This study analyzes the role of emotional intelligence and resilience in work engagement of employees in the Islamic banking industry during the Covid-19 pandemic. To this end, it gathers data from 364 Islamic bank employees. Using the PLS-SEM for data analysis, the results show positive and significant effects of emotional intelligence and resilience on the work engagement. The emotional intelligence also had a positive influence on resilience. This shows that positive forces from within the individual affect the productivity of organizational members during current pandemic. The implication of the results of this study for management is the need for special attention toward developing the positive potential of individuals so that each member of the organization has good emotional intelligence and resilience.
{"title":"DETERMINANTS OF WORK ENGAGEMENT DURING PANDEMIC: THE CASE OF ISLAMIC BANKING WORKERS","authors":"Syayyidah Maftuhatul Jannah, Rasistia Wisandianing Primadineska","doi":"10.21098/jimf.v8i4.1433","DOIUrl":"https://doi.org/10.21098/jimf.v8i4.1433","url":null,"abstract":"This study analyzes the role of emotional intelligence and resilience in work engagement of employees in the Islamic banking industry during the Covid-19 pandemic. To this end, it gathers data from 364 Islamic bank employees. Using the PLS-SEM for data analysis, the results show positive and significant effects of emotional intelligence and resilience on the work engagement. The emotional intelligence also had a positive influence on resilience. This shows that positive forces from within the individual affect the productivity of organizational members during current pandemic. The implication of the results of this study for management is the need for special attention toward developing the positive potential of individuals so that each member of the organization has good emotional intelligence and resilience.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"110 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2022-12-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84199207","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
S. Sunarsih, Rizqi Umar Al Hashfi, U. Munawaroh, Endang Suhari
This paper analyzes the effect of liquidity risk and credit risk on Islamic bank stability and whether the risk-stability nexus changes during the Covid-19 pandemic. Using a panel quarterly dataset of 14 Islamic banks from 2017 to 2020, a total of 224 quarterly-bank observations in total and the system generalized method of moment, we find that credit risk and liquidity risk are negatively associated with bank stability. Moreover, the COVID-19 does not alter the negative relationship between liquidity risk and stability. To validate the results, we also estimate the model using the LSDVC. The LSDVC results remain consistent. These results provide new insight into understanding risk management implementation for minimizing these risks.
{"title":"NEXUS OF RISK AND STABILITY IN ISLAMIC BANKS DURING THE PANDEMIC: EVIDENCE FROM INDONESIA","authors":"S. Sunarsih, Rizqi Umar Al Hashfi, U. Munawaroh, Endang Suhari","doi":"10.21098/jimf.v8i4.1444","DOIUrl":"https://doi.org/10.21098/jimf.v8i4.1444","url":null,"abstract":"This paper analyzes the effect of liquidity risk and credit risk on Islamic bank stability and whether the risk-stability nexus changes during the Covid-19 pandemic. Using a panel quarterly dataset of 14 Islamic banks from 2017 to 2020, a total of 224 quarterly-bank observations in total and the system generalized method of moment, we find that credit risk and liquidity risk are negatively associated with bank stability. Moreover, the COVID-19 does not alter the negative relationship between liquidity risk and stability. To validate the results, we also estimate the model using the LSDVC. The LSDVC results remain consistent. These results provide new insight into understanding risk management implementation for minimizing these risks.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"8 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2022-12-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82839776","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates the impact of liquidity on Islamic bank profitability. We examine the existence of asymmetric causal linkages or structural shifts in the profitability-liquidity nexus for a sample of 34 Islamic banks in the Middle East and North Africa (MENA) countries over the period 2005-2017 using the Panel Threshold Regression and controlling for the bank-specific and macroeconomic variables. Empirical evidence highlights a non-linear relationship between liquidity and Islamic bank profitability. Indeed, there is a significant negative relationship between liquidity and profitability if the ratio of loan/total assets does not exceed the threshold. Contrariwise, liquidity positively affects profitability. Furthermore, the empirical evidence shows that bank size is adversely related to banks’ profitability given the economies of scale issues of Islamic banks. The CAR impact is well emphasized above and below the threshold. We highlight that Islamic banks face a trade-off between liquidity and profitability. They are recommended to strengthen the liquidity risk management instruments to improve their profitability notably within a framework of Basel III liquidity requirements to maintain adequate high-quality liquid assets.
