International Journal of Islamic and Middle Eastern Finance and Management最新文献

Purpose

Bank creditworthiness refers to the evaluation of a bank’s ability to meet its financial obligations. It is an assessment of the bank’s financial health, stability and capacity to manage risks. This paper aims to investigate the credit rating patterns that are crucial for assessing creditworthiness of the Islamic banks, thereby evaluating the stability of their industry.

Design/methodology/approach

Three distinct machine learning algorithms are exploited and evaluated for the desired objective. This research initially uses the decision tree machine learning algorithm as a base learner conducting an in-depth comparison with the ensemble decision tree and Random Forest. Subsequently, the Apriori algorithm is deployed to uncover the most significant attributes impacting a bank’s credit rating. To appraise the previously elucidated models, a ten-fold cross-validation method is applied. This method involves segmenting the data sets into ten folds, with nine used for training and one for testing alternatively ten times changeable. This approach aims to mitigate any potential biases that could arise during the learning and training phases. Following this process, the accuracy is assessed and depicted in a confusion matrix as outlined in the methodology section.

Findings

The findings of this investigation reveal that the Random Forest machine learning algorithm superperforms others, achieving an impressive 90.5% accuracy in predicting credit ratings. Notably, our research sheds light on the significance of the loan-to-deposit ratio as a primary attribute affecting credit rating predictions. Moreover, this study uncovers additional pivotal banking features that intensely impact the measurements under study. This paper’s findings provide evidence that the loan-to-deposit ratio looks to be the purest bank attribute that affects credit rating prediction. In addition, deposit-to-assets ratio and profit sharing investment account ratio criteria are found to be effective in credit rating prediction and the ownership structure criterion came to be viewed as one of the essential bank attributes in credit rating prediction.

Originality/value

These findings contribute significant evidence to the understanding of attributes that strongly influence credit rating predictions within the banking sector. This study uniquely contributes by uncovering patterns that have not been previously documented in the literature, broadening our understanding in this field.

Purpose

The face value of nonowner-occupied real estate and business fixed assets is excluded from Zakah, according to most Fiqh scholars who argue that it has not been explicitly ordered during the lifetime of Prophet Muhammad (sas). This study aims to test the hypothesis that the role of these properties in the early Islamic economy was insignificant and, therefore, differed from today.

Design/methodology/approach

A qualitative historical analysis of primary Islamic sources and narrations from early Muslim historiography has been conducted to understand real estate sales and rent, construction costs and the number and size of houses owned by the Sahabah. In addition, inheritance reports and land gift records have been examined to obtain relevant information about the value of real estate. As for business fixed assets, the type, number and wealth of craftspeople as well as their tools have been analyzed to reveal their significance in comparison with today.

Findings

The findings of this study confirm the hypothesis that real estate for investment purposes and business fixed assets were quasi-non-existent during the lifetime of the Prophet (sas) and, therefore, irrelevant from a Zakah perspective.

Originality/value

This study intends to be a catalyst for the reconsideration of Zakah on these items of wealth and contributes to the Fiqhi discourse.

Purpose

This study aims to explore the use, effectiveness, motives and obstacles of analytical procedures (APs) used by auditors in Palestine, a context characterised by a pool of small and medium enterprises (SMEs), a limited skill set, poor quality of data, political uncertainty and a community-based business culture.

Design/methodology/approach

The study considers the audit market in Palestine using a sequential mixed-methods approach combining a questionnaire survey and a series of in-depth interviews. A total of 129 Big-4 and non-Big-4 auditors were surveyed.

Findings

The use of APs is driven by the auditor size (Big-4 vs non-Big-4) and the client size (large vs SMEs). Even though the use of APs has increased over the past decade, audit objectives, know-how, and personal, family and social connections among auditors and clients influence the quality of the audit process.

Practical implications

Small firms take advantage of the lack of audit governance in Palestine. Our findings suggest that the regulators should help bridge the knowledge-sharing programmes between the small and large audit firms to help improve audit quality.

