Search results for: banks

Authors: Mitku Malede Ymer

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The study was mainly intended to explore the impact of asset diversification on the financial performance of thirteen purposely selected Ethiopian commercial banks with seven consecutive years of data for the period 2011-2017, considering the availability of data. An explanatory research design has been employed to determine the impact of asset diversification on financial performance. In the meantime, a quantitative approach was used to construct the empirical model. Banks’ financial performance was measured using return on asset, and the four variables used to measure asset diversification were cash holding, fixed assets, foreign deposits, and NBE Bills, which were predictor variables. Again, the size of the bank was considered as a control variable. Then, a pooled panel regression model was employed to analyze the collected data. The result pretends that cash holding has a positive but marginally insignificant effect on financial performance, fixed assets, and foreign bank deposits have a positive and significant effect on financial performance, and NBE Bills have a negative and significant effect on banks' financial performance. Ultimately, it has been concluded that asset diversification has a significant effect on financial performance in the Ethiopian commercial banking sector. Hence, a researcher suggests that banks need to optimize their asset diversification so as to realize maximum profit and minimize the cost of funds based on the result of the study.

Keywords: asset diversification, financial performance, role, commercial banks

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Authors: Navdeep Kaur

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Corporate Social Responsibility is the process through which the organizations execute their philanthropic visions for social welfare. This paper considers the data of one Public Sector Bank–State Bank of India (SBI) and one Private Sector Bank-Industrial Credit and Investment Corporation of India (ICICI) from the year 2008 to 2016. The study is based on descriptive research design, and secondary data collected from the annual report of respective bank from website and different literature are reviewed. Least Square Method is used for estimating CSR spending for the financial year 2017-18. The analysis shows that these banks are making efforts for the implementation of CSR, but are not spending their 2% share of profits on CSR. There is a need for better CSR activities by the banks, which is possible by concentrating more on the prevailing social issues. The finding reveals that the percentage of profit after tax spends for CSR by SBI is more compare to ICICI. The estimated Spending for CSR for 2017-18 is also more in SBI as compared to ICICI.

Keywords: banking sector, corporate social responsibility in India, financial institution, public sector banks, SBI, ICICI

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Authors: Bo-wen Zhu, Bin Wu, Feng Chen

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It has become a common measure among governments to support green development of enterprises through Green Credit policies. In China, the Central Bank of China and other authorities even put forward corresponding assessment requirements for proportion of green credit in commercial banks. Policy changes might raise concerns about commercial banks turning a blind eye to greenwashing behavior by enterprises. The lack of effective regulation may lead to a diffusion of such behavior, and eventually result in the phenomenon of “bad money driving out good money”, which could dampen the incentive effect of Green Credit policies. This paper employs a complex network model based on an evolutionary game analysis framework involving enterprises, banks, and regulatory authorities to investigate inhibitory effect of the Green Credit regulation on enterprises’ greenwashing behavior, banks’ opportunistic and collusive behaviors. The findings are as follows: (1) Banking opportunism rises with Green Credit evaluation criteria and requirements for the proportion of credit balance. Restrictive regulation against violating banks is necessary as there is an increasing trend of banks adopting opportunistic strategy. (2) Raising penalties and probability of regulatory inspections can effectively suppress banks’ opportunistic behavior, however, it cannot entirely eradicate the opportunistic behavior on the bank side. (3) Although maintaining a certain inspection probability can inhibit enterprises from adopting greenwashing behavior, enterprises choose a catering production strategy instead. (4) One-time rewards from local government have limited effects on the equilibrium state and diffusion trend of bank regulatory decision-making.

Keywords: green credit, greenwashing behavior, regulation, diffusion effect

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Authors: Michael Saad Thabet Azrek

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The advanced facts era is becoming a vital element within the improvement of financial offerings enterprise, in particular, the banking enterprise. It has introduced new approaches to delivering banking to the patron, including Internet Banking. Banks started to observe digital banking (e-banking) as a means to update a number of their conventional branch features using the net as a brand-new distribution channel. A few purchasers have, as a minimum, a couple of accounts across banks and get the right of entry to these accounts using e-banking offerings. To study the contemporary net really worth role, clients ought to log in to each of their debts and get the info and paintings on consolidation. This not simplest takes enough time, but it's also a repetitive hobby at a specific frequency. To cope with this point, an account aggregation idea is introduced as an answer. E-banking account aggregation, as one of the e-banking types, appeared to construct a more potent dating with clients. Account Aggregation provider usually refers to a provider that permits clients to manage their financial institution debts maintained in distinct establishments through a not unusual net banking operating a platform, with an excessive situation to protection and privateness. This paper gives an outline of an e-banking account aggregation method as a new provider in the e-banking field.

