The impact of efficiency on discretionary loans/finance loss provision: a comparative study of Islamic and conventional banks

The impact of efficiency on discretionary loans/finance loss provision: a comparative study of Islamic and conventional banks

The paper investigates whether there is a significance difference between the practices of discretionary loan/finance loss provisions between Islamic and conventional banks. Same time, the paper tests whether the efficiency may influence the behaviour of discretionary loans/finance loss provisions...

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Main Authors: Shawtari, Fekri Ali, Saiti, Buerhan, Abdul Razak, Shaikh Hamzah, Ariff, Mohamed
Format: Article
Language:English
English
Published: Elsevier 2015
Subjects:
HG1501 Banking
Online Access:http://irep.iium.edu.my/44695/
http://irep.iium.edu.my/44695/
http://irep.iium.edu.my/44695/
http://irep.iium.edu.my/44695/1/bank.pdf
http://irep.iium.edu.my/44695/4/44695_the_impact_of_efficiency_scopus.pdf
id iium-44695
recordtype eprints
spelling iium-446952017-10-12T04:34:05Z http://irep.iium.edu.my/44695/ The impact of efficiency on discretionary loans/finance loss provision: a comparative study of Islamic and conventional banks Shawtari, Fekri Ali Saiti, Buerhan Abdul Razak, Shaikh Hamzah Ariff, Mohamed HG1501 Banking The paper investigates whether there is a significance difference between the practices of discretionary loan/finance loss provisions between Islamic and conventional banks. Same time, the paper tests whether the efficiency may influence the behaviour of discretionary loans/finance loss provisions, taken into consideration other micro and macro variables. The study utilizes panel data runs over 1996e2011 with unbalanced observations for 16 banks, of which 4 Islamic banks. In order to achieve research objectives, the two-stage approach is adopted to examine the factors that may influence the behaviour of discretionary loan/finance loss provisions with specific emphasize on the efficiency. Furthermore, efficiency scores are estimated using Data Envelopment Windows Analysis. The findings of the research show that Islamic banks employ the discretionary loans/finance loss provisions to manage their earnings. However, the magnitude of discretion of accruals is significantly lower than conventional banks with exception for foreign banks which have reported lower discretionary loans/finance loss provisions than Islamic banks. Moreover, the analysis showed that efficiency affects the overall discretionary loans/finance loss provision positively, although this impact is shaped differently for Islamic and conventional banks. Elsevier 2015-12-01 Article PeerReviewed application/pdf en http://irep.iium.edu.my/44695/1/bank.pdf application/pdf en http://irep.iium.edu.my/44695/4/44695_the_impact_of_efficiency_scopus.pdf Shawtari, Fekri Ali and Saiti, Buerhan and Abdul Razak, Shaikh Hamzah and Ariff, Mohamed (2015) The impact of efficiency on discretionary loans/finance loss provision: a comparative study of Islamic and conventional banks. Borsa Istanbul Review, 15 (4). pp. 272-282. ISSN 2214-8450 http://www.sciencedirect.com/science/article/pii/S2214845015000277 10.1016/j.bir.2015.06.002
repository_type Digital Repository
institution_category Local University
institution International Islamic University Malaysia
building IIUM Repository
collection Online Access
language English
English
topic HG1501 Banking
spellingShingle HG1501 Banking
Shawtari, Fekri Ali
Saiti, Buerhan
Abdul Razak, Shaikh Hamzah
Ariff, Mohamed
The impact of efficiency on discretionary loans/finance loss provision: a comparative study of Islamic and conventional banks
description The paper investigates whether there is a significance difference between the practices of discretionary loan/finance loss provisions between Islamic and conventional banks. Same time, the paper tests whether the efficiency may influence the behaviour of discretionary loans/finance loss provisions, taken into consideration other micro and macro variables. The study utilizes panel data runs over 1996e2011 with unbalanced observations for 16 banks, of which 4 Islamic banks. In order to achieve research objectives, the two-stage approach is adopted to examine the factors that may influence the behaviour of discretionary loan/finance loss provisions with specific emphasize on the efficiency. Furthermore, efficiency scores are estimated using Data Envelopment Windows Analysis. The findings of the research show that Islamic banks employ the discretionary loans/finance loss provisions to manage their earnings. However, the magnitude of discretion of accruals is significantly lower than conventional banks with exception for foreign banks which have reported lower discretionary loans/finance loss provisions than Islamic banks. Moreover, the analysis showed that efficiency affects the overall discretionary loans/finance loss provision positively, although this impact is shaped differently for Islamic and conventional banks.
format Article
author Shawtari, Fekri Ali
Saiti, Buerhan
Abdul Razak, Shaikh Hamzah
Ariff, Mohamed
author_facet Shawtari, Fekri Ali
Saiti, Buerhan
Abdul Razak, Shaikh Hamzah
Ariff, Mohamed
author_sort Shawtari, Fekri Ali
title The impact of efficiency on discretionary loans/finance loss provision: a comparative study of Islamic and conventional banks
title_short The impact of efficiency on discretionary loans/finance loss provision: a comparative study of Islamic and conventional banks
title_full The impact of efficiency on discretionary loans/finance loss provision: a comparative study of Islamic and conventional banks
title_fullStr The impact of efficiency on discretionary loans/finance loss provision: a comparative study of Islamic and conventional banks
title_full_unstemmed The impact of efficiency on discretionary loans/finance loss provision: a comparative study of Islamic and conventional banks
title_sort impact of efficiency on discretionary loans/finance loss provision: a comparative study of islamic and conventional banks
publisher Elsevier
publishDate 2015
url http://irep.iium.edu.my/44695/
http://irep.iium.edu.my/44695/
http://irep.iium.edu.my/44695/
http://irep.iium.edu.my/44695/1/bank.pdf
http://irep.iium.edu.my/44695/4/44695_the_impact_of_efficiency_scopus.pdf
first_indexed 2023-09-18T21:03:32Z
last_indexed 2023-09-18T21:03:32Z
_version_ 1777410782152097792

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