The relationship between zakat disclosures and Islamic banking performance: Evidence from Yemen
-
Author(s)Eissa A. Al-HomaidiLink to ORCID Index: https://orcid.org/0000-0002-6230-8276
,
Ebrahim Mohammed Al-MatariLink to ORCID Index: https://orcid.org/0000-0001-9247-2766
,
Suhaib AnagrehLink to ORCID Index: https://orcid.org/0000-0003-1751-7674
,
Mosab I. TabashLink to ORCID Index: https://orcid.org/0000-0003-3688-7224
,
Nabil Ahmed Mareai SenanLink to ORCID Index: https://orcid.org/0000-0002-6848-588X
-
DOIhttp://dx.doi.org/10.21511/bbs.16(1).2021.05
-
Article InfoVolume 16 2021 , Issue #1, pp. 52-61
- Cited by
- 1396 Views
-
510 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This paper aims to analyze the link between the disclosure of zakat information and the performance of Islamic financial institutions in Yemen. Panel data of three Islamic banks working in Yemen were used. The study used a 16-item disclosure index to measure zakat disclosure information, and the financial performance of banks was calculated using two proxies, such as return on assets (ROA) and return on equity (ROE). Based on secondary data, this study used correlation matrix, descriptive analysis and regression analysis. ROA results revealed that zakat data and the age of a bank significantly affected financial results calculated by ROA, while the size of Islamic banks had an insignificant influence of banking performance. Zakat information and the size of Islamic banks have a positive effect on bank performance, while the age of the bank negatively influences the performance of banks. The results concerning ROE indicated that zakat data and the age of a bank have a strong and significant influence on the performance of banks, determined by ROA, while the size of a bank has a negative and insignificant effect on the performance of banks, determined by ROE.
- Keywords
-
JEL Classification (Paper profile tab)M40, M41, G21, L25
-
References56
-
Tables4
-
Figures0
-
- Table 1. Definition of research indicators
- Table 2. Descriptive statistics
- Table 3. Correlation matrix
- Table 4. Regression analysis
-
- Abdou, H. A., Muslem, O. A., & Ismal, R. (2014). Risk management practices in the republic of Yemen: Are Islamic banks different? Journal of Islamic Economics, Banking and Finance, 10(3), 46-73.
- Abeywardana, N. L. E., & Panditharathna, K. M. (2016). The extent and determinants of voluntary disclosures in annual reports: Evidence from banking and finance companies in Sri Lanka. Accounting and Finance Research, 5(4), 147-162.
- Agarwal, R., & Gort, M. (2002). Firm and product life cycles and firm survival. American Economic Review, 92(2), 184-190.
- Ahmad, A., & Al-Homaidi, E. A. (2018). Disclosure of corporate governance practices in Indian Tourism companies. International Journal of Research, 5(15), 660-678.
- Al-Homaidi, E. A., Ahmad, A., Khaled, A. S. D., & Qaid, M. M. (2019a). External factors and banks’ performance: An empirical examination of commercial banks listed on Bombay Stock Exchange BSE. International Journal of Emerging Technologies and Innovative Research, 6(6), 368-371.
- Al-Homaidi, E. A., Almaqtari, F. A., Ahmad, A., & Tabash, M. I. (2019b). Impact of corporate governance mechanisms on financial performance of hotel companies: Empirical evidence from India. African Journal of Hospitality, Tourism and Leisure, 8(2), 1-21.
- Al-Homaidi, E. A., Al-Matari, E. M., Tabash, M. I., Khaled, A. S. D., & Senan, N. A. M. (2021). The influence of corporate governance characteristics on profitability of Indian firms: An empirical investigation of firms listed on Bombay Stock Exchange. Investment Management and Financial Innovations, 18(1), 114-125.
- Al-Homaidi, E. A., Farhan, N. H. S., Alahdal, W. M., Khaled, A. S. D., & Qaid, M. M. (2020a). Factors affecting profitability of Indian listed firms: a panel data approach. International Journal of Business Excellence, 23(1), 1-17.
- Al-Homaidi, E. A., Tabash, M. I., & Ahmad, A. (2020b). The profitability of Islamic banks and voluntary disclosure: empirical insights from Yemen. Cogent Economics and Finance, 8(1), 1-22.
- Al-Homaidi, E. A., Tabash, M. I., Farhan, N. H., & Almaqtari, F. A. (2018). Bank-specific and macro-economic determinants of profitability of Indian commercial banks: A panel data approach. Cogent Economics & Finance, 6(1), 1-26.
