Bank Concentration and Economic Growth Nexus: Evidence from OIC Countries

This paper examines the relationship between bank concentration and economic growth in Organization of Islamic Cooperation (OIC) countries. This is done using the system GMM estimators on a panel data sample consisting of 41 countries and 650 observations. Our analysis reveals that bank concentration has negative impact on economic growth and this relationship is non-linear. Furthermore, the impact of bank concentration on economic growth is found to be dependent on the country’s income and corruption levels. Therefore, it seems reasonable to conclude that bank concentration has negative impact on the economic growth in OIC countries

Bank Concentration and Economic Volatility in the OIC Countries: The Role of Financial Development

This study examines the effect of bank concentration and financial development on economic volatility in member countries of the Organization of Islamic Cooperation (OIC). Using the GMM estimator, we cover the 2000–2017 period. Based on both linear and non-linear estimations, we find no significant impact of bank concentration on economic volatility. By contrast, financial development reduces economic volatility. Moreover, the relationship between concentration and volatility is influenced by financial development. Considering this, policymakers should put more emphasis on developing the financial sector than controlling bank concentrations. We find that our findings remain robust in the face of different specifications and proxies used to measure bank concentration and financial development

Islamic approach to corporate social responsibility: an international model for Islamic banks

Purpose – This study aims to present a corporate social responsibility (CSR) model that would apply to Islamic banks, considering the international aspect of social responsibility because CSR is not applicable in the same way in all types of societies. Design/methodology/approach – Based on the extensive review of the existing literature, the authors aim to present an Islamic CSR model applicable to Islamic banks. This study is based on the international approach to CSR developed by Masoud (2017). Each responsibility has an equal share but with specific changes regarding the order of priorities between them and the type of responsibility. Findings – The findings show that the existing literature provides several Islamic CSR models. Most of these models are general and offer guidelines to Islamic financial institutions, but no model applies exclusively to Islamic banks. Using these models for Islamic banks is challenging because of their specific business activities, especially in non-Muslim countries. This study proposes a model that could act as the main guideline for Islamic banks with enough flexibility to meet different market and stakeholders’requirements. Practical implications – The model was not tested on a sample, and not all Islamic principles were considered. However, it is applicable for Islamic banks, especially considering internationalization in their businesses and the further development of Islamic banking. At the same time, this model puts ethical norms in the spotlight. This is particularly emphasized in the case of non-Muslim countries or in societies where a particular law does not regulate Islamic bank activities. Originality/value – Although there is a growing literature on this topic, existing studies primarily discuss the Islamic approach to CSR from the overall perspective, not in a specific industry. While some authors developed their own Islamic CSR models relying on the primary Shariah sources, others base their proposals on other classical CSR ideas. To the best of the authors’ knowledge, this is the first study based on the CSR model developed by Masoud (2017), considering the relationship between economics and religion and the implications of the Islamic moral economy

Extending the concept of financial literacy: A step toward a sustainable society

This study analyzes financial literacy in Bosnia and Herzegovina by considering three areas: interest, inflation, and diversification, with financial literacy as a multi-dimensional construct consisting of financial knowledge and financial skills. Using a cross-sectional questionnaire-based survey, 638 valid responses were collected from working-age individuals (18-65 years old). Financial knowledge and skills were analyzed through a prism of several demographic factors, including age, education, household income, and gender. Welch's F tests, ANOVA with Brown-Forsythe, LSD post hoc tests, and Welch's t-tests were performed to test the hypotheses. The findings provide evidence of moderate financial literacy. Similarly to previous studies, financial knowledge and skills partially depend on the respondent's age, education, household income, and gender. The study contributes to the current literature by taking a much-needed non-functional approach to examining financial literacy, focusing not only on financial knowledge but also on often neglected financial skills and providing insight into the unique context of Bosnia and Herzegovina

Asymmetric impact of microfinance on economic growth: Evidence from Bosnia and Herzegovina

This study explores the correlation between microfinance loans (MFL) and economic growth in Bosnia and Herzegovina (Bosnia). It utilizes the non-linear Autoregressive Distributed Lag (NARDL) method to examine cointegration and short-run dynamics by analyzing quarterly data spanning from 2010 to 2022. The findings underscore the link between MFL shocks and long-term economic growth. The study unveils the unique effects of both positive and negative MFL shocks on growth, suggesting a non-linear relationship between microfinance loans and economic growth in Bosnia. However, the study concludes that the impact of MFL on Bosnia's GDP is adverse. Short-term fluctuations in MFL show no substantial influence on Bosnian economic growth. The coefficient of the error correction model is both negative and significant indicating the stability of the long-term relationship. This implies a rapid correction, with 46.4 % of the previous quarter's imbalance rectified within the current quarter. While our results are based on a single country, they align with recent criticisms of microfinance practices. Furthermore, our study offers a novel approach as it represents the first examination of the asymmetric relationship between MFL and GDP in Bosnia, providing valuable policy recommendations

The global financial crisis and its implications for the Islamic financial industry

Purpose – The purpose of this paper is to review the evolution of the global financial crisis, draw lessons from it, and analyse its effect(s) on the Islamic financial industry (IFI). Design/methodology/approach – Based on an extensive literature review, this paper aims to highlight, explain, and discuss the implications of the global financial crisis for IFI and suggest necessary steps for the future development of the industry. Findings – The findings show that although the crisis had limited impact on IFI the major flaws of the capitalist financial system are relevant to the development of IFI. Without learning and applying the lessons from the crisis, IFI runs a risk of committing the same mistakes. Finally, greater attention should be given to the fundamental principles of Islamic finance in order to ensure the future development of industry. Research limitation/implications – The effects of the global financial crisis are still being felt all over the world, and its implications on IFI have yet to be fully understood. Owing to unavailability of relevant data, an empirical study is needed to show the real effects of the crisis on IFI. Originality/value – The lessons drawn in this paper will raise awareness among both academicians and practitioners about the inherent weaknesses of current financial practices. Furthermore, the paper highlights the major areas that need to be improved for the future development and success of IFI.Capitalist systems, Debts, Finance, Interest, Islam