Keywords: compatibility, complexity, mobile banking, observation, risk banking technology, internet banks, modernization of banks, banks, account aggregation, security, enterprise development

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Authors: Libena Cernohorska, Barbora Sutorova, Petr Teply

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There are pending discussions over an impact of global regulatory efforts on banks. In this paper we present a literature review on the profitability-risk-capital relationship in banking. Research papers dealing with this topic can be divided into two groups: the first group focusing on a capital-risk relationship and the second group analyzing a capital-profitability relationship. The first group investigates whether the imposition of stricter capital requirements reduces risk-taking incentives of banks based on a simultaneous equations model. Their model pioneered the idea that the changes in both capital and risk have endogenous and exogenous components. The results obtained by the authors indicate that changes in the capital level are positively related to the changes in asset risk. The second group of the literature concentrating solely on the relationship between the level of held capital and bank profitability is limited. Nevertheless, there are a lot of studies dealing with the banks’ profitability as such, where bank capital is very often included as an explanatory variable. Based on the literature review of dozens of relevant papers in this study, an empirical research on banks’ profitability and risk adjustment decisions under new banking rules Basel III rules can be easily undertaken.

Keywords: bank, Basel III, capital, decision making, profitability, risk, simultaneous equations model

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Authors: Vishwa Nath Maurya, Rama Shanker Sharma, Saad Talib Hasson Aljebori, Avadhesh Kumar Maurya, Diwinder Kaur Arora

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Present paper deals with problems of determining the relationship between the variables of corporate governance and financial performance of Islamic banks. Here, we dealt with the corporate governance in the banking sector, where increasing the importance of corporate governance, due to their special nature, as the bankruptcy of banks affects not only the relevant parties from customers, depositors and lenders, but also affect financial stability and then the economy as a whole. Through this paper we dealt to the specificity of governance in Islamic banks, which face double governance: Anglo-Saxon governance system and Islamic governance system. In addition, we focused our attention to measure the impact of corporate governance variables on financial performance through an empirical study on a sample of Islamic banks during the period 2005-2012 in the GCC region. Our present study implies that there is a very strong relationship between the variables of governance and financial performance of Islamic banks, where there is a positive relationship between return on assets and the composition of the Board of Directors, the size of the Board of Directors, the number of committees in the Council, as well as the number of members of the Sharia Supervisory Board, while it is clear that there is a negative relationship between return on assets and concentration ownership.

Keywords: correlation analysis, parametric estimation, corporate governance, financial performance, financial stability, conventional banks, bankruptcy, Islamic governance system

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Authors: Montoya C.A., Erina J., Erina I.

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The purpose of this research is to assess the performance and impact of CSR on business in the banking sector in Australia by applying the financial indicators of 20 ASX banks for the period from 2016-2017. The authors carried out CSR assessment in several stages of research: 1) gathering the nonfinancial and financial indicators of 20 ASX listed banks (available were only 16) from the annual reports of Australian banks for 2016 and 2017; 2) calculation of bank performance indicators using such financial indicators as return on assets (ROA), return on equity (ROE), efficiency ratio and net interest margin; 3) analysis of financial data using cross-sectional regression and answers to the research questions. Based on the obtained research results, the authors obtained answers to the initially raised research questions and came to a conclusion that Q1 - Insignificant positive coefficient result - slight positive relationship between CSR disclosure and business performance 2016; Q2 - Insignificant negative coefficient result - slight negative relationship between CSR disclosure and business performance 2017; Q3 - Insignificant positive coefficient result - slight positive relationship between CSR disclosure and business performance.

Keywords: Australia, banks, business performance, CSR

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Authors: Nisful Laila, Fatin Fadhilah Hasib, Puji Sucia Sukmaningrum, Achsania Hendratmi

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The purpose of this study is to determine and comparing the level of efficiency of Islamic Banks in Indonesia and United Kingdom during eurozone sovereign debt crisis. This study using a quantitative non-parametric approach with Data Envelopment Analysis (DEA) VRS assumption, and a statistical tool Mann-Whitney U-Test. The samples are 11 Islamic Banks in Indonesia and 4 Islamic Banks in England. This research used mediating approach. Input variable consists of total deposit, asset, and the cost of labour. Output variable consists of financing and profit/loss. This study shows that the efficiency of Islamic Bank in Indonesia and United Kingdom are varied and fluctuated during the observation period. There is no significant different the efficiency performance of Islamic Banks in Indonesia and United Kingdom.

