Thursday, September 3, 2020
How has Technology Contributed to Globalization? Clarify How Changes In Technology Have Contributed Towards Globalization Of Markets And Of Production? Innovation has significantly changed people groups lifestyle everywhere throughout the world and the present reality has become a genuine indication of a worldwide town. Not just the recurrence of universal voyaging expanded complex yet the conceivable outcomes of cross-fringe exchanging of merchandise and enterprises have additionally expanded exponentially. These effects are all in all known as globalization. (Slope, 2009) characterizes globalization as a procedure which empowers people, associations and governments from various natins to run over one another and communicate in an intergative way. The final product of such intergation would be an intergated globalized showcase framework which can go about as a mixture of indivual economies of various countries. There are two manners by which globalization can be imagined, for example with the creation viewpoint and thebmarket point of view. (Slope, 2009) characterizes the business sectors globalization as softening down and assembly of separately free commercial centers into an amalgamated commercial center. Sharing of the wellsprings of creation from various land areas for levaraging the quality and cost of the merchandise and enterprises produces is the thought behind the items globalization. (Slope, 2009) Numerous organizations have been detailed to help oversee, direct and police the marvels of globalization and to advance the foundation of transnational arrangements for worldwide exchange. A couple are as following:: The World Trade Organization (WTO) The International Monetary Fund (IMF) The World Bank The United Nations (UN) These foundations follow up on a universal level to manage and handle any issues that the various nations, organizations and individual may confront while experiencing globalization for example The IMF offers fiscal types of assistance and goes about if all else fails for the individuals in money related pain (Gitman, 2008) Presently the inquiry is the means by which rather than what. How does globalization occur? What drives globalization? There are numerous drivers or rather changes that bring about globalization. By and large, there are two full scale drivers of globalization. These are the declining exchange and speculation boundaries among nations and changes in innovation Associations over the world presently face lower level of snags to putting and exchanging outside grounds. This adaptability permits the organizations to pick worldwide areas where they need to spend least on creation costs and receive most extreme rewards consequently by deliberately finding their creation site, and administration and item outlet areas. Configuration would thus be able to be made in one worldwide area, creation at a second worldwide site and the specialty market can be an absolutely distant market at the opposite apocalypse. Globalization of creation accordingly abuses modest work in the third world markets and rich purchasers in the principal world markets. (Arribas, 2009) The innovative changes are not simply restricted to the mechanization of the creation line yet it likewise remembers the headway for foundation and network. The most significant advancement has been the chip. The improvements in correspondence advancements like remote, optic fiber, satellite interchanges and the quick development of the web have carried the worldwide business to a formerly unheard of level. Enhancements have likewise happened in the field of transportation innovation bringing about the improvement of business fly airplane, which possesses decreased the energy for travel. Globalization isn't just coming about because of declining exchange obstructions or changes innovation yet after investigating two different components become possibly the most important factor. These are Foreign Direct Investment (FDI) and expanding universal exchange. Globalization is anything but a straight line occasion rather it has been developing from numerous decades and the ramifications of this marvel are in effect firmly felt now. This has been going on since the 1960s. During the 1960s the US commanded the globes economy and the worldwide exchange picture and it likewise drove the front when it came to FDI, comparably the US multinationals positioned high in universal business (Hill, 2009). This has all changed because of globalization and different nations, firms and people have ascended to contend in the worldwide commercial center. Much has changed in the socioeconomics of the world when taking a gander at world GDP and exchange. China didn't have an offer on the planets yield in 1963, presently has 11.5 % of the GDP in 2007 and 7.2% of the universes send out in 2006. This shows the gigantic impact of globalization in the current world commercial center. China in 2008 was recorded as the third biggest Economy dependent on Nominal GDP. The portion of world yield created by underdeveloped nations has consistently expanded since the 1960s. There additionally has been a steady development in cross-outskirt stream of FDI and it doesn't come as an unexpected that China has been the biggest collector of FDI (Hill, 2009). There are numerous aspects to globalization and on a more intensive look there is the worldwide endeavor. A worldwide endeavor (MNE) is a kind of business which has tasks in at least two nations. A worldwide endeavor can likewise be alluded to as an International Corporation. MNEs have amazing impact over nearby just as the worldwide economies and assume a significant job in universal relations and globalization. In the past the western market was shut for some economies yet that pattern has changed and numerous business sectors have opened up for the western market to put resources into. The breakdown of socialism in Eastern Europe has made a host open doors for fare and speculation. The greatest open door rose in China because of monetary grew even with the proceeding with socialist control. Additionally the adjustment in majority rule government and the free market changes in Latin America have likewise given an opportunities for speculation from outside financial specialists. Going over all what globalization brings to the table, an inquiry strikes a chord that a move towards a worldwide commercial center something to be thankful for? There numerous perspectives on this specific inquiry. Numerous specialists accept that globalization is helping success by giving more occupations, lower costs of work, materials, land and in this way bringing about greater gainfulness. Though different specialists recommend that globalization isn't helpful as chiefs who are overseeing transnational and worldwide associations need to consider much more factors when contrasted with clichÃ© heads (Hill, 2009). Dealing with a worldwide business contrasts from an ordinary business in four eminent zones: Contrasts in nations expect organizations to utilize various practices in various nations. Managers face more noteworthy and complex scope of issues. Organizations need to follow as far as possible forced by various governments in nations and need to work inside those cutoff points. Global business requires changing over assets and is truly defenseless to vacillations in the conversion standard. To beat these bits of knowledge about overseeing global associations directors need to utilize un-organized arrangements and practices that may require extra assets as far as work, capital and land. This carries us to our next idea, why such a significant number of specialists against what globalization bring to the table. (Artis, 2009) Globalization has infrequently been viewed as an answer for issues like underdevelopment, lack of healthy sustenance and infringement of human rights, and significant human rights establishments have been set up and joined into the worldwide human rights system. Governments are discovering it progressively hard to abuse their residents human rights without pulling in the consideration of the media and universal associations because of created broadcast communications and worldwide reliance. For sure, generally speaking human rights rehearses have improved overall during the most recent decade or something like that. In any case, this improvement has nor been general nor direct. (Bardhan, 2006) The contemporary world request owes its reality to a huge degree to the data power released because of the free progression of thoughts and interchanges across geological limits with no limitation or deterrents with assistance of the most recent correspondence advancements. While globalization has made it workable for the human rights bodies to respond on human rights maltreatment in the remote social orders of the world, a similar globalization has in truth additionally uncovered the self-governing social orders to human rights maltreatment at hands of the more impressive on-screen characters in the worldwide situation. What may be a blow-back for an incredible on-screen character in the developing scene request may be a human rights misuse including exploitation of exposed kids and females for the beneficiary. Along these lines as for human rights, globalization is a twofold edged weapon and it can work in the two different ways. Not exclusively do the more vulnerable players in th is world request hazard the fury of crude intensity of the more remarkable on-screen characters yet the multinationals and aggregates will in general go about as relentless forces in their own right. The residents of the more fragile countries are left helpless before amazing yet selected worldwide mammoths like IMF, the World Bank , peacekeeping powers and first world NGOs who progressively control the lives and destinies of the occupants of the more vulnerable countries of the world. Weve discussed what globalization is, the thing that the key segment drivers of globalization are, the manner by which it influences the creation procedure. In doing so weve discussed the MNCs (MNEs) and furthermore how the socioeconomics have changed since globalization begun. This likewise has given us an image of how supervisors who are functioning for transnational association consider various components for their, arranging, sorting out and driving choices. Progression in innovation didn't globalize the creation and commercial center however it has expanded the force of globalization manifolds. In spite of the fact that globalization is generally considered as a positive marvel yet a
Wednesday, August 26, 2020
what is illumination papers What is Enlightenment? In the eighteenth century in France Britain and Germany a general scholarly move towards more noteworthy dependence on the human sciences and their significance to the limits of existing information started. This development was alluded to as The Enlightenment. As the name proposes the development set out to shed a more noteworthy on mankind, human instinct what's more, the idea of presence. An incredible want was shared to decide the degree of our insight into the world and for approaches to increase a more prominent This development depended on a mass dismissal of convention and as of now called for the expulsion of every single set up origination and partialities regularly held. The Catholic Church, and for sure all religions went under substantial investigation also, dismissal because of their all unavoidable hold on all issues instructive, logical and philosophical. Strict ethics and rules additionally became Science, rationale and logic turned into the chief devices of theory in this period as was prove by the new strategies utilized in contention, Custom in the entirety of its structures, be it strict or logical was shunned in favor of a fresh start from which to start re-surveying what we can know. In spite of the fact that Descartes was the primary Philosopher to utilize reason as an instrument and Francis Bacon extraordinarily impacted Enlightenment thought it is John Locke, an English Protestant rationalist situated in Amsterdam who is seen to be the dad figure of this development. In France an army of learned people known as the philosophes turned into a marvels, and all inclusive scholars such as Hume and Kant characterized the edification development. So as to comprehend what the Enlightenment is one must consider the recorded period it impacted and took its impact from. The edification occurred against an authentic foundation of earth shattering social change. The transformation of the fifteenth century and ... <!
