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Proposing a Multidimensional Bankruptcy Prediction Model: An Approach for Sustainable Islamic Banking

Mehreen Mehreen (), Maran Marimuthu (), Samsul Ariffin Abdul Karim () and Amin Jan ()
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Mehreen Mehreen: Department of Management and Humanities, Universiti Teknologi PETRONAS, Bandar Seri Iskandar, Seri Iskandar 32610, Perak, Malaysia
Maran Marimuthu: Department of Management and Humanities, Universiti Teknologi PETRONAS, Bandar Seri Iskandar, Seri Iskandar 32610, Perak, Malaysia
Samsul Ariffin Abdul Karim: Fundamental and Applied Sciences Department and Centre for Smart Grid Energy Research (CSMER), Institute of Autonomous System, Universiti Teknologi PETRONAS, Bandar Seri Iskandar, Seri Iskandar 32610, Perak Darul Ridzuan, Malaysia
Amin Jan: Department of Management and Humanities, Universiti Teknologi PETRONAS, Bandar Seri Iskandar, Seri Iskandar 32610, Perak, Malaysia

Sustainability, 2020, vol. 12, issue 8, 1-18

Abstract: The main purpose of this study is to conceptualize a sustainable banking model for Islamic banking by blending three essential business aspects namely financial performance, Islamic corporate governance, and sustainability practices dimension. In the case of Islamic banking, evidence shows that a Shariah-based bankruptcy prediction model for apprehending the true bankruptcy prediction is over-sighted. This study offers an efficient Shariah-based bankruptcy prediction model by first, reviewing the previously applied conventional bankruptcy prediction models; secondly, by developing and proposing a robust, multidimensional model for predicting bankruptcy in Islamic banking. This framework may have profound implications on the existing bankruptcy evaluation structure of the Islamic banking industry and may provide a strong sustainability management guideline to the global Islamic banking industry.

Keywords: bankruptcy prediction; financial performance; Islamic banking; sustainability; Shariah governance (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
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