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In the following section, the Islamic banking movement worldwide is discussed followed by a brief
comparison between the Islamic banking models in the gulf region (as one of the main parts of the
world applying Islamic Banking) and its counterpart outside of the gulf region. Basis of Islamic
Banking and Finance Chapter 1 Introduction to Islamic Banking and Finance Learning Objectives A.
They find strong co-movement of bitcoin in the same direction at a lower frequency with Islamic
equity and bond, suggesting lower (higher) diversification benefits for the long run (short-run)
investors. The result from statistic data process showed that there were differences in efficiency,
asset quality, and stability between Islamic Banking and Conventional Banking where conventional
banking more efficient, have better asset quality and more stability than sharia banking. GIFs
Highlight your latest work via email or social media with custom GIFs. However, people are still not
completely aware of how it is different from conventional finance system. Islamic Bank and
Albaraka Bank are considered the first official Islamic banks to enter the South African market after
each bank was awarded banking licenses in 1989. Thus, the blockchain will automatically ensure the
shariah compliance of business activities, assess business risk, and provide relevant information for
the investor to decide their participation in the business. Besides, in the yellow cluster, Canada,
Greece, Italy, Malta, and Morocco tend to have a common research topic. Next, we review the key
findings in the empirical literature on the differences between Islamic and conventional banking at
the micro and macro levels. The borrower and the lender work closely together and share the risk of
the venture, which is selected based on its projected returns. Field research to collect such data on
Islamic banks, identifying all aspects of engagement toward the community, could assist in this
endeavor. 12.4.6 Liquidity Creation Banks provide two overlapping functions in the economy: (1)
creating liquidity to provide the non-bank public with access to liquid funds, and (2) transforming
risk to provide safer investments. The questionnaire collected data from respondents related to their
socio-demographic profile, including data related to each construct covered in this study. Besides,
this study also mentioned that the existence of shariah screening criteria on Sukuk and the DJ
Islamic index improves the resistance of Islamic investment instruments towards uncertainty and the
economic meltdown period. You can download the paper by clicking the button above. Most
importantly, this study showed that the stricter Islamic principles applied by the P2P platform would
reduce the probability of failure faced by the P2P platform. In other words, the conventional
thinking of banking has an existence in Islamic Banking and only profit maximization concept is
being considered rather than the concept of profit maximization with social welfare. During
economic meltdown due to COVID-19 ( Nugroho, 2021 ), Islamic gold-backed cryptocurrency (GC-
gold) has shown better performance than conventional GC-gold, which is indicated by the resistance
of Islamic GC-gold to COVID-19's impact. Thus the study suggested the inclusion of additional
factors on the performance of SSB. The substantial rise in consumer demand for Sharia -compliant
contracts has led multinational banks such as Chase Bank, Citibank, ABN Amro, and HSBC to
establish Islamic finance branches while conducting separate conventional banking operations. This
dilemma will remain in developing countries if a global digital currency is not introduced. Download
Free PDF View PDF The Fundamentals Of Islamic Banking and Finance: A Prologue ABD HAKIM
ABD RAZAK The raison d'etre of this article is to supply basic insights on the origin and
characteristics of the Islamic Banking system, its distinguishing features, and related contentious
issues that have remained the subject of ongoing debates among Sharia' scholars and members of the
academia. They show that firms engaged in CSR activities are less likely to manipulate earnings, and
that being included in a Sharia index does not play an important role in determining earnings quality.
Additionally, the results show that customer satisfaction contributes to customer loyalty; thus,
emphasis should also be given to increasing customer satisfaction levels due to its effect on customer
loyalty. First, Islamic banks create more liquidity because they are generally better at absorbing risk,
they are more highly capitalized, and they are less exposed to bank runs than conventional banks.
Second, Gharar and Maysar, speculation and excessive risk-taking or betting, respectively, are
prohibited. This paper explores the basic principles and concepts in Islamic Banking and reviews the
potential of Islamic Banking in India. Section 6 provides managerial implications, and Section 7
presents the concluding observations. 2. Literature review 2.1 objectives of islamic banking. To
elaborate, Riba —an important feature of conventional banking—corresponds to the “fixing in
advance of a positive return on a loan as a reward for waiting to be repaid” (Zaher and Hassan,
2001, p. 156). The prohibition of Riba, which is an increase in money not connected to a tangible
real economic increase, is consistent with the principle of equity. Sharia banks as a solution of
conventional banking that caused the financial crisis because of the principle of justice and Falah is
an essential pillar of sharia banks.