Keywords: data envelopment analysis, efficiency, eurozone crisis, islamic bank

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Authors: Md. Abdul Kader, Md. Akiz Uddin

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The Islamic banking system is based on the Islamic shariah principles. Islamic banking is set up to avoid riba (interest)--which is prohibited in Islam-- and to prevent unscrupulous practices and participate actively in achieving the welfare-oriented Islamic economy. In the process of offering Islamic banking services, practitioners have been facing several challenges. Out of many challenges, this paper particularly highlights the need for a centralized legal framework for Islamic banks that should be compliant with the shariah law. The researchers employed a qualitative method to collect case studies from high-profile Islamic Bankers and analyzed respective legal documents and policy papers to conduct the study. This study investigates the Shariah Governance Framework (SGF), amended Banking Companies Act, 1991 (Act No. 14 of 1991), and the Shariah Supervisory Board (SSB) of Islamic banks in Bangladesh to evaluate how legal framework supervise and/or monitor Islamic banking system under the jurisdiction of shariah law. The study reveals that the Shariah governance system in Bangladesh is mainly voluntary rather than regulatory, and there is an absence of full-fledged SGF. Though there is no complete Islamic Banking Act for controlling, guiding, and supervising the Islamic banks in Bangladesh, some Islamic banking provisions have already been incorporated in the amended Banking Companies Act, 1991 (Act No. 14 of 1991). Bangladesh Bank did not set up any separate Department at its Head Office to control, guide and supervise the operation of the Islamic banks. So, ensuring the implementation of Shariah principles concurrent with the legal framework of banking policies is recommended in this study. This study also prescribes that the government should enact a law or policy for the operations of Islamic banks in order to improve the Islamic Banking system of Bangladesh. In addition, the central bank can set up a Central Shariah Supervisory Board (CSSB) or authorize the existing Central Shariah Board for Islamic Banks of Bangladesh (CSBIB) to supervise and monitor overall activities of Islamic banks and resolve the disputes among the stakeholders concerning the Shariah issues of Islamic banks.

Keywords: islamic banking, shariah law, banking policies, shariah governance framework (SGF)

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Authors: Sagir Abubakar

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Organization must move along with the employees, because organization should adapt itself to the changing environment. The paper examines the effect of training and development on employee performance. Training and development has an important role in improve the performance, skills and attitude of employee in an organization. Training and development will also help an employee to do his present job or to prepare him for a higher position with increased responsibilities. The paper analyses the employee performance towards training and development conducted in some selected banks within Bauchi metropolis. Review of related literature was done on, training, training objectives, methods and development and its method. A census survey was carried out using staff of GTB and Skye Banks Bauchi branch where a total of 40 questionnaires were administered personally by the researcher and there were 100% responses. Correlation analysis was adopted for the analysis of data collected. The study concludes that 95% of respondents agreed that training and development are vital for both employee and organizations performance. They also suggest that training and development should be made compulsory for all categories of employee in an organization. Training and Development programmes are necessary in any organization for improving the quality of work of the employee.

Keywords: training, development, employee, performance, banks

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Authors: Mohammad Iqbal Maiik

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Islamic marketing ethics combines the principle of value maximization with the principles of equity and justice for the welfare of the society. Adherence to the Islamic ethics in the Islamic banking industry can help elevate the standards of both behavior and living of bankers and customers alike. In a rapidly changing marketing environment, the need to be customer-focused has never been as important as it is today. At present where customers are becoming more demanding and increasingly mobile between competing financial providers, being customer-focused is not enough. Islamic banks and more specifically their customer-contact employees (customer relation advisers or officers) need to be perceived by their customers as being Islamic. This study represents an initial step in analyzing the role of Islamic ethical sales behavior as it may be perceived by the customers of Islamic Banks.

Keywords: Islam, ethics, marketing, Islamic banks

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Authors: Achsania Hendratmi, Puji Sucia Sukmaningrum, Fatin Fadhilah Hasib, Nisful Laila

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The research aimed to know the influence of Capital Adequacy Ratio (CAR), Return on Assets (ROA) and Size of the Financing to Deposit Ratio (FDR) Islamic Banks in Malaysia by using eleven Islamic Banks in Indonesia and fifteen Islamic Banks in Malaysia in the period 2012 to 2016 as samples. The research used a quantitative approach method, and the analysis technique used multiple linear regression. Based on the result of t-test (partial), CAR, ROA and size significantly affect of FDR. While the results of f-test (simultaneous) showed that CAR, ROA and Size significant effect on FDR.