Saturday, August 22, 2020
Extraordinary chain of being - Term Paper Example Notwithstanding, the progression of time saw this pattern gradually blur away and the classes that were until now much regarded before long lost noteworthiness. A genuine case of this can be seen from the Tudor Dynasty which made a decent attempt as it could to keep up the presence of the classes and yet created strategies that debilitated the chain further. As indicated by Bucholz and Key (87), the Great Chain of Being was an arrangement of administration that characterized the English individuals by class, age and sex. From the divisions, it had the option to separate who was and was not a knight, an esquire, or a respectable man (Bucholz and Key 11). The first of this class was the eminence and respectable men who were the leaders of the network. This was the trailed by the men of their word and even among the respectable men, there were still classes where the first and chief were the lord, dukes, among others while close to these were knights, esquires, and straightforward honorable men. Regardless of the solid social progressive system, the progression of time saw this chain getting more fragile and more fragile with the peak coming during the Tudor Dynasty. In any case, the Tudor Dynasty attempted to keep up the chain and yet completed strategies and activities that solitary prompted debilitate the Great Chain of Being further (Ke y and Bucholz 17). In the start of the fifteenth century, the England experienced a progression of wars that influenced both the economy and administration of the country. Following the war that was going on in the West Country, the lord along with his guides picked Richard, the then duke of York to be the defender of the Realm. By 1461, the duke of Yolk opposed the Lancastrian government that he had promised to serve reliably. Not long after Richard had taken the seat, he was executed without a second thought by his own child Edward who took influence in 1461. Be that as it may, the Lancastrians continued creation rival claims dependent on birthplace just as formal pledges of steadfastness and this prompted far reaching viciousness in the whole nation. During the 1460Ã¢â¬â¢s and
Assorted variety Of Phylum Chordata - Essay Example In fish they are changed to shape gills and they may vanish as the creature develops particularly in a portion of the vertebrates. The pharyngeal gill cut is available sooner or later in life of the creatures. Nerve string: It is empty and dorsoventrally positioned to the notochord and finishes in the cerebrum. Different highlights are solid tail (post butt-centric tail) and endostyle (a notch like structure in the ventral mass of the pharynx. Anyway the general highlights displayed by creatures in this phylum are: The creatures have a respectively even body Their bodies are sectioned and consequently have divided muscles Their coelom is very much evolved They have all around created circulatory framework with a ventrally positioned heart and are subsequently more dynamic than their partner spineless creatures. Their skeleton is either hard or cartilaginous Their stomach related framework is finished implying that their gut goes through the body from mouth to the rear-end. The phylum chordate falls under the Kingdom Animalia and is additionally partitioned into the subphyla Urochordata, Cephalochordata and Vertebrata. In any case, creatures in these subphyla may show various attributes yet the explanation behind them being assembled in a similar phylum is on the grounds that they display comparable characters alluded to as binding together connections, for example, urochordatesÃ¢â¬â¢ hatchlings have both notochord and nerve line which disappears in adulthood. Cephalochordates have a notochord and nerve line which persevere to adulthood however don't have skull. In vertebrates, the notochord is supplanted with vertebral section at adulthood stage and the nerve rope turns into the spinal string. Subphylum Urochordata Urochordates otherwise called Tunicates and exemplified by Ascidia have the accompanying attributes: At grown-up stage, their body is secured with a suck like structure (Tunica) and has two siphons one through which water enters the body (incurrent siphon) and the other through which water leaves the body (excurrent siphon). They are channel feeders and sessile. Despite the fact that grown-ups are sessile, their hatchlings are free swimming and display practically all chordate attributes. Subphylum Cephalochordata Exemplified by amphioxus and lancelets, cephalochordates have eel like bodies, they are marine, their bodies are fragmented. Individuals from the phylum are delicate bodied and hence, cephalochordates are not fossilized. A notochord reaches out through their prolonged body and mouth is furnished with cirri which helps in acquiring food. They have various gill cuts and are additionally dioecious. They are channel feeders (extricate food from water taken in however the mouth by help of cilia on their wheel organ. Subphylum vertebrata Vertebrates are the most progressive chordates and separated from having an inward skeleton, they display the accompanying qualities: Their bodies are portioned They have a reciprocal bal anced body Their endoskeleton is either a hard or cartilaginous Pharyngeal gill cuts are lost in grown-ups however are available during undeveloped stage Their heart is ventrally positioned They gangs post butt-centric tail They have a shut circulatory framework Vertebrata Classes caught are: Agnatha, Chondrichthyes, Osteichthyes,Amphibia ,Reptila ,aves and Mammalia Class Agnatha Agnathans emerge from a gathering of vertebrates known as Cylclostomes (fishes or gathering of vertebrates without jaws) which prohibits Gnathostomes (gathering of vertebrat
Friday, August 21, 2020
Prior this year, my mum and father concluded that we would be going to Benidorm for seven days toward the start of the late spring occasions. My sister, Tara and I were so energized for the occasion that we quickly began checking during the time despite the fact that it was April and we wouldn't be going until the finish of June/beginning of July. The months paving the way to the occasion was a hurricane of arranging what we were taking and what we would do while we were there. At long last the day came and we were getting up at 3 am so we could prepare and get the 6 oÃ¢â¬â¢clock plane from Edinburgh air terminal to Alicante airport.I recall bobbing in my seat in fervor while we were landing and letting out a screech of joy when we were securely on the ground and allowed to leave the plane. The main thing I felt when I left the plane was the finished unwinding that the burning sun all over brought to me. Very soon we were sitting in a packed transport that would take all of us to o ur various inns. Our lodging was one of the initial not many stops as we were moderately near the beach.On first look, the inn (which I can't for the life of me recall the name of) looked quite standard. It wasnÃ¢â¬â¢t appalling looking anyway it didn't resemble the Ritz. Be that as it may, when I got inside I was shocked by how tasteful the banquet room was. I really wanted to think about whether our room would be similarly as tasteful and exquisite as the banquet room. My response to that specific inquiry was no. The room was pleasant enough considering we wouldn't invest a lot of energy in there yet I couldnÃ¢â¬â¢t help however be baffled by the size of our room.The thing I delighted in the most about our room was shockingly the washroom, the lighting in there was total flawlessness for preparing toward the beginning of the day and evening and the shower was amazing! I could simply feel all the pressure in my shoulders wash away while in that shower. Our first day in Benidorm wasnÃ¢â¬â¢t such exciting, Tara and I went through the majority of our outing by the pool swimming (Tara) and absorbing some nutrient D (me).Eventually we needed to leave the pool at around 8 oÃ¢â¬â¢clock for supper whichÃ¢ would be beginning soon. The supper the inn served was uncommon! Maybe they had taken a dish from each nation on the planet and put it into a smorgasbord where we could simply take whatever intrigued us! Day two of our vacation of discovered us going through the day sunbathing at the sea shore and swimming in the ocean. The water was a wonderful clear blue shading and the sand was brilliant. The feature of day two for me however were the peaches that my father purchased at an organic product slow down while we were strolling down to the beach.They were the biggest and juiciest peaches I had ever had and kept my stomach content until supper time. On the third and fourth days within recent memory in Benidorm were spent in the amusement park Ã¢â¬Å"Terra Mitica Ã¢â¬ which means Ã¢â¬Ëmythical landÃ¢â¬â¢. The amusement park was part into 5 unique parts: Egypt, Greece, Iberia, the Islands and Rome. Every zone had their own rides and shows. By and by my preferred part was of the amusement park was the vessel ride around the recreation center as it was brightened mysteriously. Day five discovered us investigating the old and new town and the shops that they offered.We found a vessel ride that would take us to Benidorm Island and keeping in mind that there we strolled right to the highest point of the slope and down again which in the horrendous warmth was a troublesome accomplishment to achieve. The following day was spent at a segregated sea shore that we found while investigating the town. This sea shore was somewhat extraordinary to the primary sea shore however, as there were fish swimming in the water with us. Our last day in Benidorm was spent at a marine creature park, Ã¢â¬Å"MundomarÃ¢â¬ where we watched a winged animal, ocean lion and dolphin appear, saw turtles/tortoises, lemurs, monkeys and seals and had our photos taken with dolphins.It was the ideal completion of the occasion that had without a doubt been the best occasion of my life. With our sparkling tans, trinkets and pictures that should have been transferred onto Facebook, we loaded onto the plane that would return us to Edinburgh, I really wanted to feel dampened by the way that we were leaving this amazing, dazzling and warm spot and returning home to troubling Scotland! In any case, as it's been said, every single beneficial thing must reach a conclusion.
