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Mongi Lassoued ·Quarterly Review of Economics and Finance ·2018 ·JEL: G18; G21; G32; G33

The study of credit risk is a great interest and the debate over the relative credit risk of Islamic banks remains open. The study aims at addressing this key question: Do Islamic banks (IBs) have higher credit risk than conventional banks (CBs) in Malaysia? Accordingly, some papers tried to answer this question but they were performed using cross-country data. The cross-country data should have been treated more cautiously since every country has its own developmental backgrounds and regional resulting in different characteristics of banking industry. Moreover, different financial systems that give support or limit the operation of Islamic banks will also make more difficult to compare the data of each country. For that reason, it is suggested to take suitable control for heterogeneity across countries to obtain consistently good conclusions about the credit risk. Different from the cross-country works, this study will focus on the country-level data of Malaysia. A panel data model was applied and it was used the generalized least squares (GLS) model and a yearly bank level data to evaluate the credit risk of 22 conventional banks and 17 Islamic banks in Malaysia. In addition, the study period, which lasted from 2005 to 2015, seems to be representative since it encompasses the period of the sub-prime crisis. This project is an extension of the study begun by Čihák and Hesse (2008) that used cross-country bank data such Malaysia. The results are particularly interesting and do not confirm the results generated by these researchers. The main contribution that this work will hopefully make is to show the reasons which account for the Islamic banks' higher degree of credit risk, and particularly to provide additional insights and complement the existing cross-country studies on Islamic bank stability.

Sakiru Adebola Solarin · Shawkat Hammoudeh · Muhammad Shahbaz ·Journal of International Financial Markets, Institutions and Money ·2018 ·JEL: C58; E42; E43; G01; G21

This paper contributes to the existing empirical literature on savings and Islamic banking systems by comprehensively examining the determinants of Islamic banking deposits in Malaysia. Initially, we examine the factors affecting the deposits in Islamic banking by types, which include investment deposits, demand deposits, savings deposits, ringgit Tawarruq deposits, dollar Tawarruq deposits and negotiable instrument deposits. Additionally, we investigate the determinants of deposits in Islamic banking by holders including household deposits, business deposits, financial institution deposits, federal government deposits, state government deposits and statutory agency deposits. We also examine the factors affecting the total deposits in the Islamic banking system. After confirming that the variables are stationary in the first difference through the use of the residual augmented least squares (RALS) procedure of Meng et al. (2014), we use the break-augmented cointegration methods of Johansen et al. (2000) and Giles and Godwin (2012) to check the cointegrating relationships and generate the long run coefficients of the variables. The results show that industrial production index, real interest rates on fixed and savings deposits have positive impacts on several components of Islamic banking deposits and the total deposits of Islamic banks, while real interest rates on deposits in commercial banks have a negative impact. However, the roles of both the Shariah index and the real exchange rate are mixed.

Abdo Yousef Qaid Saad · Amer M Alhusini Alshehri ·Journal of Asian Finance, Economics and Business ·2021 ·JEL: M00, M31, G1, G2, G21

The study aims to measures the service quality of Islamic banking in Malaysia from non-Malaysian customers’ perspective based on the six different dimensions of the SERVQUAL model, namely, Shariah, assurance, reliability, tangibles, empathy and responsiveness. This study surveyed 100 non-Malaysian respondents from 25 different countries who have first-hand experience with Islamic banking services in Malaysia. The collected data were analysed by using the SPSS v23 for reliability analysis and descriptive statistics. The results indicates that customers’ impressions of Islamic banks’ service quality in Malaysia did not meet their standards. The independent variables, namely, compliance, assurance, reliability and empathy have positively affected customer satisfaction, while two dimensions, namely, tangibility and responsiveness does not significantly influence non-Malaysian customer satisfaction in the Islamic banking system in Malaysia. The findings of the study suggested that the Islamic banks should develop and obey the customer perception’s policy by following customers’ expectations and the results are also expected to include recommendations for improving the level of satisfaction of the Islamic banking system’s foreign clients in Malaysia. Since this study was limited to Islamic banks in Malaysia, the findings may not be applicable to other traditional banks.

Muhammad Hafiz Abd Rashid · Muhammad Iskandar Hamzah · Amirul Afif Muhamat · Aida Azlina Mansor · Rahayu hasanordin ·Journal of Asian Finance, Economics and Business ·2022 ·JEL: M10, M30, M31

Studies examining the interplay between brand transgression and brand forgiveness is notably sparse especially in the context of Southeast Asian banking customers. The purpose of this research is to add to the existing literature by examining the impact of brand transgression, which is represented by negative past experience image incongruence, and corporate wrongdoing on brand forgiveness among Islamic banking customers in Malaysia. The increasing surge in interest in unfavorable brand relationships has sparked concerns about its impact on brand forgiveness. As a result, this theoretical argument, which lacks empirical proof, has to be statistically tested. The current study was conducted utilizing a non-probability purposive sampling technique among clients in the Klang Valley who had poor experiences with Islamic banking services. Data analysis included descriptive statistics, exploratory factor analysis, and multiple regression on a total of 211 valid replies. The findings show that two elements of brand transgression, image inconsistency, and corporate wrongdoing, have a major impact on brand forgiveness. However, the other dimension namely negative past experience was found to be non-significant to brand forgiveness. Research implications and directions for future studies are also discussed in this paper.