 countries, the study uses a two-stage least squares method to examine the performance determinants of IBs to control the reverse causality from performance to capital structure.Findings– After control of the macroeconomic environment, financial market structure and taxation, results indicate that ...
Capital Structure Decisions in Islamic Banking: Empirical Evidence from Pakistan
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The performance of Islamic vs . conventional banks : A note on the suitability of capital ratios
2016
This paper examines the effect of various types of bank capital on the profitability and efficiency of conventional and Islamic banks. Our results show that higher quality forms of capital ameliorate the profitability and efficiency for both systems although the results are stronger for conventional banks. The capital effect is more pronounced for large, too-big-to-fail, and highly capitalized banks. The findings also suggest that the capital guidelines provided by the Islamic Financial Services Board (IFSB) are more effective in increasing the performance of Islamic banks than those provided by the Basel Committee on Banking and Supervision (BCBS). Furthermore, the impact of capital on bank performance is more pronounced in countries with better information disclosure, better auditing standards, and more dynamic regulatory authorities. Overall, the results are robust across various subsamples, alternative profitability and efficiency measures and different estimation techniques.
International Journal of Economics and Financial Issues, 2015
This study is set out to examine the cogency of capital structure theories in a unique Islamic financial environment where tax shield is irrelevant, paying or receiving interest is undesirable and government exercises control over major economic activities. To achieve this objective, the annual reports of all Kuwaiti banks listed on the Kuwait Stock Exchange for the period between 2010 and 2014 were used to extract internal bank variables. In addition, external macroeconomic data were extracted from World Bank statistics. The results of the pooled regression analysis disclosed that the capital structure of the Kuwaiti banks are influenced by their size measured by total assets, cash dividends paid and the market value/book value of the bank's share. While the result was inconsistent with agency theory, it provides support to the pick-order, trade off and market theories.
Determinants of Capital Adequacy Ratio (CAR) in MENA Region: Islamic vs. Conventional Banks
International Journal of Accounting and Financial Reporting, 2019
Purpose: The purpose of this research is to conduct a comparative analysis of CAR determinants between Islamic and conventional banks. Design/methodology/approach: The analysis is conducted using GMM on annual data for 38 Islamic banks (IBs) and 75 conventional banks (CBs) in 10 MENA countries during 2009-2013. CAR is used as a dependent variable and is measured by the Basel framework. The independent variables are: profitability; liquidity risk; credit risk; bank size; deposits to assets; operational efficiency; portfolio risk; and two macroeconomic variables (GDP growth rate and average world governance indicators for each country). Findings: The results show that both IBs and CBs have a significant association between CAR and (bank size, operational efficiency, and GDP growth rate) and CAR is affected retroactively on the long-run. In IBs the results show a significant association between CAR 288 and deposits to assets ratio. However, CBs results show an association between CAR and (profitability, credit risk, and portfolio risk). Practical implications: The empirical evidence accentuates the difference between both banking systems and the importance to enforce the application of the Islamic Financial Services Board (IFSB) proposal on IBs based in different jurisdictions. This will enhance the IBs stability and efficiency; and achieve standardization of CAR calculation between IBs. Originality/value: Filling the gap in the Islamic finance literature by trying to examine whether factors influencing CAR are similar between both banking systems or to confirm on the view that they are completely different and should not adhere to the same regulatory bodies.