Tuesday, August 18, 2020
What to Do When You Know Youre Going to Miss a Deadline Deadlines! Everyone dreads them, yet they are unavoidable and very important. Deadlines help to keep you accountable, they help you to prioritize what you will work on and push you to get your work done. Meeting deadlines also keeps your bosses and clients happy and boosts the morale and productivity of your team.As important as they are, sometimes it becomes impossible to meet your deadlines. Either you have a lot on your table, the design team didnât get the designs to you on time, or you underestimated the time it would take you to get the work done. Regardless of the reason, you have realized that your deadline is fast approaching and there is nothing you can possibly do to get the work done on time. Butterflies start fluttering inside your belly and the panic hits you like a Mack truck.You know your boss, client or whoever is expecting your work is going to be mad. Your panic is justified. A survey by recruitment company Career Builder shows that 35% of employers have sacked a n employee for work-related delays.If you have a looming deadline that you are afraid you wonât be able to meet, I have some good news for you. There is no need to panic. If you handle the situation with class and professionalism, you will not only keep your job, you will also earn the admiration of your boss or client, despite missing your deadline. Hereâs what you should do. GIVE ADVANCE NOTICENo one wants to hear that the work they are expecting at that very moment is far from done. Here is the thing. You donât just suddenly miss a deadline (unless you have an emergency or you scheduled the wrong day on your calendar). There are tell-tale signs that you wonât be able to meet your deadline.Maybe there were some delays getting something you required for the project. Maybe your computer crashed, forcing you to redo the work from scratch (which is why you always need to have a backup). Regardless of the reason behind missing your deadline, there is a high chance you were awar e that you will miss the deadline well in advance.Hereâs the problem with most people. When they notice that there is a chance that they will miss a deadline, they go on overdrive and pull all-nighters trying to get the work done on time. The problem with that is that if you actually miss the deadline, you will inconvenience everyone who was waiting for your work. Even if you manage to complete the work on time, there is a high chance it will look like it was done by a college kid.To avoid this, you need to give an advance notice to everyone who will be affected by the delay. By notifying your boss, client or colleagues about the delay in advance, you give them the chance to readjust their schedule to accommodate the delay, rather than messing up schedules that were dependent on your work.This also makes you look professional in spite of missing a deadline. Additionally, most people will have no problem obliging your request for additional time when you notify them in advance and provide a sensible reason for requesting the extension.GIVE A BRIEF EXPLANATION OF WHY YOU ARE MISSING THE DEADLINEYou donât want to come across as incompetent or lazy, so it is important to give a brief explanation of why you are missing the deadline.Start by offering an apology for missing your deadline and then give the reason behind the delay. If it was your fault, take responsibility for it. Doing so shows that you are a mature person and that you have learnt from the experience and are unlikely to repeat the same mistake again. If the delay was not your fault, give a simple outline of the facts that led to the missed deadline.When explaining the reason behind the delay, avoid giving meaningless excuses or placing the blame on someone else. Doing this only makes you appear unprofessional and immature.GIVE AN ALTERNATIVE DEADLINEOnce you give a notification that your work will be running late, the other person will automatically start wondering when they will receive the work so that they can focus on moving forward. What many people in this situation do is to request for some additional time.Thatâs not the best approach. Instead of asking for an unspecified amount of additional time, outline the amount of work that is remaining, explain what you are doing to get the work done and the amount of time you will need to get the work done.This shows that even though you are behind on your work, you are doing everything you can to deliver the work as soon as possible. This also makes it easier for others to give their suggestions on the best approach to ensure that the work is completed as quickly as possible.Itâs good to keep in mind that your boss or client might push you to complete the work sooner than your alternative date, so you should be prepared for that.GIVE AN OPTION OR A BONUSMost people will have no problem giving you additional time to complete the work. Even if your boss or client gives you an extension, it is always best to assume that by m issing your deadline, you have caused some inconvenience.You should make up for the inconvenience by offering an option or a bonus. This shows that you actually take the deadline seriously, even if you were not able to meet it. If you are working directly with the client, you can give them a special discount to make up for the delay. For example, you can give the client a 10% discount on the project or give them a coupon that allows them to claim a discount on their next project.Alternatively, you can offer the client a related service for free. For example, if you were writing an eBook for the client, you can offer to design a cover for them free of charge to make up for the delay. Another option is to offer to send the work you have completed already.Offering such options or bonuses not only shows that you did not deliberately miss the deadline, it also allows you to create a positive impression despite the fact that you missed a deadline.OVER-COMMUNICATE IN THE FOLLOWING DAYSBy m issing your deadline, you have already caused some inconveniences and created unease in the mind of your boss or client. To ease their concerns, you should communicate with them regularly until you deliver the work.Give periodic updates of what you are doing and the progress you are making towards meeting your new deadline. Regular communication does a number of things. First, it gives the reassurance that you are actually working on the project and that you wonât miss the new deadline.Second, it shows the amount of work you are doing and justifies the extension. A daily or weekly update of everything you are doing makes it clear to your boss or client why you could not possibly meet the deadline and helps make sure that more realistic deadlines are set in future.Finally, it helps you come across as professional and minimizes the chances of receiving a negative remark in your performance appraisal.DELIVER ON THE NEW DUE DATEYou have already inconvenienced others by missing the fir st deadline. Nothing will make you appear more unprofessional than missing your new deadline. This is why it is very important to make sure that you can actually get the work done by your newly proposed deadline.If you miss your new deadline, people will assume that lazy and not serious with your work. If you were working directly with a client, the client might even opt not to give you any more work. In addition to delivering the work before your newly proposed deadline, you also need to deliver high quality work.What is the essence of requesting for an extension only to deliver low quality work? The higher the quality of the work you deliver, the less serious your delay will seem.MAKE SURE IT DOES NOT HAPPEN AGAINMissing a deadline once or twice is perfectly normal and is understandable and forgivable. A report by Career Builder shows that 34% of employers do not mind the occasional delay, provided it does not turn into a habit. Regularly missing deadlines, on the other hand, is c ause for serious concern. Despite having gracefully handled a missed deadline, you should give assurances that it will not happen again.Donât stop at giving assurance. Make sure that you follow through with your promise.Sometimes, when people realize that their boss or a client was not too angry because of a missed deadline, they take it as a chance to take things lightly and slack off in their work.Donât do that. You should always keep in mind that your clients and your bosses hired you with the expectation that you will always do your best in your job and deliver all your assignments on time. If they notice that you are slacking off, they might not hesitate to let you go.Whatever you do, make sure that missing deadlines does not become more than an occasional occurrence.WHAT NOT TO DOApart from the above steps, there are some things you should avoid doing once you realize that you are going to miss a deadline. Doing such things will negatively impact your reputation and will m ake you appear unprofessional. These include:Donât Make ExcusesWhen you realize that you are going to miss a deadline, your first instinct might be to come up with an excuse to explain the delay. Either your computer unexpectedly crashed, you got sick, your mother in law came visiting, your kids got sick, your dog died, or some other funny excuse.Also known as rationalization, this is a psychological defense mechanism that your mind uses to justify the unacceptable behavior while avoiding the actual reason behind the behavior. By coming up with excuses, you avoid taking responsibility for missing the deadline.Well, no one wants to hear your half-baked excuses. They just want to know when the work will be ready. Excuses donât make you appear like a victim of circumstance as you would wish.Instead, they make you look like a lazy guy who cannot manage their time well. Therefore, instead of coming up with a litany of excuses, simply apologize for missing the deadline and give an alt ernative date when the work will be ready.Donât Ignore ThemThis is another common response when people realize that they are going to miss a deadline. Instead of communicating the delay to the boss or client, they decide to go mute until they are ready to deliver the work. While your boss or clients does not want to hear lame excuses, it does not mean that they donât want an update on why the work is yet to be delivered. Maybe you donât want to get yelled at, and thatâs understandable.However, by going mute, you not only inconvenience the other person, you also make them more worried and angrier, which will only lead to a more intense lashing out when you finally decide to communicate. To avoid this, make it a point to notify your boss or client the minute it becomes apparent to you that you wonât be able to meet the deadline.Donât Engage In Blame GamesSometimes, missing a deadline might not be your fault. Somebody else might have made it impossible for you to meet the d eadline.Either a colleague or client did not deliver something you needed on time, more work was added to the project, and so on. In such situations, it might be very tempting to place the blame on the person you feel is responsible for the missed deadline and rant about how lazy and incompetent they are, or how they lied to you. Donât do this.Directly accusing another person only makes you look like a jerk. What you need to do in this situation is to simply state the facts that led to the missed deadline and leave it to the person you owe the work to work out for themselves who to blame.Donât Make Promises You Cannot KeepOnce you miss a deadline, your reputation is already on the line. In this situation, it is very easy to find yourself making grand promises in an attempt to save your reputation. You might promise to have the work ready by the next day or to give them a special bonus to make up for the delay.Before doing this, you need to ask yourself if this is something you w ill actually do. Are you confident that you will get the work done by the date you have promised? Are you actually willing to do some free work for the client?Promising something and not following through will lead to an even bigger blow to your reputation. What you need to do is to be honest with, both with yourself and your boss or client. For instance, it is better to say that the work will take an extra week instead of promising that it will be ready within two days only for you to miss the deadline again.HOW TO REDUCE THE CHANCES OF MISSING A DEADLINE While the tips I shared above will make it easier for you to gracefully and professionally handle a missed deadline, it is always better to avoid missing the deadline in the first place. Below are some tips on how to minimize the chances of missing a deadline in future.Have A Reminder Schedule Of All Due DeadlinesYou should have a record of all promised deliverables, communication, or service. Enter them on your calendar or planne r and then create reminders to give you an alert a few days before the deadline is due.Doing this ensures that you are on top of all due deadlines and prevents deadlines from catching you unawares. Being reminded when deadlines are approaching also makes it easier to prioritize the work with the closest deadline.Create A Buffer On Due DatesIf it is up to you to choose a deadline for a project, donât give the exact date when you think the work will be done. Give yourself a buffer on the due date. For instance, if you think that it will take you 5 days to complete the work, tell your boss or the client that the work will be ready in a week.The two extra days provide you with some flexibility to still deliver on time in case something unforeseen comes up or if the project takes longer than you expected. Giving yourself a buffer on the due date has an added advantage. If you complete the work within the 5 days, you can deliver it two days before the actual deadline.This is a surefire way of leaving your boss or client impressed. If you are unsure of how long a project will actually take, donât just choose a deadline and then hope that you will somehow beat it. Instead, reach out to someone with experience in that field and have them advice you on how long it might take.Know When You Have Hectic Weeks AheadSometimes, missed deadlines are a direct result of having too much on your table. To avoid missing deadlines because you had so much to do, you should look ahead to see other obligations that might interfere with your work.For instance, if you notice that you have some work due on Friday next week yet you have meetings scheduled for Tuesday and Wednesday, you can get started on your projects early so that the meetings do not derail you from meeting your deadlines.Learn To Say NoSometimes, you will be given deadlines that are impossible to meet. If you notice that the deadline is not workable, do not be afraid to decline the assignment. If you accept the assig nment, it does not matter if you turn into superman in an attempt to get the work done; if you miss the deadline, you will still be treated as someone who does not take their work seriously.To avoid this, make it clear to your boss or client that the deadline is not workable. If they are not willing to change the deadline, politely decline the assignment.Get Started TodayI have noticed that when people are given an assignment, many of them wait until the deadline approaches before getting started on the work. The problem with this is that you will not be able to get the work done on time in case something unexpected comes up. To avoid this, you should get started on any due work as soon as you can.Donât put it off till later, unless you have some other important assignment you need to complete first. Getting started right away also allows you to identify early on if something you need is missing. Imagine being given a one month deadline for a project and then calling the recipient a week to the deadline and telling them that something you need to start the project is missing.This shows that you do not take their work seriously and that you put it off till the last minute, and they are unlikely to be impressed.Avoid DistractionsMany times, people miss deadlines not because they did not have enough time, not because they had a lot on their table, not even because the assignment was challenging, but because of distractions. How many times have you spent an hour scrolling your social media feed or chatting with colleagues at the office when you know that you need to be working on a certain project?I bet this has happened to all of us.To avoid wasting the time you should spend working on your assignments, try to limit the amount of time you spend on websites, social media and office banter. Try turning off notifications on your phone so that messages and activity on your social media do not distract you.If colleagues stop by your desk for a chat that exceeds a mi nute, politely let them know that you are busy and that you will get back to them for a chat once you are done with your work.WRAPPING UPIn the course of your professional life, it is inevitable that you will miss a deadline at some point. A missed deadline should not be a source of panic. If handled gracefully, you can turn a missed deadline into an opportunity to showcase your professionalism.Once you notice that you are going to miss a deadline, give a notice as early as possible, apologize for missing the deadline, briefly explain what caused you to miss the deadline and then give an alternative date when the work will be ready. If possible, give options or a special bonus.Avoid giving excuses, ignoring the recipient, blaming others or giving promises you cannot keep. Once you receive an extension, give regular updates on your progress, make sure you deliver by the new deadline and try as much not to miss another deadline.