{"title":"ASYMMETRIC CAUSAL LINKAGES BETWEEN LIQUIDITY AND PROFITABILITY FOR MENA ISLAMIC BANKS","authors":"Khoutem Ben Jedidia, I. B. Salah","doi":"10.21098/jimf.v8i4.1546","DOIUrl":"https://doi.org/10.21098/jimf.v8i4.1546","url":null,"abstract":"This paper investigates the impact of liquidity on Islamic bank profitability. We examine the existence of asymmetric causal linkages or structural shifts in the profitability-liquidity nexus for a sample of 34 Islamic banks in the Middle East and North Africa (MENA) countries over the period 2005-2017 using the Panel Threshold Regression and controlling for the bank-specific and macroeconomic variables. Empirical evidence highlights a non-linear relationship between liquidity and Islamic bank profitability. Indeed, there is a significant negative relationship between liquidity and profitability if the ratio of loan/total assets does not exceed the threshold. Contrariwise, liquidity positively affects profitability. Furthermore, the empirical evidence shows that bank size is adversely related to banks’ profitability given the economies of scale issues of Islamic banks. The CAR impact is well emphasized above and below the threshold. We highlight that Islamic banks face a trade-off between liquidity and profitability. They are recommended to strengthen the liquidity risk management instruments to improve their profitability notably within a framework of Basel III liquidity requirements to maintain adequate high-quality liquid assets.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"69 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2022-12-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86096787","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates (i) the volatility of Indonesian Islamic, SRI, and Conventional equities, (ii) their serial correlation, and (iii) their dynamic correlation and relationship during the COVID-19 pandemic. Using MGARCH-DCC, our findings suggest that the Islamic index is most volatile but performs more efficiently than the others and exhibits no co-movement with Conventional and SRI during the Pandemic crisis. The study empirically shows the resilience and efficiency of the Islamic stocks in Indonesia during the Pandemic. These findings provide valuable and practical recommendations on portfolio diversification for investors and offers policy implications for regulators interesting in and dealing with impact or responsible investing.
{"title":"PERFORMANCE OF CONVENTIONAL, ISLAMIC, AND SOCIAL RESPONSIBLE INVESTMENT (SRI) INDICES DURING COVID-19: A STUDY OF INDONESIAN STOCK MARKET","authors":"N. Hidayah, P. Swastika","doi":"10.21098/jimf.v8i4.1483","DOIUrl":"https://doi.org/10.21098/jimf.v8i4.1483","url":null,"abstract":"This paper investigates (i) the volatility of Indonesian Islamic, SRI, and Conventional equities, (ii) their serial correlation, and (iii) their dynamic correlation and relationship during the COVID-19 pandemic. Using MGARCH-DCC, our findings suggest that the Islamic index is most volatile but performs more efficiently than the others and exhibits no co-movement with Conventional and SRI during the Pandemic crisis. The study empirically shows the resilience and efficiency of the Islamic stocks in Indonesia during the Pandemic. These findings provide valuable and practical recommendations on portfolio diversification for investors and offers policy implications for regulators interesting in and dealing with impact or responsible investing.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"35 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2022-12-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81013084","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
M. A. Khattak, Mohsin Ali, Noureen A. Khan, Fawad Ahmad
This study explores the relationship between competition and performance in a dual-banking setting. More specifically, we compare whether using the Traditional Lerner index (TLI) the efficiency-adjusted Lerner index (EALI) would yield different conclusions. We take data from 2008 to 2020 and take Malaysia as a case study. Considering the nature of the dataset and the variables within, we employ the system Generalized Method of Moments. Our findings reveal contradictory results when market power is measured differently. Based on the overall sample, the models using the adjusted market power is supportive of the ‘competition-stability view’ while the models with TLI report evidence in favor of the ‘competition-fragility view.’ The Islamic banks' results support the ‘competition-fragility view’ when competition is measured with the efficiency-adjusted Lerner index (EALI) and the ‘competition-stability view’ when measured with the TLI. These findings are robust to different econometric estimators and carry important policy implications.
