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The Development of Islamic (Participation) Banking in Bangladesh and Its Contribution to the Economy

Year 2023, Volume: 25 Issue: 44, 391 - 415, 30.06.2023

Abstract

Islamic banking is progressively gaining popularity throughout the world as a result of the numerous benefits, it has provided to humanity in social fields, especially in the field of economy. Similarly, the Islamic banking industry has recently been the main focus of attention for Bangladesh's financial sector. As a result of the Islamic banking system's superiority, several traditional banks have been transformed into Islamic Shariah-based systems. The purpose of this study is to investigate the progress of the Islamic banking industry and it also assessed its contributions. The paper used secondary sources such as academic papers, textbooks, reports, websites, and the financial ratio analysis was utilized. The study finds that despite the global recession and other barriers, Islamic banks outperform traditional banks with a market share of around 28% (more than one-fourth) in the entire banking sector in Bangladesh and more than 49,433 employees in the Islamic banking industry. The study concluded that although Bangladesh does not have an Islamic banking act and a central Shariah board by the Bangladesh government, it is making rapid progress and Islamic banking has enormous potential in Bangladesh.

References

  • Abduh, M. ve Chowdhury, N. T. (2012). Does Islamic Banking Matter for Economic Growth in Bangladesh. Journal of Islamic Economics, Banking and Finance, 8(3), 104-113.
  • Ahmad, A. U. F. ve Hassan, M. K. (2007). Regulation and Performance of Islamic Banking in Bangladesh. Thunderbird International Business Review, 49(2), 251-277. doi:10.1002/tie.20142
  • Aktan, B., Masood, O., ve Iqbal, M. (2009). Development and Future Prospects of Islamic Banking in Bangladesh. International Journal of Monetary Economics and Finance, 2(3-4), 336-347. doi:10.1504/IJMEF.2009.029067
  • Alam, M. K., Ab Rahman, S., Mustafa, H., Shah, S. M. ve Hossain, M. S. (2019). Shariah Governance Framework of Islamic Banks in Bangladesh: Practices, Problems and Recommendations. Asian Economic and Financial Review, 9(1), 118-132. doi:10.18488/journal.aefr.2019.91.118.132
  • Alam, M. K., Rahman, S. A., Thakur, O. A., Bashir, M. A. ve Hosen, S. (2020). The Reasons Behind the Absence of a Comprehensive Shariah Governance Framework of Islamic Banks in Bangladesh. International Journal of Economics and Business Administration, 8(1), 134-145. doi:10.35808/ijeba/414
  • Bangladesh Bank (2022a). Developments of Islamic Banking in Bangladesh, Report, Apr-Jun, 2022. https://www.bb.org.bd//pub/quaterly/islamic_banking/islamic_apr-jun2022.pdf, (15.02.2023).
  • Bangladesh Bank (2022b). Developments of Islamic Banking in Bangladesh, Report, Jan-Mar 2022. https://www.bb.org.bd//pub/quaterly/islamic_banking/islamic_jan-mar2022.pdf, (15.02.2023).
  • Bangladesh Bank (2022c). Developments of Islamic Banking in Bangladesh, Report, Jul-Sep, 2022. https://www.bb.org.bd//pub/quaterly/islamic_banking/islamic_jul-sep2022.pdf, (15.02.2023).
  • Bangladesh Bank (2022d). Report on Capital Market Development in Bangladesh, October-2022. https://www.bb.org.bd//pub/monthly/capital_market/capital-october-2022.pdf, (11.02.2023).
