The Impact of the Corona Pandemic on the Performance of Islamic Banks in Jordan

The present study aimed to investigate the impact of the Corona pandemic on the performance of Islamic banks in Jordan. The researcher adopted a descriptive analytical approach. This study is a case study on the financial indicators of the Jordan Islamic Bank for the years 2017-2021. As the years 2020-2021 are which the Corona pandemic affected Islamic banks, so these years were chosen in addition to the years 2017-2019 to get a clear idea of the difference between the two periods. The study found that financial indicators and values contained in the Balance Sheet were not significantly affected during the Corona pandemic. The study reported that Net Change In Cash & Cash Equivalents decreased during the year 2020. The study concludes that Islamic banks were not significantly affected during the Corona pandemic, especially as they follow financing formulas that differ from commercial banks. The results of this study have an important implication for the decision makers in Islamic banks, contributing to their guidance about the impact of global crises on the performance of Islamic banks in general. The study recommends conducting more studies on the impact of the Corona pandemic on the performance of Islamic banks. © 2023, Success Culture Press. All rights reserved.

Government policy response to COVID-19 and bank performance: a comparison between Islamic and conventional banks

PurposeThis study aims to examine the joint impact of the COVID-19 pandemic and the government response on the performance of Islamic and conventional banks. Design/methodology/approachData were collected from a sample of 94 conventional and 14 Islamic banks in Indonesia from March 2020 to September 2021. The system generalized methods of moments estimation is used to analyze the data. FindingsThis study finds robust results regarding the negative impact of the COVID-19 pandemic and the positive effects of government responses to COVID-19 pandemic on bank performance in Indonesian banking. Moreover, in line with the rise in confirmed COVID-19 cases, a higher government policy responses index improves bank performance, both in conventional and Islamic banks. Practical implicationsThis paper highlights the importance of the government policy responses index to absorb the negative impact of the COVID-19 outbreak on banking performance. Originality/valueThis paper provides novel insights into the joint impact of the COVID-19 pandemic and government responses to COVID-19 pandemic on bank performance between conventional and Islamic banks.

A Fintech-Based Zakat Model Using Artificial Intelligence

The COVID-19 pandemic and its associated lockdown have created a mammoth economic cost to the economies around the globe. The policy response to the crisis must be fast, secure, and sustainable. It has also created astonishing solidarity among the people with every element of society irrespective of race, caste, creed, or religion working together to save humanity. To overcome the financial and economic disruption caused by the pandemic, it needs immediate attention from the economists and policymakers. Islamic finance has many financial instruments for helping the poor by alleviating poverty, distributing income fairly, and improving social welfare, they comprise, Zakat, Sadaqat, Awqaf, etc. Zakat is the compulsory contribution from the Muslims to the poor and needy every year. Zakat is the compulsory donation from the rich and able Muslims which must be given to the poor and needy within a year. This immediate benefit of Zakat is well suited to tackle an economic crisis such as the one caused by COVID-19. Islamic finance in combination with the Fintech-based technologies like AI, Blockchain, machine learning, and natural language processing can work wonders in achieving Islamic finance objectives. The present study proposes an AI-based Islamic Fintech model to helping the needy and poor affected due to COVID-19. The model uses AI and NLP-based Fintech model for collection and dissemination of Zakat money to needy, poor, COVID-affected, and vulnerable sections of the society. © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022.

Gender diversity and risk-taking: evidence from dual banking systems

Purpose: This paper aims to examine the relationship between gender diversity and the risk profile of 141 listed banks from 14 emerging countries over the period of 2012–2020. Specifically, this study investigates whether the relationship between gender diversity and banking risk varies between Islamic banks and conventional banks, both before and during the COVID-19 pandemic. The second aim is to investigate whether COVID-19 health crisis moderates the effect of gender diversity on banks' risk-taking behavior within a dual banking system. Design/methodology/approach: This study derives its theoretical foundation from both the token theory and the critical mass theory. Both fixed and random effects are combined to examine the relationship between gender diversity and bank risk-taking in emerging countries. Findings: The results show that female presence on the board of directors reduces banks' financial risk. However, the presence of women continues to positively affect the capital adequacy ratio of large banks. The results also show that the presence of at least two female directors significantly reduces banking risk. The findings support the expectations of the token and critical mass theories. In addition, the presence of female board members, per se, does not influence the risk-taking behavior of Islamic banks. Finally, this study demonstrates that the moderating role of the COVID-19 health crisis is only more effective for large banks than for small ones. The analyses demonstrate good reliability and robustness of the findings of this study. Practical implications: The study provides novel insights for policymakers and practitioners on how female directors impact banks' risk-taking behavior in dual-banking countries. It also contributes to the debate on gender diversity and corporate governance literature, which can help in monitoring bank risk-taking and improving financial stability. Originality/value: This study presents new evidence about the importance of board gender diversity for bank risk-taking in a dual banking system by considering the moderating influence of the COVID-19 pandemic. This study also contributes to the literature on bank risk-taking by applying two measures of gender diversity and a critical mass of women on boards. © 2023, Emerald Publishing Limited.

