International Research Journal of Finance and Economics
 Issue 143
 December, 2015
Factors Influencing the Adoption Decision of Islamic Banking System in Palestine from the Point View of Individual Customers
Abdelrahman H. Ahmed and Dr. Sualp Davut

The aim of this study is to gather and analyze variegated array of information on Islamic banks customers’ preferences, and assess their present and potential impact on their decision to adopt an Islamic banking system. The main aim of conducting this paper is to identify the most important selection motives and analyze the key determinants contributing to adoption of Islamic financial system from three different perspectives: religious sincerity, cognition of Islamic financial products and service quality provided. This study is primarily an exploratory research that attempts to remove the ambiguity surrounded the idea of Islamic finance and unfolds the challenges facing the implementation of Islamic banking theory in Palestine. A sample of 120 Islamic banks’ customers has been selected for this research using non-probability purposive sampling procedures. Statistical techniques, such as frequencies, Pearson’s correlation coefficient, and other related statistical analysis techniques have been applied. The study concluded that religious sincerity, cognition of Islamic financial products and service and quality provided have a great influence on Islamic bank adoption in Palestine. However, the study showed that the service quality motive is the highest factor influencing the adoption decision of Islamic banking system in Palestine from the point view of their consumers. The study is undoubtedly valuable in the Palestinian context, as it will provide empirical facts to the current debate on the viability of Islamic banking services in the country, and provides substantial and original contribution to the idea of Islamic banking in Palestine.
Keywords: Islamic Banking, Selection Criteria, Religious Sincerity, Cognition, Service Quality, Consumer Behaviors.
Technical Efficiency of Jordanian Insurance Industry
Said J. Aqel, Mahmoud F. AL Refai and Adli A. Qaraein

This study aims to analyze the technical efficiency of Jordanian insurance industry by applying Data Envelopment Analysis (DEA) on 28 companies during the years 2009 to 2013. The study found that the average technical efficiency during the study period was 64% while the pure technical efficiency was 76%, and scale efficiency was 71.8%. The study also found, that out of 28 insurers, only six were technical efficient, eight were pure technical efficient and six insurers scale efficient. The study found that the main cause for the technical inefficiency of the Jordanian insurers was due to the scale inefficiencies and pure technical inefficiencies. The study identified the most important efficiency determinant factors through using the Tobit regression analysis. The analysis indicated that there is a significant positive relationship between the size, market share, profit & number of branches on one hand and efficiency on the other, while there is insignificant negative relationship between the efficiency and leverage. Therefore, the results confirm that there are other factors such as size, market share, profit and number of branches influencing the Technical efficiency other than input and output.
Keywords: Insurance, Technical Efficiency, Pure Technical Efficiency, Scale Efficiency, Data Envelopment Analysis, Tobit Regression, Jordan
Government and class in post-revolutionary Iran, a case study of Hashemi Rafsanjani and Khatami’s Governments
Saeed Hajinaseri and Hosseinali Yarokhi Joshaghani

The Authors’ claim in this paper is that a terse and brief glance to historical experience of Islamic Republic of Iran life indicates that in each period of political system life, with getting salient of various values due to emergencies or due to political agents’ views and following it, policies in accordance to these values, the demands of some social classes have only been gratified. As a result of this process, some social classes are paid attention to while other classes get ignored or put into sidelines. The authors, however, using analytical-descriptive approach to show this process, have analyzed and investigated both Hashemi Rafsanjani and Mohammad Khatami’s administrations.
Keywords: Islamic Republic of Iran, social classes, Hashemi Rafsanjani Government, Khatami Government, Economic development, political development
An Empirical Investigation of the Relationship between Imports and Economic Growth: The Case of Saudi Arabia
Dr. Zafar Ahmad Sultan and Dr. Tarek Tawfik Alkhteeb

The present paper examines the impact of imports on economic growth in the context of Saudi Arabia during 1980 to 2012. To meet the consumer’s and developmental needs of the economy, Saudi Arabia resorts to imports of different commodities. Applying Johansen’s method of cointegration, we find that long run equilibrium relationship exists between imports, investment and economic growth in Saudi Arabia. Causality test estimated by vector error correction model (VECM) indicates bi-directional relationship between imports and economic growth measured in terms of real per capita income (PCI) in Saudi Arabia in the long run. Findings suggest that Saudi Arabia should continue to liberalise its trade policy so that goods can be imported easily and cheaply and give boost to rate of economic growth.
Keywords: Imports, Economic Growth, Cointegration, Causality.
JEL classification: C22, C32, F43
The Determinants of Bank Profitability Around M&AS: Evidence from Europe
George Kyriazopoulos, Evangelos Drymbetas and Chionis Dionisios

