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Capital structure of Islamic banks: a critical review of theoretical and empirical research

Capital structure of Islamic banks: a critical review of theoretical and empirical research PurposeThis paper aims to critically evaluate theoretical and empirical research into capital structure practices in Islamic banks (IBs) from four perspectives, namely, theoretical aspect and its nature, determinants of capital structure in IBs, links between capital structure and risk management and nexus between capital structure and performance of IBs.Design/methodology/approachThe authors will review and examine past studies on IBs’ capital structure from both theoretical and empirical research.FindingsThe paper concludes that most of the literature on IB capital structure is largely theoretical than empirical. The existing studies on IB capital structure have various limitations, which suggest a need for detailed empirical work. Detailed empirical research in the field of capital structure will support bank managers and policymakers in making decisions about improving capital structure.Originality/valueThis research will make several noteworthy contributions to address literature gaps for IB capital structure. Furthermore, this paper will identify areas for future research into capital structure practices and IB financing decisions. Lastly, this paper will equip regulators with guidelines for establishing sound capital requirements for IB. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Qualitative Research in Financial Markets Emerald Publishing

Capital structure of Islamic banks: a critical review of theoretical and empirical research

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1755-4179
DOI
10.1108/QRFM-01-2017-0007
Publisher site
See Article on Publisher Site

Abstract

PurposeThis paper aims to critically evaluate theoretical and empirical research into capital structure practices in Islamic banks (IBs) from four perspectives, namely, theoretical aspect and its nature, determinants of capital structure in IBs, links between capital structure and risk management and nexus between capital structure and performance of IBs.Design/methodology/approachThe authors will review and examine past studies on IBs’ capital structure from both theoretical and empirical research.FindingsThe paper concludes that most of the literature on IB capital structure is largely theoretical than empirical. The existing studies on IB capital structure have various limitations, which suggest a need for detailed empirical work. Detailed empirical research in the field of capital structure will support bank managers and policymakers in making decisions about improving capital structure.Originality/valueThis research will make several noteworthy contributions to address literature gaps for IB capital structure. Furthermore, this paper will identify areas for future research into capital structure practices and IB financing decisions. Lastly, this paper will equip regulators with guidelines for establishing sound capital requirements for IB.

Journal

Qualitative Research in Financial MarketsEmerald Publishing

Published: Aug 7, 2017

References