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Bankruptcy Forecasting and Economic Sustainability Profile of the Market Leading Islamic Banking Countries

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Listed:
  • Amin Jan

    (Universiti Teknologi Petronas, Seri Iskandar, Malaysia)

  • Maran Marimuthu

    (Universiti Teknologi Petronas, Seri Iskandar, Malaysia)

  • Muhammad Pisol bin Mohd @ Mat Isa

    (Universiti Teknologi Petronas, Seri Iskandar, Malaysia)

  • Muhammad Kashif Shad

    (Universiti Teknologi Petronas, Seri Iskandar, Malaysia)

Abstract

This study used bankruptcy forecasting as a proxy for measuring economic sustainability profile of the Islamic banks in the market leading Islamic banking countries. The countries are Malaysia, Saudi Arabia, Iran, UAE and Kuwait. A sample of 29 Islamic banks with a post-crisis period data from 2009-2013 was collected for empirical testing. Results indicated that Saudi Arabian Islamic banks recorded the most minimal bankruptcy rate of 29 percent, followed by UAE with 31 percent, Kuwait with 48 percent, Malaysia with 55 percent and Iran with 68 percent respectively. The results further indicated that profitability, liquidity, insolvency, and productivity ratios have a significant positive impact on bankruptcy profile of the selected Islamic banks. This study lends credence to multiple stakeholders for taking appropriate measures regarding the deteriorating economic sustainability of the Islamic banks in the market leading Islamic banking countries. It also urges to develop a separate Shariah-based sustainability measurement framework for the Islamic banks.

Suggested Citation

  • Amin Jan & Maran Marimuthu & Muhammad Pisol bin Mohd @ Mat Isa & Muhammad Kashif Shad, 2019. "Bankruptcy Forecasting and Economic Sustainability Profile of the Market Leading Islamic Banking Countries," International Journal of Asian Business and Information Management (IJABIM), IGI Global, vol. 10(2), pages 73-90, April.
    • Handle: RePEc:igg:jabim0:v:10:y:2019:i:2:p:73-90
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    Cited by:

    1. Syed Quaid Ali Shah & Fong-Woon Lai & Muhammad Kashif Shad & Zdeňka Konečná & Feybi Ariani Goni & Abdoulmohammad Gholamzadeh Chofreh & Jiří Jaromír Klemeš, 2021. "The Inclusion of Intellectual Capital into the Green Board Committee to Enhance Firm Performance," Sustainability, MDPI, vol. 13(19), pages 1-21, September.
    2. Mehreen Mehreen & Maran Marimuthu & Samsul Ariffin Abdul Karim & Amin Jan, 2020. "Proposing a Multidimensional Bankruptcy Prediction Model: An Approach for Sustainable Islamic Banking," Sustainability, MDPI, vol. 12(8), pages 1-18, April.
    3. Amin Jan & Maran Marimuthu & Rohail Hassan & Mehreen, 2019. "Sustainable Business Practices and Firm’s Financial Performance in Islamic Banking: Under the Moderating Role of Islamic Corporate Governance," Sustainability, MDPI, vol. 11(23), pages 1-25, November.

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