Journal of Islamic Finance (JIF)
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Identifying Service Quality Priority of Islamic Banks in Malaysia
Full text linkService quality remains a focal issue in banking industry as banking institutions are providing heterogeneous products, including Islamic banks. Particularly when the competition becomes more intense, providing superior service quality provided competitive advantage to the organizations in order to remain relevant in the industry. Accordingly, the purpose of this paper is to identify not only the importance of service quality on customer satisfaction but also to examine the performance of each service quality dimensions in satisfying the customers. Using survey method, data of 413 respondents have been analysed using PLS-SEM. The study used PARKSEV model which is enhanced with “compliance†dimension to measure service quality as it is developed in a non-Western cultural context which better suits Malaysia environment. The result shows that the service quality dimensions that contribute significantly to customersatisfaction are “reliabilityâ€, “sincerityâ€, “complianceâ€, “convenience†and “responsivenessâ€. In terms of performance, “compliance†and “sincerity†are well executed as they are classified in the first quadrant. However, another two dimensions which are “convenience†and “responsiveness†fell in the fourth quadrant which should be taken corrective actions as both dimensions are important but do not performing well. “Reliability†is nearing the third quadrant indicating that though it is significant, but the dimension is relatively less critical as it has been appropriately delivered. Using the Importance-Performance Matrix Analysis (IPMA), the findings provide insights to Islamic bank managers on resource allocation priority and further investment in technology to enhance service quality performance
Determinants of Capital Structure among Shariah Compliant Industrial Product and Services Firms Listed on Ace Market, Bursa Malaysia
Full text linkThe importance of capital structure management has been the issue of intense attention. Firms need to manage their capital structure to ensure that their operations continue profitable and further growth shareholders fund. The aim of this paper is to provide the evidence on the determinant’s capital structure among Malaysia Shariah compliant trading firms in Ace Market of Bursa Malaysia.  Secondary data from year 2011 until 2018 was analyzed using eview software. Result of random effect shows that profitability, non-debt tax shield and liquidity are the determinants that have significantly influenced on debt ratio for trading firms in Malaysia Ace Market. The result could fill up the gap in this area and creates an important implication for investors, managers as well as policy makers in order for them to make strategic investments and financial decisions
Managing Crypto-pegged Exchange Rates Risks in Islamic Banks in the Era of Digitalization Economy and Tokenization
Full text linkThe FX markets of the world have become one of the largest of all financial markets. Trading turnover averaged as high as $4.7[1] trillion a day in recent years, 70 times the daily trading volume on the New York Stock Exchange. Online foreign exchange trading is increasing. Electronic foreign exchange trading volume tops 60 percent of overall global foreign exchange trading. Traditionally foreign exchange risk is considered as part of market risk despite being a profound one. Foreign exchange is a critical risk factor that has at times been profound enough to cause entire economies to face crises and move towards recession. In the world of globalization, digitalization and tokenization where banks are expanding their businesses internationally faster than ever the growing foreign exchange and newborn cryptocurrency risk should be set as an independent source in risk management process. The paper analyses the growing pattern of foreign exchange risk within five years period for six Islamic banks in GCC region: National commercial bank Saudi Arabia; Al Baraka Banking group, Bahrain, Al Rajhi Bank, Saudi Arabia, Dubai Islamic Bank, UAE, Qatar Islamic Bank, Qatar and Samba Financial Group, Saudi Arabia (traditional bank with Islamic banking business). The analysis reviles the need for more robust exchange risk management and establishing a new “crypto-gold standard†or crypto-pegged exchange rates for eliminating the volatility and future losses due to it. The results show that tokenization could be a good tool for managing the exchange rate risk.
[1] https://www.wsj.com/articles/SB1000142405311190399990457646821185328411
Determinants of Bank Choice in Afghanistan
Full text linkAfghanistan is a country with a 99% Muslim population. It was believed that subsequently after the emergence of Islamic banking in the country, the conventional banks would weaken and gradually disappear from the society. But today, the situation is not as expected, even in the presence of Islamic banking, a larger part of the market is still captured by conventional banks. For whys and wherefores, this study deals with a comprehensive descriptive discussion in determining the factors influencing the choice between Islamic and conventional banking. The study also aims to assess the level of awareness of people regarding Islamic banking products. Moreover, the study considers determining the future willingness of conventional banking customers to switch to Islamic banking. Besides, the study also includes a part to understand the reasons for the slow growth of Islamic banking in Afghanistan. The outcome of this study can help Islamic banks to assess their weaknesses and take new steps for improving their products. As a result, the researcher recommends that Islamic banks and windows operating in Afghanistan should focus on developing new marketing strategies, arrange certain seminars to create Islamic banking awareness among people. Furthermore, they should focus on introducing new Shariah-based products as per the market needs and should not only rely on their Islamic image. Moreover, Islamic banks should consider all those factors discussed in this study which influence customer’s choice in today’s highly competitive banking industry
Takaful, Zakat and Waqf Instruments in Ensuring Holistic Senior Citizens Program Development in Malaysia
Full text linkMalaysia will face the phenomenon of aging nation in 2040. In 2020 alone, the elderly in Malaysia is expected to reach 3.21 million people. The current of modernization greatly changes the structure of the Malaysian family whereby children are not able to take care of their old parents due to high demand of work and life. The work culture in Malaysia demands that employees to put priority on works and thus less focus on their family and elderly parents. Not only that the work opportunities that are mainly based in the cities and central areas require the young to travel and migrate far from their parent’s residence, leaving the elderly parents unattended. This phenomenon requires urgent attention and consideration from the government and relevant bodies to plan for the future of the elderly Malaysian. This paper aims to first, appraise the role of Takaful, Waqf and Zakat in helping and supporting the elderly or senior citizens in Malaysia. Second is to propose Takaful, Waqf and Zakat as instruments to provide financial assistance and protection to the elderly community.Third is to propose how these three instruments can be integrated for the utmost protection of policy holders and their beneficiaries when they reach the golden age