  • Bangladesh Bank (2021). Banks and Financial Institutions (FIs) - 2021. https://www.bb.org.bd/en/index.php/financialactivity/bankfi#:~:text=There%20are%2061%20scheduled%20b anks,and%20Bank%20Company%20Act%2C%201991, (10.02.2023).
  • Bangladesh Bank (2019). Developments of Islamic Banking in Bangladesh, Report, Jan-March, 2019. https://www.bb.org.bd//pub/quaterly/islamic_banking/jan_march_2019.pdf, (15.02.2023).
  • Bhuiyan, M. A. H., Darda, M. A., ve Hossain, M. B. (2021). Corporate social responsibility (CSR) practices in Islamic banks of Bangladesh. Social Responsibility Journal, 18(5), 1-16. doi:10.1108/SRJ-07-2020-0280
  • CSBIB (2022). Overview; Central Shariah Board for Islamic Banks of Bangladesh (CSBIB). https://www.csbib.org/our-overview, (16.02.2023).
  • EBTRA (2017). EXIM Bank Training and Research Academy (EBTRA). https://www.eximbankbd.com/about/ebtra, (16.02.2023).
  • EXIM Bank (2022). EXIM Bank Agricultural University Bangladesh. http://ebaub.edu.bd/#, (14.02.2023).
  • Global Islami Bank (2021). Global Islami Bank Starts Journey Forward. https://www.globalislamibankbd.com/global-islami-bank-starts-journey-forward/, (16.02.2023).
  • Hasan, M. (2014). An Assessment on Social Welfare Activities of Islami Bank Bangladesh Ltd. (BBA report). Department of Business Administration, Daffodil International University, Dhaka, Bangladesh.
  • Hassan, M. K., Ahmed, M. K. ve Robin, I. A. (2019). An Overview of Islamic Banking and Finance in Bangladesh. (Report No. 11). Research Center for Islamic Economics (IKAM), Istanbul.
  • Hassan, M. K., İslam, M. T., Ahmed, Z. ve Sarker, J. I. (2023). Islamic Banking in Bangladesh: a literature review and future research agenda. International Journal of Islamic and Middle Eastern Finance and Management, 1-25. doi:10.1108/IMEFM-05-2022-0185
  • Hassan, M. K., Ullah, M. H. ve Khanam, R. (2017). Shariah Governance Practices in Bangladesh. Chapter in Shariah Governance Systems and Practices in a Globalized World, Edited by Nazim Ali, 1-22.
  • IBBL (2015). Islamic Bank Bangladesh Limited (IBBL) Annual Report, Dhaka: GY/2015/300.
  • IBBL (2021). Islamic Bank Bangladesh Limited (IBBL) Annual Report, Dhaka: GY/2021/404.
  • IBBL (2022). Performance of Rural Development Scheme up to 30 November, 2022. https://www.islamibankbd.com/oldweb/prodServices/rdsScheme.php, (17.02.2023).
  • IBF (2023). Islami Bank Foundation (IBF). https://www.ibfbd.org/, (17.02.2023).
  • IBTRA (2022a). About Diploma in Islamic Banking (DIB), Islami Bank Training and Research Academy (IBTRA). https://www.ibtra.com/dib-info, (20.02.2023).
  • IBTRA (2022b). Entrepreneur Development Training Program. https://www.ibtra.com/news-show/the-month- long-entrepreneur-development-training-program-organized-by-chittagong-regional-center-of-ibtra- ended-on-6-june-2022, (20.02.2023).
  • IBTRA (2022c). Skills for Employment Investment Program (SEIP). https://www.ibtra.com/news- show/inauguration-ceremony-of-edt-on-skills-for-employment-investment-program-seip, (20.02.2023).
  • IFSB (2022). Islamic Financial Services Industry (IFSI) Stability Report, Malaysia: GY/2022/161.
  • IFSB (2021). Islamic Financial Services Industry (IFSI) Stability Report, Malaysia: GY/2021/150.
  • Ikra, S. S., Rahman, M. A., Wanke, P. ve Azad, M. A. K. (2021). Islamic Banking Efficiency Literature (2000–2020): A Bibliometric Analysis and Research Front Mapping. International Journal of Islamic and Middle Eastern Finance and Management, 14(5), 1043-1060.
