Financing risk management to anticipate financial distress in Islamic banks

Riana Afliha Eka Kurnia; Tjiptohadi Sawarjuwono; Sri Herianingrum

Submitted

January 10, 2018

Accepted

January 10, 2018

Published

December 10, 2017

Download

Word(EN) PDF(ID)

Statistic

Read Counter : 890 Download : 10860

Abstract

Uncertainty was not only found in conventional banks but also in Islamic banks. Financing risks in Islamic banks can occur because Islamic banks have made some modifications to sharia contracts used for financing to adjust general business of banks environments. Thus Islamic banks, like conventional ones, face risks and business issues. This study discusses how risk management at Bank Islam poses a risk to financial difficulties probability. This study will explain that Islamic banks should establish a risk management system by its functionality and complexity of the banks, and the system provides bank's risk management organization that suits with sharia principle to at least be able to avoid financial distress conditions.

License

Authors who publish with this journal agree to the following terms:

Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).

How to Cite

Kurnia, R. A. E., Sawarjuwono, T., & Herianingrum, S. (2017). Financing risk management to anticipate financial distress in Islamic banks. Journal of Islamic Economics Lariba, 3(2), 51–64. Retrieved from https://journal.uii.ac.id/JIELariba/article/view/9653

Download Citation

References

Amendola, A., Restaino, M., & Sensini, L. (2015). An analysis of the determinants of financial distress in Italy: A competing risks approach. International Review of Economics & Finance, 37, 33â€“41. https://doi.org/10.1016/J.IREF.2014.10.012
Antonio, M. S. (2015). Bank syariah: Dari teori ke praktik (Cet. 23). Jakarta, Indonesia: Gema Insani Press.
Ash-Shallabi, A. M. (2014). Biografi Imam Al-Ghazali dan Syekh
Abdul Qadir Jailani. Jakarta, Indonesia: Beirut Publishing.
Ath-Thayyar, A. bin M. (2015). Ensiklopedi fiqh muamalah. Yogyakarta, Indonesia: Maktabah Al-Hanif.
Booth, A. R. (2016). Islamic philosophy and the ethics of belief. London, UK: Palgrave Macmillan. https://doi.org/10.1057/978-1-137-55700-1
Botha, M. E. (1989). Theory development in perspective: The role of conceptual frameworks and models in theory development. Journal of Advanced Nursing, 14(1), 49â€“55. https://doi.org/10.1111/j.1365-2648.1989.tb03404.x
Bouslama, G., & Lahrichi, Y. (2017). Uncertainty and risk management from Islamic perspective. Research in International Business and Finance, 39, 718â€“726. https://doi.org/10.1016/J.RIBAF.2015.11.018
Chen, Y., Weston, J. F., & Altman, E. I. (1995). Financial distress and restructuring models. Financial Management, 24(2), 57â€“75. https://doi.org/10.2307/3665535
Depree, C. M. (1989). Testing and evaluating a conceptual framework of accounting. Abacus, 25(2), 61â€“73. https://doi.org/10.1111/j.1467-6281.1989.tb00221.x
Djojosugito, R. (2008). Mitigating legal risk in Islamic banking operations. Humanomics, 24(2), 110â€“121. https://doi.org/10.1108/08288660810876822
Geng, R., Bose, I., & Chen, X. (2015). Prediction of financial distress: An empirical study of listed Chinese companies using data mining. European Journal of Operational Research, 241(1), 236â€“247. https://doi.org/10.1016/J.EJOR.2014.08.016
Glaessner, T., & Mas, I. (1995). Incentives and the resolution of bank distress. The World Bank Research Observer, 10(1), 53â€“73. https://doi.org/10.2307/3986566
Haron, M. S., Ramli, R., Injas, M. M. Y., & Injas, R. A. (2015). Reputation risk and its impact on the Islamic banks: Case of the murabaha. International Journal of Economics and Financial Issues, 5(4), 854â€“859. Retrieved from https://www.econjournals.com/index.php/ijefi/article/view/1406