Sunday, June 21, 2020
Chapter 1: Introduction Introduction to the Subject Background of the Subject General Objective The purpose of this study is to examine how the internal factors of the Islamic Banking affected their performance before, during and after the financial crisis in the GCC in comparison to the conventional banking in the same area. Research Questions This study aims to answer the following questions: How did the financial crisis affect the profitability of Islamic Banks in comparison to Conventional Banks? What are the internal factors (bank specific characteristics) that influence the profitability of Islamic banking for every year from 2006 2009? Did these factors have the same impact on the profitability of Islamic Banking before, during and after the financial crisis? Did these internal factors influence the profitability of Islamic Banking in the same manner as of the Conventional Banking? Need for the Study Significance of the Study Assumptions of the Study Limitations of the Study Although we cannot neglect the importance of the external factors on the profitability of Islamic Banking, they were not included in this study. To understand the reason behind this decision, we need to go through the different types of external factors and how they are classified: Macroeconomic Factors Country Regulation Rules Bank Regulation Rules These factors were not included for the following reasons: Since we are examining the performance of 92 banks (27 Islamic Banks and 65 Conventional Banks) in 6 countries, the number of countries used in the study is not significant enough to study the impact of GDP and inflation accurately on Bank profitability especially when examining each year separately Country Regulation Rules as per the IMF Database, although it differs slightly for the selected countries, did not change over the period from 2006 to 2009. This means that for each bank, these factors remained constant. Data about Bank Regulation Rules cou ld not be obtained for GCC banks Delimitation of the Study This study was delaminated to the Islamic and Conventional Banks in the GCC whose data could be obtained in the Bankscope database. Chapter 2: Literature Review Overview of Islamic Banking Islamic Baking has established as an alternative to conventional interest-based banking. The first stirring of the Islamic Banking movement began in 1963 by Dr. Ahmed Alnajar in a small town in Egypt, called Mit Ghamar. Dr. Alnajar completed his education in Germany and found that it had many saving banks operating on interest. He took the idea from a savings bank in Germany and created his own small Islamic bank that was interest free. After Dr. Alnajars small bank proved successful, the establishment of other Islamic banks followed. In 1971, the Nasser Social Bank was founded in Egypt with the objective of lending out money as a charity on the basis of a profit and loss sharing system and helping people in need. And in 1975, the idea of Islamic banking spread to other Islamic regions such Dubai Islamic bank in United Arab Emirates and The Islamic Development (IDB) Bank in Jeddah, Saudi Arabia (Wilson, 1990). Even though Islamic Banking has only been around for thirty years and is still in an evolving stage, Islamic Banking is the fastest growing segment of the credit markets in the Muslim countries. In 2009, Assets held by Islamic Banking banks rose by 28.6 percent to $822bn from $639bn in 2008, according to The Bankers Ã¢â¬Å"Top 500 Islamic Financial InstitutionsÃ¢â¬ survey while conventional banks posted annual asset growth of just 6.8 percent. Furthermore, GCC states accounted for $353.2bn or 42.9 percent of the global aggregate, while Iran remained the largest single market for Shariah-compliant assets, accounting for 35.6 percent of the total. Finally, Islamic banking operations are not limited to Islamic countries but are spreading throughout the world. One reason is the growing trend toward transcending national boundaries, and unifying Muslims into a political and economic entity that could have a significant impact on the pattern of world trade (Abdel-Magid, 1981). Islamic Banking Rules and Principles Islamic banking rules are according to the Islamic Shariah derived from the Quran and prophet Mohameds sayings. The three main practices that are clearly prohibited in the Quran and the prophets sayings are, Riba (Interest), Gharar (Uncertainty), and Maysir (Betting). Prohibition of Riba or any predetermined or fixed rate in financial institutions is the most important factor in the Islamic principles pertaining to banking. As stated in the Quran Ã¢â¬Å"Allah forbids ribaÃ¢â¬ . Riba means an increase and under Shariah the term refers to the premium that must be paid by the borrower to the lender along with the principle amount as a condition for the loan (Omar and Abdel, 1996). Gharar occurs when the purchaser does not know what has been bought and the seller does not know what has been sold. In other words, trading should be clear by stating in a contract the existing actual object(s) to be sold, with a price and time to eliminate confusion and uncertainty between the buyers and the sellers. Mai sir is considered in Islam as one form of injustice in the appropriation of others wealth. The act of gambling, sometimes referred to betting on the occurrence of a future event, is prohibited and no reward accrues for the employment of spending of wealth that an individual may gain through means of gambling. Under this prohibition, any contract entered into, should be free from uncertainty, risk and speculation. Contracting parties should have perfect knowledge of the counter values intended to be exchanged as a result of their transactions. Therefore, and according to Ahmed and Hassan (2007), the principles of Islamic banking and finance enshrined from al-Quran and Prophet MohamedÃ¢â¬Ës Sayings can be summed up as follows: Any predetermined payment over and above the actual amount of principal is prohibited. The lender must share in the profits or losses arising out of the enterprise for which the money was lent. Making money from money is not acceptable in Islam. Gharar (deception) and Maisir (gambling) are also prohibited. Investments should only support practices or products that are not forbidden or even discouraged by Islam. Islamic Banking Products Islamic Banking products have to be done according to Islamic rules and principles, based on profit and loss sharing as well as avoiding interest. According to BNM statistics 2007, Al Bai Bithaman Ajil financing is the most common in Islamic Banking. There are a lot of Islamic Banking products; however there are some famous Islamic products that will be discussed in this section. 1. Al Bai Bithaman Ajil /BBA This involves the credit sale of goods on a deferred payment basis. In BAA, the Islamic bank will purchase certain assets on a deferred payment basis and then sell the goods back to the customer at an agreed price including some margin or profit. The customer will make payment by installments over an agreed period. A fixed rate BBA is a powerful hedging tool against interest rates (Rosly, 1999). 2. Murabahah Murabahah is a contract of sale. The Islamic Bank acts as a middle man and purchases the goods requested by the customer. The bank will later sell the goods to the customer in a sale and purchase agreement, whereby the lender re-sales to the borrower at a higher price agreed on by both parties. These are more for short term financing 3. Mudharabah According to Kettel (2006), Mudharabah is a basic principle of profit and loss, where instead of lending money at a fixed rate return, the banker forms a partnership with the borrower, thereby sharing in a ventures profit and loss. Mudharabah is an agreement between the lender and entrepreneur, whereby the lender agrees to finance the project on a profit sharing basis according to a predetermined ratio agreed by both parties concerned. If there are any losses the lender will bear all the losses. 4. Musharakah Musharakah means partnership whereby the Islamic institution provides the capital needed by the customer with the understanding that they both share the profit and loss according to a formula agreed before the business transaction is transacted. In Musharakah all partners are ent itled to participate in the management of the investment but it is not compulsory. Musharakah can help in providing financing for large investments in modern economic activities 5. Al Ijarah Ijarah means meaning to give something on a rental basis. In Ijarah, the bank acquires ownership based on the promise and leases back to the client for a given period. The customer pays the rental but the ownership still remains with the bank or lender. As the ownership remains with the lessor (bank), it continues to give the service for which it was rented. Under this contract, the lessor has the right to re-negotiate the quantum of the lease payment at every agreed interval to ensure rental remains in line with the market rates (Hume, 2004). 6. Wadiah Wadiah is a trust contract and the bank provides gift (hibah) and various types of benefits to the customer. This is exactly like a normal conventional savings account. 7. Istisna Istisna allows one party buys the goods and the other party undertakes to manufacture them according to agreed specifications. Normally, Istisna is used to finance construction and manufacturing projects. 8. Salam Salam is defined as the forward purchase of specified goods with full forward payment. This contract is normally used for financing agricultural production. According to Hassan (2004), Salam based future contracts for agricultural commodities, supported by Islamic Banks, can help to overcome the agricultural financial problems Table 2.1 lists the products of conventional banking and their correspondent products in Islamic Banking. Deposit Services Current Deposit Wadiah Wad Dhamana / Qard Hasan Savings Deposit Wadiah Wad Dhamana / Mudaraba General Investment deposit Mudaraba Special Investment deposit Mudaraba Retail / Consumer Banking Housing Property Finance BBA / Ijara wa Iktina /Diminishing Musharaka Hire Purchase Ijara Thumma Al-Bai Share Financing BBA / Mudaraba / Musharaka Working Capital Financing Murabahah/ Bai Al-Einah/ Tawarruq Credit Card Bai Al-Einah/ Tawarruq Charge Card Qard Hasan Corporate Banking/ Trade Finance Project Financing Mudaraba / Musharaka / BBA / Istisna / Ijara Letter of Credit Musharaka/ Wakala/ Murabaha Venture Capital Diminishing Mudaraba/ Musharaka Financing Syndication Musharaka + Murabaha/ Istisna / Ijara Revolving Financing Bai Al-Einah Short-term Cash Advance Bai Al-Einah/ Tawarruq Working Capital Finance Murabaha/ Salam/ Istijrar Letter of Credit Murabaha Letter of Guarantee Kafala + Ujr Leasing Ijara Export/ Import Finance Musharaka/ Salam/ Murabaha Work-in-Progress, Construction Finance Istisna Bill Discounting Bai al-Dayn Underwriting, Advisory Services Ujr Treasury / Money Market Investment Products Sell buy-back agreements Bai al-Einah Islamic Bonds Mudaraba / Mushraka + BBA / Istisna / Ijara Government