Ardianto Ardianto, Suham Cahyono, Abu Hanifa Noman and Noor Adwa Sulaiman
This study aims to investigate the extent to which the characteristics of Sharia supervisory boards (SSB) in banking institutions impact the disclosure of information pertaining…
Abstract
Purpose
This study aims to investigate the extent to which the characteristics of Sharia supervisory boards (SSB) in banking institutions impact the disclosure of information pertaining to green banking practices.
Design/methodology/approach
A comprehensive dynamic panel data analysis approach was applied to a data set comprising Islamic banks from 15 countries in the Middle East and North Africa (MENA) region, covering the period from 2012 to 2022. In addition, a series of robustness and endogeneity analyses were conducted to ensure the consistency of the main findings.
Findings
This study shows that the characteristics of the SSB significantly impact the green banking disclosure practices of Islamic banks. Specifically, the proportion of board members who hold multiple SSB positions and the presence of foreign board members exhibit a negative and significant effect on green banking disclosure. Conversely, the size of the SSB is positively and significantly associated with green banking disclosure. Thus, the extent of green banking disclosure in Islamic banks is likely to increase with the size of the SSB. However, an increase in board members’ external commitments and a higher proportion of foreign board members are associated with a decline in green banking disclosure. Further analysis supports these findings, confirming their consistency across different contexts.
Research limitations/implications
The findings of this study highlight the critical role that the composition and characteristics of the SSB play in shaping the green banking practices of Islamic banks in MENA countries. These insights provide valuable guidance for policymakers and Islamic financial institutions aiming to strengthen sustainability practices while adhering to Shariah principles. As green banking becomes increasingly crucial in the global financial landscape, optimizing the SSB’s composition could be a key driver in advancing the environmental goals of Islamic banking in the MENA region.
Practical implications
Islamic banks in the MENA region should focus on optimizing their SSB composition to enhance green banking disclosure. Increasing the size of the SSB can positively influence disclosure practices. However, banks should manage board members’ external engagements to ensure they have sufficient focus on green initiatives. Strategic recruitment of foreign members with a commitment to sustainability, coupled with targeted training programs, can further improve disclosure.
Originality/value
Specific SSB characteristics such as size and foreign board members influence disclosure of green banking, which previous studies did not conduct research on.
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Abu Hanifa Md. Noman, Che Ruhana Isa, Md Aslam Mia and Chan Sok-Gee
This study aims to examine the impact of activity restrictions in shaping the risk-taking behaviour of banks through the channel of competition in different economic conditions.
Abstract
Purpose
This study aims to examine the impact of activity restrictions in shaping the risk-taking behaviour of banks through the channel of competition in different economic conditions.
Design/methodology/approach
The authors use a dynamic panel regression method, particularly a two-step system generalised method of moments to address the risk-taking persistence of banks and endogeneity of activity restrictions and competition with banks’ risk-taking using financial freedom and property rights as instrumental variables. Activity restrictions are computed by constructing an index based on the survey results of Barth et al. (2001, 2006, 2008 and 2013a). Competition is measured by the Panzar–Rosse H-statistic and risk-taking behaviour are measured by non-performing loan ratio and lnZ-score. In the investigation process, the authors control bank characteristics – size, efficiency, ownership and loan composition and macroeconomic factors – gross domestic product growth and inflation, and use 2,527 bank-year observations from 180 commercial banks of Association of the Southeast Asian Nations-five countries over the 1990–2014 period.
Findings
This study finds that activity restrictions exacerbate the risk-taking behaviour of the banks leading to changes in the channel of competition because of the “risk-shifting effect” of competition. The finding is robust by considering the financial crisis and alternative specifications.
Research limitations/implications
This study contributes to bank literature and policy formulation regarding the effect of activity restrictions on the risk-taking behaviour of banks, which is an issue of concern amongst bank regulators, policymakers and academics, especially in the aftermath of the 2008–2009 global financial crisis.
Practical implications
Understanding how the competition plays a role in the relationship between activity restrictions and the risk-taking of banks in different economic situations.
Originality/value
This study provides new insight into the bank literature by investigating the moderating role of competition on activity restrictions and the risk-taking behaviour of banks in a different economic environment.
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Khalil Yahya Mohammed Abdo, Abu Hanifa Md. Noman and Mohamed Hisham Hanifa
This study aims to address how Islamic banks (IBs) and conventional banks (CBs) manage their liquidity and their speed of adjusting liquidity holdings both in the short- and long…
Abstract
Purpose
This study aims to address how Islamic banks (IBs) and conventional banks (CBs) manage their liquidity and their speed of adjusting liquidity holdings both in the short- and long term.
Design/methodology/approach
This study uses the partial adjustment model (PAM) on a sample of 445 banks from 17 Organisation of Islamic Cooperation countries over the period 2010–2018.
Findings
Results reveal that despite IBs’ placement of higher short-term liquidity buffer, they experience lower net stable fund ratio (NSFR) in the long term, relative to CBs. This study’s results also reveal that IBs enjoy higher and lower speed of adjustment (SOA) for NSFR in the long- and short term, respectively. Furthermore, the results suggest that bank-specific and macroeconomic factors weaken the liquidity SOA.