Hassan, M. K., & Lewis, M. K. (2007). Islamic banking: An introduction and overview. In Handbook of Islamic banking (pp. 1â€“17). Cheltenham, UK: Edward Elgar Publishing Limited.
Ikatan Bankir Indonesia. (2014). Memahami bisnis bank syariah. Jakarta, Indonesia: Gramedia Pustaka Utama.
Ismal, R. (2012). Formulating withdrawal risk and bankruptcy risk in Islamic banking. International Journal of Islamic and Middle Eastern Finance and Management, 5(1), 63â€“77. https://doi.org/10.1108/17538391211216848
Karim, A. A. (2008). Bank syariah: Analisis fiqih dan keuangan (Cet. 3). Jakarta, Indonesia: Raja Grafindo Persada.
Kayed, R. N., & Mohammed, K. M. (2009). Unique risks of Islamic modes of finance: Systemic, credit and market risks. Journal of Islamic Economics, Banking and Finance, 5(3), 9â€“34. Retrieved from http://ibtra.com/pdf/journal/v5_n3_article1.pdf
Kettell, B. (2011). Introduction to Islamic banking and finance. West Sussex, UK: John Wiley & Sons Ltd.
Khan, W. M. (1985). Towards an interest-free Islamic economic system. Leicester, UK: The Islamic Foundation.
Khan, W. M. (1987). Towards an interest-free economic system. In M. S. Khan & A. Mirakhor (Eds.), Theoretical studies in Islamic banking and finance. Houston, US: Institute for Research and Islamic Studies.
Koh, S., Durand, R. B., Dai, L., & Chang, M. (2015). Financial distress: Lifecycle and corporate restructuring. Journal of Corporate Finance, 33, 19â€“33. https://doi.org/10.1016/J.JCORPFIN.2015.04.004
Lewis, M. K., & Algaoud, L. M. (2001). Islamic banking. Cheltenham, UK: Edward Elgar Publishing Limited.
Manzaneque, M., Priego, A. M., & Merino, E. (2016). Corporate governance effect on financial distress likelihood: Evidence from Spain. Revista de Contabilidad, 19(1), 111â€“121. https://doi.org/10.1016/J.RCSAR.2015.04.001
Muhammad. (2014). Manajemen dana bank syariah. Jakarta, Indonesia: RajaGrafindo Persada.
Richardson, G., Lanis, R., & Taylor, G. (2015). Financial distress, outside directors and corporate tax aggressiveness spanning the global financial crisis: An empirical analysis. Journal of Banking & Finance, 52, 112â€“129. https://doi.org/10.1016/J.JBANKFIN.2014.11.013
Rivai, V., & Ismal, R. (2013). Islamic risk management for Islamic bank. Jakarta, Indonesia: Gramedia Pustaka Utama.
Rosly, S. A. (2005). Critical issues on Islamic banking and financial markets: Islamic economics, banking and finance, investments, takaful and financial planning. Kuala Lumpur, Malaysia: Dinamas Publishing.
Rosly, S. A., & Mohd. Zaini, M. A. (2008). Riskâ€return analysis of Islamic banksâ€™ investment deposits and shareholdersâ€™ fund. Managerial Finance, 34(10), 695â€“707. https://doi.org/10.1108/03074350810891010
Saunders, M., Lewis, P., & Thornhill, A. (2012). Research methods for business students (6th ed.). Essex, UK: Pearson Education Limited.
Supardi, & Mastuti, S. (2003). Validitas penggunaan z-score altman untuk menilai kebangkrutan pada perusahaan perbankan go public di Bursa Efek Jakarta. KOMPAK: Jurnal Akuntansi, Manajemen Dan Sistem Informasi, 7(1), 68â€“93.
Suroso. (2006). Investasi pada saham perusahaan yang menghadapi financial distress. Usahawan, 2(XXXV).
Toumi, K., Viviani, J.-L., & Belkacem, L. (2011). Actual risk sharing measurement in Islamic banks. In W. Sun, C. Louche, & R. PÃ©rez (Eds.), Finance and sustainability: Towards a new paradigm? A post-crisis agenda (pp. 325â€“347). London, UK: Emerald Group Publishing Limited. https://doi.org/10.1108/S2043-9059(2011)0000002021
Wahyudi, I., Dewi, M. K., Rosmanita, F., Prasetyo, M. B., Putri, N. I. S., & Haidir, B. M. (2013). Manajemen risiko bank Islam. Jakarta, Indonesia: Salemba Empat.
Whitaker, R. B. (1999). The early stages of financial distress. Journal of Economics and Finance, 23(2), 123â€“132. https://doi.org/10.1007/BF02745946

