IDEAS home Printed from https://ideas.repec.org/a/eco/journ1/2015-04-02.html
   My bibliography  Save this article

Reputation Risk and its Impact on the Islamic Banks: Case of the Murabaha

Author

Listed:
  • Mohamad Sabri Haron

    (Department of Pusat Citra University, Department of Institute of Malaysia and International Studies (IKMAS), Universiti Kebangsaan Malaysia, Bangi, Selangor, Malaysia,)

  • Rashila Ramli

    (Department of IKMAS, Director of Institute of Malaysia and International Studies (IKMAS), Universiti Kebangsaan Malaysia, Bangi, Selangor, Malaysia,)

  • Malek Marwan Yousef Injas

    (Department of Economic Development, PHD student at Institute of Malaysia and International Studies (IKMAS), Universiti Kebangsaan Malaysia, Bangi, Selangor, Malaysia,)

  • Raghad Azzam Injas

    (Department of Economic Development, Master student at Institute of Malaysia and International Studies (IKMAS), Universiti Kebangsaan Malaysia, Bangi, Selangor, Malaysia.)

Abstract

Murabaha to the purchase orderer (MPO) is a rival product in the Islamic banking (IBs) system. It is implemented in the most of IBs. However, there is a controversy among contemporary jurists (Shari'ah Supervisory Board [SSBs]) in the mechanism of the implementation of this product. The objective of this study is to show the controversial issues related to the product of Murabaha and to identify its impact on the bank's reputation. This study is an exploratory study therefore, based on the literature review relating to the issues of MPO, reputation risk, and non-compliance risk. This study tries to describe and reveal the relationship between reputation and non-compliance risk. As well as revealing the impact of reputation risk on the IB stability and financial performance. It aims to brought the attention of decision-makers regarding consequences of these risks. At the end of this paper, concluded that the IBs like all other corporations, affected by the risks reputation, despite their principles that based on Islamic precepts.

Suggested Citation

  • Mohamad Sabri Haron & Rashila Ramli & Malek Marwan Yousef Injas & Raghad Azzam Injas, 2015. "Reputation Risk and its Impact on the Islamic Banks: Case of the Murabaha," International Journal of Economics and Financial Issues, Econjournals, vol. 5(4), pages 854-859.
    • Handle: RePEc:eco:journ1:2015-04-02
    as