Keywords: capital adequacy ratio, financing to deposit ratio, return on assets, size

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Authors: Imran Mehboob Shaikh, Kamaruzaman Noordin

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Musharakah Mutanaqisah or Diminishing Partnership is a derivative of Musharakah contract, which is used by Islamic banks for housing finance facility. Most of the banks offer housing finance based on the concept of Musharakah Mutanaqisah, apart from few which still offer housing finance using BBA, Tawarruq (commodity Murabahah) and Istisna. This research attempts to compare the practice of DP housing finance offered in Malaysia. This paper will further look into challenges in Musharakah Mutanaqisah practice and its sustainability as a mortgage product. In practice there are certain issues related to Musharakah Mutanaqisah also known as Musharakah al Muntaiah bi tamlik, widely accepted and mostly used for housing finance by the Islamic banks. In Malaysia, it is in transforming stage from Bay bithamman Ajil, which is mostly used for housing finance in ASEAN region i.e., Malaysia, Indonesia and Brunei. In order to conduct this study, a discussion was carried out with few researchers who had worked on the topic previously and some Islamic bank officers attached to a full-fledged Islamic bank in Malaysia. Apart from that previous literature on Musharakah Mutanaqisah was also reviewed and various books, as well as online data, was considered for this study, and websites of different Islamic banks with information for Diminishing partnership, home financing were retrieved. This paper will highlight issues surrounding Diminishing Partnership contract and its conformity to Maqasid al Shariah (objectives of Shariah). Diminishing Partnership is widely accepted in different parts of the world and is mostly used for housing finance. The future prospect of DP is believed to be affirmative. As the product is a better substitute for BBA and most of the Islamic banks around the world have utilized their housing portfolio using the contract but at the same time, there are certain issues that need to be overcome. Even though Islamic banks are striving to sustain and compete the conventional banks but securing the customers from Gharar and other issues should be the primary objective of Islamic financial institutions.

Keywords: BBA, home financing, musharakah mutanaqisah, tawarruq

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Authors: Gerhard Grebe, Johan Marx

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The aim of the study is to assess the state of operational risk management and the adoption of an appropriate risk culture in Ghanaian banks. The Bank of Ghana (BoG) joined the Basel Consultative Group (BCG) of the Basel Committee on Bank Supervision (BCBS) in 2021 and is proceeding with the implementation of the Basel III international regulatory framework for banks. The BoG’s Directive about risk management encourages, inter alia, the creation of an appropriate risk culture by Ghanaian banks. However, it is not evident how the risk management staff of Ghanaian banks experience the risk culture and the implementation of operational risk management in the banks where they are employed. Ghana is a developing economy, and it is addressing challenges with its organisational culture. According to Transparency International, successive Ghanaian governments claim to be fighting corruption, but little success has been achieved so far. This points to a possible lack of accountability, transparency, and integrity in the environment in which Ghanaian banks operate and which could influence their risk culture negatively. Purposive sampling was used for the survey, and the questionnaire was completed byGhanaian bank personnel who specializesin operational risk management, risk governance, and compliance, bank supervision, risk analyses, as well as the implementation of the operational risk management requirements of the Basel regulatory frameworks. The respondents indicated that they are fostering a risk culture and implementing monitoring and reporting procedures; the three lines of defence (3LOD); compliance; internal auditing; disclosure of operational risk information; and receiving guidance from the bank supervisor in an attempt to improve their operational risk management practices. However, the respondents reported the following challenges with staff members who are not inside the risk management departments(in order of priority), namelydemonstrating a risk culture, training and development; communication; reporting and disclosure; roles and responsibilities; performance appraisal; and technological and environmental barriers. Recommendations to address these challenges are provided

Keywords: ghana, operational risk, risk culture, risk management

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Authors: Amira Khelil, Habib Affes

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Organization resource planning implementation success is important. Today`s competitors in business, in enterprise resource planning and in managing are becoming one of the main tools of achieving competitiveness in business. Resource technologies are considered as an infrastructure to create and maintain business to improve front and back-office efficiency and effectiveness. This study is significant to bring new ideas in determining the key antecedents which are technological resource planning implementation based on knowledge capacity perspectives and help to understand the key success factor in the Tunisian banks. Based on a survey of 150 front office Tunisian agents working in Tunisian banks with mixed capital, using Groupware system, only 51 respondents had given feedback to this survey. By using Warp PLS 3.0, through several tests the relationship between knowledge capability and Groupware implementation success having beta coefficient 0.37 and P-Value <0.01. This result highlights that knowledge capability of bank agent can influence the success of the Groupware implementation.