  • Islam, M. S. ve Das, P. C. (2013). Green Banking Practices in Bangladesh. IOSR Journal of Business and Management, 8(3), 39-44.
  • Islam, M. T., Hassan, M. K., Abdullahi, K. T. ve Gider, Z. (2022). Participation (Islamic) Banking in Turkey: A Bibliometric Analysis and Future Research Agenda. International Journal of Economics & Management, 16(2), 193-212. doi:10.47836/ijeam.16.2.04
  • Julia, T. ve Kassim, S. (2020). Exploring Green Banking Performance of Islamic Banks vs Conventional Banks in Bangladesh Based on Maqasid Shariah Framework. Journal of Islamic Marketing, 11(3), 729-744. doi:10.1108/JIMA-10-2017-0105
  • Kabir Hassan, M. (1999). Islamic Banking in Theory and Practice: The Experience of Bangladesh. Managerial Finance, 25(5), 60-113. doi:10.1108/03074359910765966
  • Khan, T. ve Mohomed, A. B. R. N. (2017). Ethical Banking and Islamic Banking: A Comparison of Triodos Bank and Islami Bank Bangladesh Limited. Islamic Economic Studies, 130(5377), 1-45.
  • Mahdi, A. M. ve Rahaman, M. S. (2020). Islamic Banking and Finance in Bangladesh. Journal of Business Accounting and Financing, 1(1), 10-15.
  • Mannan, M. A. (2015). Islamic Banking in Bangladesh: Progress and Potentials. Islami Bank Bangladesh Limited, 1-26.
  • Perves, M. M. (2015). Legal and Regulatory Framework in Islamic Banking System: Bangladesh Perspective. European Journal of Business and Management, 7(21), 179-188.
  • Rahman, M. M. ve Islam, A. T. (2012). Human Characters of Foundation Trainees of Islami Bank Bangladesh Limited and Its’ Impact on their Performance. Journal of Islamic Economics, Banking and Finance, 8(1), 9-34.
  • Razvi, M. (1981). The Mecca Summit. Pakistan Horizon, 34(3), 44-55.
  • Sadat, I., Kader, S. A. ve Zayed, N. M. (2020). Development of Islamic Banking and Finance in Bangladesh. DIU Journal of Business and Entrepreneurship, 13(1), 73-85.
  • Sarker, A. A. (2005). Islamic Banking in Bangladesh: Achievements and Challenges. Journal of Islamic Economics, Banking and Finance, 1(1), 45-59.
  • Sarker, A. A. (2000). Regulation of Islamic Banking in Bangladesh: role of Bangladesh bank. International Journal of Islamic Financial Services, 2(1), 45-56.
  • Solaiman, M. ve Yasmin, S. (2012). Entrepreneurship Development for Rehabilitation of Muslim Youth– Investigating the Role of Islamic Bank Bangladesh Ltd. (IBBL). Business Management Dynamics, 1(9), 1-13.
  • Standard Bank Limited (2021). Standard Bank Limited is Now a Full-fledged Shariah Based Islami Bank. https://www.standardbankbd.com/LatestNewsFull.php?e=213, (23.02.2023).
  • TKBB (2020). Participation Banking Strategy Update Report 2021-2025. Participation Banks Association Of Turkey, https://tkbb.org.tr/Documents/Yonetmelikler/EY_TKBB_Participation_Banking_Strategy_Update_Report_20 21-2025__English.pdf?v=1, (24.02.2023).
  • Uddin, M. N.ve Ahmmed, M. (2018). Islamic Banking and Green Banking for Sustainable Development: Evidence from Bangladesh. Al-Iqtishad Journal of Islamic Economics, 10(1), 97-114.
  • Velez, H. (2022). What Is Green Banking? https://www.thegoodtrade.com/features/green-banking-definition, (25.02.2023).
  • Westover, J. (2008). The Record of Microfinance: The Effectiveness/Ineffectiveness of Microfinance Programs as a Means of Alleviating Poverty. Electronic Journal of Sociology, 12(1), 1-8.

