nep-isf New Economics Papers
on Islamic Finance
Issue of 2023‒10‒23
two papers chosen by
Ali Polat, Ankara Yıldırım Beyazıt Üniversitesi

  1. Determinants of Islamic banking performance in OIC member countries By Bobbo Amadou; Hamed Salim Yazid
  2. Religion and Growth By Becker, Sascha O; Rubin, Jared; Woessmann, Ludger

  1. By: Bobbo Amadou (University of Yaoundé 2, Cameroon); Hamed Salim Yazid (University of Yaoundé 2, Cameroon)
    Abstract: The aim of this article is to identify the determinants of the performance of Islamic banks by examining the relative contribution of the said determinants in the member countries of the Organization of Islamic Cooperation (OIC). The methodology used is based on a multivariate framework, in particular, Generalized Least Squares and the Generalized Method of Moments. From a set of quarterly data of 20 OIC member countries collected over the period 2013 to 2020, we find that: i) liquidity ratio, profitability ratio and presence of compliance committee in sharia improve the performance of Islamic banks. ii) Liquidity ratio and presence of Shariah compliance committee are found to be more important in influencing the performance of Islamic banks in OIC member countries with respective weights of 0.510 and 0.699. It is therefore up to the actors of the Islamic banking sector of the OIC member countries to establish an overall governance policy framework and to comply with the rules and principles of the Islamic Shariah while maintaining strict control over the various transactions, which will lead to the reduction of costs and will make it possible to take measures which can contribute to increasing their resources and their investments which will make it possible to make economies of scale.
    Keywords: OIC, Islamic Bank, Performance, GMM
    Date: 2023–01
  2. By: Becker, Sascha O (Monash University and University of Warwick; CAGE, CEH@ANU, CEPR, CESifo, CReAM, IZA, ROA, Rockwool Foundation Berlin, and SoDa Labs); Rubin, Jared (Chapman University); Woessmann, Ludger (University of Munich, ifo Institute; Hoover Institution, Stanford University, CESifo, IZA, and CAGE)
    Abstract: We use the elements of a macroeconomic production function—physical capital, human capital, labor, and technology—together with standard growth models to frame the role of religion in economic growth. Unifying a growing literature, we argue that religion can enhance or impinge upon economic growth through all four elements because it shapes individual preferences, societal norms, and institutions. Religion affects physical capital accumulation by influencing thrift and financial development. It affects human capital through both religious and secular education. It affects population and labor by influencing work effort, fertility, and the demographic transition. And it affects total factor productivity by constraining or unleashing technological change and through rituals, legal institutions, political economy, and conflict. Synthesizing a disjoint literature in this way opens many interesting directions for future research.
    Keywords: religion ; growth ; Christianity ; Judaism ; Islam ; preferences ; norms ; institutions ; capital ; saving ; financial development ; human capital ; education ; population ; labor ; demography ; fertility ; total factor productivity, ;technological change ; rituals ; political economy ; conflict JEL Codes: Z12 ; O40 ; N30 ; I25 ; O15
    Date: 2023

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