The use of financial technology has increased the reach of Islamic financial institutions to the last
man standing in the queue with social finance such as zakat, waqf, and Islamic microfinance (H. The
SSB’s characteristics are also associated with Islamic banks’ credit ratings (Grassa, 2016 ). Banks
create liquidity “on the balance sheet” by transforming illiquid assets (e.g., small business loans) into
liquid liabilities (e.g., transaction deposits), and “off the balance sheet” by providing loan
commitments and other guarantees of liquid funds. This, in turn, has implications for economic
development (Petersen and Rajan, 1995; Jayaratne and Strahan, 1996; Cetorelli and Gambera, 2001 )
and financial development (Levine, 2005 ). 12.6 Conclusion and Directions for Future Research To
conclude, we first survey recent empirical literature on the micro and macro impact of Islamic
banking. Islamic Banking is growing with fast speed all over the world particularly in Pakistan while
the conventional banking is surprisingly declining in the countries which are the champion of
capitalism and founder of interest-based financial system. Moreover, intention, ease, sample, factor,
and determinant also dominated the latest topic. Bitar, Hassan, and Walker ( 2017 ), for example,
argue that conventional bank accounting indicators used in the literature are relatively one-
dimensional, and may lead to contradictory results. Debt financing can play a disciplinary role
through interest payment obligations, inducing managers to perform and improve productivity.
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Carousel Next What is Scribd. It covers the aspect of man-God relationships which is the devotional
laws ( c ibadat); man-man relationships which is the inter-personal laws (mu c amalat). Impact of
Financial Technology (FinTech) on Islamic Finance and Financial Stability. This study ascertained
that the rejection from banking institutions leads the customer to find other financing alternatives,
such as P2P lending that offers a more extended payment period, shariah-based loans, and profit loss
sharing schemes. Proper inferences are drawn and meaningful conclusions are made. Islamic banking
efficiency literature (2000-2020): a bibliometric This paper aims to present a citation-based
bibliometric review of Islamic banking efficiency literature from 2000 until August 2020 for
analyzing the content of the literature and mapping future research directions.,Using bibliometric
citation analysis, this study reviews and examines a total of 278 documents from Web of Science
(WoS) indexed s. When the loan is paid off, the asset's ownership is transferred to the borrower.
Purposive and convenience sampling techniques were used for sample selection. These studies
highlighted that PMBC provided shariah compliances standards to perform the function of money
while operating as a peer-to-peer payment system. This is because they cannot benefit from central
banks’ liquidity provisions during liquidity shortages because they are based on interest lending
(Alqahtani, Mayes, and Brown, 2017 ). Regulatory bodies like Sharia Auditors and Sharia governing
bodies shall also be discussed. Next, the Kuwait Finance House was established in 1977. Thus, the
blockchain will automatically ensure the shariah compliance of business activities, assess business
risk, and provide relevant information for the investor to decide their participation in the business.
We also review the scarce literature on the impact of Islamic banking on financial inclusion and
entrepreneurship, as well as on market competitiveness and power. 12.5.1 Islamic Banks, Financial
Development, and Economic Growth The main functions of financial intermediaries are to mobilize
savings and efficiently allocate funds. The final step is categorizing and summarizing literature
findings. Therefore, another future stream of research could focus on assessing the capabilities of
Islamic banks to engage in CSR activities. Islamic banks need to collaborate with Islamic
microfinance institutions to achieve financial inclusion. In conclusion, research related to FinTech
and the Islamic finance industry has spread globally and attracted researchers from various countries,
including non-Muslim majority countries. 3.2. Research main theme The most discussed topics in
Islamic FinTech research are presented using keyword co-occurrence analysis. Help Center Here
you'll find an answer to your question. On the shariah -compliancy of blockchain-based fintech.