Originality/value

Studies on audit quality, particularly using APs, in the context of politically unstable cases such as Palestine are limited. The study has implications for the use of APs in the case of SMEs to prepare for the technological revolution that will modernise audit procedures and quality soon.

Purpose

This paper aims to delve into the factors influencing the adoption of Islamic Fintech and investigates the potential impact of Religious Orientation.

Design/methodology/approach

The study uses a questionnaire to collect data from 291 Jordanians, using Structural Equation Model – Partial Least Squares (SEM-PLS) to evaluate the research model and test hypotheses.

Findings

The outcomes of the Smart PLS path analysis revealed that several factors significantly influence the adoption of Islamic Fintech. Notably, perceived risk, financial literacy, trust and convenience were identified as pivotal determinants in shaping individuals' decisions to adopt Islamic Fintech. Additionally, the study unveils the noteworthy role of religious orientation as a moderator, impacting the relationship between perceived risk, financial literacy, trust and convenience concerning the adoption of Islamic Fintech.

Originality/value

This study contributes fresh insights to the existing literature concerning the adoption of Islamic Fintech, enhancing the understanding of the key drivers in this domain. Furthermore, it emphasizes the practical implications of religious orientation in shaping individuals' attitudes and behaviors pertaining to Islamic Fintech adoption.

Purpose

This study aims to examine the influence of ownership structure and board characteristics on the performance of Indonesian Islamic rural banks (IRB) using the system generalized method of moment model.

Design/methodology/approach

This research uses Indonesian IRB unbalanced annual panel data from 2016 to 2022. IRB performance is measured by return on assets (ROA), return on equity (ROE) and nonperforming financing (NPF). The ownership structure is represented by controlling shareholders, ownership of the board of directors (BD) and ownership of the board of commissioners (BC). Meanwhile, board characteristics are represented by the size of the BC, the proportion of female board directors and female president directors.

Findings

The results show that the ownership structure and board characteristics play an important role in improving the IRB’s performance. Technically, the results show that the size of the BC and the ownership of the BD increase all IRB performance measures. Female president directors and controlling shareholders improve IRB’s performance as measured by ROA and ROE. Women’s boards of directors improve IRB performance as measured by NPF. Meanwhile, the ownership of the BC does not show its effect on all IRB performance measures.

Research limitations/implications

This study fills a literature gap on the influence of ownership structure and board characteristics on IRB Indonesia’s performance. In addition, it adds understanding and insight for Islamic bank regulators, management and IRB depositors in Indonesia.

Originality/value

To the best of the authors’ knowledge, this study is one of the first to provide an empirical survey on the influence of controlling shareholders and board characteristics on IRB performance, particularly in Indonesia.

Purpose

Research on Islamic entrepreneurship (IE) is growing but with difficulty. After reviewing six IE models, several problematic inconsistencies were identified, which can be categorized into three: sporadic objectives of IE, diverging core components and inconsistent levels of analysis. This study aims to articulate a synthesized IE model.

Design/methodology/approach

An Islamic critical realist synthesis is used by combining six IE models and situating them within an Islamic system of governance. Specifically, the Islamic governance conceptual matrix is used to offer an objective template.

Findings

A synthesized model of IE within an Islamic system of governance comprises the following: the objectives of IE are not to be confined to only financial sustainability, but to achieve all five Maqās.id of the Sharī’ah (i.e. preservation and promotion of faith, life, intellect, posterity and wealth); models of IE should cover the individual, group, organizational, societal, state and international levels for comprehensiveness; tawhīd is crucial to distinguish between IE and conventional entrepreneurship; halal IE activities can be further categorized into obligatory, recommended, permissible and reprehensible; Islamic values are to be differentiated from cultural values; and both Islamic and cultural values shape IE and vice versa.

Research limitations/implications

Limited number of models of IE were included in this synthesis. Although the resulting synthesized model is extensive, additional models of IE can be built to extend or even challenge it.

Originality/value

A novel model of IE within an Islamic system of governance is presented.