Managing bank performance under COVID-19: A novel inverse DEA efficiency approach.

The evolution of the COVID-19 pandemic is highly unpredictable; however, its impacts are limited to neither a single sector nor a single country. This study evaluates the performance and efficiency of 49 Islamic banks across 10 countries during 2019-2020 to assess how those banks can preserve their performance and remain resilient in the aftermath of the COVID-19 pandemic. Using the conventional inverse data envelopment analysis (InvDEA) approach, we show that because of reductions in their outputs, 31 out of the 49 banks studied would need to reduce their inputs so that their efficiency can remain unchanged. However, we show that only 10 banks need to make such adjustments to maintain their efficiency levels using our proposed InvDEA efficiency model. The adjustment for those 10 banks would help in reducing more inputs, suggesting more cost savings, and improving the overall efficiency of the examined banks, compared with the other 31 banks.

Determinants of nonperforming financing in Indonesian Islamic banks: A regional and sectoral analysis

This study examines the determinants of Islamic banks' non-performing financing from the perspective of regional and sectoral aspects during the periods before and during the pandemic. The study adopts a dynamic panel data analysis, namely the Generalized Method of Moments, and assesses panel data from the Indonesian banking industry in 32 provinces from October 2018 to July 2021 on a monthly basis. The study uses non-performing financing as the dependent variable and regional inflation, total financing, financing to deposit ratio, and Islamic bank size as the dependent variables. The findings indicate that the COVID-19 pandemic generally influenced the performance of non-performing financing in Islamic banks. This was evident in the significant relationship between regional inflation, total financing, financing to deposit ratio, and the non-performing financing value. Moreover, in the sectoral analysis, a different level of impact was observed in each sector. The most severe impact was seen in the construction sector, while other sectors were less affected during the pandemic. The regional analysis shows that all provinces on Java Island, as the epicenter of the pandemic in Indonesia, did not perform better than the provinces outside Java. Concerning policy implications, the Indonesian Financial Services Authority must be more aware of the determinants of Islamic banks' non-performing financing by considering sectoral and regional aspects. Furthermore, sectoral and regional-based policies should be developed to achieve and maintain the performance of Islamic banks' non-performing financing. © Faaza Fakhrunnas, Riska Dwi Astuti, Mohammad Bekti Hendrie Anto, 2022.

Conditional Conservatism in Islamic Banks During the COVID-19 Pandemic

This study explores conditional conservatism (CC) in listed Islamic banks (IB) during the COVID-19 pandemic. The author collects data manually over the period from 2019 to 2020. In order to capture CC, the author uses the C_score measurement in the main model. As predicted, the author finds an increase in CC level within IB during the COVID-19 pandemic. This finding enriches the current literature on CC, IB, and the economic outcomes of the COVID-19 pandemic. On the other hand, decision-makers (investors, creditors, etc.) can benefit from the governance role of CC experienced in IB during crises such as the COVID-19 pandemic. © 2023, The Author(s), under exclusive license to Springer Nature Switzerland AG.

Heterogeneity of investor sentiment, geopolitical risk and economic policy uncertainty: do Islamic banks differ during COVID-19 pandemic?