References

Amendola, A., Restaino, M., & Sensini, L. (2015). An analysis of the determinants of financial distress in Italy: A competing risks approach. International Review of Economics & Finance, 37, 33â€“41. https://doi.org/10.1016/J.IREF.2014.10.012

Antonio, M. S. (2015). Bank syariah: Dari teori ke praktik (Cet. 23). Jakarta, Indonesia: Gema Insani Press.

Ash-Shallabi, A. M. (2014). Biografi Imam Al-Ghazali dan Syekh

Abdul Qadir Jailani. Jakarta, Indonesia: Beirut Publishing.

Ath-Thayyar, A. bin M. (2015). Ensiklopedi fiqh muamalah. Yogyakarta, Indonesia: Maktabah Al-Hanif.

Booth, A. R. (2016). Islamic philosophy and the ethics of belief. London, UK: Palgrave Macmillan. https://doi.org/10.1057/978-1-137-55700-1

Botha, M. E. (1989). Theory development in perspective: The role of conceptual frameworks and models in theory development. Journal of Advanced Nursing, 14(1), 49â€“55. https://doi.org/10.1111/j.1365-2648.1989.tb03404.x

Bouslama, G., & Lahrichi, Y. (2017). Uncertainty and risk management from Islamic perspective. Research in International Business and Finance, 39, 718â€“726. https://doi.org/10.1016/J.RIBAF.2015.11.018

Chen, Y., Weston, J. F., & Altman, E. I. (1995). Financial distress and restructuring models. Financial Management, 24(2), 57â€“75. https://doi.org/10.2307/3665535

Depree, C. M. (1989). Testing and evaluating a conceptual framework of accounting. Abacus, 25(2), 61â€“73. https://doi.org/10.1111/j.1467-6281.1989.tb00221.x

Djojosugito, R. (2008). Mitigating legal risk in Islamic banking operations. Humanomics, 24(2), 110â€“121. https://doi.org/10.1108/08288660810876822

Geng, R., Bose, I., & Chen, X. (2015). Prediction of financial distress: An empirical study of listed Chinese companies using data mining. European Journal of Operational Research, 241(1), 236â€“247. https://doi.org/10.1016/J.EJOR.2014.08.016

Glaessner, T., & Mas, I. (1995). Incentives and the resolution of bank distress. The World Bank Research Observer, 10(1), 53â€“73. https://doi.org/10.2307/3986566

Haron, M. S., Ramli, R., Injas, M. M. Y., & Injas, R. A. (2015). Reputation risk and its impact on the Islamic banks: Case of the murabaha. International Journal of Economics and Financial Issues, 5(4), 854â€“859. Retrieved from https://www.econjournals.com/index.php/ijefi/article/view/1406

Hassan, M. K., & Lewis, M. K. (2007). Islamic banking: An introduction and overview. In Handbook of Islamic banking (pp. 1â€“17). Cheltenham, UK: Edward Elgar Publishing Limited.

Ikatan Bankir Indonesia. (2014). Memahami bisnis bank syariah. Jakarta, Indonesia: Gramedia Pustaka Utama.

Ismal, R. (2012). Formulating withdrawal risk and bankruptcy risk in Islamic banking. International Journal of Islamic and Middle Eastern Finance and Management, 5(1), 63â€“77. https://doi.org/10.1108/17538391211216848

Karim, A. A. (2008). Bank syariah: Analisis fiqih dan keuangan (Cet. 3). Jakarta, Indonesia: Raja Grafindo Persada.

