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Article
Publication date: 18 April 2017

Cupian and Muhamad Abduh

The purpose of this paper is to examine the competitive conditions and market power of Islamic banks in Indonesia for the period of 2006-2013.

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Abstract

Purpose

The purpose of this paper is to examine the competitive conditions and market power of Islamic banks in Indonesia for the period of 2006-2013.

Design/methodology/approach

Using samples of 27 Islamic banks, the study uses a variety of structural and non-structural measures related to the traditional approach and the new empirical approach of the industrial organization. The methodology is based on a set of measures of the competition and market power. The first measures, concentration ratios and Herfindahl–Hirschman index, are to determine the competitiveness level, while the second measures of Panzar–Rosse H-statistic and Lerner index are to examine the market power of Islamic banks in Indonesia.

Findings

The finding of this study has confirmed the situation of Islamic banking industry in Indonesia which is operated in a higher degree of market power which leads to a less competitive market. Islamic banks earn their revenues under monopolistic competition over the tested period. This study has also found a negative but insignificant relationship between concentration and competition which shows that in the past few years, the market power for leading firms in Indonesia Islamic banking industry has reduced.

Practical implications

The paper is a very useful source of information that may provide relevant guidelines in guiding the future development of competition of Islamic Banking industry. In addition, the paper provides relevant guidelines for improving competitiveness of Islamic banks.

Originality/value

This study combines two approaches for bank competition measurement and bank market powers measurement which can provide more robust findings. To the best of the authors’ knowledge, the study on Islamic banking competitiveness level and market power is very limited, especially in the case of Indonesia. Therefore, this study could contribute significantly toward the literature of the related field.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 10 no. 1
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 20 December 2022

Ahmad Abbas, Neks Triani, Wa Ode Rayyani and Muchriana Muchran

This paper aims to describe earnings growth and marketability generated by Islamic banks in Indonesia and to find the effects of a moderated mediation model on the nexus between…

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Abstract

Purpose

This paper aims to describe earnings growth and marketability generated by Islamic banks in Indonesia and to find the effects of a moderated mediation model on the nexus between Islamic financial inclusion and literacy, marketability and earnings growth.

Design/methodology/approach

The sample of this research was Islamic commercial banks in Indonesia listed on the Financial Services Authority and Bank Indonesia using time-series data of financial statements from 2014 to 2021. This research was designed using the model of moderated mediation.

Findings

Earnings growth experienced by Islamic banks in Indonesia has a positive average value followed by a positive marketability. Based on the significance test, the level of earnings growth is positively affected by marketability. The result indicates that the higher the marketability, the higher the earnings growth of Islamic banks. In a moderated mediation model, the result has found a positive effect on the nexus between inclusion supported by the role of literacy, marketability and earnings growth. It indicates that Islamic financial inclusion moderated purely by the role of literacy enhances Islamic banking marketability so that earnings growth continuously increases.

Practical implications

The increase of literacy is an empirically proven way to strengthen market power, so the finding obtained in this research can be feedback from the scheme made by the Indonesian government in supporting the Islamic business and for the corporate area being eager to grow greater and faster in competing and equalizing its power in the banking industry. In addition, this research implies that other countries continuously promote and increase the role of Islamic financial literacy and inclusion to enhance market power and increase the growth in Islamic banking.

Originality/value

This research extends the limited scholarly work on the role of Islamic financial literacy and inclusion using a different design from prior studies. The framework of market power theory has been elaborated to find the effect of Islamic financial inclusion supported by the role of literacy on earnings growth through marketability. This research is a trailblazer in testing the nexus model between variables allowing the path analysis using the moderated mediation model.

Details

Journal of Islamic Accounting and Business Research, vol. 14 no. 7
Type: Research Article
ISSN: 1759-0817

Keywords

Available. Open Access. Open Access
Article
Publication date: 11 December 2019

Ahmad Abbas and Ainun Arizah

The purpose of this paper is to analyze marketability constructed from market share and concentration and to test its effect on the profitability and the mediation effects of…

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Abstract

Purpose

The purpose of this paper is to analyze marketability constructed from market share and concentration and to test its effect on the profitability and the mediation effects of profit‒loss sharing under stewardship theory.