Purpose: This study examined the impact of;COVID-19 investor sentiment, COVID-19 cases, geopolitical risk (GPR), economic policy uncertainty (EPU), oil returns and Islamic banking on bank stock returns. In addition, it examined whether Islamic bank stock returns differed from conventional banks when interacting with selected variables. Design/methodology/approach: This study consisted of 137 conventional and Islamic stock market listed banks in 16 Middle East and North Africa (MENA) countries from February 2020 to July 2021. Monthly data were used for bank stock returns, number of COVID-19 cases, COVID-19 investor sentiment, oil price and EPU, while GPR data were obtained annually. This paper used unconditional quantile regression (UQR) in its analysis. Findings: COVID-19 investor sentiment and EPU negatively influenced bank stock returns. However, oil returns were only positive and significant in first quantile. Conversely, GPR negatively impacted bank returns up to the median quantile, while the impact was positive in upper quantiles. Islamic banks outperformed conventional banks in all quantiles. Additionally, GPR negatively influenced Islamic bank returns up to 75th quantile, while oil returns negatively impacted Islamic bank returns up to 95th quantile. Ultimately, COVID-19 investor sentiment and EPU positively influenced Islamic bank returns up to 95th quantile. Practical implications: Market conditions must be considered when implementing investment decisions and policies, as the effects of market shocks are mostly asymmetrical. For example, it is important for international investors to take into consideration asymmetric factors, such as market uncertainty in oil market. Especially in bearish Islamic markets, bad news concerning uncertainty can be perceived as riskier than good news. Social implications: A change in health sentiment, such as COVID-19 cases and COVID-19 investor sentiment, can be used to determine future direction of conventional and Islamic stock markets. Asymmetric effects associated with market news can make portfolio management more effective. COVID-19 investor sentiment states can be used to predict Islamic market index dynamics in MENA region. Originality/value: This paper offered insight into heterogeneity of market conditions and dependencies of Islamic banks' stock market returns on COVID-19 investor sentiment and uncertainty, among others that should be considered when implementing investment decisions and policies. © 2023, Emerald Publishing Limited.

Bank lending during the COVID-19 pandemic: A comparison of Islamic and conventional banks

Using a sample of 421 banks from 17 countries, we find that the lending growth of Islamic and conventional banks decreased during the initial phase of the COVID-19 crisis. However, the decrease is significant for conventional banks only. Credit growth for Islamic banks grew around 2.5% faster than that for conventional banks, especially in countries with a macroprudential framework in place in the year leading up to the crisis. Our evidence remains unchanged with alternative empirical methodologies, definitions of bank lending, variations in the pre-crisis period, and proxies for the severity of COVID-19 in different countries.

CSR to tackle the Economic Effect of Covid 19:The case of Bangladesh

Purpose - The purpose of this study is to examine the economic impact of COVID-19 and analyse how the corporate social responsibility (CSR) initiatives of Islami banks (IBs) can contribute to reducing the adverse economic impact in the context of Bangladesh. Design/Methodology/approach: Currently eight full-fledged IBs are functioning in Bangladesh adhering to the underlying principles of Shariah;among them, seven are actively engaged in CSR activities to help the underprivileged segments of its citizens. This study, through employing a content analysis method examined the information available from these IBs as well as other government sources and published materials to address the COVID-19 economic impacts, specially the role of these IBs. Finding(s): This study finds that along the line with national and international funds, IBs' CSR funds can also help address the economic downturn in Bangladesh caused by the COVID-19 pandemic. The study further identified that if IBs develop a consortium among themselves, the CSR funds can be better utilised for the socio-economic development of Bangladesh. Research limitations/implications: The scope of this study is somehow limited, as it has only considered the impact of CSR funds by IBs in Bangladesh. Further research can be conducted in future considering the total CSR funds by all banks, i.e., conventional and Islamic banks. Practical implications: This study demonstrated that IBs spend USD 83.30 million annually, which means USD 417 in five years period. Based on the recommendations of this study, all IBs may work together to develop a joint CSR strategy for the socio-economic development of Bangladesh. Considering Bangladesh's poverty level, such a joint CSR strategy would be helpful for the vulnerable population of the country. Originality/value: This study is unique in the sense that it seeks to address the economic challenges of COVID-19 in the context of Bangladesh with support from the CSR initiatives of IBs. This study has created a new insight for IBs into developing an integrated CSR strategy, which is expected to bring significant contributions to the livelihood of the susceptible citizens of this country. Copyright © 2023, Ibn Sina Trust. All rights reserved.

Bank performance before and during the COVID-19 crisis: Does efficiency play a role?

This study aims to evaluate the effect of efficiency and banking market structure on bank performance in the Middle East and North Africa (MENA) region. The relationship between efficiency and bank performance in the countries in the MENA region during the COVID-19 outbreak has not been examined. We use data for 225 banks in 18 MENA countries and find that bank performance strongly depends on the efficiency level and market power of banks. Furthermore, we investigate whether efficiency and market competition effects are significantly different between the two banking systems (Islamic and conventional). Our results indicate that efficiency and competition have a greater influence on the profitability level of conventional than Islamic banks. However, the efficiency impact is only marginally significant during the COVID-19 outbreak. Overall, our results suggest that managing a higher efficiency level leads to improved financial stability but, at the same time, increases the bank's appetite for taking higher risks. These findings deepen the existing notion that efficient banks are more resilient during global financial crises and emphasize the importance of bank regulatory reforms that boost efficiency in standing against the negative consequences of the recent (COVID-19) crisis.

