How did Covid-19 change the pricing of retail deposit funds?
Thursday 16 December 2021
02:00 PM - 03:30 PM
This event will share research and a discrete-time option-analytic valuation model of the participatory fees earned by Islamic banks for managing third-party funds on a profit-sharing basis in which Islamic banks compete with each other and with conventional banks to attract and retain investment funds. In the model, banks decide optimal profit-sharing ratios to maximise shareholder value in light of uncertain future account volumes and customer switching. However, Covid-19 and its risk to bank stability induced deviations from decisions which are optimal in the long-term. We evaluate the extent of these short-term deviations using actual profit sharing ratios before and during the crisis for 69 Islamic banks in 22 countries from 2003 to mid-2021, and identify the most significant drivers, including bank-specific factors, e.g. liquidity position going into the pandemic, and health-related factors, e.g. country-level case numbers.
About the Speakers - Dr Kenneth Baldwin and Dr Maryam Alhalboni
Kenneth Baldwin is an Assistant Professor in Finance at Coventry University, and an Associate Member of CFCI. His research interests are the financial and risk management decision-making of Islamic banks, corporate finance, asset valuation, and market microstructure. Prior to academia he spent 25-years in the financial services industry. He is a Chartered Accountant, has a PhD in microeconomic theory, and graduated from Oxford University having studied Physics.
Maryam Alhalboni is a lecturer in Finance at York University, and an ex-financial services practitioner. Maryam has a BSc in Economics, an MSc in Finance and Investment, and a PhD in Finance from the University of Essex. Her research interests are in the areas of Islamic finance, corporate finance, cultural political economy, financial markets, and market microstructure. The bulk of her papers concentrate on Islamic finance, high-frequency trading, and market liquidity.