DEPOSIT WITHDRAWAL BEHAVIOR IN ISLAMIC BANKING

Deposit withdrawal risk is one of the most important risks to be managed by Islamic banks for some reasons, particularly those operating in dual banking system countries. Those reasons are: 1. Islamic banks operate side by side with the conventional ones, which require them to perform well and be profitable fpr their depositors. 2. Islamic bank depositors expect Islamic banks to pay competitive returns and provide comprehensive banking services (rational behaviours). During the 1997-1998 and 2007 - 2008 global financial crisis, especially when conventional banks offered attractive returns, Islamic banks faced a dillema as the increased interest rate caused rational Islamic banking despositors to have higher rate of return expectations from their islamic banks. such dilemma leads to a displaced commercial risk and finally to withdrawal risk. 3. Unlike its conventional counterparts, Islamic banks are bound by Islamic principles that forbid them to take any interest-related incomes. This makes deposits from depositors an important source of funds for the operation and financing Islamic banks. Therefore, the risk of fund withdrawal is another important aspect that should be well-managed in Islamic Banking. One way to anticipate withdrawal risk is being able to identify the depositors' withdrawal behavior. This book, therefore, is aimed at analyzing depositors' intention to withdraw their money from Islamic banks in the situation of receiving issue of shariah non-compliance products and practices, experiencing lower rate of return, and receiving rumours on banking crisis to occur in the near future. Individual and bank attributes, psychological factors, and macroeconomics variables will be utilized in order to have a good and best fitted model depicting withdrawal behavior of Islamic banks' depositors. 9789991782737