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Title:	The influence of partnership financing on the efficiency and stability of Islamic banks: evidence from Malaysia and Indonesia
Authors:	Norfaizah Othman (UKM ) (P55475)
Supervisor:	Mariani Abdul Majid, Assoc. Prof. Dr.
Keywords:	Banks and banking -- Religious aspects -- Islam
Issue Date:	22-Mar-2018
Description:	Islam emphasized on greater reliance on PLS through Mudharabah and Musharakah (partnership financing). However, presently, most of the Islamic banking operation focuses on debt financing. The overuse of debt based financing show that Islamic banking replicates a mainstream banking model. Besides, the global financial crisis caused by debt has reduced efficiency and stability of banking system. Therefore, it is important for Islamic banks to see whether partnership financing can help to improve efficiency and stability Islamic banking system. Theoretically, partnership financing help banks to improve efficiency and maintain stability. Hence, the thesis empirically attempts to determine the effect of partnership financing on bank efficiency and bank stability. The first essay estimate determinants crises for Islamic banking industry using the Early Warning System (EWS). Using logit model in EWS on Malaysian and Indonesian Islamic banks over 1996-2012, the results indicate that bank with partnership financing, public ownership, exchange rate and economic freedom are important factors in determining the probability of crisis. The second essay determines the effects of partnership financing and financial crisis on the efficiency of Islamic banks. Using Stochastic Frontier Approach (SFA) on the same sample, the findings indicate that bank with partnership financing are more output efficient than other banks. However, banks with high partnership financing appeared to be less efficient during crises. In addition, highly capitalized banks that offer large amount of partnership financing may increase bank efficiency. Large-size banks are more efficient than small-sized bank. While bank with poor loan quality reduces bank efficiency. The final essay determines the effects of partnership financing, efficiency and financial crises on Islamic banks stability. Using z-score on Malaysian and Indonesian Islamic banks over 1996-2012 in measuring bank stability, the random effect model showed that banks with partnership financing are more stable compared to banks with non-partnership financing. In addition, banks that offer medium to high partnership financing are more stable than bank with lower partnership financing. Moreover, being efficient helps banks with partnership financing to be more stable. During crisis, bank with partnership financing is more stable particularly those with lower level of partnership financing. The findings of the thesis provided some policy implications. Firstly, the offering of partnership financing by banks may increase their product innovation. Therefore, bank should promote partnership modes of financing as it is less probable affected by crises. Secondly; to improve bank efficiency, bank may offer medium to high level of partnership financing. Hence, it may be necessary for bank to increase size through merger among Islamic financial institutions. Finally, bank managers need to be cautious because high partnership financing may lead to higher risk exposure. Bank may offer lower level of partnership financing to sustain stable during crisis.,Certification of Master's/Doctoral Thesis" is not available
Pages:	144
Call Number:	HG3368.A6N647 2018 tesis
Publisher:	UKM, Bangi
Appears in Collections:	Faculty of Economy and Management / Fakulti Ekonomi dan Pengurusan

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