Theses supervised by Eralp Bektaş
15 theses · Eastern Mediterranean University
Mature and Significant Link between Islamic & Conventional Banking
Basically a jointly shared goal of the banking system is to serve the humanity for their needs that leads towards their betterment of the persons individually, a family, vicinity, society and the economy of the countries as a whole. It is mutually consensus by the think tanks globally that the past experiences now paved the way to redesign the policies for economic development as this proved from the researches about Natural and Social Sciences. Currently banks are designing number of services to boost up the wellbeing of the populations in which they are operating.All these services/products are basically essentials to everyone’s routine life without any discrimination at all. Hence the banking industry are repeatedly trying to introduce distinct services/products in different ways to the earlier or existing ones for the future according to the requirement of their customers/societies needs that fulfills and satisfies them. However due to the proliferation of various types of Banks a common man who is believer of any revealed religion including Islam, Christianity and Judaism or any other is very much in a state of confusion. On one hand is the very cherishing dream of development while on the other hand is faith. So these developments lead to the question among the peoples over two kinds of Banks (Islamic and Conventional).I want to discuss that what are the similarities and differences between these if there are, and how big are these? Key words: inevitable, pivotal, sufficed, steeply proliferated, and bluntly refused.
Determinants of Commercial Banks’ Lending Behavior in South Africa
This study is carried out to investigate the factors that determine commercial banks’ lending behavior in South Africa. The model used for this study is summarized in South African commercial banks loans to total assets as the dependent variable and other predictor variables such as credit risk, equity risk, liquidity risk, management efficiency, and GDP growth for the period: 2007-2014. Using the panel data model and regression analysis, this research investigates if any relationship exists between the dependent variable and the specified independent variables. Also, it investigates the significant effect of these independent variables to the South African commercial banks’ lending decisions. This study discovered that the predictor bank specific and macroeconomic variables used were significant at alpha level 1% and 10% and influences banks’ lending behavior. In addition, credit risk, equity risk and management efficiency all have a positive significant influence whilst GDP growth and liquidity risk both have a negative significant impact on commercial banks’ decision to lend in South Africa. Keywords: Commercial banks, credit risk ratio, determinants of commercial banks’ lending, GDP growth, South Africa.
Comparative Analysis Between Islamic and Conventional Banking System In Term of Profitability and Governance
It is known the banking sector is play the main role in the economy in the world, whereas there are a lot of theories and studies was discussed especially after global financial crisis to explain over the Islamic banks affected by the last crisis. This research is going to comparison financial performance between Islamic banking and conventional banking in five countries. This comparison study will examine the financial performance for two different banking systems depending on the profitability ratios including Return on Equity and Return on Assets by using CAMEL approach in Malaysia, Pakistan, Egypt, Qatar and Turkey. In additional, good governance concept became an important factor recently, this paper will measure the impacts of governance factor on the profitability in Islamic and conventional banks. For this purpose, applying E-views program for estimate correlation and regression analyses to make hypotheses test then concluding the results by using F-test. The data in this research was extracted from financial annual reports of banks from 2008 to 2013. However, the results illustrate the difference of financial performance between Islamic banks and conventional banks. Keywords: Islamic Banks, Conventional Banks, Profitability and governance.
Capital Structure, Risk, and Performance of Banks: Empirical Study of Ghana and Nigeria
This study examines the determinants of bank capital structure in Ghana and Nigeria. It also sought to investigate the linear relation between capital structure and risk (Beta) of banks in Ghana. A panel data of 7 listed commercial banks in Ghana was analyzed over a period of 2008-2012, using a generalized least squares technique to estimate fixed and random effect regression models. At the same time, a panel data of ten commercial banks in Nigeria was also analyzed over the same span but from 2007 to 2011 for lack of data on some banks in the year 2012. The results indicate that liquidity, operating expenses, and return on average equity are the significant determinant of Capital Structure for both countries. All the variables except return on average equity have a negative association with leverage in the case of Ghana whereas liquidity and operating efficiency have a negative relationship with leverage in the case of Nigeria. These results are in line with corporate finance theory such as Trade-off theory, Agency Cost, Pecking order theory and signaling effect. This will help analyst and financial managers to understand the dynamics of capital structure in the banking sector of Ghana and Nigeria. Keywords: Capital Structure, Profitability, Equity Risk, Ghana, Nigeria
Islamic Banking and Finance
Islamic Banking and Finance has been growing rapidly during the last decades. Descriptive analysis has been used in order to introduce the Islamic banking and finance and how it works. On other hand, clarify the Islamic Banking and Finance Systems and show how it works in part of liability and also profit and loss sharing basis. In addition to that, the main similarities and differences were properly identified, introduced and discussed in the paper. It is obvious that there are many similarities between both systems while the major differences lies on the accepted and charged interests in loans provided by conventional banks since Islamic banks do not accept interest as it is prohibited by Islamic law. The paper also explained sufficiently the ability of Islamic banks to operate in Islamic and Non-Islamic populations’ countries. Over the last years, Islamic banks gained the trust of clients in Islamic countries as well as there was a real demand for such systems in non-Islamic countries. Monetary policies under Islamic banking systems has been also introduced and explained. As well as, what are the tools and techniques that were used in order to ensure stability for banks? Keywords: Islamic banking and Finance, Riba, Musharkah, Murabaha, Mudarabah, Islamic Monetary policy.
