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Profit distribution management by Islamic banks: An empirical investigation

  • Farook, Sayd
  • Hassan, M. Kabir
  • Clinch, Gregory

The objective of this paper is to ascertain whether Islamic banks do in fact manage profit distributions and if so, what factors are associated with the extent of profit distribution management. The results suggest that most Islamic banks manage profit distributions, with the extent of profit distribution 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.

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File URL: http://www.sciencedirect.com/science/article/pii/S1062976912000300
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Article provided by Elsevier in its journal The Quarterly Review of Economics and Finance.

Volume (Year): 52 (2012)
Issue (Month): 3 ()
Pages: 333-347

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Handle: RePEc:eee:quaeco:v:52:y:2012:i:3:p:333-347
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620167

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  1. DeYoung, Robert & Roland, Karin P., 2001. "Product Mix and Earnings Volatility at Commercial Banks: Evidence from a Degree of Total Leverage Model," Journal of Financial Intermediation, Elsevier, vol. 10(1), pages 54-84, January.
  2. Ndikumana, Leonce, 2005. "Financial development, financial structure, and domestic investment: International evidence," Journal of International Money and Finance, Elsevier, vol. 24(4), pages 651-673, June.
  3. Simon Archer & Rifaat Ahmed Abdel Karim, 2006. "On Capital Structure, Risk Sharing And Capital Adequacy In Islamic Banks," International Journal of Theoretical and Applied Finance (IJTAF), World Scientific Publishing Co. Pte. Ltd., vol. 9(03), pages 269-280.
  4. Susan Creane & Rishi Goyal & A. Mushfiq Mobarak & Randa Sab, 2006. "Measuring Financial Development in the Middle East and North Africa: A New Database," IMF Staff Papers, Palgrave Macmillan, vol. 53(3), pages 7.
  5. Taisier A. Zoubi & Osamah Al-Khazali, 2007. "Empirical testing of the loss provisions of banks in the GCC region," Managerial Finance, Emerald Group Publishing, vol. 33(7), pages 500-511.
  6. Martin Čihák & Heiko Hesse, 2010. "Islamic Banks and Financial Stability: An Empirical Analysis," Journal of Financial Services Research, Springer, vol. 38(2), pages 95-113, December.
  7. Sergio Lehmann, 1997. "Investment under Uncertainty and Financial Market Development: A q-Theory Approach," Working Papers Central Bank of Chile 17, Central Bank of Chile.
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