Customers' Perceptions on Islamic Banking: A Case Study in the Gambia
Full text linkThis study examines customers’ perceptions of Islamic banking in the Gambia using both descriptive statistics and logistic regression methods. A sample of 150 customers from the four major conventional banks and the only Islamic bank – Arab Gambia Islamic Bank (AGIB), took part in this study. Customers’ religious commitments, knowledge of Islam, awareness of Islamic banking products, among other variables were assessed. The descriptive statistics compares and points out the differences between the responses of customers of conventional banks and AGIB. The results indicated that the customers of AGIB are more religiously committed compared to the customers of the conventional banks. The findings also show that the customers of AGIB have more knowledge of Islam and Islamic banking compared to their counterparts from the conventional banks. However, customers’ awareness and usage of Islamic banking products are very poor among all the respondents. Almost all the customers agree that interest is prohibited in Islam, but they regard the AGIB not to be Shariah compliant. The findings show that religious commitment, knowledgeable about Islam and Islamic banking are the most important determinants of banking with the AGIB
Impact of Human Capital Skills on Corporate Performance: A Case of Islamic Banks in Pakistan
Full text linkThe education system in Islamic Banking and Finance (IBF) is trying to respond to the challenges of a fast-growing industry of IBF all over the world especially in Pakistan. This study examines the impact of human capital skills on the Islamic bank's performance in Pakistan. An empirical quantitative study was conducted using a survey-based research strategy to explore the areas for improvement in education for IBF. The population of this research covers Pakistan's 5 full-fledged Islamic banks and 9 traditional banks having more than 50 Islamic branches. The empirical findings revealed that a clear understanding of Islamic finance is crucial and there is a need to gain more exposure and experience in the banking sector and knowledge. Besides that, a proper education of Islamic banking provides significant impact on the performance of Islamic banks. The study concluded that general banking employability skills possessed by Islamic bank employees has an insignificant influence on the corporate performance of Islamic banks. The study is quite genuine concerning the topic, variables, and the approach used to conduct it
Malaysian Consumer Intention toward Takaful Scheme for Mental Health Disorders: A Preliminary Findings using Multiple Regression Analysis
Full text linkMental health disorders are predicted to become the next health concern after heart disease impacting the Malaysians by year 2020. It was reported that one in five teenagers felt depressed, two out of five felt anxious, 11.2% felt suicidal and 10.1% attempted suicide. These statistics are extremely alarming and there is an urge for the Islamic wealth protection operators to introduce a takaful scheme that covers mental health treatment in Malaysia. This paper investigates the factors influencing the Malaysians consumers’ intention towards the takaful scheme for mental health disorders. An applied expanded Theory of Reasoned Action (TRA) model were used in the research and the variables such as awareness, perception, attitude, subjective norm and intention towards the takaful scheme for mental health disorders were investigated. This study is meant as a pilot research carried out in Malaysia. The respondents participated in this study were 60 Malaysians takaful consumers who undertook an online survey in Klang Valley, Malaysia. This study reveals that the mean of attitude with the score of 4.27 is the highest score. The Pearson correlation is positive for both independent and dependent variables. Analysis of regression indicates a strong positive relationship between subjective norm and intention, thus suggesting that subjective norm is an important area that links the intention against the mental health disorder in takaful scheme. This research also proposed for future studies to focus on the factors that affect the willingness of consumers towards takaful mental health disorder schemes. It is hoped that the results of this study will serve as an informative reference for further development of takaful scheme for mental health disorder
Exploring the Challenges of the Historical Development of Islamic Banking System in Afghanistan Using Document Analysis
Full text linkThe banking system of Afghanistan has experienced various conditions since the establishment of the first bank in 1933 and could not develop enough due to the civil war. This study investigates the historical development of the banking sector especially Islamic banking in Afghanistan. In addition to civil wars, Afghanistan's banking system has faced many challenges in terms of modernization, the low number of depositors and borrowers, regulations, and so on. It is found through qualitative research approach using documentary analysis that there was significant progress in modernizing the banking sector in Afghanistan with the help of international donors since 2001. Afghanistan has a dual banking sector and there is a full-fledged Islamic bank, the Islamic Bank of Afghanistan (IBA), and some banks with Islamic banking windows. However, according to findings the number of banks decreased compared to 2018 from 14 banks to 12 banks in 2020. The implication of this study is to provide information for the policymakers and Islamic banking institutions inAfghanistan to learn from these challenges and to improve the Islamic banking system in the country. Moreover, this study will fulfill the literature gap regarding the Islamic banking system in Afghanistan
Islamic Bank Dispute Resolution and Socioeconomic Rights: Comparison between Indonesia and Malaysia
Full text linkThe purpose of this study is to identify dispute resolution mechanisms for Islamic banks in Indonesia and Malaysia and to analyze the role of courts in resolving Islamic banking disputes to protect the economic and social rights of communities. This study uses secondary data, such as data obtained from library research, Quran, Hadith, fatwa, Islamic banking law, regulations on solving Islamic banking disputes, articles and books. The study concludes that the principles of dispute resolution for Islamic banking in Indonesia and Malaysia are in principle almost the same, as they both use the Ṣulḥ and Taḥkim methods in resolving disputes other than through litigation. Although the process in Indonesia is more numerous and tiered, it can even be tested for the law to the constitutional court. The most powerful form of constitutional recognition is the recognition of socio-economic rights as rights, which can be enforced judicially in a fair manner, and civil and political rights are usually implemented in this way. The role of the court is to achieve the constitutionality of laws that support social and economic rights