Islamic banking accounts for the largest share of total assets (76 percent), followed by Islamic capital
markets (23 percent), and Islamic insurance (1.3 percent) (IFSB, 2018 ). Over the last decade, the
family of cryptocurrencies has witnessed tremendous growth, with more than USD 2 trillion in total
market value.
Islamic Banking — A Challenge to Conventional Banking. Sa'ad et al. (2019) proposed a model and
argued that the MSC model is innovative and provides equal benefits for the parties: business
owners, investors, and P2P companies. To achieve the research objectives, survey questionnaires were
administered fifty respondents including both practitioners and academics and the data were
analysed using simple percentages. Their univariate analysis shows that the market risk profile of
Islamic banks is no different, on average, from that of conventional banks. Contrary to the
conventional banks, Islamic banks are required to operate according to the principles of Muammalat,
which are identified as the avoidance of Riba', Gharar, Maysir, Hilah, and the promotion of ethical
business practices such as justice, fairness and transparency. Second, Gharar and Maysar, speculation
and excessive risk-taking or betting, respectively, are prohibited. In other words, the conventional
thinking of banking has an existence in Islamic Banking and only profit maximization concept is
being considered rather than the concept of profit maximization with social welfare. He is also the
holder of the Emerging Scholars Award by the Federal Reserve and the Conference of State Bank
Supervisors. Section 4 presents the results, and Section 5 discusses the results. In the final part of the
paper an attempt has been made to conduct a SWOT analysis of Islamic banking in India. Although
its coverage of small banks might be incomplete, including Islamic banks, the data is valuable for the
purpose of illustrating the growth of Islamic banks. The search criterion is confined to empirical
studies that examined the transmission of interest-based monetary policy through Islamic banks'
financing, particularly empirical studies that check the existence of an Islamic bank financing
channel of conventional monetary policy. The 2008 global financial meltdown has created a unique
awareness among banking consumers on the need of an alternative to complement the conventional
banking system, which was viewed by financial scholars as suffering from a crisis of failed morality
as a result of greed, exploitation, and corruption. Business plan for dry cleanersBusiness plan for dry
cleaners steps to problem solving in relationships interim assignment lead the team, business plan for
dry cleaners small business planning courses. On the other hands, Islamic economy, including its
handling methods, are guided by the Holy Quran and the hadiths of the Prophet Muhammad (Peace
be Upon Him). The first modern (private) Islamic bank, Dubai Islamic Bank, was also established in
1975. Therefore, it is included in the science of ethics, considering that it discusses an attitude of an
individual in economic activity. Please try again. Not in a club? Learn more Join or create book clubs
Choose books together Track your books Bring your club to Amazon Book Clubs, start a new book
club and invite your friends to join, or find a club that’s right for you for free. Factors Influencing
the Adoption of Islamic Banking Products: A Review The paper employed the literature review
methodology to synthesize research findings in the study area. He argues that FinTech-based
microfinance can generate enormous employment and economic prosperity for the poor. In Islamic
banks, demand deposits ( Amanah ) are entrusted to the bank. Additionally, the recommended model
also validates the relationship between customer satisfaction and customer loyalty in an emerging
South African Islamic banking market. Islamic banks, however, have higher loan-deposit ratios,
lower non-performing loans, and lower loan-loss provisions than conventional banks. Of the various
types of debt instruments in Islamic banking, the last two types, Salam and Istisna, are used least
often. However, little consideration has been given to the Sharia compliance objectives of the Islamic
bank and its impact on customer satisfaction and loyalty within the South African context. The
development of the crowdfunding market depends on the market structure and economic
development, advancement in the regulatory framework, and IT infrastructure. Some authors find
that Islamic banks are not distinguishable in practice from conventional banks (Siddiqi, 2006;
Bourkhis and Nabi, 2013 ); others find that Islamic banks outperform their conventional bank
counterparts in terms of profitability and efficiency. Their results show that banks are substantially
different when using individual financial ratios; however, they find no significant difference in
overall financial strength between Islamic and conventional banks. Hence it is very much important
to investigate the present condition of the industry, which led the researchers to review the existing
literature regarding Islamic banking in Sri Lanka. Global crowdfunding is growing at 44%, with total
assets of USD 290 billion to USD 418 billion from 2016 to 2017, respectively ( Ziegler et al., 2020 ).