- Al-Homaidi, E. A., Tabash, M. I., Farhan, N. H., & Almaqtari, F. A. (2019c). The determinants of liquidity of Indian listed commercial banks: A panel data approach. Cogent Economics & Finance, 7(1), 1-20.
- Aljifri, K., Alzarouni, A., Ng, C., & Tahir, M. I. (2014). The association between firm characteristics and corporate financial disclosures: evidence from UAE companies. The International Journal of Business and Finance Research, 8(2), 101-124.
- Allamy, K. K., Moh, A., Ahmad, A., & Al-Homaidi, E. A. (2020). Influence of internal and macro factors on profitability of Indian commercial banks: empirical study. Studies in Economics and Business Relations, 1(1), 20-26.
- Almaqtari, F. A., Al-Homaidi, E. A., Tabash, M. I., & Farhan, N. H. (2018). The determinants of profitability of Indian commercial banks: A panel data approach. International Journal of Finance & Economics, 24(1), 168-185.
- Al-Sartawi, A. M. A. M., & Reyad, S. M. R. (2019). The relationship between the extent of online financial disclosure and profitability of Islamic banks. Journal of Financial Reporting and Accounting, 17(2), 343-362.
- Al-Shammari, B. (2013). An investigation of voluntary disclosure by Kuwaiti Shariah- compliant companies. Journal of Economic and Administrative Sciences, 29(1), 21-41.
- Arimurti, R., & Wijayana, S. E. (2019). Analisis tingkat pengungkapan zakat dan laporan keuangan pada organisasi pengelola zakat di Indonesia (Doctoral Thesis). Universitas Gadjah Mada.
- Bakar, N. B. (2007). A zakat accounting standard ZAS for Malaysian companies. American Journal of Islamic Social Sciences, 24(4), 74-92.
- Chakroun, R., Matoussi, H., & Mbirki, S. (2017). Determinants of CSR disclosure of Tunisian listed banks: A multi support analysis. Social Responsibility Journal, 13(3), 552-584.
- Cooke, T. E. (1989). Disclosure in the corporate annual reports of Swedish companies. Accounting and Business Research, 19(74), 113-124.
- Djaghballou, C., Djaghballou, M., Larbani, M., & Mohamad, A. (2018). Efficiency and productivity performance of zakat funds in Algeria. International Journal of Islamic and Middle Eastern Finance and Management, 11(3), 474-494.
- Efobi, U. R., & Bwala, A. (2013). Voluntary information disclosure practices of listed companies in Nigeria. ICAV Journal of Accounting & Finance, 2(1), 13-30.
- Farook, S., Hassan, M. K., & Lanis, R. (2011). Determinants of corporate social responsibility disclosure: the case of Islamic banks. Journal of Islamic Accounting & Business Research, 2(2), 114-141.
- Grassa, R., El-Halaby, S., & Hussainey, K. (2019). Corporate governance and multi-corporate disclosures evidence from Islamic banks. In T. Azid, A. A. Alnodel, & M. A. Qureshi (Eds.), Research in Corporate and Shari’ah Governance in the Muslim World: Theory and Practice (pp. 167-187). Emerald Publishing Limited.
- Haji, A. A., & Ghazali, N. A. M. (2013). The quality and determinants of voluntary disclosures in annual reports of Shari’ah compliant companies in Malaysia. Humanomics, 29(1), 24-42.
- Haniffa, R. M., & Hudaib, M. (2007), Exploring the ethical identity of Islamic banks via communication in annual reports. Journal of Business Ethics, 76, 97-116.
- Hawashe, A. A. (2016). Commercial banks’ attributes and annual voluntary disclosure: The case of Libya. International Journal of Accounting and Financial Reporting, 5(2), 208-233.
- Hossain, M. (2008). The extent of disclosure in annual reports of banking companies: The case of India. European Journal of Scientific Research, 23(4), 660-681.
- Hossain, M., & Hammami, H. (2009). Voluntary disclosure in the annual reports of an emerging country: The case of Qatar. Advances in Accounting, 25(2), 255-265.
- Javaid, S., & Alalawi, S. (2018). Performance and profitability of Islamic banks In Saudi Arabia: An empirical analysis. Asian Economic and Financial Review, 8(1), 38-51.
- Kerr, S. (2007). DIFC Investments Issues Islamic Bond. Financial Times.
- Lee, C., & Hsieh, M. (2013). The impact of bank capital on profitability and risk in Asian banking. Journal of International Money and Finance, 32, 251-281.
