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Short-Term and Long-Term Effects of Sharia Supervision on Banks' Performance

Authors: Azam Ahmadyan;

Short-Term and Long-Term Effects of Sharia Supervision on Banks' Performance

Abstract

Today, in Islamic societies, the importance of a sharia-based evaluation of banking is recognized more than ever. As a result, many Islamic countries have formed sharia supervision committees and compiled the necessary regulations to determine the duties, responsibilities, and functions of these committees. In Iran, also, in 2022, it was decided to set independent sharia supervisors in banks. What is important is the quantification of the short-term and long-term effects of this presence on the performance of the country's banks. In this article a dummy variable has been defined for sharia supervision, and the criteria of equipping and allocating resources, asset quality, and health rating are used to measure banks' performances. The ARDL model has been used to estimate short-term and long-term relationships. The article's most important findings indicate a negative and significant relationship between sharia supervision and resource allocation and banks' health rating in the short term, and a positive and significant long-term one. Also, sharia supervision does not affect the quality of assets in the short term, but it does have a positive and significant effect in the long term. Hence, in the long run, sharia supervision can reduce the ratio of non-performing loans to total loans.

Keywords

Islamic law, ardl model, HG1-9999, camels, asset quality, KBP1-4860, shariah supervision, Finance

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
0
Average
Average
Average
gold