Practical implications
This study sheds light on the importance of the adjusting speed of bank liquidity in a bid to provide regulators with insights for enhancing liquidity holdings and emphasising the regulation of banks’ reaction pace to attain the target buffers.
Originality/value
This study estimates the liquidity adjustment speed of IBs and CBs by providing a comprehensive discussion and empirical evidence across countries. To the best of the authors’ knowledge, this study is the first to use PAM for the assessment of liquidity holdings in IBs and the first to examine SOA of short-term liquidity holdings in the banking sector.
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This study aims to evaluate the interaction between bank capital and explicit deposit insurance scheme (DIS) on the financial stability of Islamic and conventional banks.
Abstract
Purpose
This study aims to evaluate the interaction between bank capital and explicit deposit insurance scheme (DIS) on the financial stability of Islamic and conventional banks.
Design/methodology/approach
The author's sample covers 52 Islamic and 108 conventional banks operating in 12 countries over the period 2000–2021 using the random-effects generalized least squares (RE-GLS) regression technique.
Findings
The author's results reveal that bank capital negatively mediates the relationship between explicit DIS and the financial stability of both Islamic and conventional banks. Additionally, explicit DIS has a positive impact on the financial stability of conventional banks. However, the results are mixed for Islamic banks, as the effect of explicit DIS is positive for the Middle East and North Africa (MENA) region but negative for the South and Southeast Asia (SSA) region. Finally, the interaction between explicit DIS and the COVID-19 pandemic has a negative effect on conventional banks operating in the MENA region, while it has a positive effect on Islamic banks operating in the SSA region.
Research limitations/implications
The findings of this paper have important implications for regulators in evaluating DIS policies and in anticipating any potential adverse consequences that might arise for both Islamic and conventional banks in normal and crisis times. Policymakers should strive to preserve the benefits of DIS while mitigating the destabilizing effects of its interaction with capital ratios.
Originality/value
This study introduces a novel aspect by examining the mediating role of capital in the relationship between explicit DIS and the financial stability of Islamic and conventional banks.
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Sets out to develop an integrated model that considers simultaneously inventory production decisions, PM schedule, and warranty policy for a deteriorating system that experiences…
Abstract
Purpose
Sets out to develop an integrated model that considers simultaneously inventory production decisions, PM schedule, and warranty policy for a deteriorating system that experiences shifts to an out of control state. The time to shift follows a general probability distribution with increasing hazard rate, so that time‐based PM is effective in improving the system reliability.
Design/methodology/approach
A profit function is used to model the production system. Optimization techniques are used to generate optimal solutions for the problem. Although global optimality cannot be guaranteed, empirical results show that global optimal solutions are obtained.
Findings
The integrated model provides decisions on inventory levels, production run length, and PM schedule simultaneously. It is illustrated through numerical examples that investment in PM can lead to savings in warranty claims for repairable products. As a result, the overall profit per unit, in certain cases, is higher with PM than without PM.
Research limitations/implications
The production system is taken, numerical examples are presented and a sensitivity analysis is conducted to gain more insight into the developed model. In particular, the numerical analysis shows that a better PM program reduces warranty claims.
Practical implications
In addition to the joint optimization of production/inventory decisions and PM schedule, such models can be very useful in making resource allocation decisions between warranty and PM programs. It is clear from the numerical analysis that a better PM program reduces warranty claims.
Originality/value
The paper provides a joint optimization of production inventory decisions and the PM schedule for a system subject to a time to shift that follows a general probability distribution. Previous research considered only an exponential distribution and did not consider PM.
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Tigist Abebe Desalegn, Hongquan Zhu and Dinkneh Gebre Borojo
This study aims to examine the impact of economic policy uncertainty and bank competition on the financial stability of the Chinese banking industry. This study answers two…
Abstract
Purpose
This study aims to examine the impact of economic policy uncertainty and bank competition on the financial stability of the Chinese banking industry. This study answers two fundamental questions. First, does economic policy uncertainty (EPU) affects the financial stability of banks in China? Second, does competition affect the financial stability of the Chinese banking sector?
Design/methodology/approach
The sample includes all commercial banks to provide a full picture of the Chinese banking sector. This study covers the time between 2011 and 2019. The sample period captures different EPU spikes and key policy changes. This study used different econometric methodologies such as the generalized method of moments and the fixed effect and ordinary least square estimation models. Furthermore, this study used the Instrumental Variable model to solve endogeneity, autocorrelation and unobserved heterogeneity concerns. Besides, alternative EPU and financial stability measures were used. Moreover, this study reestimates the model after dropping the big five state-owned banks.
Findings
This study found that both EPU and competition reduce financial stability. This implies that EPU has a negative impact on financial stability. This shows that uncertainty distorts resource allocation efficiency and creates confusion, leading to financial instability in the banking sector. Besides, this study found that competition negatively affects financial stability. This result implies that high competition pushes banks toward riskier activities that ultimately lead to increased financial instability.
