Thomas Jefferson and Sally Hemmings

Thomas Jefferson and Sally Hemmings Sally Hemmings was the daughter of Elizabeth Hemmings. Sally was born in 1733, most people thought she was mulatto. A mulatto was a common term used during slavery when an African American slave and white person create a relations. Most people asked why she had power over Thomas Jefferson. But her family and friends were just trying to make sure that she was being well taken care of by Thomas. It was very possible that Thomas could lose his job for carrying a relationship with a slave. Sally was considered a pampered slave, but she got what she wanted for her children. Was their mixed marriage relationship and mistake? If one were to have an interracial relationship it would be kept in the dark from society or a consequence was paid. After the death of John Wayles and Martha Wayles which was sallys parents. Thomas Jefferson inherited the ownership Hemmings family and moved all of them to Monticello when he lived there. That would be known as the new residence for the Hemmings. The place where the two had met. Some speculate that due to their kinship, Hemmings and Martha Jefferson may have looked very similar which could have been a key factor in Jeffersons attraction to Sally Hemmings. Since there is no factual evidence in writing from either Thomas Jefferson or Sally Hemmings, many people relied on other family members writings and used assumptions to draw conclusions about their relationship. Till this day, many people still have inconclusive evidence about their relationship and why it lasted a long time. Sally made the decision to continue a long term relationship with Thomas Jefferson, after a heavy evaluation of her options, her conditions and the little empowerment she had over Thomas Jefferson. Although Thomas Jefferson was a founding father of the United States of America, he was still human. That being said, Jefferson could have committed the act of having children with one of his slaves Sally Hemmings. Due to the evidence given, this is known to be true. The light treatment of the Hemmings family, the emancipation of the Hemmings family, and Madison and Eston Hemmings accounts of claiming Thomas Jefferson as their father are all reasons that point to the fact that Jefferson indeed fathered the children of Sally Hemmings. Thomas Jefferson often treated the Hemmings family lightly, or without a big workload. As it is stated in A Brief Biography of Sally Hemmings ´ Sallys son Madison recalled that one of [Sallys] duties was to take care of [Jeffersons] chamber and wardrobe, look after us children, and do light work such as sewing. ´(A Brief Biography of Sally Hemmings ´) Along with the light workload, she was also paid occasionally a monthly wage of twelve lires. ´( A Brief Biography of Sally Hemmings ´) This small payment and light workload signifies that Jefferson had some emotional ties to Sally considering he did not pay his other slaves anything. Of all the slaves that Jefferson owned, it is not recorded that any of them received special treatment other than teemings family. Thomas Jefferson treated Sally well as she was his daughters nurse throughout her life. While Jefferson was in France, it is recorded that Sally was sent to France to accompany Martha and Maria Jefferson. It is said by Madison Hemmings that during that time [in France] my mother became Mr. Jeffersons concubine and when he was called back home she was enceinte by him. ´ ( ³The Memoirs of Madison Hemmings ´) Madison Hemmings also stated that soon after their arrival [from France] (Memoirs of Madison Hemmings ´) Not only did the Hemmings family receive light treatment, but they were the only slaves of Thomas Jefferson to be emancipated by him, with the exception of one of his body servants. Israel Jefferson a slave of Thomas Jefferson stated that [Jeffersons] death was an affair of great moment and uncertainty to us slaves, for Mr. Jefferson provided for the freedom of seven servants only; Sally, his chambermaid, who took the name Hemmings, her four children. Beverly, Harriet, Madison, and Eston, John Hemmings, brother to Sally, and Brunel Colburn and old and faithful body servant. Never emancipated any slaves but hose of the Hemmings family. Other than being the concubine or kin of Thomas Jefferson, there was no reason that Thomas Jefferson would emancipate his slaves according to his life as a slave owner. Jefferson clearly wrote in his will that the Hemmings family be free of their slave bond a great a certain age, most likely the age of 21. Another piece of evidence that Jefferson fathered children by Sally Hemmings is the accounts that  ³Both Madison and Eston Hemmings made known their belief that they were the sons of Thomas Jeffer son. ´(A Brief Biography of Sally Hemmings ´) In  ³The Memoirs of Madison Hemmings, ´ Madison refers to Thomas Jefferson Directly as  ³father ´ six times when he writes of him. Madison grew up with Thomas Jefferson as his father and continued to follow this belief throughout his life.  ³We were the only children of by a slave woman proclaimed Madison. This particular statement assures that Jeffersons relationship with Sally and her Children relates to their emancipation in Jeffersons will. Madison and Eston Hemmings are not the only accounts of assurance that they are Jeffersons children. Israel Jefferson also gives assurance that Thomas Jefferson was, in fact, the father of Sally Hemings children. In his memoir I also know servant, Sally Hemmings was employed as his chambermaid, and that Mr. Jefferson was in the most intimate terms with her; that, in fact, she was his concubine. This I knew from an intimate relationship. Sally can conscientiously confirm his statement as any other fact which I believe from circumstance but do not positively know. Thomas Jefferson was by no doubt the father of Sally Hemings children. The relationship between Thomas Jefferson and the Hemmings Family was not a coincidence. Jeffersons acts were only proof that he was human. Many other great men in history have had similar stories to that of Jeffersons. Thomas Jefferson was the father of Beverly, Harriet, Madison, and Eston Hemmings as evidence of the light treatment and emancipation he gave to the Hemmings family and the memoirs of the Hemmings family and Israel Jefferson. Was it true was the question most people asked In 1997, Dr. Eugene Foster, a retired medical professor, began investigating the possibility of a genetic link between living descendants of Thomas Jefferson and those of Sally Hemmings. He compared the blood from five descendants of Field Jefferson, Thomass paternal uncle, with the blood of the descendants of Sally Hemmings, Thomas Woodson, and the Cars. The DNA was extracted from the blood samples at the University of Virginia, then sent to Oxford, England where it was tested by three different laboratories. The results showed a match between the Y chromosomes of the Field Jefferson descendants and the Eston Hemming descendent, providing strong support to the theory that Thomas Jefferson fathered at least one of Sally Hemings children. The chances that this match happened by coincidence are less than .1 percent. Was the case closed? A claim that most Jefferson scholars had earlier considered so implausible that nearly all of them rejected it without a truly rigorous investigation-has gained new credibility and extensive national publicity. In 1997, law professor Annette Gordon-Reed reviewed the evidence and concluded that the case for Jeffersons paternity was much stronger than scholars had supposed. In 1999, DNA tests proved compatible with the possibility that Jefferson had fathered Eston Hemmings, Sallys youngest son. The DNA report, a conference held at the University of Virginia, a volume of essays resulting from that conference. Madison Hemmings, another of Sallys sons, said that he and his siblings were Jeffersons children (and his only slave children) in a report which accords in much of its substance with other sources. According to this interview, Thomas and Sally initiated an affair while they were together in Paris from 1787 to 1789. Sally became pregnant and agreed to return to the United States after they entered into a treaty in which Jefferson promised extraordinary privileges for Sally and freedom for her children when they reached age 21. Some very interesting facts would be Madison Hemmings, another of Sallys sons, said that he and his siblings were Jeffersons children in a report which accords in much of its substance with other sources. According to this interview, Thomas and Sally initiated an affair while they were together in Paris from 1787 to 1789. Sally became pregnant and agreed to return to the United States after they entered into a treaty in which Jefferson promised extraordinary privileges for Sally and freedom for her children when they reached age 21. A supposed resemblance between Thomas Jefferson and some of Sally Hemmings children (or other Monticello slaves) is hardly evidence of a very substantial kind. A resemblance is often seen by some observers and denied by others. Later in life by 2003 there was a book published the attorney/historian, Annette Gordon Reed, published a book on Thomas Jefferson and Sally Hemmings, The Hemmings of Monticello: An American Family, a follow-up to her 1998 book, Th omas Jefferson and Sally Hemmings: An American Controversy.

