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Relationship between participation bank performance and its determinants

This paper reports significant new findings on banking performance by relating (i) 7 bank-specific measures, (ii) 3 non-bank-specific measures with (iii) time dummy variable as control for financial crisis in the test period. The findings concern the performance of a new type of bank called the ...

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Main Authors: Nasserinia, Ali, Syed Mohamed, Mohamed Ariff, Cheng, Fan Fah
Format: Article
Language:English
Published: Universiti Putra Malaysia Press 2017
Online Access:http://psasir.upm.edu.my/id/eprint/52554/1/31%20JSSH-0286-2016-3rdProof.pdf
http://psasir.upm.edu.my/id/eprint/52554/
http://www.pertanika.upm.edu.my/Pertanika%20PAPERS/JSSH%20Vol.%2025%20(2)%20Jun.%202017/31%20JSSH-0286-2016-3rdProof.pdf
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spelling my.upm.eprints.525542017-06-07T02:52:13Z http://psasir.upm.edu.my/id/eprint/52554/ Relationship between participation bank performance and its determinants Nasserinia, Ali Syed Mohamed, Mohamed Ariff Cheng, Fan Fah This paper reports significant new findings on banking performance by relating (i) 7 bank-specific measures, (ii) 3 non-bank-specific measures with (iii) time dummy variable as control for financial crisis in the test period. The findings concern the performance of a new type of bank called the 'participation bank'. Participation banks price their funding through profit-sharing contracts with customers, so deposit and lending costs are decided not on the basis of market interest rates as in the case of mainstream banks. A sample of 100 participation banks covering 25 countries were selected for this study over the financial years 2007-2015. We used a new measure equivalent to the net interest margin called 'profit share margin', which has not been previously used to study banks. In fact, no study using participation banks has been carried out as yet. The dynamic panel GMM procedure was applied to obtain robust estimators; this is a refined econometric method that is also seldom applied in banking studies. The results revealed that 6 bank-specific factors statistically significantly affected the performance of participation banks in the test period. The paper also reports that the practice of including non-bank-specific factors as possibly relevant for performance is questionable as these were not found to be significant. The findings were from both OLS and GMM panel regressions providing comparison statistics with some past studies. Universiti Putra Malaysia Press 2017 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/52554/1/31%20JSSH-0286-2016-3rdProof.pdf Nasserinia, Ali and Syed Mohamed, Mohamed Ariff and Cheng, Fan Fah (2017) Relationship between participation bank performance and its determinants. Pertanika Journal of Social Sciences & Humanities, 25 (2). pp. 993-1018. ISSN 0128-7702; ESSN: 2231-8534 http://www.pertanika.upm.edu.my/Pertanika%20PAPERS/JSSH%20Vol.%2025%20(2)%20Jun.%202017/31%20JSSH-0286-2016-3rdProof.pdf
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description This paper reports significant new findings on banking performance by relating (i) 7 bank-specific measures, (ii) 3 non-bank-specific measures with (iii) time dummy variable as control for financial crisis in the test period. The findings concern the performance of a new type of bank called the 'participation bank'. Participation banks price their funding through profit-sharing contracts with customers, so deposit and lending costs are decided not on the basis of market interest rates as in the case of mainstream banks. A sample of 100 participation banks covering 25 countries were selected for this study over the financial years 2007-2015. We used a new measure equivalent to the net interest margin called 'profit share margin', which has not been previously used to study banks. In fact, no study using participation banks has been carried out as yet. The dynamic panel GMM procedure was applied to obtain robust estimators; this is a refined econometric method that is also seldom applied in banking studies. The results revealed that 6 bank-specific factors statistically significantly affected the performance of participation banks in the test period. The paper also reports that the practice of including non-bank-specific factors as possibly relevant for performance is questionable as these were not found to be significant. The findings were from both OLS and GMM panel regressions providing comparison statistics with some past studies.
format Article
author Nasserinia, Ali
Syed Mohamed, Mohamed Ariff
Cheng, Fan Fah
spellingShingle Nasserinia, Ali
Syed Mohamed, Mohamed Ariff
Cheng, Fan Fah
Relationship between participation bank performance and its determinants
author_facet Nasserinia, Ali
Syed Mohamed, Mohamed Ariff
Cheng, Fan Fah
author_sort Nasserinia, Ali
title Relationship between participation bank performance and its determinants
title_short Relationship between participation bank performance and its determinants
title_full Relationship between participation bank performance and its determinants
title_fullStr Relationship between participation bank performance and its determinants
title_full_unstemmed Relationship between participation bank performance and its determinants
title_sort relationship between participation bank performance and its determinants
publisher Universiti Putra Malaysia Press
publishDate 2017
url http://psasir.upm.edu.my/id/eprint/52554/1/31%20JSSH-0286-2016-3rdProof.pdf
http://psasir.upm.edu.my/id/eprint/52554/
http://www.pertanika.upm.edu.my/Pertanika%20PAPERS/JSSH%20Vol.%2025%20(2)%20Jun.%202017/31%20JSSH-0286-2016-3rdProof.pdf
_version_ 1643835283823656960
score 13.211869

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