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Mohd Afandi Abu Bakar

Bio: Mohd Afandi Abu Bakar is an academic researcher from International Islamic University Malaysia. The author has contributed to research in topics: Return on assets. The author has an hindex of 1, co-authored 1 publications receiving 333 citations.

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TL;DR: In this article, the authors found that although Islamic credit finance products may have complied with Shariah rules, their lack of ethical content is not expected to motivate IBS banks to strive for efficiency through scale and scope economies.
Abstract: The study found that Islamic banking scheme (IBS) banks have recorded higher return on assets (ROA) as they are able to utilize existing overheads carried by mainstream banks. As this lowers their overhead expenses, it is found that the higher ROA ratio for IBS banks does not imply efficiency. It is also inconsistent with their relatively low asset utilization and investment margin ratios. This finding confirmed our contention that Islamic banking that thrives on interest‐like products (credit finance) is less likely to outshine mainstream banks on efficiency terms. Although Islamic credit finance products may have complied with Shariah rules, their lack of ethical content is not expected to motivate IBS banks to strive for efficiency through scale and scope economies.

356 citations


Cited by
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Journal ArticleDOI
TL;DR: In this paper, the authors determine whether it is possible to distinguish between conventional and Islamic banks in the Gulf Cooperation Council (GCC) region on the basis of financial characteristics alone.

393 citations

Journal ArticleDOI
TL;DR: In this article, the authors investigated the cost and profit efficiency levels of 71 commercial banks in Gulf cooperation council countries over the period 1999-2007 and found that the conventional banks on average were more efficient than Islamic banks.
Abstract: Using stochastic frontier approach, this paper investigates the cost and profit efficiency levels of 71 commercial banks in Gulf cooperation council countries over the period 1999–2007. This study also conducts a comparative analysis of the efficiency across countries and between conventional and Islamic banks. Moreover, we examine the bank-specific variables that may explain the sources of inefficiency. The empirical results indicate that banks in the Gulf region are relatively more efficient at generating profits than at controlling costs. We also find that in terms of both cost and profit efficiency levels, the conventional banks on average are more efficient than Islamic banks. Furthermore, we observe a positive correlation of cost and profit efficiency with bank capitalization and profitability, and a negative one with operation cost. Higher loan activity increases the profit efficiency of banks, but it has a negative impact on cost efficiency.

270 citations

Journal ArticleDOI
TL;DR: In this paper, the acceptance level of a new Islamic home financing concept, diminishing partnership (DP), by consumers in Malaysia using the theory of reasoned action as the guiding principle was examined.
Abstract: Purpose – The purpose of this study is to examine the acceptance level of a new Islamic home financing concept, diminishing partnership (DP), by consumers in Malaysia using the theory of reasoned action as the guiding principle.Design/methodology/approach – Cross sectional data were collected through a survey and analysed by means of factor analysis, correlation and regression analysis.Findings – Positive attitude or degree of favorableness towards the DP concept and religious and social influence are jointly responsible in determining the intention to engage in DP though the former commands greater influence.Research limitations/implications – The use of convenience sampling and postgraduate students may not sufficiently capture the variations that could potentially exist in the market.Practical implications – Introducing a leading Islamic finance product requires more than just a mere Shariah Board approval as customers are far more critical than has often been assumed. Demand for the home diminishing p...

229 citations

Journal ArticleDOI
TL;DR: In this article, the authors survey the viewpoints of various stakeholder groups on the philosophy and objectives of Islamic banking, particularly in a dual banking environment, as in the case of Malaysia, and reveal that respondents regard Islamic banking as an institution that should uphold social objectives and promote Islamic values towards their staffs, clients and the general public.
Abstract: Purpose – The purpose of this paper is to survey the viewpoints of various stakeholder groups on the philosophy and objectives of Islamic banking, particularly in a dual banking environment, as in the case of Malaysia.Design/methodology/approach – The paper presents primary data collected by self‐administered and postal questionnaires involving a sample of 1,500 respondents representing seven stakeholder groups, namely customers, depositors, local communities, Islamic banking managers, employees, banking regulatory officers and Shariah advisers. An exploratory factor analysis is employed to examine the respondents' perceptions towards various objectives of Islamic banking.Findings – This paper reveals that respondents regard Islamic banking as an institution that should uphold social objectives and promote Islamic values towards their staffs, clients and the general public. Other factors perceived to be important include contributing to the social welfare of the community, promoting sustainable developmen...

225 citations

Journal ArticleDOI
TL;DR: In this article, an extensive review of micro finance with the objective of building a case for Islamic banking to participate in a microfinance initiative is presented, and the use of a special purpose vehicle (SPV) is suggested as one of the possible alternatives for Islamic banks channelling funds to the poor.
Abstract: Purpose – The main purpose of this paper is to review the microfinance scheme and discuss how Islamic banks can participate in such an endeavour without actually compromising the issue of institutional viability and sustainability.Design/methodology/approach – The paper is based on an extensive review of microfinance with the objective of building a case for Islamic banking to participate in a microfinance initiative.Findings – As reviewed in this paper, microfinance requires innovative approaches beyond the traditional financial intermediary role. Among others, building human capacity through social intermediation and designing group‐based lending programmes are proven to be among the effective tools to reduce transaction costs and lower exposure to numerous financial risks in relation to providing credit to the rural poor. This paper also suggests the use of a special purpose vehicle (SPV) as one of the possible alternatives for Islamic banks channelling funds to the poor.Research limitations/implicatio...

214 citations