Investment Issues Qard Hasan/ Salam/ Mudaraba Other Products Services Stock-Broking Services Murabaha/ Wakala/ Joala Funds Transfer (Domestic Foreign) Wakala/ Joala Safe-Keeping Collection (Negotiable Instruments) Wakala/ Joala Factoring Wakala/ Joala/ Bai al-Dayn Administration of Property, Estates and Wills Wakala Hiring of Strong Boxes Amana/ Wakala Demand Draft, Travellers Cheques Ujr/ Joala ATM Service, Standing Instruction, Telebanking Ujr Source: Obaidullah, 2005 Financial Crisis and the Islamic Banking To be able to compete with conventional banks, Islamic banks have to offer financial products that are comparable to the ones offered by the conventional banks. This exposes the Islamic banks to similar credit, liquidity and risks driven by market instability. Despite that, Islamic banks managed to remain stable at the early phases of the crisis. That was driven by three main Factors. First, Islamic banks financing activities are strongly tied to the real economic activities than their conventional counterpart. Even though Musharakah and Mudharabah both provide better risk sharing while keeping strong link to the real sector, they are used minimally for different reasons. Most financing activities are done through Murabah and Ijarah followed by Istinsa. In the GCC and during 2007, Murabaha comprised of 65.4%, Ijarah 12.78% and Istinsa 2.83%. Both Murabaha and Ijrah transactions require the Islamic bank to know the clients purspose and use of finance as well the ownership of the asset by the bank. This help in ensuring that the funds are used for their stated purposes. On the other hand, conventional banks do not require disclosing the use of funds as long as the client is believed to creditworthy or can post suitable collateral. Second, Islamic banks avoid direct exposure to exotic and toxic financial derivative products. Since Shariah prohibits riba and gharar, the asset portfolio of Islamic banks did not include any CDOs, CMBSs, and CDSs which turned out to be highly toxic for conventional banks and amplifying factor for the crisis. These derivative products, initially used for hedging purposes, became device for highly speculative investments among conventional financial institutions. Unavailability of hedging instruments for Islamic financial institutions, which was perceived as weakness before the crisis, became a strengthening factor for them. However, exposure to other investment risks driven from equity markets, sukuk, real-estate and ownersh ip stakes in other businesses remain a source of concern when overdone or undertaken purely for speculative gains. Third, Islamic banks in general have a larger proportion of their assets in liquid form than their conventional counterparts. This is driven by two main reasons: (1) there is no lender of last resort (LOLR) facility available to Islamic banks, and they do not have access to market liquidity in the form of the interbank market, high liquidity was maintained for risk management purpose. (2) Excess liquidity is required due to lack of interest-free short-term investment opportunities as real economic investments require some development period. As the global financial crisis became a global economic crisis, it started to affect Islamic banks in an indirect manner. The financial crisis has triggered a chain reaction whereby the slowdown in the real economies of the developed countries has started to affect economic growth and investment activities in export driven eco nomies of the developing countries through lower trade in goods and services as well as through the declining commodity prices including that of oil. The economic downturn is not only affecting the investment and financing activities of financial institutions including those of Islamic banks, it is also reducing the funding of these banks through lower personal savings and declining corporate profits. It should be noted that most of the Islamic banking industry comprises of commercial banks whose major funding source are retail deposits, investment banking constitutes only a small portion of the industry. Islamic banks in some regions may face risk on their financing and investment side of the balance sheet due to the crisis induced volatility of equity markets where these banks have large positions. Downturn in the real estate markets where these banks have large direct and indirect exposures is also another source of risk. Similarly, the changing wealth position of their high-net- worth (HNW) clients who also hold financial exposure in the hard-hit conventional financial sector of the West and therefore are now postponing any investment plans is also a factor. The relative importance of each of these factors varies by the region. For example, the banks in the GCC and particularly in the UAE are more exposed to real estate market risk, followed by risk of international equity markets. For the banks in Asia, their investments in domestic and international equity markets are a source of concern as equity markets are showing higher volatility. In some of the countries, the existing fiscal imbalance which has widened after the crisis is also a factor in the increased volatility of the markets Previous Literature The study of bank profitability is an important tool to evaluate bank operation by examining the different factors affecting bank profitability and using these factors for management planning and strategic analysis. In the last four decades, many studies have been conducted to study both bank profitability and the determinants of bank profitability either for particular country or for a panel of countries. These studies normally divide these factors into internal factors and external factors. Internal factors represent the bank-specific characteristics such as bank size, liquidity structure; liabilitiesÃ¢â¬ ¦etc while external factors can be macroeconomic factors such as inflation and GDP growth or Country-specific regulations rules and practices. In the area of banking profitability, many studies have been conducted to investigate the profitability of conventional banks while only few were conducted in the field of Islamic banking. In this chapter, we will review these studies for conventional banking first and then will focus on studies in the Islamic banking field. Then we will cover the conceptual framework of this research. Conventional Banking Different studies have been conducted in the field of conventional banking profitability. Short (1979), Bourke (1989), Molyneux and Thornton (1992), Goddard, Molyneux, and Wilson (2004), Peters et al. (2004) are some of the researchers in the field. Short (1979) is one of the early scholars who studied the relationship between banking profit rates and concentration for sixty banks in Canada, Western Europe and Japan during the 1970s and he included independent variables including government ownership and concentration by using H index to quantify concentration. Results showed that the government ownership impact on profitability varied throughout the countries studied but expressed an overall negative relationship. He also found evidence that indicated higher concentration rates lead to higher profit rates (Short, 1979). Bourke (1989) also compared concentration to bank profitability but included other determinants. Bourke (1989) covered ninety banks in Australia, Europe, and North America between 1972 and 198 and examined different internal and external factors: internal factors such as staff expenses, capital ratio, liquidity ratio, and loans to deposit ratio; external factors such as regulation, size of economies of scale, competition, concentration, growth in market, interest rate, government ownership, and market power. His results show that increase in government ownership leads to lower profitability in banking. He also found that concentration, interest rates, and money supply are positively related to profitability along with capital and reserves of total assets as well as cash and bank deposits of total assets. Bourke adds that well capitalized banks enjoy cheaper access to sources of funds as they are less risky than less capitalized banks (Bourke, 1989). Later, Molyneux and Thornton (1992) studied the determinants of European banks profitability. The paper examined eighteen counties in Europe between 1986 and 1989. This paper replicated B ourkes (1989) work by using internal and external determinants of bank profitability. However, Molyneux and Thornton (1992) results showed that government ownership expresses a positive coefficient with return on capital (profitability) which contradicts with Bourkes findings. Other results were similar to Bourkes, showing that concentration, interest rate, and money supply were positively related to bank profitability (Molyneux and Thornton, 1992). In one of the recent papers on bank profitability on European banks, Goddard, Molyneux, and Wilson (2004) shows similar findings to the paper by Molyneux and Thornton (1992). It investigates the determinants of profitability in six European countries and it covered 665 banks between 1992 and 1998. The study used cross-sectional and dynamic panel models. The variables used in the regression analysis were ROE, the logarithmic of total assets, Off Balance Sheet (OBS) dividends, Capital to Asset Ratio (CAR). The results from both models w ere similar: evidence reveals that there is a positive relationship between size (total assets) and profitability. Meanwhile, OBS appears to have a positive relationship with profitability for UK but neutral or negative for other European countries. Moreover, results also state that CAR has a positive relationship with profitability. Furthermore, the paper touched on ownership type by indicating that there is high competition in banking due to the fact that there is foreign bank involvement in domestic banks, and that profitability is not linked to ownership (Goddard, Molyneux, and Wilson, 2004). Peters et al. (2004) studied the characteristics of banks in post-war Lebanon for the years 1993 to 2000 and compared the results to a group of banks from five other countries in the Middle East including UAE, KSA, Kuwait, Bahrain and Oman for the years 1995 through 1999. They used Return on Equity (ROE) measure profitability and leverage and they employed regression models that relate b ank profitability ratios to various explanatory variables. This study tests the relationships between bank profitability and size, asset portfolio composition, off-balance sheet items, ownership by a foreign bank, and the ratio of employment to assets. The results show a strong association between economic growth and bank profitability, whether measured by ROE or ROA. They found that Lebanese banks are profitable, but not as profitable as a control group of banks from five other countries located in the Middle East. Islamic Banking In the area of Islamic Banking, Bashir (2000) assessed the performance of Islamic banks in eight Middle Eastern countries. He analyzed important bank characteristics that affect the performance of Islamic banks by controlling economic and financial