Design/methodology/approach

This research employs data of financial statements published by ten sharia commercial banks listed in the Indonesia Financial Services Authority during the period 2011–2016. The data are analyzed into path analysis model using multiple mediators.

Findings

The result reveals that sharia banks’ marketability in Indonesia tends to be low. Based on the test of significance through Partial Least Square, it is found that marketability has a positive effect on the level of profitability, indicating that market share and concentration of sharia banks positively lead the change on the level of Return on Asset and Return on Equity. This paper further identifies the mediation effects emerged through mudharabah and musharakah. The results point out that mudharabah has a partial effect and musharakah has a competitive effect on the relationship between market share and profitability.

Practical implications

This paper can be a decision-maker for Central Bank and Financial Services Authority for encouraging sharia banks to enhance the power market through the mode of finances with profit‒loss sharing.

Originality/value

The growth of sharia banks is currently becoming highlight of the literature of sharia banks. This paper provides insights into stewardship theory that sharia banking management provides the concept of the alignment of interest.

Details

Asian Journal of Accounting Research, vol. 4 no. 2
Type: Research Article
ISSN: 2443-4175

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Article
Publication date: 19 November 2024

Suman Das and Ambika Prasad Pati

Over the past three decades, financial deregulation and various reforms have significantly transformed the competitive environment for banks in Indonesia. These changes have…

19

Abstract

Purpose

Over the past three decades, financial deregulation and various reforms have significantly transformed the competitive environment for banks in Indonesia. These changes have introduced new challenges for banks to retain their market power and ensure their survival. In light of this, the article aims to assess the current levels of market power held by Indonesian banks and explore the factors that influence it.

Design/methodology/approach

The paper measured the degree of market power and identified its impacting factors for 22 listed commercial banks using the Adjusted Lerner Index (ALI) and appropriate regression technique over a period of 2011–2023.

Findings

The empirical findings reveal that banks in Indonesia enjoy high market power, and factors such as capitalization, diversification, operational inefficiency, asset quality and GDP growth rate significantly impact banks’ market power. Additionally, the findings contradict the structure-conduct-performance paradigm, which advocates that a concentrated banking system impairs competition.

Research limitations/implications

The study suggests that regulatory authorities should closely monitor the market power levels and promote strategies to enhance competition within the banking sector. Additionally, banks should prioritize implementing measures to reduce operational costs and improve the quality of assets.

Originality/value

This research represents one of the early attempts to gauge the market power of publicly listed conventional commercial banks in Indonesia by employing the Adjusted Lerner Index. Additionally, it introduces “technology adoption” as a novel variable to the analysis alongside other established variables.

Details

Journal of Economic and Administrative Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2054-6238

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Article
Publication date: 13 September 2024

Muhammad Syauqi Bin-Armia, Muhammad Siddiq Armia and Muhammad Fazlurrahman Syarif

This study aims to evaluate the impact of Law No. 11 of 2018 on Islamic Financial Institutions in Aceh, Indonesia. It also aims to understand the balance between the economic…

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Abstract

Purpose

This study aims to evaluate the impact of Law No. 11 of 2018 on Islamic Financial Institutions in Aceh, Indonesia. It also aims to understand the balance between the economic rights of individuals under Shariah law and the broader concept of God’s rights, as interpreted by this legislation. In addition, the research argues that the implementation of Law No. 11 of 2018 is untimely, with a focus on examining its influence on the cumulative abnormal return (CAR) of Shariah banks and its slight contribution to the direct economic impact.

Design/methodology/approach

This study adopts a mixed-methods approach that integrates qualitative and quantitative analyses. The qualitative aspect uses a black-letter law approach for legislative scrutiny, whereas the quantitative aspect assesses economic indicators and firm performance using an event study analysis. The study also includes a two-tailed assessment to test hypotheses related to the law’s direct impact on institutional performance.

Findings

The study reveals that Law No. 11 of 2018 had minimal impact on national-scale corporate performance and a notable increase in poverty indices in Aceh, indicating a potential misalignment between the law’s intention and its economic consequences. The results also show the law’s ineffectiveness in significantly influencing the CAR of Islamic banks, highlighting a clash of norms and a lack of substantial economic substance in the implementation of Shariah compliance.

