Does cost-inefficiency in Islamic banking matter for earnings uncertainty?

被引:9
|
作者
Boubaker, Sabri [1 ,2 ,3 ]
Uddin, Md Hamid [4 ]
Kabir, Sarkar Humayun [5 ]
Mollah, Sabur [6 ,7 ]
机构
[1] EM Normandie Business Sch, Metis Lab, Paris, France
[2] Vietnam Natl Univ, Int Sch, Hanoi, Vietnam
[3] Swansea Univ, Swansea, Wales
[4] Univ Southampton Malaysia, Business Sch, Iskandar Puteri, Malaysia
[5] Coventry Univ, Sch Econ Finance & Accounting, Coventry, England
[6] Univ Sheffield, Management Sch, Sheffield, England
[7] Univ Sharjah, Sharjah, U Arab Emirates
关键词
Earnings uncertainty; Islamic banking; Islamic financial contracts; Financial intermediation; Cost efficiency; Loan performance; Corporate governance; Earnings quality and management; Islamic finance and accounting; RISK-TAKING; NONINTEREST INCOME; CONVENTIONAL BANKS; PERFORMANCE; EFFICIENCY; IMPACT; PROFITABILITY; STABILITY; RELIGIOSITY; GOVERNANCE;
D O I
10.1108/RAF-07-2022-0193
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
PurposeThis paper aims to investigate a fundamental research question of whether the Islamic banking business model makes corporate earnings more uncertain. This question arises because prior research shows that Islamic banks do well in loan performance but incur more operational costs than conventional banks, indicating the systemic limitation of Islamic banks in business risk management. Design/methodology/approachThe study used a sample of banks to conduct the panel regression analysis with 15 years of data for 532 banks (129 Islamic and 403 conventional) from 23 Muslim countries across the world. The authors estimate earnings uncertainty in two ways: the spread and standard deviation of the country-adjusted return over the sample period and applied the difference-in-difference approach interacting cost to income ratio with the Islamic bank dummy, checking if Islamic bank's high operational costs contribute to more earning uncertainty. FindingsIslamic banks' returns on assets are significantly more uncertain than conventional banks due to higher operational costs. Consistent with earlier evidence, the study also finds that Islamic banks generally have fewer nonperforming loans than conventional banks. The authors conclude that Islamic banks trade-off between reducing credit risk and escalating business risk. Originality/valueThis study documents that the Islamic banking model helps build a safer asset portfolio but gives rise to the uncertainty of corporate earnings. Therefore, the choice between Islamic and conventional banking models involves a trade-off between credit and business risks. It is a new finding that we add to the literature body on Islamic finance.
引用
收藏
页码:1 / 36
页数:36
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