structure measures. The paper studied fourteen Islamic banks from Bahrain, Egypt, Jordan, Kuwait, Qatar, Sudan, Turkey, and United Arab Emirates between 1993 and 1998. To examining profitability, the paper used Non Interest Margin (NIM), Before Tax Profit (BTP), Return on Assets (ROA), and Return on Equity (ROE) as performance indicators. There were also internal and external variables: internal variables were bank size, leverage, loans, short-term funding, overhead, and ownership; external variables included macroeconomic environment, regulation, and financial market. In general, results from the study confirm previous findings and show that Islamic banks profitability is positively related to equity and loans. Consequently, if loans an d equity are high, Islamic banks should be more profitable. If leverage is high and loan to assets is also large, Islamic banks will be more profitable. The results also indicate that favorable macro-economic conditions help profitability (Bashir, 2000). Hassoune (2002) examined Islamic bank profitability in an interest rate cycle. In his paper, compared ROE and ROA Volatility for both Islamic and conventional banks in three GCC region, Kuwait, Saudi Arabia, and Qatar. He states that since Islamic banking is based on profit and loss sharing, managements have to generate sufficient returns for investors given that they are not willing accept no returns (Hassoune, 2002). Bashir and Hassan (2004) studied the determinants of Islamic banking profitability covers 43 Islamic Banks between 1994 and 2001 in 21 countries. Their figures show Islamic banks to have a better capital asset ratio compared to commercial banks which means that Islamic banks are well capitalized. Also, their pap er used internal and external banks characteristics to determine profitability as well as economic measures, financial structure variables, and country variables. They used, Net-non Interest Margin (NIM), which is non interest income to the bank such as, bank fees, service charges and foreign exchange to identify profitability. Other profitability indicators adopted were Before Tax Profit divided by total assets (BTP/TA), Return on Assets (ROA), and Return on Equity (ROE). Results obtained by Bashir and Hassan (2004), were similar to the Bashir (2000) results, which found a positive relationship between capital and profitability but a negative relationship between loans and profitability. Bashir and Hassan also found total assets to have a negative relationship with profitability which amazingly means that smaller banks are more profitable. In addition, during an economic boom, banks profitability seems to improve because there are fewer nonperforming loans. Inflation, on the oth er hand, does not have any effect on Islamic bank profitability. Finally, results also indicate that overhead expenses for Islamic banks have a positive relation with profitability which means if expenses increase, profitability also increases (Bashir and Hassan, 2004). Alkassim (2005) examined the determinants of profitability in the banking sector of the GCC countries and found that asset have a negative impact on profitability of conventional banks but have a positive impact on profitability of Islamic banks. They also observed that positive impact on profitability for conventional but have a negative impact for Islamic banking. Liu and Hung (2006) examined the relationship between service quality and long-term profitability of Taiwans banks and found a positive link between branch number and long-term profitability and also proved that average salaries are detrimental to banks profit. Masood, Aktan and Chaudhary (2009) studied the co-integration and causal relationship bet ween Return on Equity and Return on Assets for 12 banks in KSA for the period between 1999- 2007. For their research, the used time series model of ADF unit-root test, Johansen co-integration test, Granger causality test and graphical comparison model. They found that there are stable long run relationships between the two variables and that it is only a one-direction cause-effect relationship between ROE and ROA. The results show that ROE is a granger cause to ROA but ROA is not a granger cause to ROE that is ROE can affect ROA input but ROA does not affect the ROE in the Saudi Arabian Banking sector. Conceptual Framework Theoretical framework is a basic conceptual structure organized around a theory. It defines the kinds of variables that are going to be used in the analysis. In this research, the theoretical framework consists of seven independent variables that represent four aspects of the Bank Characteristics. Theses aspects are the Bank Size (Total Assets), Capital Structure (Equity and Tangible Equity), Liquidity (Loans and Liquid Assets) and Liabilities (Deposits and Overheads). Bank profitability is the dependent variable and two measures of bank profitability are used in this study, namely return on average equity (ROAE) and return on average assets (ROAA). In this section we develop the hypothesis to be examined in this research paper. Development of Hypotheses This paper attempts to test seven hypotheses. A hypothesis is a claim or assumption about the value of a population parameter. It consists either of a suggested explanation for a phenomenon or of a reasoned proposal suggesting a possible correlation between multiple phenomena. According to Becker (1995), hypothesis testing is the process of judging which of two contradictory statements is correct. Hypothesis 1: Profitability has a positive and significant relationship with the total assets (ASSETS). Total Assets of a company represents its valuables including both tangible assets such as equipments and properties along with its intangible assets such as goodwill and patent. For banks, total assets include loans which are the basis for bank operations either through interest or interest-free practices. Total assets is used as a tool to measure the bank size; banks with higher total assets indicate bigger banks. Molyneux and el (2004) included total assets in their study and found a positive significant relationship between total assets and profitability. Therefore, total assets are expected to have positive relation with profitability which means that bigger banks are expected to be more profitable. Total assets are converted logarithmic to be more consistent with the other ratios Hypothesis 2: Profitability has a positive and significant relationship with equity to asset ratio (EQUITY). Total equity over total assets measures banks capital structure and adequate. It indicated bank ability to withstand losses and handle risk exposure with shareholders. Hassan and Bashir (2004) examined the relationship between EQUITY and bank profitability and found positive relationship. Therefore, EQUITY is included in this study and it is expected to have a positive relation with performance because well capitalized banks are less risky and more profitable (Bourke, 1989) Hypothesis 3: Profitability has a positive and significant relationship with Tangible Equity to total liabilities ratio (TNGEQTY). Tangible Equity represents the subset of shareholders equity that is not common shares and not intangible asset. Tangible Equity became very popular after the financial crisis as a measure of bank viability since it indicates of how much ownership equity owners of common stock would receive in the event of a companys liquidation. Beltratti and Stulz (2009) examined tangible equity to liabilities in their study to examine why some banks perform better during the financial crisis and found positive and insignificant relationship between TNEQTY and bank profitability. Therefore, TNEQTY is included in this study and it is expected to have positive relationship since banks with better capital structure in since of more equity seems to perform better. Hypothesis 4: Profitability has a positive and significant relationship with the loans to assets ratio (LOANS) Total loans over total assets a liquidity ratio used that indicates how much of bank assets are tied to loans. For banks, the higher LOANS ratio means less liquidity. Demirguc-Kunt and Huizinga, (1997) found positive relationship between LOANS and bank profitability. LOANS is included in this study and anticipated to have positive relationship with profitability. Furthermore, conventional banks rely on interest-based loans while Islamic banks rely on profit and loss sharing interest-free lending. Therefore, this ratio is also used to compare the performance of interest-based loans and interest-free lending. Hypothesis 5: Profitability has a positive and significant relationship with the liquid assets to total assets ratio (LIQUID). Liquid assets include currency, deposit accounts, and negotiable instruments that can be converted easily into cash. Liquid assets to total assets ratio is a liquidity ratio that measure how easily the banks assets can be converted into cash. Beltratti and Stulz (2009) found that LIQUID has positive and significant relation with profitability as banks with more liquid assets tend to perform better. Therefore, LIQUID is included in this study and expected to have positive relationship with profitability. Hypothesis 6: Profitability has a reverse and significant relationship with the deposits to assets ratio (DEPOSITS). Deposits to total ratio is another liquidity indicator but is considered a liability since they measure the impact of liabilities on profitability. Bashir and Hassan (2004) examined deposits in their study and found a negative relationship with profitability. Therefore, we expect that DEPOSITS to have negative relationship with profitability. Hypothesis 7: Profitability has a positive and significant relationship with the overhead to assets ratio (OVERHEAD). Overhead costs represent all bank expenses excluding interest expenses as they are considered as operations expenses. Overhead over total assets is a liability ratio that measures the operation efficiency of the bank. Alkassim (2005) included OVERHEAD in his research and found positive relationship to profitability. Therefore, OVERHEAD is included in this study and expected to have positive relationship to profitability. Chapter 3: Methods Data Sample Since the main objective of this research is study how the financial crisis affected the profitability of Islamic Banking in the GCC region in comparison to the conventional banking in the same region, a time-series cross-sectional data is used for the period of 2006 to 2009. Cross-sectional data provide information on variables for a given period of time while time-series data give information about variables over a number of periods of time. The financial data for all GCC banks used in this study were extracted from Bankscope database. Bankscope database has many advantages: it has information for over 30,000 banks, plus the accounting information is presented in a standardized format. Therefore, the accounting information of Islamic Banking is adjusted to be comparable with accounting information of conventional banks. After removing all records