The impact of oil prices and the financial market on cost efficiency in the insurance and Takaful sectors: Evidence from a stochastic frontier analysis

The Gulf Cooperation Council’s (GCC) insurance industry, including conventional insurance and Takaful, has witnessed remarkable growth during the last decade. However, the economies of this region rely on oil as the primary stream of revenue and lack development in financial markets. This could affect the insurance industry. For this reason, this paper examines the impact of oil prices and the financial market on the cost efficiency of the insurance and Takaful sectors in GCC countries using a stochastic frontier cost function with data from 2009–2016. The results show that the relationship between oil prices and efficiency changes from positive to negative when the prices increase, whereas the relationship between the financial market and efficiency is negative. No clear evidence of the impact of oil prices on efficiency arises from the differences between conventional insurance and Takaful. However, there are differences regarding the financial market, with a negative impact on conventional insurance and a positive one on the Takaful business. The results of this study have implications for regulators and management. The Takaful industry is rapidly growing compared to conventional insurance in the GCC and, therefore, the financial market may have added benefits for the GCC region. However, caution is required in relation to the impact of the financial market on conventional insurance. Furthermore, management may require the development of strategies to deal with the nature of GCC economies to avoid shocks to oil prices.     

银行商誉资本与货币竞争性发行——来自中国白银风潮前夕银行微观数据的经验证据

1976年哈耶克提出了货币非国家化理论 ,主张赋予私人银行独立的货币发行权以约束政府滥发货币的行为 ,但反对者认为追求私利的发钞行必将无限增发货币引致通胀.文章将银行的发行和信贷统一起来分析银行声誉如何影响其发行行为,研究表明:在竞争性发行条件下 ,声誉机制能够有效地约束发钞行的行为,银行因追求长远收益而稳健发行.进而,文章以银行的生存历史和是否为上海银行公会会员度量声誉 ,利用白银风潮前夕中国34家发钞行和150家银行的微观数据检验声誉机制的作用 ,研究发现:声誉越好的银行,兑换券发行越稳健;声誉为银行带来了诸多经营优势,如更多的实收资本、盈余积累和存款 ,以致声誉好的银行贷款规模更大 ,利润水平更高 ;发钞行确实是因追求长远收益而稳健发行.根据民国时期银行竞争性发行的历史经验 ,文章首次为货币非国家化理论提供了微观证据 ,也为当前的货币政策制定和人民币国际化提供了启示.     

The procyclicality of loan loss provisions in Islamic banks

From a sample of Islamic banks around the world from 1997 to 2012, this paper examines whether loan loss provisioning in Islamic banks is procyclical. Our empirical findings highlight that loan loss provisioning in Islamic banks remains procyclical, although the ‘expected’ loan loss model (E-LLM) has been implemented for Islamic banks in several countries. A closer investigation further documents that Islamic banks also use loan loss provisions for discretionary managerial actions, especially related to capital management in which loan loss reserves and provisions are inflated when bank capitalization declines. Eventually, this paper highlights that higher capitalization can mitigate the procyclicality of loan loss provisions in Islamic banks. In other words, loan loss provisioning becomes countercyclical for Islamic banks with higher capitalization. This paper therefore casts doubts on the adoption of the E-LLM for Islamic banks to promote countercyclical effects, because the E-LLM may be influenced by managerial discretion, including opportunistic capital management using loan loss provisions that may undermine the importance of maintaining bank capitalization.     

How do electronic word of mouth practices contribute to mobile banking adoption?

Mobile banking (m-banking) is the fastest growing and most cost-effective channel for delivering banking services. Electronic word of mouth (eWOM) plays a crucial role in the success of e-commerce. Therefore, the main purpose of this study is to investigate a comprehensive moderated mediated mechanism for enhancing m-banking adoption behavior through positive eWOM triggers using the elaboration likelihood model (ELM). Argument Quality, valence, consistency and volume were considered eWOM triggers, and the conceptual model also included initial trust in m-banking as a mediator and consumer involvement in m-banking as a moderator. A total of 1153 useable surveys completed by the Indian users of social networking websites were used for analysis. The findings showed that of the triggers, argument quality, valence, and consistency enhance intention to adopt m-banking. These effects were mediated by initial trust in m-banking. The mediation effects of initial trust between valence – Intention varied between high and low consumer involvement in m-banking. These findings make several contributions to the literature on marketing communication, particularly to eWOM research and ELM theory. Practically, this study provides several recommendations to banks about how to use positive eWOM for motivating consumers to adopt m-banking.     