Kayed, R. N., & Mohammed, K. M. (2009). Unique risks of Islamic modes of finance: Systemic, credit and market risks. Journal of Islamic Economics, Banking and Finance, 5(3), 9â€“34. Retrieved from http://ibtra.com/pdf/journal/v5_n3_article1.pdf

Kettell, B. (2011). Introduction to Islamic banking and finance. West Sussex, UK: John Wiley & Sons Ltd.

Khan, W. M. (1985). Towards an interest-free Islamic economic system. Leicester, UK: The Islamic Foundation.

Khan, W. M. (1987). Towards an interest-free economic system. In M. S. Khan & A. Mirakhor (Eds.), Theoretical studies in Islamic banking and finance. Houston, US: Institute for Research and Islamic Studies.

Koh, S., Durand, R. B., Dai, L., & Chang, M. (2015). Financial distress: Lifecycle and corporate restructuring. Journal of Corporate Finance, 33, 19â€“33. https://doi.org/10.1016/J.JCORPFIN.2015.04.004

Lewis, M. K., & Algaoud, L. M. (2001). Islamic banking. Cheltenham, UK: Edward Elgar Publishing Limited.

Manzaneque, M., Priego, A. M., & Merino, E. (2016). Corporate governance effect on financial distress likelihood: Evidence from Spain. Revista de Contabilidad, 19(1), 111â€“121. https://doi.org/10.1016/J.RCSAR.2015.04.001

Muhammad. (2014). Manajemen dana bank syariah. Jakarta, Indonesia: RajaGrafindo Persada.

Richardson, G., Lanis, R., & Taylor, G. (2015). Financial distress, outside directors and corporate tax aggressiveness spanning the global financial crisis: An empirical analysis. Journal of Banking & Finance, 52, 112â€“129. https://doi.org/10.1016/J.JBANKFIN.2014.11.013

Rivai, V., & Ismal, R. (2013). Islamic risk management for Islamic bank. Jakarta, Indonesia: Gramedia Pustaka Utama.

Rosly, S. A. (2005). Critical issues on Islamic banking and financial markets: Islamic economics, banking and finance, investments, takaful and financial planning. Kuala Lumpur, Malaysia: Dinamas Publishing.

Rosly, S. A., & Mohd. Zaini, M. A. (2008). Riskâ€return analysis of Islamic banksâ€™ investment deposits and shareholdersâ€™ fund. Managerial Finance, 34(10), 695â€“707. https://doi.org/10.1108/03074350810891010

Saunders, M., Lewis, P., & Thornhill, A. (2012). Research methods for business students (6th ed.). Essex, UK: Pearson Education Limited.

Supardi, & Mastuti, S. (2003). Validitas penggunaan z-score altman untuk menilai kebangkrutan pada perusahaan perbankan go public di Bursa Efek Jakarta. KOMPAK: Jurnal Akuntansi, Manajemen Dan Sistem Informasi, 7(1), 68â€“93.

Suroso. (2006). Investasi pada saham perusahaan yang menghadapi financial distress. Usahawan, 2(XXXV).

Toumi, K., Viviani, J.-L., & Belkacem, L. (2011). Actual risk sharing measurement in Islamic banks. In W. Sun, C. Louche, & R. PÃ©rez (Eds.), Finance and sustainability: Towards a new paradigm? A post-crisis agenda (pp. 325â€“347). London, UK: Emerald Group Publishing Limited. https://doi.org/10.1108/S2043-9059(2011)0000002021

Wahyudi, I., Dewi, M. K., Rosmanita, F., Prasetyo, M. B., Putri, N. I. S., & Haidir, B. M. (2013). Manajemen risiko bank Islam. Jakarta, Indonesia: Salemba Empat.

Whitaker, R. B. (1999). The early stages of financial distress. Journal of Economics and Finance, 23(2), 123â€“132. https://doi.org/10.1007/BF02745946

Financing risk management to anticipate financial distress in Islamic banks

Article Sidebar

Main Article Content

Abstract

Article Details

References

References

Most read articles by the same author(s)