Do intellectual capital and financing matter for the profitability of the Islamic banking industry in Indonesia?

In Indonesia, the Islamic banking industry has been experiencing growth since its establishment in 1992. Although its profitability has declined slightly due to Covid-19, Islamic banks have recorded higher profitability than the average banking industry nationwide. Motivated to identify the factors that determine the banking profitability, this research empirically tests the contribution of intellectual capital (measured by VAICTM), banks’ liquidity (financing-to-deposit ratio), and financing ineffectiveness (non-performing financing or NPF) to the profitability (return on assets or ROA) of Islamic banks in Indonesia. We gathered data from the published financial information comprising a total of 130 observation years. The result shows that intellectual capital, banks’ liquidity, and financing ineffectiveness impacted the profitability of Islamic banks in Indonesia. The findings of this study provide policy implications for Indonesia’s Islamic banks to apply prudential banking principles in their financing activities. Copyright © 2022 Inderscience Enterprises Ltd.

Compatibility of the CSR practices of Islamic banks with the United Nations SDGs amidst COVID-19: a documentary evidence

Purpose - This study aims to establish whether the corporate social responsibilities (CSR) practices of Islamic banks are compatible with the sustainable development goals (SDGs) of the United Nations. Design/methodology/approach - A documentary research method was applied by examining the annual reports of selected Islamic banks from Bangladesh, Indonesia, Pakistan, the UAE and Malaysia for 2020, which coincided with the COVID-19 pandemic. Findings - The results indicate that Islamic banks discharged various CSR activities and contributed huge funds toward achieving the SDGs of the United Nations. Specifically, the banks prioritized the following CSR sectors: education, health, environmental protection and disaster relief and management. Besides, they provided support to micro and small businesses toward poverty alleviation. Research limitations/implications - This study examined only CSR reports of the selected Islamic banks for 2020. Practical implications - The findings have practical implications that may enable Islamic banks across the globe to improve their CSR initiatives, activities and reporting toward realizing the SDGs. They arc also helpful to policyrnakers and regulators for the provisions of policies and regulations to motivate or mandate Islamic banks to effectively improve their CSR practices. Social implications - CSR practices of Islamic banks can significantly support the SDGs toward mitigating many economic and social problems. Originality/value - This study applied a relevant but rarely used method to explore the role of CSR practices of Islamic banks in achieving the SDGs.

BETWEEN TWO CRISES: DO ISLAMIC BANKS SUFFER?

This study compares the effects of the Global Financial crisis and COVID-19 pandemic on the Islamic banking sector in the Gulf Cooperation Council (GCC). Using a sample of 32 Islamic banks observed over the period 2006 to 2020, the paper reveals that the two events have different effects on the Islamic banking sector. Overall, Islamic banks are not as profitable and resilient in the COVID-19 pandemic as in the global financial crisis. However, Islamic banks in GCC countries has gained experience and become more efficient and stable over time. The policy implication of this study supports digitalization and the increased prominence of financial technology (Fintech). In addition, monetary authorities in the GCC have to introduce innovative products to help the Islamic banking sector to be more resilient to such crises. © 2021 The authors.

RELATIONSHIP BETWEEN BOARD INDEPENDENCE AND CSR SPENDING OF ISLAMIC BANKS IN BANGLADESH

This study examines the relationship between board independence and CSR expenditures on education, health and human and disaster relief for the case of Islamic banks in Bangladesh, using unbalanced panel data from 2010 to 2020, the results indicate that board independence is positively and significantly associated with CSR expenditures on education and human and disaster relief sectors but is insignificantly related to the CSR expenditure on health. Thus, in forming the governance framework of Islamic banks, there is a need to have board independence to promote the social responsibility of Islamic banks. Indeed, our results suggest that it should be a regulatory requirement. © 2022 ournal of Islamic Monetary Economics and Finance. All rights reserved.

