| By: |
Saleh,Salman, Ali and Zeitun, Rami (University of Wollongong) |
| Abstract: |
Islamic banking in Jordan started around two decades ago. Since then it has
played an important role in financing and contributing to different economics
and social sectors in the country in compliance with the principles of Shariah
rules in Islamic banking practices. Since there have been limited studies on
the financial performance of Islamic banks in the country. The aim of this
paper is to examine and analyse the Jordanian experience with Islamic banking,
and in particular the experience for the first and second Islamic bank in the
country, Jordan Islamic Bank for Finance and Investment (JIBFI), and Islamic
International Arab Bank (IIAB) in order to evaluate the Islamic
banksâÃÂàperformance in the county. The paper goes further to shed
some light on the domestic as well as global challenges, which are facing this
sector. However, this paper used the performance evaluation methodology by
conducting the profit maximization, capital structure, and liquidity tests.
This paper found that the efficiency and ability of both banks has increased
and both have expanded their investment and activities and had played an
important role in financing projects in Jordan. Another interesting finding of
the paper that these banks have focused on the short-term investment, perhaps
this seems to be the case in most Islamic banking practices. Another finding
is that the Bank for Finance and Investment (JIBFI) has a high profitability
that encourages other banks to practice the Islamic financial system. The
paper also found that Islamic banks have a high growth in the credit
facilities and in profitability. |
| Keywords: |
Islamic banking, Performance, Efficiency, Challenges, Jordan |
| Date: |
2006 |
| URL: |
http://d.repec.org/n?u=RePEc:uow:depec1:wp06-21&r=eff |