with missing data, a total of 92 banks were included in this study for the years from 2006 to 2008 (27 Islamic Banks and 65 Conve ntional Banks). As for 2009, out of these 92 banks, only 38 banks have their financial reports published by the time of data extraction. Therefore, 2009 data sample was limited to those 38 banks (9 Islamic Banks and 29 Conventional Banks). Most of previous researches that studied bank profitability used panel data as it combines cross-sectional and time-series data in the regression model. The advantage of using panel data is that more observations on the explanatory variable are available. Since we are trying to study how the bank profitability was affected by the financial crisis over the years, we use the regression model to examine the data of each year separately. This help to understand how profitability measures and determinants vary over the period from 2006 to 2009. Goodness of fit To ensure the fit distributions of observations in the sample data, chi-square test was applied. Chi-square is a statistical model that is used to determine if the distribution of observations in the sample data closely matches the hypothetical distribution of the population. In our case, the distribution of the population is represented by the total number of Islamic banks and conventional banks in the GCC. For years 2006 2008: Type Frequency Sample Percent population Percent Conventional 65 70.65 68 Islamic 27 29.35 32 Chi-Square: 0.2974 Degree of Freedom: 1 Pr ChiSq: 0.5855 For year 2009: Type Frequency Sample Percent population Percent Conventional 29 76.32 68 Islamic 9 23.68 32 Chi-Square: 1.2076 Degree of Freedom: 1 Pr ChiSq: 0.2718 The results of chi-square test indicate whether the observed proportions from our sample differ significantly from the hypothesized proportion. In our case, the Islamic to conventional banks ratio does not differ significantly from the distribution of the population. Variable Definition A total of nine variables are used in the regression model. The variables are divided into two dependent variables representing the profitability measures of Islamic banking and they are Return on Average Assets (ROAA) and Return on Average Equity (ROAE), and seven independent variables which are Total Assets, Equity, Tangible Equity, Loans, Liquid Assets Deposits and Overheads. These seven variables represent four bank-specific internal factors which are Bank Size, Capital Structure, Liquidity and Liabilities. The table below summarizes the variables used in this study and the expected result. Dependent Variables ROA Return on Assets Net Income / Total Assets ROE Return on Equity Net Income / Equity Independent Variables Bank Size ASSETS Total Assets Log (Total Assets) Positive (+) Capital EQUITY Equity Equity / Total Assets Positive (+) TNGEQTY Tangible Equity Tangible Equity / Total Liabilities Positive (+) Liquidity LOANS Loans Loans / Total Assets Positive (+) LIQUID Liquid Assets Liquid Assets / Total Assets Positive (+) Liabilities DEPOSITS Deposits Deposits / Total Assets Negative (-) OVERHEAD Overhead Costs Overhead Costs / Total Assets Positive (+) Profitability Measures There are many ratios that have been used by researchers to measure bank profitability but the two most often used ratios are the return on assets (ROA) and the return on equity (ROE) (Iqbal et al., 2005). Return on Assets (ROA) Return of Assets ROA of a bank is the net after-tax income divided by its total assets (Rose, 2002). The return on assets (ROA) is the most important single ratio in comparing the efficiency and operating performance of banks since it indicates the return generated from the assets financed by the bank. Average assets are being used in this study, in order to capture any differences that occurred in assets during the fiscal year. Return on Equity (ROE) ROE is the ratio of a banks net after-tax income divided by its total equity capital (Rose, 2002). The return on equity (ROE) indicates how effectively the management of the enterprise (bank) is able to turn shareholders? funds (i.e. equity) into net profit. It is the rate of return flowing to the banks shareholders (Samad, 1999). The higher ROA and ROE reflect higher managerial efficiency of the bank and vice versa. Determinants of profitability Previous studies categorize determinants of profitability into internal factors and externals factors. Internal factors are basically the bank-specific characteristics such as bank size, concentration, liquidity, liabilitiesÃ¢â¬ ¦etc. External factors can include macroeconomic such as inflation and GDP growth, and bank regulation rules and policies including restrictions and degree of independence from regularity authority. Total Assets Equity Tangible Equity Loans Liquid Assets Deposits Overhead Costs Methodology In line will the previous literature, Multiple Regression Equation will be used to examine the determinants of profitability in the Islamic Banking and compare the results with those of the conventional banking: Model 1 ROA ROA = ?1 + ?1 ASSET + ?2 EQUITY + ?3 TNGEQTY + ?4 LOANS + ?5 LIQUID +?6 DEPOSITS + ?7 OVERHEAD + ? Model 2 ROE ROE = ?2 + ?1 ASSET + ?2 EQUITY + ?3 TNGEQTY + ?4 LOANS + ?5 LIQUID +?6 DEPOSITS + ?7 OVERHEAD + ? Where: Independent Variables: ROA: Return on Assets ROE Return on Equity Dependent Variables: ASSETS: log (Total Assets) EQUITY: Equity / Total Assets TNGEQTY: Tangible Equity / Total Liabilities LOANS: Loans / Total Assets LIQUID: Liquid Assets / Total Assets DEPOSITS: Deposits / Total Assets OVERHEAD: Overhead Costs / Total Assets Data and Variables Descriptive statistics on the variables used in this study are provided in the tables below for both Islamic banks and conventional banks classified by year from 2006 to 2009. These descriptive information includes mean, maximum, minimum and standard deviation. These tables show some facts on the Islamic and conventional banking in the GCC. For example, looking at the ROAA, we can see that for the year 2006 and 2007, ROAA of Islamic banking was higher than for conventional banking. In the 2008, both Islamic banking and conventional banking has negative ROAA but conventional banking managed to turn it to positive in 2009 while Islamic banks could not. DEPOSITS ratio seems to be lower for Islamic banking than for conventional banking while EQUITY, TNGEQTY and OVERHEAD ratios are higher for Islamic banking. Descriptive Statistics Islamic Banks 2009 Variable N Mean Std Dev Minimum Maximum ROAA 9 -1.91444 10.23591 -28.41 4.96 ROAE 9 -4.86444 39.11601 -104.04 24.27 EQUITY 9 21.68 7.69115 13.19 36.56 ASSETS 9 3.82222 0.56597 3.1 4.66 LOANS 9 47.15778 24.11311 1.77 65.72 DEPOSITS 9 64.88667 23.51866 14.95 83.54 LIQUID 9 21.12 10.66565 3.96 30.96 TNGEQTY 9 28.78 13.73087 14.42 57.69 OVERHEAD 9 5.90333 11.95335 0.96 37.74 2008 Variable N Mean Std Dev Minimum Maximum ROAA 27 2.09926 6.92912 -30.07 10.19 ROAE 27 13.06037 12.53575 -32.08 31.62 EQUITY 27 25.30593 18.32378 6.34 92.32 ASSETS 27 3.52259 0.58526 1.98 4.64 LOANS 27 48.59185 25.39087 1.7 88.32 DEPOSITS 27 59.4037 24.60383 7.26 83.44 LIQUID 27 20.4963 13.30896 0.03 57.47 TNGEQTY 27 78.05333 227.56642 6.75 1201 OVERHEAD 27 3.11741 2.96539 0.34 14.45 2007 Variable N Mean Std Dev Minimum Maximum ROAA 27 5.15296 4.72983 -7.23 18.33 ROAE 27 20.48407 11.53482 -7.62 48.02 EQUITY 27 26.97037 17.2038 7.83 94.75 ASSETS 27 3.42037 0.5604 2.14 4.52 LOANS 27 46.58407 23.43044 2.34 82.81 DEPOSITS 27 58.54407 23.06997 5.03 82.97 LIQUID 27 23.71333 18.21896 0.26 81.09 TNGEQTY 27 100.49407 341.46581 8.53 1805 OVERHEAD 27 2.76074 1.92776 0.42 8.31 2006 Variable N Mean Std Dev Minimum Maximum ROAA 27 6.23 6.82785 -0.65 35.1 ROAE 27 20.65815 15.56718 -5.9 73.18 EQUITY 27 30.88 21.69757 7.63 95 ASSETS 27 3.24593 0.59087 2.17 4.45 LOANS 27 47.51926 25.52218 3.31 87.09 DEPOSITS 27 54.91407 24.9323 4.86 86.9 LIQUID 27 25.31519 19.19956 0.24 74.75 TNGEQTY 27 123.47296 361.45561 8.32 1899 OVERHEAD 27 2.83704 1.82051 0.62 7.53 Descriptive Statistics Conventional Banks 2009 Variable N Mean Std Dev Minimum Maximum ROAA 29 0.90793 3.97936 -18.62 4.68 ROAE 29 8.71724 18.09252 -73.23 29.78 EQUITY 29 14.9731 5.16499 8.6 26.18 ASSETS 29 4.09655 0.53291 2.65 4.84 LOANS 29 58.20172 17.37435 2.22 78.46 DEPOSITS 29 72.68069 16.93623 10.72 86.92 LIQUID 29 22.55172 9.11762 10.29 56.71 TNGEQTY 29 16.55138 6.94827 9.33 35.49 OVERHEAD 29 1.45724 0.75628 0.62 4.36 2008 Variable N Mean Std Dev Minimum Maximum ROAA 65 -0.61185 6.44206 -25.33 7.75 ROAE 65 2.97031 28.92545 -135.99 34.8 EQUITY 65 18.59492 12.67793 0.77 58.04 ASSETS 65 3.77046 0.67367 2 4.89 LOANS 65 51.28046 23.67111 0.27 82.01 DEPOSITS 65 67.40108 21.09781 2.1 87.45 LIQUID 65 20.20646 11.44084 3.79 75.84 TNGEQTY 65 25.90185 27.86691 0.74 138.23 OVERHEAD 65 2.19554 2.27083 0.21 11.04 2007 Variable N Mean Std Dev Minimum Maximum ROAA 65 4.514 4.11481 -2.77 20.43 ROAE 65 20.88708 13.08376 -36.87 88.04 EQUITY 65 21.11846 15.06605 6.59 69.91 ASSETS 65 3.73154 0.62688 2.22 4.84 LOANS 65 45.45323 21.72181 0.44 74.47 DEPOSITS 65 66.08862 19.94167 0.23 86.81 LIQUID 65 27.89123 12.72405 1.3 78.86 TNGEQTY 65 33.13277 40.9337 7.1 232.36 OVERHEAD 65 1.82338 1.41553 0.17 7.88 2006 Variable N Mean Std Dev Minimum Maximum ROAA 65 3.97323 3.81081 -6.76 19.4 ROAE 65 20.49815 12.11583 -11.08 57.34 EQUITY 65 21.05015 13.29398 7.59 74.16 ASSETS 65 3.60123 0.60934 2.13 4.62 LOANS 65 45.53354 23.21159 0.21 79.78 DEPOSITS 65 66.96662 19.32375 0.01 87.32 LIQUID 65 26.85492 15.27206 2.2 79.75 TNGEQTY 65 31.79769 39.7111 6.61 287.05 OVERHEAD 65 1.95 1.50485 0.16 9.25 Finally, by examining the total assets, we can see that the mean of total assets of the Islamic banks in the data sample grow from USD 4,375 to USD 13,654 over the last 4 year while for conventional banks, it grow from USD 8,664 to 21,323. Therefore, conventional banking in the GCC continue to be more significant in terms total assets as it continue to be around double the size of Islamic banks. 