Disclosure, risk and performance in islamic banking

A panel data analysis

Wan Hakimah Wan Ibrahim, Abd. Ghafar Ismail, Wan Najihah Wan Mohd Zabaria

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

This study provides a panel data analysis of the interrelationship among disclosure, risk and performance and also discusses the possible of endogeneity and exogeneity of dependent variables. In order to find the interrelations among these variables, we use eleven samples of full-fledged Islamic banks and Islamic windows between the years 2002 to 2006. The estimated results are as follows. All equations are not fit since all variables cannot explain the dependent variables significantly. Since there are three equations, we try to estimate these equations using simultaneous equations approach. The results indicate that all equations are almost efficient and our findings suggest that LEVERAGE and PROFIT are statistically significant in determining DISCLOSURE. Meanwhile, the result also suggests that DISCLOSURE and PROFIT are significant in explaining LEVERAGE. For the last equation which treats PROFIT as an endogenous variable, shows that DISCLOSURE is significant in explaining PROFIT among samples of Islamic banks. Furthermore, we have conducted the Granger-Causality test to check the endogeneity and exogeneity among the variables. The Granger-Causality results suggest that, DISCLOSURE has a possibility to be a dependent variable compared to LEVERAGE and PROFIT. Therefore, the regulatory authority should develop a policy in order to enhance the quality of disclosure in Islamic banking system.

Original languageEnglish
Pages (from-to)100-114
Number of pages15
JournalInternational Research Journal of Finance and Economics
Volume72
Publication statusPublished - Aug 2011

Fingerprint

Panel data analysis
Islamic banking
Risk disclosure
Islamic financial institutions
Exogeneity
Endogeneity
Authority
Banking system
Simultaneous equations
Interrelationship
Granger causality
Disclosure
Granger causality test
Endogenous variables

Keywords

  • Disclosures
  • Financial reporting for financial institutions
  • Granger- causality
  • Islamic banking
  • Panel data
  • Performances
  • Risks
  • Simultaneous equation method

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

Cite this

Disclosure, risk and performance in islamic banking : A panel data analysis. / Ibrahim, Wan Hakimah Wan; Ismail, Abd. Ghafar; Zabaria, Wan Najihah Wan Mohd.

In: International Research Journal of Finance and Economics, Vol. 72, 08.2011, p. 100-114.

Research output: Contribution to journalArticle

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