Keywords: groupware implementation, knowledge capacity, partial least squares method, Tunisian banks

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Authors: Md. Arifur Rahman, Ummya Salma, Nazrul Islam

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Private sector banking business is one of the leading businesses of Bangladesh as it is profitable and directly attached with the economic development of the country. Training has got very high importance in this sector for increasing the performance of the banks. It has a long term impact on a number of aspects of the bank employees and their performances. It is an investment of the organization that is permanent in nature. Study shows that there are positive relationships between training and the employee commitment, job retention, job satisfaction and company performance. Training is also concerned with promotion, compensation, work-life policies, career development, task and contextual performance of the employees. As such, this paper aims at identifying the impact of training on employee commitment, job retention, job satisfaction and the performance of the private sector banks in Bangladesh. Both primary and secondary data were used to conduct the study. Data were collected from the bank officers who were trained in their banks. Both descriptive and inferential statistics were used to analyze the data. Descriptive statistics were used to describe the present situation of the banks and their employees. Inferential statistics were used to identify the factors and their significance concerned with training. Results show that there is a significant relationship between the performance and the training of the employees. It also shows that the training can motivate employees and encourage them to work hard. However, this study did not find any relationship between the commitment of the employees and the training. This study suggests that for increasing the performance of the banks, training is a must which is to be given deliberately for improving the specific skills of the bank employees.

Keywords: training, promotion, compensation, work-life policies

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Authors: Seba Mohanty, Jitendra Mahakud

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Capital ratio is one of the major indicators of the stability of the commercial banks. Pertinent to its pervasive importance, over the years the regulators, policy makers focus on the maintenance of the particular level of capital ratio to minimize the solvency and liquidation risk. In this context, it is very much important to identify the relationship between capital and risk and find out the factors which determine the capital ratios of commercial banks. The study examines the relationship between capital and risk of the commercial banks operating in India. Other bank specific variables like bank size, deposit, profitability, non-performing assets, bank liquidity, net interest margin, loan loss reserves, deposits variability and regulatory pressure are also considered for the analysis. The period of study is 1997-2015 i.e. the period of post liberalization. To identify the impact of financial crisis and implementation of Basel II on capital ratio, we have divided the whole period into two sub-periods i.e. 1997-2008 and 2008-2015. This study considers all the three types of commercial banks, i.e. public sector, the private sector and foreign banks, which have continuous data for the whole period. The main sources of data are Prowess data base maintained by centre for monitoring Indian economy (CMIE) and Reserve Bank of India publications. We use simultaneous equation model and more specifically Two Stage Least Square method to find out the relationship between capital and risk. From the econometric analysis, we find that capital and risk affect each other simultaneously, and this is consistent across the time period and across the type of banks. Moreover, regulation has a positive significant impact on the ratio of capital to risk-weighted assets, but no significant impact on the banks risk taking behaviour. Our empirical findings also suggest that size has a negative impact on capital and risk, indicating that larger banks increase their capital less than the other banks supported by the too-big-to-fail hypothesis. This study contributes to the existing body of literature by predicting a strong relationship between capital and risk in an emerging economy, where banking sector plays a majority role for financial development. Further this study may be considered as a primary study to find out the macro economic factors which affecting risk and capital in India.

Keywords: capital, commercial bank, risk, simultaneous equation model

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Authors: Bo Hyun Kim, Sarng Woo Karng

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In constructing a hydrogen refueling station, minimizing the volume and reducing the number of banks enable lessening the construction cost. This study aims at performing the dynamic simulation on 250 kg/day of a refueling station for light-duty vehicles. The primary compressor boosts hydrogen from a tube trailer of 250 to 480 bar and stores it in a medium-pressure bank. Then, additional compression of hydrogen from 480 to 900 bar is carried out and stored in a high-pressure bank. Economic analysis was conducted considering the amount of electricity consumed by compression corresponding to the volume and the number of banks (cascade system) in charging mode. NIST REFPROP was selected as the equation of state on the ASPEN HYSYS for thermodynamic analysis of the tube-trailer, the compressors, the chillers, and the banks. Compared to a single high-pressure bank system of 3000 L, the volume of the cascade high-pressure banks (bank1: 250 L and bank 2: 1850 L) was reduced by 30%, and the power consumption of the chiller for precooling was also decreased by 16%.

Keywords: light-duty vehicles, economic analysis, cascade system, hydrogen refueling station

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Authors: Leorisyl D. Siarot

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It is conventional to see and hear Filipinos, in general, speak two or more languages. This phenomenon brings us to a closer look on how our minds process the input and produce an output with a specific chosen language. This study aimed to generate a theoretical model which explained the interaction of the first and the second languages in the human mind. After a careful analysis of the gathered data, a theoretical prototype called Language Activation Model was generated. For every string, there are three specialized banks: lexico-semantics, morphono-syntax, and pragmatics. These banks are interrelated to other banks of other language strings. As the bilingual learns more languages, a new string is replicated and is filled up with the information of the new language learned. The principles of the first and second languages' interaction are drawn; these are expressed in laws, namely: law of dominance, law of availability, law of usuality and law of preference. Furthermore, difficulties encountered in the learning of second languages were also determined.