Despite this unprecedented growth, the crowdfunding market is also subject to some limitations
especially within the framework of Islamic jurisprudence.
More importantly, it explains and examines the practices of Islamic banking in India, focusing on
issues and constraints. Read more. This type of contract thus entails a spot obligation for the client
and a future obligation for the bank. It is on this note that the introduction of Islamic finance in
Nigeria became necessary and because of the need of especially the Muslim communities. The
relevance of this study is contributing to the debate which concerns the possible relevance of Islamic
Banking to the potential development and redefinition of conventional banking. QR Codes Generate
QR Codes for your digital content. As can be seen, the number reporting to Bankscope increased
from thirty-six in 1999 to 104 in 2014, with a peak of 116 in 2011. Figure 12.3 plots the total assets
of Islamic banks. Thus, the weaker contracting party in a financial transaction is protected from an
increase in wealth that is not related to a productive activity (Hussain, Shahmoradi, and Turk, 2015
). The 2008 global financial meltdown has created a unique awareness among banking consumers on
the need of an alternative to complement the conventional banking system, which was viewed by
financial. Those charged with governance should also understand other factors contributing to
customer satisfaction at an individual level, such as quality of services delivered, product
expectations and social welfare expectations. It is recommended that the Islamic banks develop a
charter that sets out their objectives and how it aligns with the requirements of the Sharia. Moreover,
while the literature as reviewed here has been expanding rapidly since the onset of the GFC, the
implications of Islamic banking for country-level financial stability remain unclear. Example of
business research paperExample of business research paper, tufts essays that worked economic essay
microeconomics. Basis of Islamic Banking and Finance Chapter 1 Introduction to Islamic Banking
and Finance Learning Objectives A. For example, Tawarruq, instruments used by Islamic banks to
fulfill clients’ demands to extend personal loans, are permitted in the UAE but not in Iran. The
contract terms cannot be altered during the life of the contract, even if the client defaults or is late
making payments. In addition, they observe that Islamic banks exhibit lower leverage across
different sub-periods around the GFC. Consequently, the product becomes Shari’ah compliant but
the core attributes of Islamic Economic System i.e. Justice and Social Welfare etc. Likewise,
Hendratmi et al. (2020) proposed an innovative crowdfunding model by developing a website that
will not only provide a good source of generating funds but also help connect geographically
diversified investors. The discussion of the above-mentioned literature lends support for the
conceptual model, as shown in Figure 1, that attempts to examine the stated hypotheses in the South
African context. 3. Methodology 3.1 research design and sample. Moreover, financial inclusion has
become the least popular topic studied by researchers, as only 13 papers (15%) have been found in
the Scopus database. Contrary to the conventional banks, Islamic banks are required to operate
according to the principles of Muammalat, which are identified as the avoidance of Riba', Gharar,
Maysir, Hilah, and the promotion of ethical business practices such as justice, fairness and
transparency. The paper employed the literature review methodology to synthesize research findings
in the study area. Prior studies on P2P lending stress the challenge and potential development of
Islamic P2P lending. Islamic banking Customer satisfaction Customer loyalty Moosa, R. Free tattoo
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business plan writing a concept definition essay, how write a response paper. Moreover, several
previous review studies on Islamic economics, banking, and finance, primarily relied on Scopus e. If
someone takes a decision wrongly then it will result in a lack of retirement planning and poor
borrowing behavior. Moreover, Tajudin et al. (2020) also emphasized that adopting FinTech improves
the performance of Islamic financial institutions in two ways. This study elaborated the urgency of
handling problematic financing in Islamic banks in the development of the Indonesian Islamic
economy. Ijara payments can be changed during the contract period, unlike Murabaha payments.
