nep-isf New Economics Papers
on Islamic Finance
Issue of 2023‒04‒24
two papers chosen by
Ali Polat, Ankara Yıldırım Beyazıt Üniversitesi

  1. Customers’ Perceptions of FinTech Adaptability in the Islamic Banking Sector: Comparative study on Malaysia and Saudi Arabia By Oladapo, Ibrahim Abiodun; Hamoudah, Manal Mohammed; Alam, Md. Mahmudul; Muda, Ruhaini; Olaopa, Olawale Rafiu
  2. Shari’ah Governance Quality and Environmental, Social and Governance Performance in Islamic Banks. A Cross-Country Evidence. By Yossra Boudawara; Kaouther Toumi; Amira Wannes; Khaled Hussainey

  1. By: Oladapo, Ibrahim Abiodun; Hamoudah, Manal Mohammed; Alam, Md. Mahmudul (Universiti Utara Malaysia); Muda, Ruhaini; Olaopa, Olawale Rafiu
    Abstract: Purpose – This paper aims to compare the perceptions of Islamic bank customers concerning FinTech services in Malaysia and Saudi Arabia. It also investigates the level to which customers are willing to adapt FinTech services. Design/methodology/approach – Primary data were collected from May to September 2019 using a questionnaire to survey 102 Islamic bank customers in Malaysia, and 147 in Saudi Arabia.The data are analysed based on Structural Equation Modelling (SEM) using the partial least squares (PLS) approach. Findings – The findings show that knowledge, attitude, and subjective norms are the highly significant determining factors that influence customers’ opinions on adapting to new technology, but awareness demonstrates only a moderately positive effect. Moreover, the impact of these factors on the intention to adopt FinTech services significantly differs between Malaysian and Saudi Arabian customers. Originality/value – This is an original study based on primary data on customers of Islamic banking in Malaysia and Saudi Arabia. It provides some novel insights into how the Islamic banking industry can boost customers’ confidence and enhance their patronage by adopting FinTech in their business operation model. These findings should be of value to managers, policymakers, and regulators in the Islamic banking industry in both Muslim and non-Muslim countries.
    Date: 2022–03–08
  2. By: Yossra Boudawara (Université de Sfax - University of Sfax); Kaouther Toumi (LGTO - Laboratoire de Gestion et des Transitions Organisationnelles - UT3 - Université Toulouse III - Paul Sabatier - Université Fédérale Toulouse Midi-Pyrénées); Amira Wannes (Université de Sfax - University of Sfax); Khaled Hussainey (University of Portsmouth)
    Abstract: Purpose: The paper examines the impact of Shari'ah governance quality on environmental, social, and governance (ESG) performance in Islamic banks. Design/methodology: The study's sample consists of 66 Islamic banks from 14 countries over 2015-2019. The research uses the Heckman model, which is a two-stage estimation method to obtain unbiased estimates, as ESG scores are only observable for 17 Islamic banks in the Eikon Refinitiv database at the time of the analysis. Findings: The analysis shows that Shari'ah governance has a beneficial role to achieve ESG performance. It also shows that enhanced profiles of Shari'ah supervisory boards' attributes are more efficient than the operational procedures to promote ESG performance. In addition, the analysis shows that enhanced Shari'ah supervisory boards' attributes strengthen the bank's corporate governance framework while sound-designed procedures increase the bank's social activities by emphasizing their roles to ensure Shari'ah compliance. Finally, the analysis sheds light on the failure of Shari'ah governance to promote environmental performance. Originality: The research complements the governance-banks' ESG performance literature by examining the role of Shari'ah governance. The research also extends the literature on Islamic banks' sustainability by pointing to the Shari'ah governance failure to enhance environmental performance and thus, achieve Maqasid al-Shariah regarding the environment. Practical implications: The research provides policy insights to Islamic banks' stakeholders to promote social and governance performance in the Islamic finance industry through improving Shari'ah governance practices. However, raising environmental awareness is imminent among all actors implicated in the Shari'ah governance processes to help overcome the anthropogenic risks.
    Keywords: ESG Impact, Islamic banking, Sustainability, Governance
    Date: 2023

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