    Download full text from publisher

    File URL: http://www.econjournals.com/index.php/ijefi/article/download/1406/pdf
    Download Restriction: no
    File URL: http://www.econjournals.com/index.php/ijefi/article/view/1406/pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hennie Van Greuning & Zamir Iqbal, 2008. "Risk Analysis for Islamic Banks," World Bank Publications - Books, The World Bank Group, number 6923.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mohammad Saifuzzaman, 2023. "A Review of Challenges and Solutions in the Use of Murabaha Products in Islamic Banking," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(7), pages 906-918, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Khawla Bourkhis & Mahmoud Sami Nabi, 2011. "Have Islamic Banks Been More Resistant Than Conventional Banks to the 2007-2008 Financial Crisis?," Working Papers 616, Economic Research Forum, revised 08 Jan 2011.
    2. Djelassi, Mouldi & Boukhatem, Jamel, 2020. "Modelling liquidity management in Islamic banks from a microeconomic perspective," Finance Research Letters, Elsevier, vol. 36(C).
    3. Metin Aktas & Osman Taylan, 2021. "Determinants of Islamic Banks’ Profitability Using Panel Data Analysis and ANFIS Approaches in Saudi Arabia محددات ربحية المصارف الإسلامية باستخدام تحليل البيانات المَقْطعية وأساليب الاستدلال التَّكَي," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 34(2), pages 19-40, July.
    4. Osama Omar Jaara & Bassam Omar Jaara & Jamal Shamieh & Usama Adnan Fendi, 2017. "Liquidity Risk Exposure in Islamic and Conventional Banks," International Journal of Economics and Financial Issues, Econjournals, vol. 7(6), pages 16-26.
    5. Saeed, Momna & Izzeldin, Marwan, 2016. "Examining the relationship between default risk and efficiency in Islamic and conventional banks," Journal of Economic Behavior & Organization, Elsevier, vol. 132(S), pages 127-154.
    6. Girish Karunakaran Nair & Harsh Purohit & Nidhi Choudhary, 2014. "Influence of Risk Management on Performance: An Empirical Study of International Islamic Bank," International Journal of Economics and Financial Issues, Econjournals, vol. 4(3), pages 549-563.
    7. Hassan B. Ghassan & Stefano Fachin, 2016. "Time series analysis of financial stability of banks: Evidence from Saudi Arabia," Review of Financial Economics, John Wiley & Sons, vol. 31(1), pages 3-17, November.
    8. Zulkhibri Abdul Majid , Muhamed & Ghazal , Reza, 2012. "Comparative Analysis of Islamic Banking Supervision and Regulation Development," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 6(3), pages 113-162, April.
    9. Karbhari, Yusuf & Muye, Ibrahim & Hassan, Ahmad Fahmi S. & Elnahass, Marwa, 2018. "Governance mechanisms and efficiency: Evidence from an alternative insurance (Takaful) market," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 56(C), pages 71-92.
    10. Nabi, Mahmoud Sami, 2012. "Dual Banking and Financial Contagion," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 20, pages 29-54.
    11. Hassan, M. Kabir & Aliyu, Sirajo, 2018. "A contemporary survey of islamic banking literature," Journal of Financial Stability, Elsevier, vol. 34(C), pages 12-43.
    12. Islahi, Abdul Azim, 2013. "First vs. second generation Islamic economists: Deviations and differences in thoughts," MPRA Paper 68353, University Library of Munich, Germany, revised 2015.
    13. Md. Kausar Alama & Suhaimi Ab. Rahmanb & Oli Ahad Thakurc & Md Abdul Bashird & and Sharif Hosene, 2020. "The Reasons Behind the Absence of a Comprehensive Shariah Governance Framework of Islamic Banks in Bangladesh," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 134-145.
    14. Fauziah Mahat & Noor Azman Ali, 2015. "The Roles of Risk Governance on Islamic Banking Systems," Proceedings of International Academic Conferences 2705187, International Institute of Social and Economic Sciences.
    15. Shinta Amalina Hazrati Havidz & Chandra Setiawan, 2015. "A Comparative Study of Efficiency between Conventional and Islamic Banks in Indonesia," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(5), pages 790-804, May.
    16. NEIFAR, Malika & Gharbi, Leila, 2020. "Islamic vs Conventional banks: what differences ? Tunisian case," MPRA Paper 102972, University Library of Munich, Germany.
    17. Athari, Seyed Alireza & Adaoglu, Cahit & Bektas, Eralp, 2016. "Investor protection and dividend policy: The case of Islamic and conventional banks," Emerging Markets Review, Elsevier, vol. 27(C), pages 100-117.
    18. Saeed, Momna & Izzeldin, Marwan & Hassan, M. Kabir & Pappas, Vasileios, 2020. "The inter-temporal relationship between risk, capital and efficiency: The case of Islamic and conventional banks," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    19. Kaouther Toumi Lajimi & Rana El Bahsh & Serge Agbodjo, 2017. "The determinants of bank profitability, does Islamic ethics perspective matter ? A comprehensive study on Islamic banks vs. Conventional ones," Post-Print hal-04109833, HAL.
    20. Mohd. Yusof, Rosylin & Bahlous, Mejda & Tursunov, Hamza, 2015. "Are Profit Sharing Rates of Mudharabah Account Linked to Interest Rates? An Investigation on Islamic Banks in GCC Countries," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 49(2), pages 77-86.

    More about this item

    Keywords

    Murabaha to the Purchase Orderer; Reputational Risks; Non-compliance Risks; Islamic Bank;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ1:2015-04-02. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.