Keywords: bilingualism, psycholinguistics, second language learning, languages

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Authors: Sabur Mollah, Asma Mobarek

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This study aims to explore the endogenous relationship between Shari’ah governance and board governance for Islamic banks to identify complementary or substituting relationship between these governance parameters. By using a sample of 161 Islamic Banks from 24 countries for the period of 2005-2013, we show an endogenous relationship between Shari’ah Supervisory Board (SSB) and Board of Directors (BoD). In this relationship, SSB and BoD complement each other. We also show that this complementary relationship between SSB and BoD helps enhance both management and asset quality, but mitigates capital adequacy, earnings, and liquidity in Islamic banks. The study has important implications for financial stability in the Islamic banking system.

Keywords: Shari’ah Supervisory Board, Boards of Directors, Islamic banking, financial stability

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Authors: Aliyu Aminu Baba, Yahaya Danjuma, Ahmad Sule Liman-Katagum

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This paper examines the effects of the board of directors’ diversity on firm performance. We investigate the relationship between the number of women directors on the board and important board committees and financial performance measured as return on assets. Our statistical analysis supports the theoretical position of the effect diversity on financial performance. These studies enhanced the previous studies on the board of director’s gender diversity, board committees, and its impacts on firm financial performance. The study uses data from eighteen (18) Nigerian commercial banks. The study finds that banks with a higher number of females directors on board and board committees have higher Earning per share(EPS)) and Return on Assets (ROA). It also finds that some banks did not even have a single female on its corporate board. Evidence imply that decisions concerning the appointment of women to corporate boards should be on criteria and financial performance. It is recommended that banks can enhance their financial performance by having more female directors on their corporate board.

Keywords: board of directors, gender diversity, board committees, financial performance

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Authors: Karolína Vozková, Matěj Kuc

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Net fee and commission income is one of the key elements of a bank’s core income. In the current low-interest rate environment, this type of income is gaining importance relative to net interest income. This paper analyses the effects of bank and country specific determinants of net fee and commission income on a set of cooperative banks from European countries in the 2007-2014 period. In order to do that, dynamic panel data methods (system Generalized Methods of Moments) were employed. Subsequently, alternative panel data methods were run as robustness checks of the analysis. Strong positive impact of bank concentration on the share of net fee and commission income was found, which proves that cooperative banks tend to display a higher share of fee income in less competitive markets. This is probably connected with the fact that they stick with their traditional deposit-taking and loan-providing model and fees on these services are driven down by the competitors. Moreover, compared to commercial banks, cooperatives do not expand heavily into non-traditional fee bearing services under competition and their overall fee income share is therefore decreasing with the increased competitiveness of the sector.

Keywords: cooperative banking, dynamic panel data models, net fee and commission income, system GMM

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Authors: Audia Syafa'atur Rahman, Rozali Haron

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The practices of Islamic banking are more attuned to the goals of profit maximization rather than obtaining ethical profit. Ethical profit is obtained from interest-free earnings and to give an impact which benefits to the growth of society and economy. Good corporate governance practices are needed to assure the sustainability of Islamic banks in order to achieve Maqasid Shariah with the main purpose of boosting the well-being of people. The Maqasid Shariah performance measurement is used to measure the duties and responsibilities expected to be performed by Islamic banks. It covers not only unification dimension like financial measurement, but also many dimensions covered to reflect the main purpose of Islamic banks. The implementation of good corporate governance is essential because it covers the interests of the stakeholders and facilitates effective monitoring to encourage Islamic banks to utilize resources more efficiently in order to achieve the Maqasid Shariah. This study aims to provide the empirical evidence on the Maqasid performance of Islamic banks in relation to the Maqasid performance evaluation model, to examine the influence of SSB characteristics and board structures to Islamic Banks performance as measured by Maqasid performance evaluation model. By employing the simple additive weighting method, Maqasid index for all the Islamic Banks in Indonesia within 2012 to 2016 ranged from above 11% to 28%. The Maqasid Syariah performance index where results reached above 20% are obtained by Islamic Banks such as Bank Muamalat Indonesia, Bank Panin Syariah, and Bank BRI Syariah. The consistent achievement above 23% is achieved by BMI. Other Islamic Banks such as Bank Victoria Syariah, Bank Jabar Banten Syariah, Bank BNI Syariah, Bank Mega Syariah, BCA Syariah, and Maybank Syariah Indonesia shows a fluctuating value of the Maqasid performance index every year. The impact of SSB characteristics and board structures are tested using random-effects generalized least square. The findings indicate that SSB characteristics (Shariah Supervisory Board size, Shariah Supervisory Board cross membership, Shariah Supervisory Board Education, and Shariah Supervisory Board reputation) and board structures (Board size and Board independence) have an essential role in improving the performance of Islamic Banks. The findings denote Shariah Supervisory Board with smaller size, higher portion of Shariah Supervisory Board cross membership; lesser Shariah Supervisory Board holds doctorate degree, lesser reputable scholar, more members on board of directors, and less independence non-executive directors will enhance the performance of Islamic Banks.

