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THE RELATIONSHIP BETWEEN BANK ORIENTATION AND SHUBUHAT: A STUDY ON ISLAMIC BANKS IN MALAYSIA

THE RELATIONSHIP BETWEEN BANK ORIENTATION AND SHUBUHAT: A STUDY ON ISLAMIC BANKS IN MALAYSIA Malaysia has a number of full-fledged Islamic banks including several foreign owned entities of conventional institutions who have established Islamic subsidiaries and also entities who are conducting foreign currency business (Central Bank of Malaysia 2011). Full-fledged Islamic banks can fully orientate all of their activities to the Islamic ideals; while the subsidiary Islamic banks cannot, since they are still a part of their holding banks, i.e. conventional banks. The objectives of this paper are, therefore, to firstly find out if there are such things as shubuhat in Islamic banks, and if there are; to secondly determine relationship between shubuhat and orientation of Islamic bank. A total of 21 Islamic banks in Malaysia representing the whole population were selected. Secondary data was used and sourced from the banks’ 2010 annual report. Using descriptive statistics, the existence and the extent of existence of shubuhat in Islamic banks operating in Malaysia was ascertained. It was found that shubuhat did exist in some Islamic banks, and the full-fledged Islamic banks had lesser shubuhat than the subsidiary Islamic banks. JEL codes: E5, G21, G24 Keywords: orientation of bank, doubtful activities (Shubuhat), Islamic banks http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Economics, Management, and Financial Markets Addleton Academic Publishers

THE RELATIONSHIP BETWEEN BANK ORIENTATION AND SHUBUHAT: A STUDY ON ISLAMIC BANKS IN MALAYSIA

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Publisher
Addleton Academic Publishers
Copyright
© 2009 Addleton Academic Publishers
ISSN
1842-3191
eISSN
1938-212X
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Abstract

Malaysia has a number of full-fledged Islamic banks including several foreign owned entities of conventional institutions who have established Islamic subsidiaries and also entities who are conducting foreign currency business (Central Bank of Malaysia 2011). Full-fledged Islamic banks can fully orientate all of their activities to the Islamic ideals; while the subsidiary Islamic banks cannot, since they are still a part of their holding banks, i.e. conventional banks. The objectives of this paper are, therefore, to firstly find out if there are such things as shubuhat in Islamic banks, and if there are; to secondly determine relationship between shubuhat and orientation of Islamic bank. A total of 21 Islamic banks in Malaysia representing the whole population were selected. Secondary data was used and sourced from the banks’ 2010 annual report. Using descriptive statistics, the existence and the extent of existence of shubuhat in Islamic banks operating in Malaysia was ascertained. It was found that shubuhat did exist in some Islamic banks, and the full-fledged Islamic banks had lesser shubuhat than the subsidiary Islamic banks. JEL codes: E5, G21, G24 Keywords: orientation of bank, doubtful activities (Shubuhat), Islamic banks

Journal

Economics, Management, and Financial Markets – Addleton Academic Publishers

Published: Jan 1, 2013

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