Originality/value
This study is the first of its kind that examines the impact of EPU and competition on the financial stability of the Chinese banking sector. This study conducted several robustness tests such as the instrumental variable model, alternative measurement and sample construction methods. This study brings policy implications and lessons for the banking sector.
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Heba Masoud and Mohamed Albaity
This study examines the effect of general trust (GT) and confidence in banks (CIB) on bank risk-taking. Besides, it explores the moderating role of CIB on the relationship between…
Abstract
Purpose
This study examines the effect of general trust (GT) and confidence in banks (CIB) on bank risk-taking. Besides, it explores the moderating role of CIB on the relationship between GT and bank risk-taking.
Design/methodology/approach
Secondary data was obtained from the World Value Survey, World Bank and BankFocus from 2011 to 2018. Two-step system GMM estimator was used to examine the links between the GT and CIB with bank risk-taking in MENA region.
Findings
Results indicated that both GT and CIB negatively influenced bank risk-taking. Moreover, CIB weakened the negative relationship between GT and bank risk-taking. However, the results were different for MENA region as compared to the full sample.
Originality/value
The studies on the link between trust and bank risk-taking are either carried out on an international sample or using a developed economies sample. However, the authors believe that developing economies might exhibit different relationships due to cultural and structural differences present in developed countries. Besides, the authors believe that testing the moderating effect of CIB could shed more light on the differences between developing and developed countries.
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Prashant M. Ambad and Makarand S. Kulkarni
The purpose of this paper is to develop an attractiveness index-based warranty cost model considering decision variables as design alternatives, warranty duration and support…
Abstract
Purpose
The purpose of this paper is to develop an attractiveness index-based warranty cost model considering decision variables as design alternatives, warranty duration and support level.
Design/methodology/approach
A warranty optimization approach is illustrated using a real life example of an automobile engine with Mean Time Between Failures and Warranty Attractiveness Index as constraints.
Findings
It will help to improve the customer satisfaction by giving a more attractive warranty compared to that being offered by the competitors.
Practical implications
Approaches that consider the effect of decision variables on attractiveness of a warranty policy in a quantitative manner have received relatively less attention. The paper attempts to capture the attractiveness of warranty from the manufacturer as well as customer point of view.
Originality/value
The proposed approach will help manufacturers to take appropriate decisions related to warranty parameters and component selection at the design stage.
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Linda C. Ueltschy, Robert F. Krampf and Peter Yannopoulos
Perceived consumer risk is explored in relation to online (Internet) purchasing using a cross‐national sample (N=562) from the United States, Canada and U.K. Objectives of the…
Abstract
Perceived consumer risk is explored in relation to online (Internet) purchasing using a cross‐national sample (N=562) from the United States, Canada and U.K. Objectives of the study are to determine if experience in online purchasing reduces perceived risk, if perceived risk varies across product/service categories and if certain types of risk are more important in purchasing certain products/services. Lastly, does national culture affect perceptions of risk? Results are discussed and suggestions are offered to managers on how to reduce perceived risk, thus increasing online purchasing in the three countries examined.
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Sascha Kraus, Dominik K. Kanbach, Peter M. Krysta, Maurice M. Steinhoff and Nino Tomini
In a move characterized by ambiguity, Facebook changed its name to Meta in October 2021, announcing a new era of social interaction, enabled by the metaverse technology that…
Abstract
Purpose
In a move characterized by ambiguity, Facebook changed its name to Meta in October 2021, announcing a new era of social interaction, enabled by the metaverse technology that appears poised to become the future center of gravity for online social interactions. At first glance, the communicated change signals a radically new business model (BM) based on an unprecedented configuration of the three following components: value creation, value proposition and value capture. The purpose of this paper is to analyze Facebook’s announced changes in its BM to clarify whether the change is as radical as communicated or rather represents an incremental transformation of the current BM.
Design/methodology/approach
This investigation adopted an in-depth case study research method. The process included using a structured approach to collect 153 data points, including academic studies and publicly available information, followed by qualitative content analysis.
Findings
The results of our analysis of Facebook’s entrepreneurial journey indicate that the communicated strategic refocusing does not correspond to a radical BM innovation pattern. Even though Facebook’s BM might evolve into the innovation phase, as the current changes appear very futuristic, the authors estimate that the core elements of the BM will change incrementally. The investigation indicates that the underlying logic of the straightforward communicative efforts primarily serves two purposes: to improve the external perception of the company and to disseminate an internal change signal within the organization.
Originality/value
This paper is the first study that takes an entrepreneurship and BM perspective in analyzing Facebook’s approach in rebranding to Meta and refocusing its strategy on building the metaverse. The academic and practical relevance, as well as the potential future impact on business and society, makes the investigation of this case an intriguing prospect. Additionally, the study illuminates the difference between the communicated vision and the real impact on the business, suggesting critical questions about future large-scale rebranding efforts and their effects.