The impact of shariah compliance on the financial performance of Malaysian Islamic banks: Moderating effect of Shariah Committee

The positioning of Islamic banks as economic or social entities has been prominently debated on a global scale as Islamic bank social practices are still being neglected following their current emphasis on financial performance. Hence, this study investigates the relationship between Shariah complia...

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Main Author:	Muhammad Ahmar, Ali
Format:	Thesis
Language:	eng eng
Published:	2023
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/10568/1/Grant%20the%20permission_s903277.pdf https://etd.uum.edu.my/10568/2/s903277_01.pdf
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id	my-uum-etd.10568
record_format	uketd_dc
spelling	my-uum-etd.105682023-07-16T01:25:36Z The impact of shariah compliance on the financial performance of Malaysian Islamic banks: Moderating effect of Shariah Committee 2023 Muhammad Ahmar, Ali Shuib, Mohd Sollehudin Islamic Business School Islamic Business School HG Finance The positioning of Islamic banks as economic or social entities has been prominently debated on a global scale as Islamic bank social practices are still being neglected following their current emphasis on financial performance. Hence, this study investigates the relationship between Shariah compliance and the financial performance of Malaysian Islamic banks, as well as the moderating effect of the effectiveness of the Shariah Committee. Six Shariah compliance indicators represent the independent variables of the study. Meanwhile, the study's dependent variable is financial performance proxied by Return on Assets (ROA) and Return on Equity (ROE). The study uses panel data analysis, whereby the annual reports of 16 Islamic banks in Malaysia were analysed over ten years from 2010 to 2019. Panel regression models consisting of random and fixed effects are incorporated for data evaluation. The study's findings show a significant influence of Shariah-compliant financing, Zakat, advertising and operational efficiency on financial performance represented by ROA. At the same time, the ROE model reports a significant influence of Zakat, advertising, non-performing financing and operational efficiency on the ROE of the banks. In addition, the effectiveness of the Shariah Committee moderates the influence of Shariah-compliant financing, Zakat, advertising, household financing and operational efficiency on the ROA of the banks. Further, the findings reveal that the Shariah Committee can moderate the influence of Zakat, advertising, non-performing financing and operational efficiency on the ROE of the banks. The study outcomes offer pivotal insights into effective Shariah committee roles in Malaysia, especially for the Shariah Advisory Council (SAC) of Bank Negara Malaysia (BNM) to implicitly optimise Islamic bank financial performance. 2023 Thesis https://etd.uum.edu.my/10568/ https://etd.uum.edu.my/10568/1/Grant%20the%20permission_s903277.pdf text eng staffonly https://etd.uum.edu.my/10568/2/s903277_01.pdf text eng public other doctoral Universiti Utara Malaysia
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Shuib, Mohd Sollehudin
topic	HG Finance
spellingShingle	HG Finance Muhammad Ahmar, Ali The impact of shariah compliance on the financial performance of Malaysian Islamic banks: Moderating effect of Shariah Committee
description	The positioning of Islamic banks as economic or social entities has been prominently debated on a global scale as Islamic bank social practices are still being neglected following their current emphasis on financial performance. Hence, this study investigates the relationship between Shariah compliance and the financial performance of Malaysian Islamic banks, as well as the moderating effect of the effectiveness of the Shariah Committee. Six Shariah compliance indicators represent the independent variables of the study. Meanwhile, the study's dependent variable is financial performance proxied by Return on Assets (ROA) and Return on Equity (ROE). The study uses panel data analysis, whereby the annual reports of 16 Islamic banks in Malaysia were analysed over ten years from 2010 to 2019. Panel regression models consisting of random and fixed effects are incorporated for data evaluation. The study's findings show a significant influence of Shariah-compliant financing, Zakat, advertising and operational efficiency on financial performance represented by ROA. At the same time, the ROE model reports a significant influence of Zakat, advertising, non-performing financing and operational efficiency on the ROE of the banks. In addition, the effectiveness of the Shariah Committee moderates the influence of Shariah-compliant financing, Zakat, advertising, household financing and operational efficiency on the ROA of the banks. Further, the findings reveal that the Shariah Committee can moderate the influence of Zakat, advertising, non-performing financing and operational efficiency on the ROE of the banks. The study outcomes offer pivotal insights into effective Shariah committee roles in Malaysia, especially for the Shariah Advisory Council (SAC) of Bank Negara Malaysia (BNM) to implicitly optimise Islamic bank financial performance.
format	Thesis
qualification_name	other
qualification_level	Doctorate
author	Muhammad Ahmar, Ali
author_facet	Muhammad Ahmar, Ali
author_sort	Muhammad Ahmar, Ali
title	The impact of shariah compliance on the financial performance of Malaysian Islamic banks: Moderating effect of Shariah Committee
title_short	The impact of shariah compliance on the financial performance of Malaysian Islamic banks: Moderating effect of Shariah Committee
title_full	The impact of shariah compliance on the financial performance of Malaysian Islamic banks: Moderating effect of Shariah Committee
title_fullStr	The impact of shariah compliance on the financial performance of Malaysian Islamic banks: Moderating effect of Shariah Committee
title_full_unstemmed	The impact of shariah compliance on the financial performance of Malaysian Islamic banks: Moderating effect of Shariah Committee
title_sort	impact of shariah compliance on the financial performance of malaysian islamic banks: moderating effect of shariah committee
granting_institution	Universiti Utara Malaysia
granting_department	Islamic Business School
publishDate	2023
url	https://etd.uum.edu.my/10568/1/Grant%20the%20permission_s903277.pdf https://etd.uum.edu.my/10568/2/s903277_01.pdf
_version_	1776103844651991040

The impact of shariah compliance on the financial performance of Malaysian Islamic banks: Moderating effect of Shariah Committee

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