Risk implications and discretionary financial reporting of Islamic financial institutions : a collection of research essays

Farook, SZ

Risk implications and discretionary financial reporting of Islamic financial institutions : a collection of research essays

Farook, SZ

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Publication Type:: Thesis
Issue Date:: 2009

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Field	Value	Language
dc.contributor.author	Farook, SZ
dc.date.accessioned	2014-12-12T04:05:22Z
dc.date.available	2014-12-12T04:05:22Z
dc.date.issued	2009
dc.identifier.uri	http://hdl.handle.net/10453/30566
dc.description	University of Technology, Sydney. Faculty of Business.	en_US
dc.description	NO FULL TEXT AVAILABLE. This thesis contains 3rd party copyright material. The hardcopy may be available for consultation at the UTS Library.
dc.description.abstract	NO FULL TEXT AVAILABLE. This thesis contains 3rd party copyright material. ----- Islamic banks are uniquely characterised by religious constraints that prohibit interest based activities. Instead, Islamic banks enter into performance based contracts with depositors who are paid a pre-agreed share of profits (less a management fee) earned for the year. However, it is anecdotally evident that some of these banks pay distributions that mimic competitive deposit interest rates, which may be far removed from the underlying performance of the bank. Moreover, the religious constraints result in a substantial portion of fixed return financing assets. Among other effects, these are likely to have significant implications for shareholder earnings' performance which may consequently impact the bank managers' incentives to utilise discretionary accounting choice. In this collection of research essays, I first investigate the factors associated with the 'management' of profit distributions to depositors. I find some, though limited, support to suggest that such profit distribution management is directly related to religiosity, financial development, asset composition, and existence of discretionary reserves, while it is inversely related to market familiarity with Islamic banking, market concentration, depositor funding reliance and the age of the Islamic bank. In the second study, I find that the financial stability of Islamic banks is inversely related to the level of fixed rate assets, profit sharing assets and the existence of discretionary reserves. The results of the third study suggest that some loan loss provisioning decisions may be associated with the extent of profit distribution management, with Islamic banks consistently reporting lower loan loss provision expense.	en_US
dc.format	Thesis (PhD)	en_US
dc.language.iso	en	en_US
dc.rights	The author owns the copyright in this thesis including all reproduction and reuse rights for the work. The work may not be altered without the permission of the copyright owner. Attribution is essential when quoting or paraphrasing from this thesis.
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	Islamic banking and finance.	en_US
dc.subject	Accounting for Islamic finance.	en_US
dc.title	Risk implications and discretionary financial reporting of Islamic financial institutions : a collection of research essays	en_US
dc.type	Thesis
utslib.copyright.status	closed_access

Abstract:

NO FULL TEXT AVAILABLE. This thesis contains 3rd party copyright material. ----- Islamic banks are uniquely characterised by religious constraints that prohibit interest based activities. Instead, Islamic banks enter into performance based contracts with depositors who are paid a pre-agreed share of profits (less a management fee) earned for the year. However, it is anecdotally evident that some of these banks pay distributions that mimic competitive deposit interest rates, which may be far removed from the underlying performance of the bank. Moreover, the religious constraints result in a substantial portion of fixed return financing assets. Among other effects, these are likely to have significant implications for shareholder earnings' performance which may consequently impact the bank managers' incentives to utilise discretionary accounting choice. In this collection of research essays, I first investigate the factors associated with the 'management' of profit distributions to depositors. I find some, though limited, support to suggest that such profit distribution management is directly related to religiosity, financial development, asset composition, and existence of discretionary reserves, while it is inversely related to market familiarity with Islamic banking, market concentration, depositor funding reliance and the age of the Islamic bank. In the second study, I find that the financial stability of Islamic banks is inversely related to the level of fixed rate assets, profit sharing assets and the existence of discretionary reserves. The results of the third study suggest that some loan loss provisioning decisions may be associated with the extent of profit distribution management, with Islamic banks consistently reporting lower loan loss provision expense.

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