Bangladeş'te İslami (Katılım) Bankacılığın Gelişimi ve Ekonomiye Katkıları

Year 2023, Volume: 25 Issue: 44, 391 - 415, 30.06.2023

Abstract

İslami bankacılık, başta ekonomi alanı olmak üzere toplumsal açıdan da insanlığa sağlamış olduğu sayısız faydaların bir sonucu olarak dünya çapında giderek popülerlik kazanmaktadır. Benzer şekilde, İslami bankacılık son zamanlarda Bangladeş'in finans sektörünün odak noktası olmuştur. İslami bankacılık sisteminin performans üstünlüğünün bir sonucu olarak, birçok geleneksel banka İslami hukuk tabanlı (çalışma) sistemlerine dönüştürülmüştür. Bu çalışmanın amacı Bangladeş’te İslami bankacılık sektörünün gelişimini araştırmak ve katkılarını değerlendirmektir. Makalede akademik makaleler, ders kitapları, raporlar, web siteleri gibi ikincil kaynaklardan yararlanılmış ve finansal oran analizi kullanılmıştır. Çalışma, İslami bankaların, küresel durgunluk ve diğer engellere rağmen, Bangladeş'teki tüm bankacılık sektöründe yaklaşık %28 (dörtte birden fazla) pazar payı ve İslami bankacılık sektöründe 49.433'den fazla çalışanı ile geleneksel bankalardan daha iyi performans gösterdiğini ortaya koymaktadır. Ayrıca, Bangladeş’te bağımsız bir İslami bankacılık yasası ve merkezi bir İslam hukuku kurulu olmamasına rağmen hızla ilerleme gösterdiği ve İslami bankacılığın Bangladeş'te muazzam bir potansiyele sahip olduğu sonucuna varmıştır.