The Effect of Crude Oil Price on Islamic and Conventional Banks’ Profitability Case Study: OPEC Countries
This study investigates the effect of crude oil price variation on bank profitability. Examining 170 banks 36 Islamic banks and 134 conventional banks located in 13 OPEC countries from 2011 to 2016. Using panel data the study highlight bank-specific as well as macroeconomic variables. Moreover, it compares between Islamic and conventional banks, regarding their profitability and their sensitivity to the fluctuations of oil price. By using ROA, ROE, NIM and NNIM as proxies for bank profitability, our estimation analysis displays that there is positive relationship between oil price and bank profitability. Furthermore, our findings shows that oil price and bank profitability relationship is more significant in conventional banks than the Islamic ones. The results also disclose that cost efficiency is the most effecting variable on the profit of OPEC countries banks. Whereas, GDP growth this the least one. Keywords: Oil price, Islamic banks, Conventional banks, Bank profitability, OPEC, Panel data.
Antecedents and Consequences of Adoption of Internet Banking: A Study in the Banking Industry
This thesis proposes conceptual model based on theory of internet banking among four Turkish banks in Istanbul, Turkey. According to the study model, security and privacy, perceived usefulness and easiness in internet banking, awareness, level of personal interaction and customer satisfaction of banks services prior to the bank’s adoption of internet banking are antecedents which positively effect on acceptance of employees and customers from internet banking usage. Due to the increase in these relationships the bank profitability would increase in the banking industry as it can serve more customers at any time with more clear understanding and individualized services. Internet banking is the new phenomenon attracted and employed with wide range of banks in the market. Banks as the heart of the societies play major role in serving their customers and employees effectively and efficiently. This thesis used two questionnaires for assessing the perception of both employee and customers. 100 employee questionnaires and 100 customer questionnaires used for analyzing the collected data. In this research, Pearson correlation, regression liner, one-way ANOVA, path analysis and independent sample T-test used to test the hypotheses. Thus, all of seven hypotheses were accepted. Therefore, easiness and usefulness of internet banking, awareness, level of personal interaction, security and privacy of internet banking increase the adoption rate of internet banking. As well as satisfied customers with prior banks services are more willing to use the online web pages of the banks. All of these variables lead to serving more customers at particular time and bringing more profit to the banks. Managerial implication and future direction presented at the concluding part of the study. Keywords: Internet Banking, Customer Satisfaction, Awareness, Security and Privacy, level of Personal Interaction, Profitability, Turkey.
Cyprus Banking Crisis: What really happened, the myth, the collapse and now what?
This thesis aims to comparatively analyze the Cyprus Financial Crisis that hit the island in 2012/2013 and led to the shut down of all Banking activities for a period of 12 days. Also it will go over the other 4 financial crisis that have occurred in Cyprus, in less than 15 years, in an attempts to understand why after 4 warnings such huge crisis took the country by shock. The aim of this study is to write a qualitative thesis that would explain what is known to us as the Cyprus Banking Crisis; which was mainly caused by its exposure to the existence of overleverage real estate companies, the Greek debt crisis, the reluctance of the Cypriot government to restructure its financial sector, its inability to refund state expenses from the international market, and last but not least by its exposure to corruption that unraveled with the fall of Laiki Bank and the implementation of a Memorandum of Understanding by the TROIKA. On the other hand, the choice of this topic is to try and unravel the truth behind what is said and to analyze the possible and measures that are continuously being implemented in an attempt to make sure another crisis does not hit the financial sector of the country. Keywords: Cyprus, crisis, sovereign debt, crisis management, TROIKA, bail-in, bail-out.