Keywords: Maqasid Shariah, corporate governance, Islamic banks, Shariah supervisory board

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Authors: Sonia Rebai, Mohamed Naceur Azaiez, Dhafer Saidane

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In this study, we develop a performance evaluation model based on a multi-attribute utility approach aiming at reaching the sustainable banking (SB) status. This model is built accounting for various banks’ stakeholders in a win-win paradigm. In addition, it offers the opportunity for adopting a global measure of performance as an indication of a bank’s sustainability degree. This measure is referred to as banking sustainability performance index (BSPI). This index may constitute a basis for ranking banks. Moreover, it may constitute a bridge between the assessment types of financial and extra-financial rating agencies. A real application is performed on three French banks.

Keywords: multi-attribute utility theory, performance, sustainable banking, financial rating

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Authors: Osama Shibani

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Corporate governance effective is critical to the proper functioning of the banking sector and the economy as a whole, the Basel Committee have issued principles of corporate governance inspired from Organisation for Economic Co-operation and Development (OECD), but there is no single model of corporate governance that can work well in every country; each country, or even each organization should develop its own model that can cater for its specific needs and objectives, the corporate governance in Islamic Institutions is unique and offers a particular structure and guided by a control body which is Shariah supervisory Board (SSB), for this reason Islamic Financial Services Board in Malaysia (IFSB) has amended BCBS corporate governance principles commensurate with Islamic financial Institutions to suit the nature of the work of Islamic institutions, this paper highlight these amended by using comparative analysis method in context of the differences of corporate governance structure of Islamic banks and conventional banks. We find few different between principles (Principle 1: The Board's overall responsibilities, Principles 3: Board’s own structure and practices, Principles 9: Compliance, Principle 10: Internal audit, Principle 12: Disclosure and transparency) and there are similarities between principles (Principle 2: Board qualifications and composition, Principles 4: Senior Management (composition and tasks), Principle 6: Risk Management and Principle 8: Risk communication). Finally, we found that corporate governance principles issued by Islamic Financial Services Board (IFSB) are complemented to CG principles of Basel Committee on Banking Supervision (BCBS) with some modifications to suit the composition of Islamic banks, there are deficiencies in the interest of the Basel Committee to Islamic banks.

Keywords: basel committee (BCBS), corporate governance principles, Islamic financial services board (IFSB), agency theory

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Authors: Rabiatu Bonku, Faisal Alkaabneh

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Inspired by a food banks distribution operation for non-profit organization, we study a variant synchronized vehicle routing problem for equitable resource allocation. This research paper introduces a Mixed Integer Programming (MIP) model aimed at addressing the complex challenge of efficiently distributing vital resources, particularly for food banks serving vulnerable populations in urban areas. Our optimization approach places a strong emphasis on social equity, ensuring a fair allocation of food to partner agencies while minimizing wastage. The primary objective is to enhance operational efficiency while guaranteeing fair distribution and timely deliveries to prevent food spoilage. Furthermore, we assess four distinct models that consider various aspects of sustainability, including social and economic factors. We conduct a comprehensive numerical analysis using real-world data to gain insights into the trade-offs that arise, while also demonstrating the models’ performance in terms of fairness, effectiveness, and the percentage of food waste. This provides valuable managerial insights for food bank managers. We show that our proposed approach makes a significant contribution to the field of logistics optimization and social responsibility, offering valuable insights for improving the operations of food banks.

Keywords: food banks, humanitarian logistics, equitable resource allocation, synchronized vehicle routing

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Authors: Achsania Hendratmi, Nisful Laila, Fatin Fadhilah Hasib, Puji Sucia Sukmaningrum

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This study aims to compare and see the differences between Islamic bank in Indonesia and Islamic bank in Malaysia using RGEC method (Risk Profile, Good Corporate Governance, Earnings, and Capital). This study examines the comparison in business and social performance of eleven Islamic banks in Indonesia and fifteen Islamic banks in Malaysia. This research used quantitative approach and the collections of data was done by collecting all the annual reports of banks that has been created as a sample over the period 2011-2015. The test result of the Independent Samples T-test and Mann-Whitney Test showed there were differences in the business performance of Islamic Bank in Indonesia and Malaysia as seen from the aspect of Risk profile (FDR), GCG, and Earnings (ROA). Also, there were differences of business and social performance as seen from Earnings (ROE), Capital (CAR), and Sharia Conformity Indicator (PSR and ZR) aspects.