Purpose

Commercial banks are the financial powerhouses of a nation that can create a penetrating impact at the grassroots level. This study aims to investigate the demand-side drivers of green banking purchase intention by extending the popular theory of planned behavior (TPB) model.

Design/methodology/approach

This study used a mono-method research approach to collect customers’ cross-sectional responses using structured questionnaires. The data were further analyzed using CB-SEM.

Findings

This study points out that attitude, subjective norms, perceived behavioral control and environmental concern are demand-side factors that drive the intention of individual customers to adopt green banking services. The moderating roles of collectivism, age and gender are also discussed in this study.

Research limitations/implications

The present study’s results suffer from mono-method bias as they are based on primary data analysis alone. This limitation can be addressed by incorporating a mixed-method approach.

Practical implications

Several policy suggestions are offered based on the findings on improving green banking adoption among individual customers. The proper incorporation of these guidelines will expedite a nation’s aspirations for sustainable economic growth.

Originality/value

To the best of the authors’ knowledge, this is the first study to explore the demand-side factors that drive Omani customers’ intention to adopt green banking. Moreover, this study extends the TPB with environmental concern and personal values to examine the green banking adoption by individual customers.

Purpose

This study aims to attempt to investigate the factors that influence non-Muslims’ withdrawal behavioural intention from Islamic banking in Malaysia.

Design/methodology/approach

The push–pull–mooring approach is used to examine the determinants of withdrawal intention by non-Muslims from Islamic banking in Malaysia. Variables used in this study include religiosity (RELG) under push, deposit guarantee (DG), rate of return (RR), Islamic banks’ specific factors (IBSF) under pull and mooring factors as social influence (SI) and voluntary switching (VS) as the determinants of withdrawal intention from Islamic banking. In this study, the SPSS Statistics Version 22 and smart partial least squares were used to measure the withdrawal level.

Findings

Three variables, namely, SI, RR and IBSF are found to significantly influence the withdrawal behaviour intention. Meanwhile, three other variables, namely, RELG, DG and VS are not significant.

Practical implications

This study provides valuable insights pertaining to non-Muslim consumer withdrawal behaviour from Islamic banks. Bank managers, marketers and regulators could use these findings in developing effective strategies to increase and retain customer withdrawal.

Originality/value

This study expands the understanding of key determinants of the non-Muslim withdrawal behaviour from Islamic banks in Malaysia. To the best of the authors’ knowledge, this research is among the pioneer empirical study to assess the issue.

Purpose

The purpose of this paper is to investigate whether banks’ environmental, social and governance (ESG) initiatives increase or decrease banks’ efficiency.

Design/methodology/approach

The sample used includes all listed banks in Saudi Arabia over the years 2016–2021. The authors performed different methods, including data envelopment analysis (DEA), ordinary least squares (OLS) and quantile regressions.

Findings

The OLS regression results show a negative linkage between ESG and banks’ efficiency. Further, the quantile regression analysis indicates that the ESG effect on banks' efficiency is negative across different quantiles. However, the DEA method shows that the DEA-generated scores for Banks’ efficiency are higher for ESG-adjusted scores in comparison to efficiency scores without incorporating ESG. Further, the comparison of the DEA-generated efficiency scores, over the sample period, of adjusted ESG banks still suffers from decreasing in their efficiency over the years. Concerning existing theory, the results are consistent with the stakeholders and the resource-based theories postulating that banks' ESG practices are ethical commitments and enable firms to gain competitive advantage and increase their reputation among stakeholders.

Practical implications

The findings of this study offer important implications for regulators and bankers. Policymakers and bank regulators should make collective efforts to encourage financial institutions to adopt green finance initiatives to create an efficient financial system capable of counteracting risks from the external environment and stimulating economic growth. Banks’ managers should be aware that ESG initiatives serve society and the environment and offer a positive influence on banks’ efficiency.

Originality/value

To the best of the authors’ knowledge, this is the first study to explore the influence of ESG activities on banks' efficiency using DEA for banks in Saudi Arabia.