Research limitations/implications

This research is geographically and legally focused on Aceh, Indonesia, with a short-term analysis that may not fully capture the long-term impacts. It primarily considers the stock price performance of specific institutions for quantitative analysis and identifies potential clashes and disharmony-in-law implementation from a qualitative perspective.

Practical implications

The findings suggest the need for legal frameworks that better comply Shariah principles with economic realities. Regional governments should consider modifying policies to balance religious values and economic objectives.

Social implications

This research highlights the importance of balancing religious obligations with economic rights, indicating that strict interpretations of religious law can lead to adverse socioeconomic effects.

Originality/value

This study is unique in its comprehensive analysis of the convergence between religious law and economic rights, offering insights into the challenges faced in implementing Shariah-based economic policies in diverse economies, such as Indonesia.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 17 no. 6
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 17 May 2021

Annisa Fithria, Mahfud Sholihin, Usman Arief and Arif Anindita

This study aims to analyse the relationship between management ownership and the performance of Islamic microfinance institutions (MFIs) using panel data from Indonesian Islamic…

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Abstract

Purpose

This study aims to analyse the relationship between management ownership and the performance of Islamic microfinance institutions (MFIs) using panel data from Indonesian Islamic rural banks (Bank Pembiayaan Rakyat Syariah [BPRS]).

Design/methodology/approach

This study uses unbalanced quarterly panel data from BPRS during the period from 2011 to 2016. Performance, as the dependent variable in this study, is analysed based on three sets of measures, namely, profitability, efficiency and the financing risk. Management ownership, as the independent variable in this study, is represented by ownership by the board of directors (BOD), the board of commissioners (BOC) and the sharia supervisory boards (SSB).

Findings

The results show that ownership by the BOD and BOC does not have a significant relationship with profitability and efficiency. However, the BOD ownership has a negative relationship with the financing risk and vice versa for the BOC ownership. Additionally, the study reveals that ownership by the SSB plays a positive and significant role in increasing the profitability and efficiency but does not have a significant impact on the financing risk.

Originality/value

This is one of the first studies to provide empirical results regarding the relationship between management (BOD, BOC and SSB) ownership and the performance of BPRS. The finding reveals that ownership by the SSB is very important to increase the profitability and efficiency of the BPRS.

Contribution to Impact

This study fills the gap in the literature about Islamic MFIs in Indonesia, especially the BPRS. This research also provides an insight into corporate governance practices and Islamic MFIs’ performance using BPRS data. The findings provide useful information for policy makers and regulators.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 14 no. 5
Type: Research Article
ISSN: 1753-8394

Keywords

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Article
Publication date: 19 July 2024

Irna Puji Lestari, Galuh Tri Pambekti and Arna Asna Annisa

This paper aims to provide a comprehensive and systematic overview of relevant factors that affect green purchase behavior of Muslims.

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Abstract

Purpose

This paper aims to provide a comprehensive and systematic overview of relevant factors that affect green purchase behavior of Muslims.

Design/methodology/approach

A systematic literature review was conducted to fill in the lack of conceptual clarity on the relationship between green product purchasing and Muslim consumers.

Findings

The review revealed that studies on Muslim green purchase behavior were mostly carried out in Asian countries, with the theory of planned behavior as a highly featured approach. The in-depth analysis captured more than 50 factors of green purchasing behavior of Muslims with religiosity, which was found to be the most mentioned determinant in the literature.

Practical implications

The finding provides three insights for future research and marketing practices: Muslim consumer behavior model development, green-halal product innovation and green Islamic marketing strategy formulation.

Originality/value

To the best of the authors’ knowledge, no literature review has comprehensively identified the determinants of Muslim green purchasing behavior. Therefore, enriched with bibliographical mapping, this study will systematically conduct a literature review to explain the driving factors of Muslims in purchasing green products and outline potential directions for marketers and researchers to enhance green ecosystems.