The influence of Islamic Work Ethic on employees’ responses to change in Kuwaiti Islamic banks

Significant attention has been paid recently to Islamic Work Ethic (IWE) particularly in organizational change literature. However, the nature of the relationship remains ambiguous. Research studies attempting to uncover IWE’s influence on characteristics of employees’ responses are still in its infancy. To tackle this gap, this study contributes to knowledge by developing a possible conceptual model identifying IWE’s influence on employees’ responses towards change in the shape of their commitment to change and organizational deviance. The testing of these relationships took place in the ever-developing Kuwaiti Islamic banking sector. Data was collected from 398 employees by distributing self-administered questionnaires. Outcomes revealed that the extent of IWE’s influence on employee commitment to change varied across different components. This result offers a unique understanding into IWE’s affiliation with employee attitudes to change, especially in the Islamic banking sector. Moreover, IWE was found to negatively influence employee engagement in organizational deviance. As such, this finding has not been established within the context of change previously. Due to such findings, several implications and future research directions emerge.     

The impact of corporate governance and agency effect on earnings management – A test of the dual banking system

This study investigates the impact of the Board characteristics, Chief Executive Officer’s (CEO) power and Shariah supervision on Earnings Management (EM) within conventional and Islamic banks. We provide evidence that EM levels do not significantly differ between Islamic and conventional banks. Contrary to public belief, additional value-based attributes such as the Shariah Supervisory Board (SSB) that promotes ethical and religious values, do not help in the restriction of opportunistic behaviour in Islamic banks. Additionally, attributes such as board size, firm size and leverage have a significant negative influence on EM of both Islamic and conventional banks. Our results are important in deliberating that the word ‘Islamic’ must not be used merely as a profit manifestation, but instead must promote a value-based business, which in turn could ensure reliability and sustainability.     

Do Loan Loss Provisions Affect the Credit Fluctuations in China’s Banking System?

ABSTRACT

The global financial crisis of 2008 sparked new ideas on pro-cyclical transmission in the financial system. The accounting treatment method of loan loss provisions differs between the accounting standards that banks use and the supervisory rules of banks. This fundamental difference has attracted wide attention from academics and regulators. This article studies whether bank loan loss provisions affect credit fluctuation in China’s banking system. We divide loan loss provisions into discretionary and non-discretionary loan loss provisions. We find that non-discretionary loan loss provisions result in greater credit fluctuation, whereas discretionary loan loss provisions have no significant impact on credit fluctuation. Further evidence shows that the relation between non-discretionary loan loss provisions and credit fluctuations does not vary among different types of banks. Overall, our study shows that non-discretionary loan loss provisions can increase credit fluctuation and therefore strengthen banks’ pro-cyclical behavior.     

Deciphering ‘Islamic hospitality’: Developments,challenges and opportunities

This paper examines the principles and practices of Islamic hospitality, outlining the diverse ways in which Islam intersects with ‘hospitality’ and the ‘hospitality industry’. The intangible elements of Islamic hospitality are initially discussed, particularly the importance of the host–guest relationship and differing cultural interpretations. The discussion then evaluates the tangible aspects of Islamic hospitality through identifying trends, developments and challenges within the hotel sector, the food production and service sector, and the festivals and events sector. The work adopts a global perspective, examining Islamic hospitality with reference to both OIC (Organization of Islamic Cooperation) countries and non-OIC countries. The paper also considers new sector opportunities and acknowledges the social difficulties associated with the development of Islamic hospitality within the Western world, notably Islamophobia. Finally, the paper indicates ways forward for future research.