Islamic Banking Structure and Performance

Table of Contents

Chapter 1- Preface

1.1 Background

1.2 Aims and Research Questions

1.3 Data and Methodology

1.4 Dissertation Structure

Chapter 2- Islamic Banking Framework

2.1 Introduction

2.2 Islamic Banking Overview.

2.3 Islamic Banking Model

2.4 Main features of top performing Islamic banks

2.5 Conclusion

Chapter 3- Literature Review

3.1 Introduction

3.2 Problem of the Study

3.3 SCP Paradigm: the theoretical part of the study

3.4 Past Studies and Findings

3.4.1 Conventional Banking Literature in EU

3.4.2 Islamic Banking Literature

3.5 Conclusion

Chapter 4- Data and Methodology

4.1 Introduction

4.2 Dataset and Methodology

4.2.1 Data

4.2.2 Methodology

4.3 Model Specification and Description of variables

4.4 Conclusions

Chapter 5- Discussion of Findings

5.1 Introduction

5.2 Initial Investigation: Financial Ratio Analysis

5.3 Primary Investigation; Empirical Analysis

5.4 Discussion of Empirical Findings

5.4.1 Regression results for GCC countries

5.4.2 Regression results for non- GCC countries

5.4.3 Regression results for Islamized countries

5.5 Conclusion

Chapter 6- Conclusion

6.1 Overview

6.2 Limitations and Future Research

Objectives and Core Themes

The primary objective of this dissertation is to investigate the determinants of financial returns in Islamic banking by applying performance evaluation measures traditionally used in conventional banking. The research seeks to identify how internal bank variables and macroeconomic factors, such as market concentration and money supply, influence profitability across different regions and economic systems.

• Comparison of banking performance in fully Islamized versus mixed banking systems.
• Application of the Structure-Conduct-Performance (SCP) paradigm to the Islamic banking sector.
• Evaluation of internal determinants, including capital ratios and loan ratios, on bank returns.
• Analysis of the impact of macroeconomic factors, specifically money supply and market concentration, on Islamic banking performance.
• Investigation into the lack of standardized return measurements for Islamic financial institutions.

Extract from the Book

Summary of Chapters

Chapter 1- Preface: This chapter provides an introduction to the research background, outlining the fundamental differences between Islamic and conventional banking, and defines the aims and research questions of the study.

Chapter 2- Islamic Banking Framework: This section summarizes the history and governance structure of Islamic banks, detailing the role of the Sharia Board and providing an overview of top-performing institutions.

Chapter 3- Literature Review: The chapter evaluates past studies on the determinants of banking profitability and introduces the Structure-Conduct-Performance (SCP) paradigm as the theoretical foundation for the research.

Chapter 4- Data and Methodology: This chapter describes the dataset of 49 Islamic banks across 11 countries, explains the chosen regression model, and defines the internal and external variables used for empirical testing.

Chapter 5- Discussion of Findings: This section presents the results of the financial ratio and regression analyses, providing a comparative discussion of bank performance across GCC, non-GCC, and Islamized countries.

Chapter 6- Conclusion: The final chapter summarizes the research findings, addresses the limitations of the current study, and provides suggestions for future research in the field of Islamic banking.

Keywords

Islamic Banks, performance, structure, concentration, profitability, Sharia, profit sharing, SCP paradigm, regression analysis, capital ratios, money supply, financial intermediaries, bank returns, GCC, Islamized countries.

Frequently Asked Questions

What is the core focus of this dissertation?

The work explores the determinants of returns in Islamic banking, investigating how various internal bank variables and macroeconomic factors impact the profitability of Islamic financial institutions.

Which central themes does the study address?

The study examines the application of conventional performance measures to Islamic banking, the impact of market concentration on bank behavior, and the differences between fully Islamized and mixed banking systems.

What is the primary research goal?

The research aims to determine the underlying variables influencing returns in Islamic banks across different continents, specifically testing the applicability of the SCP hypothesis in this sector.

What scientific methodology is utilized?

The study utilizes both financial ratio analysis and Ordinary Least Square (OLS) regression analysis to evaluate the relationships between bank performance and variables like capital ratios and market concentration.

What is covered in the main section of the document?

The main section covers the Islamic banking framework, a literature review of past studies, a detailed description of the data and methodology used, and a discussion of the empirical results derived from the regression models.

How can the work be summarized through key terms?

The research is best characterized by terms such as Islamic Banks, Profitability, SCP paradigm, Market Concentration, and Profit Sharing.

How do fully Islamized banking systems differ from mixed ones according to the findings?

The findings suggest that consumers in fully Islamized systems have fewer alternatives, which pressures these banks to provide more innovative products compared to those in mixed systems.

Why is there a need for standardized return measures in Islamic banking?

The lack of standardized measurements currently inhibits the growth of Islamic banks on global markets, as they struggle to demonstrate their financial position effectively compared to conventional banks.