Effect of CSR on Firm-specific Risks and Bank Value, Comparison between Eurozone and US Banks
This thesis investigates the relationship between corporate social responsibility and the idiosyncratic risk, bank value of Eurozone and US banks. Tobin’s Q used as a value indicator in order to assess the value of Eurozone and US banks. Thomson Reuters ESG scores are used to determine the CSR scores of these banks during the same period, and the effects of the environmental, social, and governance dimensions on idiosyncratic risk are investigated separately. The quantile regression method reveals a relationship between CSR and idiosyncratic risk over different risk levels. Aligning with stakeholder and legitimacy theory a significant negative relationship has been found between the overall CSR scores and the idiosyncratic risk of Eurozone and US banks for medium- to high-risk levels. Eurozone bank’s stakeholders have an increased emphasis over CSR manners. The negative effect of CSR is nearly two times greater on idiosyncratic risk for Eurozone banks compared to the US banks which justifies the higher CSR score of Eurozone banks. The effect becomes stronger as the riskiness of the banks increases. Similar to the overall CSR score, the governance and environmental dimensions have a negative impact on Eurozone banks with medium- to high-risk levels. However Environmental dimension have a higher risk reducing effect for US banks over all quantiles compared to social and governance dimension. Even though CSR have a risk reducing impact, a negative relationship revealed between CSR scores and value of Eurozone and US banks. Findings over value reducing effect of CSR shows support the view of neo-classical and agency theory. Banks should consider amounts invested on CSR project and make strategic decisions as there is trade-off between risk mitigation and value decreasing effect of CSR.
The Determinant of Profitability of Commercial Banks in Azerbaijan
In this study, we analyzed the relationship between the profitability of banks and macroeconomic factors in Azerbaijan banking sector considering 24 banks within the period of 4 years from 2008 until 2011. In this case, we used a panel data to investi-gate that relationship. We found out that bank specific factors have more impact on the profitability of banks in Azerbaijan when compared to the macroeconomic fac-tors. With respect to the results, inflation and GDP growth rate turned out to be in-significant. We concluded by recommending some possible solutions to the problems that we came across in this study. Keywords: Bank profitability, panel data, Azerbaijan
Determinants of Capital Adequacy Ratio and its Relationship with Risks in Islamic Banks- Case of QISMUT, Kuwait and Bahrain
The study empirically investigates the relationship between the capital adequacy ratio (CAR) and different bank-specific instruments including risk and macroeconomic factors for the selected twenty-eight (28) Islamic banks which are active in Indonesia, Saudi Arabia, Malaysia, United Arab Emirates (UAE), Turkey, Kuwait, and Bahrain. Annual data from 2005 to 2014 is used. This study is the first of its kind to investigate if the CAR in Islamic banks is affected by these such factors mentioned above. The bank-specific control variables in this study are return on assets (ROA), return on equity (ROE), leverage, size, liquidity risk, and credit risk, while the macroeconomic control variables are market capitalization and stocks traded, exchange rate, gross domestic product (GDP), and inflation. In addition, we capture the impacts of the global financial crisis on Islamic banks. Firstly, we employ three methods which are fixed effects, random effects, and ordinary least squares. Then, we employ the Generalized Method of Moments (GMM) dynamic panel data estimator. We find that there are high and statistically significant relationships between the CAR and the bank-specific factors such as ROA, ROE, size, leverage, and credit risk; hence, increases in ROA, leverage, and credit risk of the Islamic banks will lead to increases in the CAR, whereas increases in ROE and size would lead to decline in the CAR. The liquidity risk has an insignificant positive relationship with the capital adequacy ratio. Furthermore, inflation, market capitalization, and exchange rate exert high and statistically significant effects on the CAR, which evidences that higher inflation would result in lower CAR, while an increase in market capitalization and exchange rate would positively contribute to the level of the CAR. On the other hand, GDP is negatively related with capital adequacy ratio while stocks traded are positively related; however, both relationships are insignificant. Finally, we run another model where “equity to assets” ratio is dependent variable with similar control variables; results reveal that, except for inflation and GDP, all the variables exert significant effects on the CAR and on the “equity to assets” ratio. In addition, we captured the effects of the global financial crisis (GFC) on Islamic banks and found that Islamic banks are affected by the GFC at high levels. Keywords: Islamic banks, capital adequacy ratio, bank-specific factors, macroeconomic factors, dynamic panel data, financial crisis
Profitability and Competition Determinants of Islamic and Conventional Banks: the case of QISMUT+3
The aim of this study is to assert profitability and competition determinants of Islamic and Conventional banks operating in top nine Islamic Finance oriented countries that are named as QISMUT+3 (Qatar, Indonesia, Saudi Arabia, Malaysia, UAE, Turkey, Bahrain, Kuwait and Pakistan). For this purpose, it uses bank specific, market structure, and macroeconomic variables that are utilized from Orbis Bank Focus and World Bank database. In addition to static models, to capture endogeneity problem and unobserved heterogeneity, a dynamic approach is used by employing system GMM estimation. The major findings of the study show higher profit persistency of Islamic banks (IBs) than conventional banks (CBs). The results also suggest that profitability determinants of IBs and CBs are different. Concerning the risk behavior, bank capitalization and credit risk variables are more important for CBs. Credit risk enhances the degree of competition in both types of banks. The size is matter only in Islamic banks, and it is in line with efficient structure hypothesis. Liquidity management reduces the competitiveness of conventional banks. IBs outperform CBs in terms of competitiveness. Crisis results attribute better resilience to Islamic banks. Keywords: Profitability, Competition, Islamic Banking, QISMUT+3, Conventional Banking, Service Industry.