References

  • Abduh, M. ve Chowdhury, N. T. (2012). Does Islamic Banking Matter for Economic Growth in Bangladesh. Journal of Islamic Economics, Banking and Finance, 8(3), 104-113.
  • Ahmad, A. U. F. ve Hassan, M. K. (2007). Regulation and Performance of Islamic Banking in Bangladesh. Thunderbird International Business Review, 49(2), 251-277. doi:10.1002/tie.20142
  • Aktan, B., Masood, O., ve Iqbal, M. (2009). Development and Future Prospects of Islamic Banking in Bangladesh. International Journal of Monetary Economics and Finance, 2(3-4), 336-347. doi:10.1504/IJMEF.2009.029067
  • Alam, M. K., Ab Rahman, S., Mustafa, H., Shah, S. M. ve Hossain, M. S. (2019). Shariah Governance Framework of Islamic Banks in Bangladesh: Practices, Problems and Recommendations. Asian Economic and Financial Review, 9(1), 118-132. doi:10.18488/journal.aefr.2019.91.118.132
  • Alam, M. K., Rahman, S. A., Thakur, O. A., Bashir, M. A. ve Hosen, S. (2020). The Reasons Behind the Absence of a Comprehensive Shariah Governance Framework of Islamic Banks in Bangladesh. International Journal of Economics and Business Administration, 8(1), 134-145. doi:10.35808/ijeba/414
  • Bangladesh Bank (2022a). Developments of Islamic Banking in Bangladesh, Report, Apr-Jun, 2022. https://www.bb.org.bd//pub/quaterly/islamic_banking/islamic_apr-jun2022.pdf, (15.02.2023).
  • Bangladesh Bank (2022b). Developments of Islamic Banking in Bangladesh, Report, Jan-Mar 2022. https://www.bb.org.bd//pub/quaterly/islamic_banking/islamic_jan-mar2022.pdf, (15.02.2023).
  • Bangladesh Bank (2022c). Developments of Islamic Banking in Bangladesh, Report, Jul-Sep, 2022. https://www.bb.org.bd//pub/quaterly/islamic_banking/islamic_jul-sep2022.pdf, (15.02.2023).
  • Bangladesh Bank (2022d). Report on Capital Market Development in Bangladesh, October-2022. https://www.bb.org.bd//pub/monthly/capital_market/capital-october-2022.pdf, (11.02.2023).
  • Bangladesh Bank (2021). Banks and Financial Institutions (FIs) - 2021. https://www.bb.org.bd/en/index.php/financialactivity/bankfi#:~:text=There%20are%2061%20scheduled%20b anks,and%20Bank%20Company%20Act%2C%201991, (10.02.2023).
  • Bangladesh Bank (2019). Developments of Islamic Banking in Bangladesh, Report, Jan-March, 2019. https://www.bb.org.bd//pub/quaterly/islamic_banking/jan_march_2019.pdf, (15.02.2023).
  • Bhuiyan, M. A. H., Darda, M. A., ve Hossain, M. B. (2021). Corporate social responsibility (CSR) practices in Islamic banks of Bangladesh. Social Responsibility Journal, 18(5), 1-16. doi:10.1108/SRJ-07-2020-0280
  • CSBIB (2022). Overview; Central Shariah Board for Islamic Banks of Bangladesh (CSBIB). https://www.csbib.org/our-overview, (16.02.2023).
  • EBTRA (2017). EXIM Bank Training and Research Academy (EBTRA). https://www.eximbankbd.com/about/ebtra, (16.02.2023).
  • EXIM Bank (2022). EXIM Bank Agricultural University Bangladesh. http://ebaub.edu.bd/#, (14.02.2023).
  • Global Islami Bank (2021). Global Islami Bank Starts Journey Forward. https://www.globalislamibankbd.com/global-islami-bank-starts-journey-forward/, (16.02.2023).
  • Hasan, M. (2014). An Assessment on Social Welfare Activities of Islami Bank Bangladesh Ltd. (BBA report). Department of Business Administration, Daffodil International University, Dhaka, Bangladesh.
  • Hassan, M. K., Ahmed, M. K. ve Robin, I. A. (2019). An Overview of Islamic Banking and Finance in Bangladesh. (Report No. 11). Research Center for Islamic Economics (IKAM), Istanbul.
  • Hassan, M. K., İslam, M. T., Ahmed, Z. ve Sarker, J. I. (2023). Islamic Banking in Bangladesh: a literature review and future research agenda. International Journal of Islamic and Middle Eastern Finance and Management, 1-25. doi:10.1108/IMEFM-05-2022-0185
  • Hassan, M. K., Ullah, M. H. ve Khanam, R. (2017). Shariah Governance Practices in Bangladesh. Chapter in Shariah Governance Systems and Practices in a Globalized World, Edited by Nazim Ali, 1-22.
  • IBBL (2015). Islamic Bank Bangladesh Limited (IBBL) Annual Report, Dhaka: GY/2015/300.
  • IBBL (2021). Islamic Bank Bangladesh Limited (IBBL) Annual Report, Dhaka: GY/2021/404.
  • IBBL (2022). Performance of Rural Development Scheme up to 30 November, 2022. https://www.islamibankbd.com/oldweb/prodServices/rdsScheme.php, (17.02.2023).
  • IBF (2023). Islami Bank Foundation (IBF). https://www.ibfbd.org/, (17.02.2023).
  • IBTRA (2022a). About Diploma in Islamic Banking (DIB), Islami Bank Training and Research Academy (IBTRA). https://www.ibtra.com/dib-info, (20.02.2023).
  • IBTRA (2022b). Entrepreneur Development Training Program. https://www.ibtra.com/news-show/the-month- long-entrepreneur-development-training-program-organized-by-chittagong-regional-center-of-ibtra- ended-on-6-june-2022, (20.02.2023).
