Journal ArticleDOI
Islamic banking: Interest-free or interest-based?
Beng Soon Chong,Ming-Hua Liu +1 more
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In this paper, a study on Malaysia showed that only a negligible portion of Islamic bank financing is strictly profit-and-loss sharing (PLS) based and that Islamic deposits are not interest-free, but are closely pegged to conventional deposits.Abstract:
A unique feature of Islamic banking, in theory, is its profit-and-loss sharing (PLS) paradigm. In practice, however, we find that Islamic banking is not very different from conventional banking. Our study on Malaysia shows that only a negligible portion of Islamic bank financing is strictly PLS based and that Islamic deposits are not interest-free, but are closely pegged to conventional deposits. Our findings suggest that the rapid growth in Islamic banking is largely driven by the Islamic resurgence worldwide rather than by the advantages of the PLS paradigm and that Islamic banks should be subject to regulations similar to those of their western counterparts.read more
Citations
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Islamic vs. conventional banking: Business model, efficiency and stability
TL;DR: In this paper, the authors compared conventional and Islamic banks and found no significant differences in business orientation, efficiency, asset quality, or stability, and found that conventional banks that operate in countries with a higher market share of Islamic banks are more cost-effective but less stable.
Journal ArticleDOI
Risk in Islamic Banking
TL;DR: In this article, the authors investigated risk and stability features of Islamic banking using a sample of 553 banks from 24 countries between 1999 and 2009 and found that small Islamic banks that are leveraged or based in countries with predominantly Muslim populations have lower credit risk than conventional banks.
Journal ArticleDOI
Islamic and conventional banks' soundness during the 2007–2008 financial crisis
TL;DR: In this paper, the effect of the 2007-2008 financial crisis on the soundness of Islamic banks and their conventional peers was investigated using the Z-score as an indicator of bank stability.
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Corporate social responsibility and financial performance in Islamic banks
TL;DR: In this article, the authors examined the relationship between corporate social responsibility (CSR ) and financial performance in Islamic banks using a comprehensive CSR index covering ten dimensions, and analyzed the CSR disclosures in a sample of 90 Islamic banks across 13 countries.
Journal ArticleDOI
Islamic Financial Institutions and Corporate Governance: New Insights for Agency Theory
TL;DR: In this paper, the authors take a theory building approach to highlighting variations of agency theory in the unique and complex context of Islamic banks, mainly stemming from the need to comply with Sharia and the separation of cash flow and control rights for a category of investors.
References
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Journal ArticleDOI
Co-integration and Error Correction: Representation, Estimation and Testing
TL;DR: The relationship between co-integration and error correction models, first suggested in Granger (1981), is here extended and used to develop estimation procedures, tests, and empirical examples.
Journal ArticleDOI
Numerical distribution functions of likelihood ratio tests for cointegration
TL;DR: In this article, the authors employ response surface regressions based on simulation experiments to calculate asymptotic distribution functions for the Johansen-type likelihood ratio tests for cointegration.
Book
Forecasting economic time series
Granger C.W.J.,P Newbold +1 more
TL;DR: In this paper, the authors present a theoretical framework for univariate time series forecasting from regression models based on the theory of time series and Spectral Analysis, and combine it with linear time series models.
Posted Content
Forecasting Economic Time Series
Clive W. J. Granger,Paul Newbold +1 more
TL;DR: In this paper, the authors present the developments in time series analysis and forecasting theory and practice and discuss the application of time series procedures in mainstream economic theory and econometric model building.
Lack of Profit Loss Sharing in Islamic Banking:Management and Control Imbalances
Humayon A. Dar,John R. Presley +1 more
Abstract: An imbalance between management and control rights is attributed as a major cause of lack of Profit Loss Sharing (PLS) in the practice of Islamic finance. Given this dichotomy, the agency problem gets accentuated, which may put the PLS at a disadvantage vis-à-vis other modes of financing. However, there is no theoretical reason to believe that PLS is inherently inefficient. In certain circumstances, this in fact may serve some important economic function.