The Response of Islamic Banks Face the Covid-19 Pandemic and the Role of Financial Technology

The Covid-19 pandemic is not yet over, and its impact has affected global economic and financial sectors. This represents a challenge for Islamic finance considered as an alternative finance especially after the advent of the 2009 global financial crisis. Islamic finance certainly has an important market share in crowdfunding and also in microfinance, and its role in the financing of SMEs all over the world is not negligible, and this financial crisis should therefore pose different challenges to Islamic finance. It requires a set of instruments specific to its category, and also needs new technologies (FinTech), strategies and financial services to cope with the possible phenomenon. Our work seeks to present how Islamic finance, with its specific financing instruments, can fight against the disastrous effects of this health crisis, in particular the instruments of Zakat, funding by Qardh-Al-Hassan and fundraising like the Sukuks and finally the importance of using a set of technologies, called Fintech, to build an alternative and sustainable financial system after Covid-19. Indeed, this health crisis should present different challenges to Islamic finance, which requires FinTech, in its new strategies and its financial services. Our Paper is structured as following, we start with a review of the literature, in a second part we present the covid-19 crisis and Islamic finance, the roles of Islamic products in the face of covid-19, and in a last part, the role of artificial intelligence in islamic finance. © 2023, The Author(s), under exclusive license to Springer Nature Switzerland AG.

The Impact of the Coronavirus (COVID-19) Pandemic on the Profitability of Islamic and Conventional Banks (Comparative Study)

The current study aim is to compare the impact of the Coronavirus (covid-19) pandemic on the profitability between each of the Islamic and conventional banks, whereas the profitability of banks was measured through the (ROA), (ROE), and (EPS) indicators for the years 2019 and 2020. However, the researcher followed the inductive method and the descriptive-analytical method in this study, knowing that the study sample consisted of 10 Islamic banks and 10 conventional banks located throughout 5 Arab countries. The most important results of the study were the presence of a negative impact of the Coronavirus (Covid-19) pandemic on the profitability of all the banks of the study sample, but the Islamic banks, the study sample, were less affected compared to the conventional banks, also, the study recommended the need to conduct a comparative study between the performance of Islamic and conventional banks. © 2023, The Author(s), under exclusive license to Springer Nature Switzerland AG.

The Moderating Effect of the Covid 19 on Credit Risk of Islamic and Conventional Bank in Emerging Markets: Evidence from Palestine

Credit risk is one of the largest and most significant risk exposures facing banks. This study aims to empirically measure the impact of credit risk on the profitability of Islamic banks and conventional banks operating in Palestine. The study also aims to show if there is a significant difference in the impact of credit risk on the profitability of Islamic and conventional banks. The interactive effect of the Covid 19 pandemic with the credit risk factors is studied to prove whether the pandemic affects the profitability of both types of banks. The study analyzed the data of 13 banks (11 conventional and two Islamic banks). The sample period extends from 2011 to 2020. Banks’ profitability is measured using return on assets (ROA) and return on equity (ROE). Credit risk variables are measured using the non-performing loan ratio, loan provision to gross loans, and capital adequacy ratio. In addition, a set of macroeconomic and micro-control variables are investigated. Using panel regression analysis, the study finds that credit risk significantly impacts Islamic and conventional banks’ profitability. However, this effect is sensitive to the measure of profitability. While credit risk significantly impacts the ROA, it has no significant impact on the ROE. In addition, the study finds that the impact of credit risk on the profitability of Islamic banks is different from that of conventional banks. In addition, the credit risk that rises during the Covid 19 pandemic has an insignificant impact on the profitability of both types of banks. © 2023, The Author(s), under exclusive license to Springer Nature Switzerland AG.

Jordanian Islamic Banks Growth Credit Services in Corona Pandemic and Fitch Standard

This paper aims to find Jordanian Islamic banks credit services increasing in corona crises based to Fitch standard by got strength assets quality. It used descriptive methodology based to Jordanian Islamic Banks annual reports during corona pandemic. It found that Jordanian Islamic Banks apply increasing of credit services as assets with suitable grantee to get back without loss. It has different credit services types than traditional banks to cause managing risk by diversification, on other hand some Jordanian banks reduced credit doubtful with increased of guarantee value in corona crises while other banks reducer credit doubtful and credit loss with increased of guarantee value in corona as Jordan Islamic bank. Therefore, it got high quality of assets, and met Fitch index. © 2023, The Author(s), under exclusive license to Springer Nature Switzerland AG.

COVID-19 effect on Islamic vs. conventional banks’ stock prices: Case of GCC countries

This Study explores the COVID-19 impact on the co-movement between Islamic and conventional banks' stock prices during the period from March 3, 2019, to January 30, 2021, in six GCC countries. The wavelet coherency approach and the DCC- GARCH (1,1) model are used to assess the COVID-19 impact on both banks' indexes. Findings of the study find that Islamic and conventional banks' stock returns move in the same direction during the pandemic, but the fluctuations of Islamic banks’ returns were less volatile compared to their conventional counterparts. These findings indicate that investors in the Islamic banking industry had more positive sentiments for the industry.