2009 2008 2007 2006 Islamic Banks 13,654 7,259 5,855 4,375 Conventional Banks 21,323 14,001 12,176 8,664 Mean of total assets from 2009 to 2006 Chapter 4: Results The objective of this thesis is to answer four different questions in the field of Islamic profitability. These questions are: How did the financial crisis affect the profitability of Islamic Banks in comparison to Conventional Banks? What are the internal factors (bank specific characteristics) that influence the profitability of Islamic banking for every year from 2006 2009? Did these factors have the same impact on the profitability of Islamic Banking before, during and after the financial crisis? Did these internal factors influence the profitability of Islamic Banking in the same manner as of the Conventional Banking? In this chapter we will cover the Pearson Correlation Coefficient and Multiple Regression results for the data sample and then we will address these questions and will evaluate the results of our model to answer these questions. Pearson Correlation Coefficient Multiple Regression Results: Multiple Regression Islamic Banking 2009 2008 2007 2006 Variable ROAA ROAE ROAA ROAE ROAA ROAE ROAA ROAE Constant -13.41662 (0.4556) -68.12575 (0.3232) -2.05837 (0.6674) -8.62794 (0.665) -0.90111 (0.8827) 13.32692 (0.5689) -4.69693 (0.4099) -22.51153 (0.2948) EQUITY -1.97496 (0.1753) -11.22477 (0.0822) 0.13918 (0.0309) 0.33912 (0.1847) 0.30097 (0.0005) 0.41231 (0.1418) 0.08089 (0.0581) -0.02646 (0.8612) ASSETS 0.56295 (0.6389) 5.63096 (0.2661) 1.6763 (0.1242) 9.3132 (0.0457) 2.35517 (0.098) 11.06649 (0.0455) 0.74877 (0.639) 9.72965 (0.1159) LOANS 0.22008 (0.248) 1.02925 (0.1699) -0.04436 (0.1955) -0.16085 (0.2562) -0.10047 (0.0105) -0.42275 (0.0055) 0.00102 (0.9785) -0.09114 (0.5237) DEPOSITS 0.01174 (0.7796) 0.05017 (0.74) -0.00065347 (0.9762) 0.01488 (0.8705) 0.00604 (0.8096) -0.01077 (0.9103) 0.00132 (0.9675) -0.0012 (0.9921) LIQUID 0.21807 (0.1201) 1.18075 (0.0583) -0.02457 (0.5638) -0.23683 (0.1909) -0.13613 (0.0012) -0.51207 (0.0014) 0.01464 (0.7246) 0.06183 (0.6913) TNGEQTY 1.38133 (0.157) 7.61263 (0.0764) 0.03772 (0.1142) 0.08201 (0.3954) -0.01262 (0.6752) -0.03393 (0.7674) 0.04259 (0.0964) 0.19132 (0.05) OVERHEAD -0.57273 (0.0903) -1.84497 (0.1084) -0.71891 (0.0089) -2.71259 (0.0157) -0.46159 (0.2363) -2.51031 (0.098) 1.13651 (0.0117) 2.62272 (0.0999) R-Square Adj R-Sq F Value 0.993 0.9684 40.46 (0.0243) 0.9938 0.9723 46.14 (0.0214) 0.5867 0.4058 3.24 (0.0243) 0.5182 0.3074 2.46 (0.0446) 0.7306 0.6196 6.59 (0.0007) 0.5246 0.3289 2.68 (0.0459) 0.6515 0.508 4.54 (0.0051) 0.5075 0.3047 2.5 (0.058) Multiple Regression Conventional Banking 2009 2008 2007 2006 Variable ROAA ROAE ROAA ROAE ROAA ROAE ROAA ROAE Constant -10.88633 (0.0139) -91.83821 (0.0297) -10.67959 (0.1406) -132.16843 (0.0163) -3.77033 (0.3214) -0.31186 (0.9891) 7.27075 (0.0612) 32.97334 (0.0588) EQUITY 0.33083 (0.03) 2.39759 (0.0964) -0.00521 (0.9454) 1.25524 (0.0303) 0.17778 (.0001) 0.12709 (0.5596) -0.03245 (0.3994) -0.55738 (0.002) ASSETS 0.78281 (0.1739) 7.73299 (0.168) 0.38106 (0.7189) 9.01256 (0.2563) 0.82674 (0.1558) 1.24962 (0.7203) -0.05295 (0.9303) 2.18287 (0.4232) LOANS -0.00133 (0.9465) -0.08544 (0.6581) 0.09645 (0.0007) 0.55782 (0.0074) -0.01068 (0.4705) 0.03734 (0.6759) -0.05022 (0.0027) -0.19802 (0.0077) DEPOSITS 0.05068 (0.0043) 0.5118 (0.0033) 0.06176 (0.1168) 0.63715 (0.0318) 0.00038022 (0.9856) 0.10103 (0.4279) -0.0126 (0.6311) 0.02699 (0.8186) LIQUID 0.04603 (0.2447) 0.51275 (0.1857) 0.0377 (0.3812) 0.2446 (0.4458) -0.01352 (0.4871) -0.05074 (0.6659) -0.03675 (0.0669) -0.26966 (0.0035) TNGEQTY -0.0743 (0.4851) -0.93751 (0.3678) -0.00109 (0.7013) -0.00828 (0.6955) 0.00553 (0.3401) 0.00522 (0.8811) -0.00049447 (0.6286) -0.00277 (0.547) OVERHEAD 0.83202 (0.0026) 6.30294 (0.014) -0.5853 (0.0548) 0.38398 (0.8634) 1.16224 (.0001) 3.53925 (0.0072) 0.81043 (0.0002) 2.85144 (0.0032) R-Square Adj R-Sq F Value 0.7743 0.6865 8.82 (.0001) 0.5862 0.4253 3.64 (0.0127) 0.5856 0.5298 10.5 (.0001) 0.2851 0.1889 2.96 (0.0109) 0.8172 0.7925 33.2 (.0001) 0.1667 0.0545 1.49 (0.1929) 0.5474 0.4865 8.98 (.0001) 0.4378 0.3621 5.78 ( .0001) Question 1 The first question to be addressed in the research is how the financial crisis affected the profitability of Islamic Banks in comparison to Conventional Banks. Since we are mainly focusing on ROAA and ROAA as measures of profitability, the most appropriate approach would be to evaluate how these ratios fluctuate during the financial crisis. Looking at the mean value of ROAE and ROAA from 2006 to 2009, we can find that although Islamic banks performed better in 2006 and 2007 in terms of ROAA while had almost similar value for ROAE, 2008 can be considered to be the worst in term of profitability for both Islamic and conventional banks. However the values for ROAA and ROAE were much lower for Islamic banks (ROAA: -1.91, ROAE: -4.86) than for conventional banks (ROAA: -0.61, ROAE: 2.97). 2006 2007 2008 2009 Islamic Banks ROAA 6.23 5.15 -1.91 2.10 ROAE 20.66 20.48 -4.86 13.06 Conventional Banks ROAA 3.97 4.51 -0.61 0.91 ROAE 20.50 20.89 2.97 8.72 Mean value for ROAA and ROAE for Islamic and conventional banks For 2009, Islamic banks managed to turn these ratios back to positive figures as well as the conventional banks. Furthermore, Islamic banks had higher ROAA and ROAE ratio than the conventional banks. The two figures below show the ROAA and ROAE for Islamic and conventional banks in GCC from 2006 and 2009. ROAA and ROAE for Islamic Banks ROAA and ROAE for Conventional Banks Question 2 The second question in this thesis has to deal with the internal factors (bank specific characteristics) that influence the profitability of Islamic banking for every year from 2006 2009. In the Literature Review chapter, and in order to evaluate the different aspects of bank characteristics, we classified the internal factors to be examined into four categories. These categories are Bank Size, Capital Structure, Liquidities and Liabilities of the Bank. Bank Size In our study, we used the Total Asset to measure bank size. ROAA and ROAE continue to positive relationship with ASSETS for the period from 2006 to 2009 despite the crisis which agrees with Molyneux and el (2004). However, our results show positive significant relationship between both ROAA and ROAE with ASSETS in year 2007 only. For years 2006, 2008 and 2009, the relationship is positive but not significant to reject the null hypothesis. Capital Structure Two factors were used to evaluate the Capital Structure in relation to profitability: EQUITY and TNGEQTY. EQUITY has positive significant relationship with ROAE in years 2006 and 2007. Also, EQUITY has positive relationship with ROAE in 2008 and negative relationship in 2009 but both are not significant to reject the null hypothesis. Also, EQUITY has significant positive relationship with ROAA in years 2006, 2007 and 2008 but positive and not significant for year 2009. Therefore, our results agree with Hassan and Bashir (2004) for years 2006 and 2007. As for the TNGEQTY, it continue to have negative relationship with ROAA and ROAE for the period from 2006 to 2009 except with ROAE for year 2009 where we have negative but not significant relationship. The relationship is positive and significant with ROAE in years 2007 and 2008 and with ROAA in years 2006, 2007 and 2008. Liquidities LOANS and LIQUID both were used in this study to understand the relationship between profitability and Liquidities of the Islamic banking. LOANS have negative relationship with ROAE and ROAA in years 2006, 2007 and 2008 but positive and not significant in year 2009. The relationship is significant negative in years 2007 and 2008. This contradicts with our hypothesis and with Demirguc-Kunt and Huizinga, (1997) who found positive relationship between LOANS and bank profitability. As for LIQUID, it has negative relationship with ROAE and ROAA in all years expect for 2009 and the relationship is only significant in year 2007. This again contradicts with our hypothesis and with Beltratti and Stulz (2009) who found that LIQUID has positive and significant relation with profitability. Liabilities DEPOSITS and OVERHEAD were used as determinants for Liabilities. DEPOSITS have negative relationship with ROAE and ROAA in years 2006 and 2007 but positive in years 2008 and 2008 but none is significant. Therefore, the null theory cannot be rejected and our results dont agree with Bashir and Hassan (2004) who found a negative relationship with profitability. As for the OVERHEAD, the relationship with ROAE and ROAA is negative for the period from 2006 to 2009 but only significant in year 2008. This contradicts with Alkassim (2005) who included OVERHEAD in his research and found positive relationship to profitability. Question 3 The third question in the study is to understand if these factors have the same impact on the profitability of Islamic Banking before, during and after the financial crisis? Bank Size ASSETS continue to have positive relationship with ROAE and ROAA. This means that despite the crisis, bigger banks continue to be more profitable than smaller banks Capital Structure EQUITY always has positive relationship with ROAE and ROAA throughout the period expect for ROAE in year 2009. Also, TNGEQTY always has negative relationship with ROAE and ROAA before, during and after the crisis except for ROAE in year 2009. This means that banks with better capital structure are in general less risky and more profitable but this seems to be changed after the crisis. Liquidates Both LOANS and LIQUID have negative relationship with ROAE and ROAE before and during the crisis (2006 to 2008) but positive relationship after the crisis (2009). This means that before and during the crisis, the banks with less assets are tied to loans and with less liquid assets tend to be more profitable. But this reverse after the crisis. Liabilities OVERHEAD always has negative relationship with ROAE and ROAA before, during and after the crisis. As for DEPOSITS, it has negative relationship in years 2006 and 2007 and it turns positive in years 2008 and 2009. This means that bank with more deposits tend to be more profitable during and after the crisis. Question 4 Last question in this study has to deal with Conventional Bank if the same internal factors influence the profitability of Islamic Banking in the same manner as of the Conventional Banking. Bank Size ASSETS has a positive relationship with ROAE and ROAA for both Islamic Banking and Conventional Banking which means that for both Banking and Conventional Banking, bigger banks tend to be more profitable despite the crisis. Capital Structure For the Conventional Banking, EQUITY has positive relationship with ROAE and ROAA for the period from 2006 to 2008 but negative relationship in year 2009. TNGEQTY has a negative relationship from 2006 to 2008 but positive in year 2009. As for the Islamic Banking, EQUITY always has positive relationship with ROAE and ROAA expect for ROAE in year 2009. Also, TNGEQTY always has negative relationship with ROAE and ROAE except for ROAE in year 2009. This means that EQUITY and TNGEQTY has the same impact on profitability for both Islamic and Conventional Banking before, during and after the crisis Liquidities For Conventional Banking, LOANS always has positive relationship with ROAE and ROAA expect for year 2006 while LIQUID always has negative relationship with ROAE and ROAA except for year 2008. For Islamic Bank, both LOANS and LIQUID have negative relationship except for year 2009. This means that the LOANS have different relationship with profitability for Islamic and Conventional Banking as it is positive for Conventional Banking (except for year 2009) and negative for Conventional Banking (except year 2006) While LIQUID has negative relationship for both Islamic Banking (except year 2009) and Conventional Banking (except year 2008) Liabilities For Conventional Banking, DEPOSITS and OVERHEAD both have positive relationship with profitability except for DEPOSITS in year 2006 and OVERHEAD for year 2008. For Islamic Banking, DEPOSITS has negative relationship for years 2006 and 2007 but positive relationship for year 2008 and 2009 while OVERHEAD has always negative relationship. Chapter 4: Conclusion