What Drives Islamic Banks Profitability in the Gulf Cooperation Council Countries?
The purpose of this paper was to assess the profitability determinants of commercial Islamic banks in Gulf Cooperation Council (GCC) countries during the period 2005-2019. The literature review reveals the lack of consensus on the fundamental Islamic banking profitability drivers in these countries...
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İLKE İlim Kültür Eğitim Vakfı
2023-02-01
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| Series: | Türkiye İslam İktisadı Dergisi |
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| Online Access: | https://tujise.org/content/6-issues/20-10-1/2-what-drives-islamic-banks-profitability-in-the-gulf-cooperation-council-countries/tujise-a3391.pdf |
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| author | Hichem Hamza |
| author_facet | Hichem Hamza |
| author_sort | Hichem Hamza |
| collection | DOAJ |
| description | The purpose of this paper was to assess the profitability determinants of commercial Islamic banks in Gulf Cooperation Council (GCC) countries during the period 2005-2019. The literature review reveals the lack of consensus on the fundamental Islamic banking profitability drivers in these countries considered as the core of the Islamic banking industry in the world. This paper, therefore, considered the most potent factors that might influence the profitability of Islamic banks in countries that rely on a dual banking system. This study used the panel data methodology and Generalized Method of Moments (GMM) estimation with a robustness check. The results reveal that the Islamic banks profitability is strongly influenced by the assets quality, deposits position and cost efficiency. The sizable Islamic banks are not the most robust in profits generation and therefore a reduced size could be recommended for profitability. The capitalisation does not play a crucial role in profitability which might support the tendency of Islamic banks to the leverage-based financing strategy. The effect of the crisis is for the most part evident, which makes the Islamic banks stability view questionable during a crisis period. Liquidity is not determinant for the Islamic banks profitability. Similar results were reached for the macroeconomic variables, which highlights the weak relationship of Islamic bank profitability with the real economy. |
| format | Article |
| id | doaj-art-ea58948226984bfba9e73eee0b419475 |
| institution | Kabale University |
| issn | 2148-3809 |
| language | English |
| publishDate | 2023-02-01 |
| publisher | İLKE İlim Kültür Eğitim Vakfı |
| record_format | Article |
| series | Türkiye İslam İktisadı Dergisi |
| spelling | doaj-art-ea58948226984bfba9e73eee0b4194752025-01-03T01:36:14ZengİLKE İlim Kültür Eğitim VakfıTürkiye İslam İktisadı Dergisi2148-38092023-02-01 101 193810.26414/A3391What Drives Islamic Banks Profitability in the Gulf Cooperation Council Countries?Hichem Hamza0https://orcid.org/0000-0001-6592-9302King Abdulaziz UniversityThe purpose of this paper was to assess the profitability determinants of commercial Islamic banks in Gulf Cooperation Council (GCC) countries during the period 2005-2019. The literature review reveals the lack of consensus on the fundamental Islamic banking profitability drivers in these countries considered as the core of the Islamic banking industry in the world. This paper, therefore, considered the most potent factors that might influence the profitability of Islamic banks in countries that rely on a dual banking system. This study used the panel data methodology and Generalized Method of Moments (GMM) estimation with a robustness check. The results reveal that the Islamic banks profitability is strongly influenced by the assets quality, deposits position and cost efficiency. The sizable Islamic banks are not the most robust in profits generation and therefore a reduced size could be recommended for profitability. The capitalisation does not play a crucial role in profitability which might support the tendency of Islamic banks to the leverage-based financing strategy. The effect of the crisis is for the most part evident, which makes the Islamic banks stability view questionable during a crisis period. Liquidity is not determinant for the Islamic banks profitability. Similar results were reached for the macroeconomic variables, which highlights the weak relationship of Islamic bank profitability with the real economy.https://tujise.org/content/6-issues/20-10-1/2-what-drives-islamic-banks-profitability-in-the-gulf-cooperation-council-countries/tujise-a3391.pdfislamic banksprofitabilitygccgmm system |
| spellingShingle | Hichem Hamza What Drives Islamic Banks Profitability in the Gulf Cooperation Council Countries? Türkiye İslam İktisadı Dergisi islamic banks profitability gcc gmm system |
| title | What Drives Islamic Banks Profitability in the Gulf Cooperation Council Countries? |
| title_full | What Drives Islamic Banks Profitability in the Gulf Cooperation Council Countries? |
| title_fullStr | What Drives Islamic Banks Profitability in the Gulf Cooperation Council Countries? |
| title_full_unstemmed | What Drives Islamic Banks Profitability in the Gulf Cooperation Council Countries? |
| title_short | What Drives Islamic Banks Profitability in the Gulf Cooperation Council Countries? |
| title_sort | what drives islamic banks profitability in the gulf cooperation council countries |
| topic | islamic banks profitability gcc gmm system |
| url | https://tujise.org/content/6-issues/20-10-1/2-what-drives-islamic-banks-profitability-in-the-gulf-cooperation-council-countries/tujise-a3391.pdf |
| work_keys_str_mv | AT hichemhamza whatdrivesislamicbanksprofitabilityinthegulfcooperationcouncilcountries |