Details

Journal of Islamic Marketing, vol. 16 no. 1
Type: Research Article
ISSN: 1759-0833

Keywords

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Article
Publication date: 18 March 2024

Mohammad Nabeel Almrafee

This study aims to examine the effect of several factors on Muslims' intentions to invest in the Hajj fund Sukuk, Jordan. The study's hypothesis and model were derived from…

247

Abstract

Purpose

This study aims to examine the effect of several factors on Muslims' intentions to invest in the Hajj fund Sukuk, Jordan. The study's hypothesis and model were derived from previous studies.

Design/methodology/approach

The present study was undertaken based on a self-administered questionnaire of 356 Jordanians who are Muslims and non-investors in Hajj Fund Sukuk. The sample was selected using a purposive sampling method. The data were analyzed using Smart-PLS version 4.

Findings

The results indicated that social influence, knowledge, religion and return on investment significantly affect the purchase intention of Jordanian Muslims to invest in Hajj Fund Sukuk.

Research limitations/implications

There are some limitations to this study. First, the study was done in Jordan; thus, additional research might be conducted in other parts of the Islamic world to learn more about the perception of investing in Islamic Sukuk, particularly Hajj Sukuk. Second, while the present study used a quantitative research technique to achieve its purpose, it would be advantageous if the researchers used more qualitative techniques, such as interviews or focus groups, in the future to explore additional factors that may impact Muslims' intent to invest in Hajj Fund Sukuk.

Practical implications

The findings of the current study could help practitioners in the Islamic sukuk industry by identifying the key factors that encourage Muslims to invest in Hajj sukuk. They may use the results of this study in the formulation of marketing policies and the development of marketing strategies to persuade more investors to invest their money in these sukuk.

Originality/value

To the best of the author’s knowledge, this is the first study carried out to better understand the main factors that may influence Muslims to invest in Hajj Sukuk in the Jordanian context. Hence, this study contributes to increasing the body of knowledge in the area of Islamic marketing in general and in the field of Islamic sukuk investment specifically.

Details

Journal of Islamic Marketing, vol. 15 no. 5
Type: Research Article
ISSN: 1759-0833

Keywords

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Article
Publication date: 9 April 2024

Rotana S. Alkadi

Green sukuk (GS) is an emerging financial tool that has gained momentum in recent years owing to increased attention being given to Islamic finance, socially responsible investing…

550

Abstract

Purpose

Green sukuk (GS) is an emerging financial tool that has gained momentum in recent years owing to increased attention being given to Islamic finance, socially responsible investing (SRI) and sustainability agendas. Yet, GS studies are fragmented, dispersed and lack comprehensive reviews. As a response to this gap in academia, this paper aims to synthesize the knowledge on GS into thematic clusters, providing a more comprehensive understanding of the subject and offering guidelines for future research.

Design/methodology/approach

This study implemented a systematic literature review approach to analyse studies on GS that were published prior to and including June 2023. The PRISMA 2020 protocol was used in the sample selection process. A total of 62 peer-reviewed journal articles from six databases were identified and categorized into various themes.

Findings

The results suggest that previous research has predominantly focused on the areas of GS advantages, drivers, market development and potential sectors, along with challenges and recommendations to improve the market. However, it was found that some other aspects, including GS pricing, performance and purchasing intention, require further research attention. The analysis also indicated that the use of theories in the GS context was limited, with only five theories employed in just four out of the 62 articles examined. Moreover, this paper’s findings revealed that the studies employing quantitative and empirical analysis methods were limited to four articles. Geographically, most of the studies were conducted in Indonesia and Malaysia, while other countries with high-potential markets (e.g. GCC) had limited GS practices and studies.

Practical implications

The results of this study have several practical implications. For investors, a review of GS will provide greater insight into the understanding of the GS market, helping them make better investment decisions. For policymakers, this paper empowers them with the knowledge to make informed decisions regarding GS markets by highlighting key recommendations identified in the literature. Finally, the proposed guidelines can be used in future research.

Originality/value

While Green Bonds have received significant attention, there is a dearth of research on GS and those that exist are fragmented. A systematic literature review is necessary to identify knowledge gaps for future research.

Details

Review of Accounting and Finance, vol. 23 no. 4
Type: Research Article
ISSN: 1475-7702

Keywords

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