Keywords: business performance, Islamic banks, RGEC, social performance

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Authors: Petr Gurný

Abstract:

One of the most important tasks in the risk management is the correct determination of probability of default (PD) of particular financial subjects. In this paper a possibility of determination of financial institution’s PD according to the credit-scoring models is discussed. The paper is divided into the two parts. The first part is devoted to the estimation of the three different models (based on the linear discriminant analysis, logit regression and probit regression) from the sample of almost three hundred US commercial banks. Afterwards these models are compared and verified on the control sample with the view to choose the best one. The second part of the paper is aimed at the application of the chosen model on the portfolio of three key Czech banks to estimate their present financial stability. However, it is not less important to be able to estimate the evolution of PD in the future. For this reason, the second task in this paper is to estimate the probability distribution of the future PD for the Czech banks. So, there are sampled randomly the values of particular indicators and estimated the PDs’ distribution, while it’s assumed that the indicators are distributed according to the multidimensional subordinated Lévy model (Variance Gamma model and Normal Inverse Gaussian model, particularly). Although the obtained results show that all banks are relatively healthy, there is still high chance that “a financial crisis” will occur, at least in terms of probability. This is indicated by estimation of the various quantiles in the estimated distributions. Finally, it should be noted that the applicability of the estimated model (with respect to the used data) is limited to the recessionary phase of the financial market.

Keywords: credit-scoring models, multidimensional subordinated Lévy model, probability of default

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Authors: Abdulaziz Abdulsaleh

Abstract:

This study aims at identifying the practices that should be taken into consideration by audit committees as a tool of corporate governance in Libyan commercial banks by investigating various perceptions on this topic. The study is based on a questionnaire submitted to audit committees ‘members at Libyan commercial banks, directors of internal audit departments as well as members of board of directors at these banks in addition to a number of external auditors and academic staff from Libyan universities. The study reveals that the role of audit committees has to be shifted from traditional areas of accounting to a broader role including functions related to financial reporting, audit planning, support the independence of internal and external auditors, acting as a channel of communication between external auditors and board of directors, reviewing external audit, and evaluating internal control systems. Although the study is a starting point in developing a framework of good audit committees’ practices in Libya, it is believed that the adoption of its results can result in enhancing the corporate governance practices not only in the banking sector but also in the entire corporate sector in Libya.

Keywords: audit committees, corporate governance, commercial banks, Libya

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Authors: Muhammad Arzim Naim, Saiful Azhar Rosly, Mohamad Sahari Nordin

Abstract:

The objective of this study is to investigate the factors affecting the rise of Shariah non-compliance risk that can bring Islamic banks to succumb to monetary loss. Prior literatures have never analyzed such risk in details despite lots of it arguing on the validity of some Shariah compliance products. The Shariah non-compliance risk in this context is looking to the potentially failure of the facility to stand from the court test say that if the banks bring it to the court for compensation from the defaulted clients. The risk may also arise if the customers refuse to make the financing payments on the grounds of the validity of the contracts, for example, when relinquishing critical requirement of Islamic contract such as ownership, the risk that may lead the banks to suffer loss when the customer invalidate the contract through the court. The impact of Shariah non-compliance risk to Islamic banks is similar to that of legal risks faced by the conventional banks. Both resulted into monetary losses to the banks respectively. In conventional banking environment, losses can be in the forms of summons paid to the customers if they won the case. In banking environment, this normally can be in very huge amount. However, it is right to mention that for Islamic banks, the subsequent impact to them can be rigorously big because it will affect their reputation. If the customers do not perceive them to be Shariah compliant, they will take their money and bank it in other places. This paper provides new insights of risks faced by credit intensive Islamic banks by providing a new extension of knowledge with regards to the Shariah non-compliance risk by identifying its individual components that directly affecting the risk together with empirical evidences. Not limited to the Islamic banking fraternities, the regulators and policy makers should be able to use findings in this paper to evaluate the components of the Shariah non-compliance risk and make the necessary actions. The paper is written based on Malaysia’s Islamic banking practices which may not directly related to other jurisdictions. Even though the focuses of this study is directly towards to the Bay Bithaman Ajil or popularly known as BBA (i.e. sale with deferred payments) financing modality, the result from this study may be applicable to other Islamic financing vehicles.

Keywords: Islamic banking, Islamic finance, Shariah Non-compliance risk, Bay Bithaman Ajil (BBA), principal axis factoring

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