{"title":"THE ADJUSTED MARKET POWER, COMPETITION, AND PERFORMANCE: ISLAMIC VS CONVENTIONAL BANKS","authors":"M. A. Khattak, Mohsin Ali, Noureen A. Khan, Fawad Ahmad","doi":"10.21098/jimf.v8i4.1532","DOIUrl":"https://doi.org/10.21098/jimf.v8i4.1532","url":null,"abstract":"This study explores the relationship between competition and performance in a dual-banking setting. More specifically, we compare whether using the Traditional Lerner index (TLI) the efficiency-adjusted Lerner index (EALI) would yield different conclusions. We take data from 2008 to 2020 and take Malaysia as a case study. Considering the nature of the dataset and the variables within, we employ the system Generalized Method of Moments. Our findings reveal contradictory results when market power is measured differently. Based on the overall sample, the models using the adjusted market power is supportive of the ‘competition-stability view’ while the models with TLI report evidence in favor of the ‘competition-fragility view.’ The Islamic banks' results support the ‘competition-fragility view’ when competition is measured with the efficiency-adjusted Lerner index (EALI) and the ‘competition-stability view’ when measured with the TLI. These findings are robust to different econometric estimators and carry important policy implications.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"33 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2022-12-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76030653","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using co-integration analysis, this study evaluates the role of Islamic banks in monetary transmission and the economic growth of Pakistani economy. More specifically, it investigates the role of Islamic bank deposits and financing in the transmission of monetary policy impacts to the real economy. The findings suggest that Islamic bank financing and deposits play key roles in Pakistan's monetary transmission process. The bank lending channel has the potential to become a major channel of monetary transmission in Pakistan's economy. The bank lending channel highlights the significance of Islamic financial institutions in disseminating the effects of monetary policy across the economy. Therefore, more efforts should be made to establish a more effective Islamic money market, which might offer Islamic banks with an alternative funding source.
{"title":"ECONOMIC OUTPUT, MONETARY POLICY TRANSMISSION AND THE ROLE OF ISLAMIC BANKS: EVIDENCE FROM PAKISTAN DUAL BANKING SYSTEM","authors":"Azam Ali, Muhamed Zulkhibri, Tanveer Kishwar","doi":"10.21098/jimf.v8i4.1486","DOIUrl":"https://doi.org/10.21098/jimf.v8i4.1486","url":null,"abstract":"Using co-integration analysis, this study evaluates the role of Islamic banks in monetary transmission and the economic growth of Pakistani economy. More specifically, it investigates the role of Islamic bank deposits and financing in the transmission of monetary policy impacts to the real economy. The findings suggest that Islamic bank financing and deposits play key roles in Pakistan's monetary transmission process. The bank lending channel has the potential to become a major channel of monetary transmission in Pakistan's economy. The bank lending channel highlights the significance of Islamic financial institutions in disseminating the effects of monetary policy across the economy. Therefore, more efforts should be made to establish a more effective Islamic money market, which might offer Islamic banks with an alternative funding source.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"22 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2022-12-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74036529","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper we analyse the Shari’ah Compliant (here after SC) firms and how do they share the output risk under pandemic era. Firms that are accepted to be SC, have been exposed to financial ratio restrictions (like debt ratios, profit ratio or current assets). For those firm not able to use debt to eliminate the income shocks, It is expected that firms after a negative output shock would be reflected to shareholders. In this paper, we measure to what extent SC firms share the risk of income shocks with the market and shareholders. Under pandemic era, SC firms have been exposed to substantial negative income shocks. For the sake of holding their SC certificates, debt leverage is not considered as an option but dropping (or cutting down) dividend payments would make the firms look bad, if they have not done it before. At this stage, firms that have the flexibility to share their income shocks with both market and shareholders before, i.e, produce more on boom market and distribute more dividends and produce less on recession and distribute less dividends, are performed better – stock prices returned to original levels earlier-during the pandemic area.