  • IBTRA (2022c). Skills for Employment Investment Program (SEIP). https://www.ibtra.com/news- show/inauguration-ceremony-of-edt-on-skills-for-employment-investment-program-seip, (20.02.2023).
  • IFSB (2022). Islamic Financial Services Industry (IFSI) Stability Report, Malaysia: GY/2022/161.
  • IFSB (2021). Islamic Financial Services Industry (IFSI) Stability Report, Malaysia: GY/2021/150.
  • Ikra, S. S., Rahman, M. A., Wanke, P. ve Azad, M. A. K. (2021). Islamic Banking Efficiency Literature (2000–2020): A Bibliometric Analysis and Research Front Mapping. International Journal of Islamic and Middle Eastern Finance and Management, 14(5), 1043-1060.
  • Islam, M. S. ve Das, P. C. (2013). Green Banking Practices in Bangladesh. IOSR Journal of Business and Management, 8(3), 39-44.
  • Islam, M. T., Hassan, M. K., Abdullahi, K. T. ve Gider, Z. (2022). Participation (Islamic) Banking in Turkey: A Bibliometric Analysis and Future Research Agenda. International Journal of Economics & Management, 16(2), 193-212. doi:10.47836/ijeam.16.2.04
  • Julia, T. ve Kassim, S. (2020). Exploring Green Banking Performance of Islamic Banks vs Conventional Banks in Bangladesh Based on Maqasid Shariah Framework. Journal of Islamic Marketing, 11(3), 729-744. doi:10.1108/JIMA-10-2017-0105
  • Kabir Hassan, M. (1999). Islamic Banking in Theory and Practice: The Experience of Bangladesh. Managerial Finance, 25(5), 60-113. doi:10.1108/03074359910765966
  • Khan, T. ve Mohomed, A. B. R. N. (2017). Ethical Banking and Islamic Banking: A Comparison of Triodos Bank and Islami Bank Bangladesh Limited. Islamic Economic Studies, 130(5377), 1-45.
  • Mahdi, A. M. ve Rahaman, M. S. (2020). Islamic Banking and Finance in Bangladesh. Journal of Business Accounting and Financing, 1(1), 10-15.
  • Mannan, M. A. (2015). Islamic Banking in Bangladesh: Progress and Potentials. Islami Bank Bangladesh Limited, 1-26.
  • Perves, M. M. (2015). Legal and Regulatory Framework in Islamic Banking System: Bangladesh Perspective. European Journal of Business and Management, 7(21), 179-188.
  • Rahman, M. M. ve Islam, A. T. (2012). Human Characters of Foundation Trainees of Islami Bank Bangladesh Limited and Its’ Impact on their Performance. Journal of Islamic Economics, Banking and Finance, 8(1), 9-34.
  • Razvi, M. (1981). The Mecca Summit. Pakistan Horizon, 34(3), 44-55.
  • Sadat, I., Kader, S. A. ve Zayed, N. M. (2020). Development of Islamic Banking and Finance in Bangladesh. DIU Journal of Business and Entrepreneurship, 13(1), 73-85.
  • Sarker, A. A. (2005). Islamic Banking in Bangladesh: Achievements and Challenges. Journal of Islamic Economics, Banking and Finance, 1(1), 45-59.
  • Sarker, A. A. (2000). Regulation of Islamic Banking in Bangladesh: role of Bangladesh bank. International Journal of Islamic Financial Services, 2(1), 45-56.
  • Solaiman, M. ve Yasmin, S. (2012). Entrepreneurship Development for Rehabilitation of Muslim Youth– Investigating the Role of Islamic Bank Bangladesh Ltd. (IBBL). Business Management Dynamics, 1(9), 1-13.
  • Standard Bank Limited (2021). Standard Bank Limited is Now a Full-fledged Shariah Based Islami Bank. https://www.standardbankbd.com/LatestNewsFull.php?e=213, (23.02.2023).
  • TKBB (2020). Participation Banking Strategy Update Report 2021-2025. Participation Banks Association Of Turkey, https://tkbb.org.tr/Documents/Yonetmelikler/EY_TKBB_Participation_Banking_Strategy_Update_Report_20 21-2025__English.pdf?v=1, (24.02.2023).
  • Uddin, M. N.ve Ahmmed, M. (2018). Islamic Banking and Green Banking for Sustainable Development: Evidence from Bangladesh. Al-Iqtishad Journal of Islamic Economics, 10(1), 97-114.
  • Velez, H. (2022). What Is Green Banking? https://www.thegoodtrade.com/features/green-banking-definition, (25.02.2023).
  • Westover, J. (2008). The Record of Microfinance: The Effectiveness/Ineffectiveness of Microfinance Programs as a Means of Alleviating Poverty. Electronic Journal of Sociology, 12(1), 1-8.
There are 49 citations in total.

Details

Primary Language Turkish
Subjects Monetary-Banking
Journal Section Research Article
Authors

Muhammed Tarık İslam 0000-0003-0369-2121

Nur Beder 0000-0001-9663-9594

Mehmet Sami Yıldız 0000-0003-4293-463X

Early Pub Date June 23, 2023
Publication Date June 30, 2023
Published in Issue Year 2023 Volume: 25 Issue: 44

Cite

APA İslam, M. T., Beder, N., & Yıldız, M. S. (2023). Bangladeş’te İslami (Katılım) Bankacılığın Gelişimi ve Ekonomiye Katkıları. Karamanoğlu Mehmetbey Üniversitesi Sosyal Ve Ekonomik Araştırmalar Dergisi, 25(44), 391-415.

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