Explaining intermediation costs of Islamic banks in OIC countries

Nurhafiza Abdul Kader Malim, Mansor Ibrahim and Mohamed Shah

Chapter 17 in Handbook of Empirical Research on Islam and Economic Life, 2017, pp 395-410 from Edward Elgar Publishing

Abstract: This chapter empirically examines the financial intermediation costs as represented by net financing margins in the Organization of Islamic Cooperation Islamic banking sector during the period 2005 to 2011 by focusing on the roles played by various bank-specific, macroeconomic-specific and institutional-governance factors. The results indicate that risk aversion, bank size and inflation are robustly related to the margins. Some evidence supporting the significance of credit risk and gross domestic product growth in explaining the margin is also documented. Interestingly, the overhead costs, market concentration and institutional-governance factors have no significant impact on the intermediation costs of Islamic banks. Our results demonstrate important policy implications in narrowing the intermediation costs of Islamic banks, namely, enhancement of risk management instruments, scale efficiency, innovation in Islamic banking products and macroeconomic stability.

Keywords: Asian Studies; Economics and Finance (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.elgaronline.com/view/9781784710729.00026.xml (application/pdf)
Our link check indicates that this URL is bad, the error code is: 503 Service Temporarily Unavailable

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:elg:eechap:16049_17

Ordering information: This item can be ordered from
http://www.e-elgar.com

Access Statistics for this chapter

More chapters in Chapters from Edward Elgar Publishing
Bibliographic data for series maintained by Darrel McCalla ().