{"title":"SHARIAH COMPLIANT FIRMS AND RISK SHARING UNDER PANDEMIC ERA","authors":"Faruk Balli, Jardine A. Husman","doi":"10.21098/jimf.v8i3.1562","DOIUrl":"https://doi.org/10.21098/jimf.v8i3.1562","url":null,"abstract":"In this paper we analyse the Shari’ah Compliant (here after SC) firms and how do they share the output risk under pandemic era. Firms that are accepted to be SC, have been exposed to financial ratio restrictions (like debt ratios, profit ratio or current assets). For those firm not able to use debt to eliminate the income shocks, It is expected that firms after a negative output shock would be reflected to shareholders. In this paper, we measure to what extent SC firms share the risk of income shocks with the market and shareholders. Under pandemic era, SC firms have been exposed to substantial negative income shocks. For the sake of holding their SC certificates, debt leverage is not considered as an option but dropping (or cutting down) dividend payments would make the firms look bad, if they have not done it before. At this stage, firms that have the flexibility to share their income shocks with both market and shareholders before, i.e, produce more on boom market and distribute more dividends and produce less on recession and distribute less dividends, are performed better – stock prices returned to original levels earlier-during the pandemic area.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"216 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2022-08-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79616059","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study constructs the financial stability indexes of Islamic and conventional banking systems for Indonesia using the dynamic factor model. Both stability indexes are then linked to economic performance in Indonesia by employing a nonlinear autoregressive distributed lag (NARDL) model. We contribute to the literature by investigating the possibility of asymmetric linkages between both financial system stability indexes and economic performance. The financial stability indexes constructed and a broad range of macro-financial variables can capture the 2008-2009 global financial crisis and the 2020-2021 COVID-19 pandemic crisis periods. The most significant results posit that positive and negative shocks in Islamic financial stability in the long run increase and decrease economic performance, respectively. However, the financial stability of conventional banks is negatively associated with economic performance in the long run. The quantile regression results also demonstrate that Islamic financial stability is statistically significant throughout all quantiles in promoting economic performance. It plays a greater role at lower quantiles and diminishes when the economic performance has been achieved at a high level. However, the conventional banking stability is a negative and significant determinant of economic performance throughout all quantiles. Results highlight that the stability of the financial system especially the Islamic financial system deepening would enhance economic performance.
{"title":"EFFECT OF ISLAMIC FINANCIAL SYSTEM STABILITY ON ECONOMIC PERFORMANCE IN INDONESIA: EVIDENCE FROM DYNAMIC FACTOR MODEL AND NARDL APPROACHES","authors":"S. Law, Masagus M. Ridhwan","doi":"10.21098/jimf.v8i3.1567","DOIUrl":"https://doi.org/10.21098/jimf.v8i3.1567","url":null,"abstract":"This study constructs the financial stability indexes of Islamic and conventional banking systems for Indonesia using the dynamic factor model. Both stability indexes are then linked to economic performance in Indonesia by employing a nonlinear autoregressive distributed lag (NARDL) model. We contribute to the literature by investigating the possibility of asymmetric linkages between both financial system stability indexes and economic performance. The financial stability indexes constructed and a broad range of macro-financial variables can capture the 2008-2009 global financial crisis and the 2020-2021 COVID-19 pandemic crisis periods. The most significant results posit that positive and negative shocks in Islamic financial stability in the long run increase and decrease economic performance, respectively. However, the financial stability of conventional banks is negatively associated with economic performance in the long run. The quantile regression results also demonstrate that Islamic financial stability is statistically significant throughout all quantiles in promoting economic performance. It plays a greater role at lower quantiles and diminishes when the economic performance has been achieved at a high level. However, the conventional banking stability is a negative and significant determinant of economic performance throughout all quantiles. Results highlight that the stability of the financial system especially the Islamic financial system deepening would enhance economic performance.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"22 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2022-08-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82779677","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study investigates how the Covid-19 pandemic has affected the loan portfolio composition of Indonesian Islamic and conventional banks. By using a sample of 108 conventional and 9 Islamic banks, we find that conventional banks issued more consumption loans during the sample period. On the contrary, Islamic banks granted more investment loans than consumption loans. In addition, given limited support from the central bank, Islamic banks still increased their contribution to investment loans portfolio more rapidly during the COVID-19 pandemic. These results support the view that Islamic banks provide funding to long-term investment projects and may contribute more to sustainable economic growth. This finding could have policy implications for both Islamic banks and the government. Despite the fact that Islamic banking is in its infancy in Indonesia, it provides funding for the real economy. Regulators may assist the Islamic banking sector in developing risk management capacity in various sectors, including agriculture, manufacturing, trading, distribution, hotels, and restaurants. Furthermore, implementing a well-integrated policy framework that includes monetary, fiscal, and financial services can also assist in optimizing the momentum of economic recovery after the pandemic despite global supply disruptions, the Russian-Ukraine war, and climate change.
