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Banking risks: global evidence from Islamic financial institutions / Nur Hazimah Amran

Banks are the skeletal structure in a country that plays a vital role as intermediaries in circulating the money in the economy. They involve numerous types of risks in day- to-day banking business activities. The risks are uncertain event inducing negative impacts to the financial system of a count...

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Main Author: Amran, Nur Hazimah
Format: Thesis
Language:English
Published: 2018
Online Access:https://ir.uitm.edu.my/id/eprint/89206/1/89206.pdf
https://ir.uitm.edu.my/id/eprint/89206/
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spelling my.uitm.ir.892062024-08-15T08:49:23Z https://ir.uitm.edu.my/id/eprint/89206/ Banking risks: global evidence from Islamic financial institutions / Nur Hazimah Amran Amran, Nur Hazimah Banks are the skeletal structure in a country that plays a vital role as intermediaries in circulating the money in the economy. They involve numerous types of risks in day- to-day banking business activities. The risks are uncertain event inducing negative impacts to the financial system of a country. Although the risks are inevitable, they can still be mitigated. Therefore, the regulators and banks are responsible to mitigate the risks in the banking system. The reason is to avoid severe risks spill-out which could harm the money circulating in the economy. If this happens, it can decelerate the banking business activities and in the worst case, lead to the malfunction of the banking system in a country hence, alarming the country’s growth. In response to the abovementioned issue, this study is motivated to investigate the possible factors influencing major banking risks that are: credit risk, liquidity risk and capital risk from the Islamic banking perspective. Furthermore, the study includes additional factors of Sharia compliancy (SC) and moral hazard (MH) in addition to CAMEL approach (C- capital adequacy, A-asset quality, M-management quality, E-earnings and L-liquidity). The study covers from the year 1999 to 2015 equivalent to seventeen (17) years, unbalanced panel data. The study focuses on the nine (9) major market players of Islamic banks that include Bahrain, Indonesia, Kuwait, Malaysia, Pakistan, Qatar, Saudi Arabia, Turkey and United Arab Emirates. The study employs Instrumental Variable Two-Stage Least Squares (IV2SLS) for the multiple regressions. The findings reveal traditional CAMEL approach influences the three (3) major risks differently. There are evidences that liquidity risk is influenced by the Sharia compliancy however, it does not have any influence on the other two (2) risks; credit risk and liquidity risks of Islamic banks. Interestingly, the Islamic banks are less likely to face moral hazard issue of too-big-to-fail (TBTF). Both of the control variables that are, economy and financial crisis influence the liquidity risk. However, the economy only influence capital risk whilst the financial crisis only influence the credit risk. The research findings benefit the market players of banking and finance industry that are banks, regulators, economists, investors, researchers and consumers. 2018 Thesis NonPeerReviewed text en https://ir.uitm.edu.my/id/eprint/89206/1/89206.pdf Banking risks: global evidence from Islamic financial institutions / Nur Hazimah Amran. (2018) Masters thesis, thesis, Universiti Teknologi MARA (UiTM). <http://terminalib.uitm.edu.my/89206.pdf>
institution Universiti Teknologi Mara
building Tun Abdul Razak Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Teknologi Mara
content_source UiTM Institutional Repository
url_provider http://ir.uitm.edu.my/
language English
description Banks are the skeletal structure in a country that plays a vital role as intermediaries in circulating the money in the economy. They involve numerous types of risks in day- to-day banking business activities. The risks are uncertain event inducing negative impacts to the financial system of a country. Although the risks are inevitable, they can still be mitigated. Therefore, the regulators and banks are responsible to mitigate the risks in the banking system. The reason is to avoid severe risks spill-out which could harm the money circulating in the economy. If this happens, it can decelerate the banking business activities and in the worst case, lead to the malfunction of the banking system in a country hence, alarming the country’s growth. In response to the abovementioned issue, this study is motivated to investigate the possible factors influencing major banking risks that are: credit risk, liquidity risk and capital risk from the Islamic banking perspective. Furthermore, the study includes additional factors of Sharia compliancy (SC) and moral hazard (MH) in addition to CAMEL approach (C- capital adequacy, A-asset quality, M-management quality, E-earnings and L-liquidity). The study covers from the year 1999 to 2015 equivalent to seventeen (17) years, unbalanced panel data. The study focuses on the nine (9) major market players of Islamic banks that include Bahrain, Indonesia, Kuwait, Malaysia, Pakistan, Qatar, Saudi Arabia, Turkey and United Arab Emirates. The study employs Instrumental Variable Two-Stage Least Squares (IV2SLS) for the multiple regressions. The findings reveal traditional CAMEL approach influences the three (3) major risks differently. There are evidences that liquidity risk is influenced by the Sharia compliancy however, it does not have any influence on the other two (2) risks; credit risk and liquidity risks of Islamic banks. Interestingly, the Islamic banks are less likely to face moral hazard issue of too-big-to-fail (TBTF). Both of the control variables that are, economy and financial crisis influence the liquidity risk. However, the economy only influence capital risk whilst the financial crisis only influence the credit risk. The research findings benefit the market players of banking and finance industry that are banks, regulators, economists, investors, researchers and consumers.
format Thesis
author Amran, Nur Hazimah
spellingShingle Amran, Nur Hazimah
Banking risks: global evidence from Islamic financial institutions / Nur Hazimah Amran
author_facet Amran, Nur Hazimah
author_sort Amran, Nur Hazimah
title Banking risks: global evidence from Islamic financial institutions / Nur Hazimah Amran
title_short Banking risks: global evidence from Islamic financial institutions / Nur Hazimah Amran
title_full Banking risks: global evidence from Islamic financial institutions / Nur Hazimah Amran
title_fullStr Banking risks: global evidence from Islamic financial institutions / Nur Hazimah Amran
title_full_unstemmed Banking risks: global evidence from Islamic financial institutions / Nur Hazimah Amran
title_sort banking risks: global evidence from islamic financial institutions / nur hazimah amran
publishDate 2018
url https://ir.uitm.edu.my/id/eprint/89206/1/89206.pdf
https://ir.uitm.edu.my/id/eprint/89206/
_version_ 1808975936337477632
score 13.211869

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