We examine the determinants of profitability for a sample of European banks that were involved in mergers and acquisitions (M&As) between 1998 and 2010. Using panel regression analysis, we gauge bank profitability before and after the year of M&As using a set of bank-specific and macroeconomic variables. We find that bank profitability is influenced by a different set of bank-specific and macroeconomic factors indicating that a corporate event may alter the determinants of bank profitability. The bank-specific factors that present a constant effect on bank profitability are capital adequacy and the percentage of non-performing loans. Looking at the macroeconomic variables, we see that GDP growth is the sole positive determinant of bank profits in both pre and post-M&A periods. Finally, cross-border M&As seem to affect more bank profitability compared to domestic ones.
Keywords: Mergers and acquisitions, macroeconomic variables, bank-specific, profitability
The Impact of Governance on Economic Growth, Income Inequality, and Poverty A Comparative Study
Adel Yacoub Shamaileh

This study examines the extent and direction of relationships between governance indicators and annual economic growth, income inequality and poverty rates in Jordan. The study further investigates the impact of governance on economic growth in five other countries: Denmark, Belgium, Bulgaria, Brazil and Bolivia. The study uses published World Bank data on World Governance Indicators (WGI) in addition to published data from other sources for the period 1998 to 2013. The data set consists of six governance clusters, namely voice and accountability, political stability, government effectiveness, regulatory quality, rule of law and control of corruption. A multiple regression analysis (OLS) uses annual economic growth rate/log annual economic growth, income inequality measured by the Gini coefficient, and poverty rate (HC) Ratio as dependent variables, with governance indicators as independent variables.
The results of the study suggest that governance is positively associated with economic growth in the six countries under consideration. Overall, the results of the study do not always support the null hypothesis that governance cannot explain economic growth. The value of R2 is significant in four countries: Jordan, Brazil and Bolivia at 0.05 level and Denmark at 0.1 level. By contrast R2 is insignificant in Belgium and Bulgaria. The results also reveal a difference in the importance of various governance dimensions influencing economic growth. The number of significant estimated coefficients varies from country to country. The results are consistent with results reported in the literature. In broad terms, the estimated growth regressions explain much of the variations except in Bolivia and Belgium.
Empirical results of the study show that governance is positively and insignificantly affecting income inequality measured by the Gini coefficient. None of the predictors is statistically significant. In contrast, the value of R2 for the relationship between governance and poverty measured by HCR is significant at 0.05 level. The study shows that income inequality measured by the Gini coefficient influences poverty measured by HCR. Increases in income inequality had significant impact on increasing poverty rate. At the same time the deterioration in rates of annual economic growth had significant effects on increasing poverty rate. The results of the study are consistent with the findings of many studies in the literature.
The implication from the findings of the study encourages governments in developing countries to formulate, adopt and implement appropriate public policies capable of improving their rank on the ladder of governance. Although governance alone is not sufficient to bring prosperity to developing countries it remains the only path for sustainable development and sustainable welfare. Various dimensions of governance deal with quality of life not with per capita of income alone. Per capita income is not a goal in itself but a means for better lives and better standards of living.
Keywords: Poverty, Governance, Income Inequality, economic growth
Empirical Financial Statement Analysis of the Jordanian Phosphate Mines Company between 2007 and 2013
Khalid Alkhatib, Ahmad Eqab Albzour and Qais Marji

The objective of this article is to analyze the financial statements of the Jordanian Phosphate Mines Company by using financial ratio analysis. Financial statements analysis considered useful to companies as a technique of analyzing the business. Financial ratio analysis mainly related to the entire sector the company is operating in, and trying to determine the company's financial position, value, behavior, and its market share. Also can be used to inspect the current performance of the company by comparing it with past performance that normally helps the management to recognize existing problems that may require action and caution of any potential problems that can be avoided; additionally ratios can be utilized in comparing performance of the company with its competitors in the same industry. The performance evaluation process of the company also attempts to increase the company's profitability and improves its shareholders wealth. For the purpose of this article, the sample data for the Jordanian Phosphate Mines Company during the period between 2007 and 2013 manually extracted from the company's annual report listed on the Jordanian Stock Exchange and then analyzed. For the data analysis methodology, the ratio analysis technique adopted. The findings of the study were inconsistent in most cases as this type of industry is capital demanding to finance its large fixed assets and credit sales volume are large. Taking into consideration, the company is the only company that operates in the phosphate mining industry and has no competitors.
Keywords: Financial, Statements Analysis, Ratios, Jordan
Public Debt Crisis, Cash Management, Capital Controls and New Electronic Payment Systems in Greece: Towards Cashless Transactions
Spyridon Repousis