Determinants of Foreign Bank Entry to the Central Asia
In the last twenty years foreign banks have expanded their presence expressively in almost all developing economies, especially transition countries. Most researches on this subject have focused on foreign entry impact on domestic banks’ performance. But we examined the determinants from foreign banks’ perspective of view. This thesis investigates determinants of foreign bank entry to the Central Asian countries. The internal and external aspects were reviewed, and the relationship between these factors and foreign bank participation in Central Asian countries were hypothesized. The current performance of the banking sector these countries were taken into account and described in details. The previous researches related to foreign entry from various countries were also taken into consideration. The macroeconomic, macro-banking and bank specific factors were identified for analyze determinants of foreign bank entry by taking into consideration the Net Interest Margin, Return on Assets, Capital Risk, Credit Risk, Inflation rate, GDP growth, FDI net inflows, Rule of Law and Domestic Credit to Private Sector by Banks . The modification of the dependent and independent variables of the regression model were displayed by using the Panel Data Analysis Method. The empirical analysis and the results produced by panel data were employed to find the factors influencing the foreign bank entry. The results showed that Rule of Law and Net Interest Margin have significant impact on foreign bank entry, whereas other variables have different results depending on models which we constructed. Keywords: Central Asia, Foreign bank entry, Banking sector
Determinants of domestic bank lending behavior evidence of Jordan
According to the importance of banking industry and the role of banks in improving the financial project, financial activities and the economy of countries, this study examines the determinant of lending which is the main source of banking business. In this study, we analyzed the determinants of lending for Jordanian domestic banks considering 16 banks for the period 2005 to 2014. Where 11 factors impacting banks lending analyzed by using unbalanced panel data to examine the relationship between dependent variable and independents variables. The results of regression showed that liquidity ratio, management quality, return on asset ratio, volume of deposits and inflation rate had positive and significant impact on banks’ lending while credit risk, return on equity ratio and regional crisis had negative and significant impact on banks’ lending also the result found that equity to asset ratio, bank size and global crisis had statistically insignificant impact on bank’s lending. So the study suggested that banks should work better to receive more deposits and take caution in making decisions related to lending to avoid any default in bad loans. Experience and skills management will affect directly on the banks’ liquidity and profitability which lead to influence the banks’ ability of lending. Keywords: Jordan, bank lending, panel data, determinants of lending
A Comparative study of Islamic and Conventional Banks Risk Management Operating in QISMUT Countries
The clue of a good financial management for any bank or financial institution is risk management. The most important part of the process of risk management is to identify and determine the source of risk. This study is carried out in order to identify and analyze the factors that influence credit risk, liquidity risk and capital risk of both Islamic and conventional banks in QISMUT countries (Qatar, Indonesia, Saudi Arabia, Malaysia, UAE and Turkey) during the period from 2011 to 2015 taking in to consideration answering research question if determinants of risk in Islamic banking sector are the same as conventional banking sector or not. Concerning credit risk log of bank size is only common factor that significantly affects both Islamic and conventional banks. Bank fund management is the only factor that shows significant impact to both Islamic and conventional banks. Deposits structure is considered to be the only significant factor that influence capital adequacy of both Islamic and conventional banks. From the investigated factors for each risk there is only factor which has significant impact on Islamic and conventional banks. This indicates that there is a big difference in the factors that influence risk in Islamic and conventional banks and this may be due to the factors mentioned in chapter 1 that differentiate Islamic banking from conventional banking. Keywords: Islamic banks, Conventional banks, Credit risk, Liquidity risk, Capital risk.