{"title":"LOAN PORTFOLIO COMPOSITION OF ISLAMIC AND CONVENTIONAL BANKS PRE- AND POST-COVID-19 PANDEMIC? CASE OF INDONESIA","authors":"Dawood Ashraf, M. Rizwan, D. Adiwibowo","doi":"10.21098/jimf.v8i3.1561","DOIUrl":"https://doi.org/10.21098/jimf.v8i3.1561","url":null,"abstract":"This study investigates how the Covid-19 pandemic has affected the loan portfolio composition of Indonesian Islamic and conventional banks. By using a sample of 108 conventional and 9 Islamic banks, we find that conventional banks issued more consumption loans during the sample period. On the contrary, Islamic banks granted more investment loans than consumption loans. In addition, given limited support from the central bank, Islamic banks still increased their contribution to investment loans portfolio more rapidly during the COVID-19 pandemic. These results support the view that Islamic banks provide funding to long-term investment projects and may contribute more to sustainable economic growth. This finding could have policy implications for both Islamic banks and the government. Despite the fact that Islamic banking is in its infancy in Indonesia, it provides funding for the real economy. Regulators may assist the Islamic banking sector in developing risk management capacity in various sectors, including agriculture, manufacturing, trading, distribution, hotels, and restaurants. Furthermore, implementing a well-integrated policy framework that includes monetary, fiscal, and financial services can also assist in optimizing the momentum of economic recovery after the pandemic despite global supply disruptions, the Russian-Ukraine war, and climate change.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"19 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2022-08-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86041106","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This research investigates how Islamic rural banks performed during the Covid-19 outbreak and how diversification is associated with the performance of the banks. Islamic rural banks provide a unique setting because they serve limited customers in a specific region in Indonesia, different from national commercial banks that accommodate all types of customers in all regions. To investigate this issue, we employ panel data of 164 Islamic rural banks dispersed across 23 provinces in Indonesia from 2020q4-2021q3. We find that covid-19 is negatively associated with the profitability of Islamic rural banks, implying that covid 19 has affected all sectors, including banks with niche markets such as Islamic rural banks. We also find that diversification is negatively related to the Islamic rural banks’ performance. This finding suggests that instead of expanding their business scope, Islamic rural banks should focus on their main business activity because their non-financing income is adversely related to their performance. Our finding suggests that policymakers effectively monitor Islamic rural banks to remain focused on their main business activity.
{"title":"THE PERFORMANCE OF INDONESIAN ISLAMIC RURAL BANKS DURING COVID-19 OUTBREAK: THE ROLE OF DIVERSIFICATION","authors":"T. Risfandy, Desti Indah Pratiwi","doi":"10.21098/jimf.v8i3.1564","DOIUrl":"https://doi.org/10.21098/jimf.v8i3.1564","url":null,"abstract":"This research investigates how Islamic rural banks performed during the Covid-19 outbreak and how diversification is associated with the performance of the banks. Islamic rural banks provide a unique setting because they serve limited customers in a specific region in Indonesia, different from national commercial banks that accommodate all types of customers in all regions. To investigate this issue, we employ panel data of 164 Islamic rural banks dispersed across 23 provinces in Indonesia from 2020q4-2021q3. We find that covid-19 is negatively associated with the profitability of Islamic rural banks, implying that covid 19 has affected all sectors, including banks with niche markets such as Islamic rural banks. We also find that diversification is negatively related to the Islamic rural banks’ performance. This finding suggests that instead of expanding their business scope, Islamic rural banks should focus on their main business activity because their non-financing income is adversely related to their performance. Our finding suggests that policymakers effectively monitor Islamic rural banks to remain focused on their main business activity.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"7 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2022-08-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79165759","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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