- Maali, B., Casson, P., & Napier, C. (2006). Social reporting by Islamic banks. ABACUS, 42(2), 266-289.
- Mendonça, H. F., & Bernardo, R. (2018). Effect of banking and macroeconomic variables on systemic risk: An application of ΔCOVAR for an emerging economy. North American Journal of Economics and Finance, 43, 141-157.
- Mgammal, M. H. (2011). Voluntary disclosure and ownership structure among Saudi Arabia companies (Doctoral Thesis). Universiti Utara Malaysia.
- Mgammal, M. H. (2017). The effect of ownership structure on voluntary disclosure: Evidence from Saudi Arabia. Journal of Advanced Management Science, 5(2), 138-151.
- Mokni, R. B. S., & Rachdi, H. (2014). Assessing the bank profitability in the MENA region A comparative analysis between conventional. International Journal of Islamic and Middle Eastern Finance and Management, 7(3), 305-332.
- Nalikka, A. (2009). Impact of gender diversity on voluntary disclosure in annual reports. Accounting & Taxation, 1(1), 101-113.
- Naser, K., Al-Hussaini, A., Al-Kwari, D., & Nuseibeh, R. (2006). Determinants of corporate social disclosure in developing countries: The case of Qatar. Advances in International Accounting, 19, 1-23.
- Nawaz, T., & Haniffa, R. (2017). Determinants of financial performance of Islamic banks: an intellectual capital perspective. Journal of Islamic Accounting and Business Research, 8(2), 130-142.
- Nazim Ali, S. (2008). Islamic finance and economics as reflected in research and publications. Review of Islamic Economics, 12(1), 151-168.
- Noordin, N., & Kassim, S. (2019). Does Shariah committee composition influence Shariah governance disclosure? Evidence from Malaysian Islamic banks. Journal of Islamic Accounting and Business Research, 10(2), 158-184.
- Olson, D., & Zoubi, T. (2017). Convergence in bank performance for commercial and Islamic banks during and after the Global Financial Crisis. Quarterly Review of Economics and Finance, 65, 71-87.
- Pasiouras, F., & Kosmidou, K. (2007). Factors influencing the profitability of domestic and foreign commercial banks in the European Union. Research in International Business and Finance, 21(2), 222-237.
- Peng, J., Jeng, V., Wang, J. L., & Chen, Y. (2017). The impact of bancassurance on efficiency and profitability of banks: Evidence from the banking industry in Taiwan. Journal of Banking and Finance, 80, 1-13.
- Petria, N., Capraru, B., & Ihnatov, I. (2015). Determinants of banks’ profitability: evidence from EU 27 banking systems. Procedia Economics and Finance, 20, 518-524.
- Premuroso, R. F. (2008). An analysis of voluntary annual report disclosures of outsourcing: Determinants and firm performance (Doctoral Thesis). Florida Atlantic University.
- Rahman, A. A., & Bukair, A. A. (2013). The influence of the Shariah Supervision Board on corporate social responsibility disclosure by Islamic banks of Gulf Co-operation Council Countries. Asian Journal of Business and Accounting, 6(2), 65-104.
- Ramlan, H., & Adnan, M. S. (2016). The profitability of Islamic and conventional bank: Case study in Malaysia. Procedia Economics and Finance, 35, 359-367.
- Sellami, Y. M., & Tahari, M. (2017). Factors influencing compliance level with AAOIFI financial accounting standards by Islamic banks. Journal of Applied Accounting Research, 18(1), 137-159.
- Shi, X., & Wu, Y. (2017). The effect of internal and external factors on innovative behaviour of Chinese manufacturing firms. China Economic Review, 46, 50-64.
- Srairi, S. (2015). Corporate governance disclosure practices and performance of Islamic banks in GCC countries. Journal of Islamic Finance, 4(2), 1-17.
- Sudirman, M., Zaenal, M. H., & Pramono, S. E. (2019). Zakat, accounting of zakat, sak design of zakat accounting guidelines based on comparative analysis of PSAK 109 and FAS (9) AAOIFI. In International Conference of Zakat (pp.216-231).
- Tabash, M., Al-Homaidi, E., Ahmad, A., & Hamood, N. (2020). Factors affecting financial performance of Indian firms: An empirical investigation of firms listed on Mumbai Stock Exchange (MSE). International Journal of Economic Policy in Emerging Economies, 13(2), 1.