Moreover, this study also makes a practical contribution. The pace quickened again after the global
financial crisis (GFC), 4 because it cast doubts on the proper functioning of conventional banking,
which, in turn, created interest in alternative models such as Islamic banking (Beck, Demirguc-Kunt,
and Merrouche, 2013; Hassan and Aliyu, 2018 ). In other studies, Ajouz et al. (2020b) proposed a
model for implementing the PMBC mechanism, and Ajouz et al. (2020c) assessed the shariah
compliances of PBMC. This will demonstrate an attitude of care towards customer needs and
expectations, strengthening customer satisfaction. 7. Conclusion Within the South African context,
this study explored the relationship between the objectives of Islamic banking on customer
satisfaction and customer loyalty. To achieve the research objectives, survey questionnaires were
administered fifty respondents including both practitioners and academics and the data were
analysed using simple percentages. In Islamic banks, demand deposits ( Amanah ) are entrusted to
the bank. Rationale Islamic banks are those that operate under Shariah Law. Their univariate analysis
shows that the market risk profile of Islamic banks is no different, on average, from that of
conventional banks. Global crowdfunding is growing at 44%, with total assets of USD 290 billion to
USD 418 billion from 2016 to 2017, respectively ( Ziegler et al., 2020 ). Despite this unprecedented
growth, the crowdfunding market is also subject to some limitations especially within the framework
of Islamic jurisprudence. Much has been written about the status of money and its role in the overall
economy after the seminal work of Nakamoto in 2008 ( Figuera and Tortorella Esposito, 2019;
Mohamad and Sifat, 2017; Oberauer, 2018 ). The earlier literature on Islamic banking built a
foundation using normative judgment, descriptive analysis, theoretical development, and appraisal of
country experiences. Bibliometric is a quantitative analysis that enables the researchers to discover
the emerging trend of collaboration networks and identify the intellectual structure of a certain field
of study ( Liu et al., 2020; Donthu et al., 2021 ). This method is useful for mapping the Islamic
FinTech research based on statistical analysis. Table 2 Financial technology. 4.1.2. Stream 2: Islamic
FinTech and distributed ledger technology This stream consists of 33 studies and is divided into two
sub-streams: Cryptocurrency (25 articles) and Blockchain (8 articles). To sum up, even though the
rationality of lending decision making in each banking system has been influenced by different risk
factors, the correlation between some of them is not clearly formed. The financial performance itself
is seen from 3 aspects, namely efficiency, asset quality, and stability. For example, the fact that
Islamic banks are not permitted to trade complex financial products leaves them with few hedging
and diversification opportunities, which increases operating risk. In other words, the conventional
thinking of banking has an existence in Islamic Banking and only profit maximization concept is
being considered rather than the concept of profit maximization with social welfare. Aggarwal and
Yousef ( 2000 ) provided supporting evidence in a study conducted two decades ago. His current
research focuses on state ownership, corporate governance, and corporate cash holdings. World Bank
Policy Research Working Paper (2013) Echchabi, A., Azouzi, D.: Predicting customers’ adoption of
Islamic banking services in Tunisia: a decomposed theory of planned behaviour approach. Another
fruitful avenue of future research could be to assess the extent to which Islamic banks contribute to
project financing. Looking at different sectors of the Islamic banking industry, the IFSI Stability
Report (IFSB, 2018 ) shows that assets and financing each grew at a compounded rate of 8.8 percent
between 2013 and 2017, while deposits grew at a compounded rate of 9.4 percent over the same
period. A systematic approach to the literature review was adopted. Jurisdictions where detailed data
is available show double-digit growth rate of assets (11 out of 22 jurisdictions), financing (nine out
of 22 jurisdictions) and deposits (one out of 22 jurisdictions), while eight other jurisdictions showed
a 2% improvement when compared to the prior year ( IFSB, 2019 ). It remains an unexplored and a
big market for Islamic Banking system. In: Alareeni, B., Hamdan, A., Elgedawy, I. (eds) The
Importance of New Technologies and Entrepreneurship in Business Development: In The Context of
Economic Diversity in Developing Countries. ICBT 2020. Lecture Notes in Networks and Systems,
vol 194. It concluded that Islamic banks are still bearing the consequences of the financial crisis;
therefore, Islamic banks should focus more on financial inclusion, and banks with a sound and high
level of the inclusive financial environment should have high efficiency. This study reviews Islamic
FinTech research development from 2017 to 2022. Additional information No additional information
is available for this paper. Therefore, this study intends to review the literature on Islamic banking.