Practice of Islamic Financial Management in Bangladesh: Evidence from Islamic Banks

Abstract

The growing awareness of the systemic importance of Islamic banking and finance to the development has prepared the ground for the work of upgrading the existing Islamic banking practices. Hence, this study aims to evaluate the Islamic Financial Management (IFM) practices of Islamic banks in Bangladesh. In line with the objective of the study, several ratio analyses were conducted based on ANNOVA test and the sample size includes 8 Islamic banks from 2007 to 2013.The findings revealed that the Islamic banks in Bangladesh are homogenous; however, they are not financially healthy when liquidity measurements are concerned. Additionally, capital structure efficiency results revealed that most of the Islamic Banks in Bangladesh are practicing debt-based financing rather than equity. While the study has observed that the practices of IFM in Bangladesh are promising, however, there are numerous challenges encroaching the industry. Hence, immediate attention from the respective authorities, including practitioners and policy makers are indeed vital.