- Trad, N., Trabelsi, M. A., & Goux, J. F. (2017). Risk and profitability of Islamic banks: A religious deception or an alternative solution? European Research on Management and Business Economics, 23(1), 40-45.
- Uyar, A., Kilic, M., & Bayyurt, N. (2013). Association between firm characteristics and corporate voluntary disclosure: Evidence from Turkish listed companies. Intangible Capital, 9(4), 1080-1112.
-
Industrial development in Saudi Arabia: disparity in growth and development
Anis Ali
doi: http://dx.doi.org/10.21511/ppm.18(2).2020.03
Problems and Perspectives in Management Volume 18, 2020 Issue #2 pp. 23-35 Views: 2956 Downloads: 1004 TO CITE АНОТАЦІЯIndustrial development in any nation plays a vital role in the strengthening of the economy and employs human resources as per specifications and directly towards the mainstream of the nation. In Saudi Arabia, there was rapid industrialization for four decades. Some manufacturing industries performed well, while some internal and external business environment factors influenced the others’ performance. The study focuses on historical development, as well as recent trends of well-performing and poor-performing industries of Saudi Arabia. Small manufacturing industries in Saudi Arabia are underdeveloped and need more attention to attain sustainable and progressive growth rate in the form of the number of establishments to enjoy the potential. Manufacture of tobacco, computer, electronics and optics, pharmaceuticals and transport equipment are the deprived and underdeveloped industries of the manufacturing sector. There should be some easy credit schemes for the development of deprived or underdeveloped manufacturing industries. To attain sustainable growth and development of the manufacturing sector, a positive attitude of the government towards underdeveloped manufacturing industries, favorable labor laws, and entrepreneurial awareness, technical and financial assistance are necessary. The growth and development of the manufacturing sector of Saudi Arabia will be helpful in the attainment of goals of Vision 2030.
-
Why banks should consider ESG risk factors in bank lending?
Sarwar Uddin Ahmed ,
Samiul Parvez Ahmed ,
Ikramul Hasan
doi: http://dx.doi.org/10.21511/bbs.13(3).2018.07
Banks and Bank Systems Volume 13, 2018 Issue #3 pp. 71-80 Views: 2794 Downloads: 1124 TO CITE АНОТАЦІЯWhy banks should be concerned about incorporating environmental, social and governance (ESG) criteria in the lending process? What is the motivation? This study aims to find the motives for considering environmental, social and governance (ESG) criteria in bank lending process. A primary survey has been conducted to know the current status and motivation for incorporating ESG factors in investment decisions. Sample comprised 30 private commercial banks (PCBs) operating in Bangladesh. Data collected were analyzed with graphs, descriptive statistics, and regression analysis. Findings of the study indicate that banks are mostly considering basic environmental, social and governance factors set by regulators qualitatively. They are lagging behind in considering the advanced ESG criteria needed for sustainable and efficient credit risk management. Based on motivation for incorporating ESG factors, it was found that banks pioneering in incorporating ESG factors in lending decisions are compensated through better financial performance. Findings of the study are expected to encourage practitioners and policy-makers to take more pragmatic steps to incorporate ESG risk factors quantitatively in lending decision-making process.
-
Integrated reporting and financial performance of South African listed banks
Reon Matemane ,
Rozane Wentzel
doi: http://dx.doi.org/10.21511/bbs.14(2).2019.11
Banks and Bank Systems Volume 14, 2019 Issue #2 pp. 128-139 Views: 2742 Downloads: 536 TO CITE АНОТАЦІЯThe recent development of integrated reporting intends to address the limitations associated with corporate reporting practices. This paper aims to examine whether a statistically significant relationship exists between integrated reporting quality and financial performance. Secondary data was used, namely the integrated reports and annual financial statements of South African banks listed on the Johannesburg Stock Exchange (JSE) for 2010–2014. For the period 2005–2009, only the financial statements were used, since integrated reporting was not yet mandatory. The research design was longitudinal and it combined qualitative and quantitative methods. Descriptive statistics and Feasible Generalized Least Square (FGLS) were used to explore the relationships between financial performance and integrated reporting quality. The results indicate that there is a positive relationship between integrated reporting quality (IRQ) and earnings per share (EPS). However, there is no significant relationship between IRQ and Tobin’s q (Q-Ratio), IRQ and return on equity (ROE), IRQ and return on assets (ROA) as well as IRQ and economic value added (EVA). Moreover, there are no significant differences on the financial performance of the listed banks before and after the introduction of integrated reporting.
