Proposing a multidimensional bankruptcy prediction model: An approach for sustainable Islamic banking

Abstract

The main purpose of this study is to conceptualize a sustainable banking model for Islamic banking by blending three essential business aspects namely financial performance, Islamic corporate governance, and sustainability practices dimension. In the case of Islamic banking, evidence shows that a Shariah-based bankruptcy prediction model for apprehending the true bankruptcy prediction is over-sighted. This study offers an efficient Shariah-based bankruptcy prediction model by first, reviewing the previously applied conventional bankruptcy prediction models; secondly, by developing and proposing a robust, multidimensional model for predicting bankruptcy in Islamic banking. This framework may have profound implications on the existing bankruptcy evaluation structure of the Islamic banking industry and may provide a strong sustainability management guideline to the global Islamic banking industry.