The purpose of this paper is to describe the Greek public debt crisis and the cash management of banking system by analyzing capital control measures in Greece during July 2015 and categorizing available Greek electronic payment and settlement systems.
Greek public debt crisis and recent referendum caused many problems in cash management of banking system. Initially high demand for cash met through speeding up of operations related with the supply and distribution of banknotes, daily monitoring of demand and proper management from Bank of Greece and extraordinary cash receipts from Italian and Austrian Central Bank.
As public debt crisis and the announcement of referendum during July 2015 caused new problems, capital controls and bank holiday were inevitable from Monday 29 June 2015. The daily withdrawal limit is 60 Euros per cash card through ATMs and banks’ branched could only issue credit and debit cards and provide passwords for internet banking. Alternative way for citizens and companies to transact is through electronic channels. In Greece, there are three payment and settlement systems: Large Value Payment System (TARGET2), Retail Payment Systems and Securities Settlement Systems.
Transaction volume of non-cash channels in Greece, increased by 28.2%, comparing 2014 – 2012. From the foregoing, an alternative payment channels will have considerable positive consequences on the Greek economy. To this end, the Greek financial system is witnessing a redirection to cashless policy, with the Bank of Greece (central bank of Greece) and commercial banks, moving to this direction due to the latest capital controls. Banks offer more passwords for internet banking and credit and debit cards for ATMs and citizens are more used to them now. Electronic payment (e-payment) landscape is on a new threshold with banks, switching and transaction companies, vendors of Automated Teller Machine (ATMs), Point of sale (POS) and third party companies all jostling to expand the scope of market.
Above findings are useful for information technology management, legislative and compliance authorities, investors and person that operate transactions with Greek banking payment and settlement systems.
Keywords: Greece, Data Payment and Settlement Systems, Banks, Capital Controls.
Search for Herding in the CEE Stock Markets: The Case of Poland and Romania
Selma Ayture

Herding distorts the Capital Asset Pricing Model (CAPM) and leads to inefficient equity pricing. Three well known hypotheses are used to detect herding in the stock markets of Poland and Romania: Christie and Huang, (1995), Chang et al., (2000) and Hwang and Salmon (2004). The reason for choosing these markets is simply because Poland had longer experience with market economy relative to Romania when it joined the EU in 2004, earlier than Romania which joined the Union in 2007. Using some 3500 daily observations (2001-2014), the Christie and Huang and the Chang et al models did not produce any evidence in support of herd behavior in Poland and Romania stock markets. However the Hwang and Salmon model did produce sufficient evidence that sentimental herding occurred in both markets but rather in smooth patterns over the sample period. Polish inves-tors appear to be more alert about the market information and quicker in adjusting back to normal market conditions when the environment is clear to the investors.
Keywords: Herding, Stock Market, Polonia, Romania
JEL Classifications: C13; C31; G14; G12
Assessing Impact of Individual Investors Risk Aversion Bias on Investment in Tehran Stock Exchange Market According to Age, Gender, Education & Investment history in ‘TSE’
Farrokh Pourbijan and Sasan Pourbijan

Financial theory is based on two important principles, the first focuses on the rational being and the performance of peoples, and the second principle acclaim that people use in the decision-making of all available information. In recent decades, researchers have pointed to the impact of human behavior on financial decisions and believe that all rationally and logical investments not based on economic indicators and on adoption own financial decisions they looks to issues of risk and stock and returns future prices in a way quite different from the financial classical theory and in their investment decisions affected of behavioral factors that we remembered from their as behavioral biases in this research. In this research, we attempted which has considered one of the behavioral biases samples which called loss aversion to measure its impact on the investment of peoples in the Tehran Stock Exchange. The results of this research represent the direct impact of loss aversion bias against investors in the Tehran Stock Exchange.
Keywords: behavioral finance, investment, Tehran Stock Exchange behavioral bias, loss aversion