Extent the Nurse is to Blame in Romeo and Juliet Essay example -- Shake

In Romeo and Juliet, to what extent is the Nurse to blame for the tragedy? In Shakespeare's Romeo and Juliet, the Nurse, by her thoughtless support of the affair between the lovers and fickle counsel, is partly to blame for the tragedy. However, it is not one factor alone that brings about the death of Romeo and Juliet, but a combination of significant actions and underlying forces. In spite of this, is certain that the Nurse played a serious role in encouraging the lovers? relationship to blossom. Instead of advising Juliet on the dangers of a love that is ?too rash, too unadvis?d, to sudden?, she continues to place Romeo upon a pedestal, proclaiming his ?face be better than any man?s, his leg excels all men?s, his [body parts] are past compare?. Her haste for Juliet to ?hie hence to Friar Lawrence? cell?, and preparations for ?cords? to be brought for Romeo to ?convoy [to Juliet] in the secret night?, are gestures that illustrate her desire for their relationship to progress quickly. Therefore by offering her approval of Romeo, the Nurse inadvertedly strengthens Juliet?s devo...

Ansar Burney

Ansar Burney born 14 August 1956 in Karachi, Sindh, Pakistan is a leading Pakistani human rights and civil rights activist. He is a graduate of Masters and Law from Karachi University and honorary recipient of a PhD. in Philosophy. In 1980, Ansar Burney began the â€Å"Ansar Burney Welfare Trust†, â€Å"Prisoners Aid Society†, and â€Å"Bureau of Missing and Kidnapped Persons† in Karachi, Pakistan.Ansar Burney is accredited as being the first man to introduce the concept of human rights in Pakistan nearly 30 years ago. He and his organisation (the Ansar Burney Trust) are also accredited for securing the release of around 700,000 innocent prisoners from countries all around the world. One such famous case was that of Mr. Muhammad Akhtar, in which Akhtar's mother was raped before his birth in prison. After Akhtar's birth no one wanted to accept him and he spent 40 years in prison before his release.Because of his outstanding achievements in the field of human and c ivil rights, Ansar Burney was the first man to receive the Pakistani National Civil Award Sitara-i-Imtiaz on 23 March 2002. And due to his two decade long international campaign to end child slavery in the Middle East in the form of child camel jockeys, Ansar Burney was declared an ‘Anti-Human Trafficking Hero' in the 2005 Trafficking in Persons Report by the US State Department.On 16 November 2007, Ansar Burney was sworn in as Pakistan's caretaker Federal Minister for Human Rights. He will be the first man to head the newly established Human Rights ministry of Pakistan. On 27 March 2008, he was elected for a term of three years as one of the 18 members of the United Nations Human Rights Council Advisory Committee and due to â€Å"his recognized experience in the field of human rights and acknowledged competence and impartiality, Burney received wide support from all regional groups of the Council†. 6] In 2008 he was listed in a poll by The Financial Daily as a favorite personality. Ansar Burney also played an instrumental role in getting the crew of MV Suez free from the captivity of Somali pirates in 2011. Anti-corruption movement On Aug 22, 2011, Ansar Buney announced that following the Eid-ul-Fitr celebrations at the end of Ramadan, he would initiate an anti-corruption movement in Pakistan based on the popular movement of Anna Hazare in India. It takes grit, commitment and perseverance to be a man of integrity. To be uman and to act human, to be a person who is able to contribute his share for the cause of humanity and human dignity in letter and spirit, to be a kind soul who feels the pain and unbearably enough to lose control, to be able to help others without any need of worldly glory, to be a person like Ansar Burney. Everything in this universe is for others: the trees, the rivers and all other beauties of seasons and nature. The trees do not eat up their own fruit, the rivers do not drink their own water; and in the same way ‘selfl ess people’ like Ansar Burney live for others.Be it the grave issue of ‘underage child camel jockeys’, the ordeal of ‘Zafran Bibi’ who was involved in a case of rape and sentenced to death by stoning, Murder of Pakistanis in Macedonia — in the name of war against terror, human trafficking of young girls for prostitution, slavery or the illegal confinements at Guantanamo Bay; Ansar Burney has always stood as an icon of human rights. International Ambassador for Peace and Human Rights, Mr Ansar Burney, born on August 14th in Karachi, he is son of late Syed Mukhtar Ahmed Burney, and he was the first man to introduce true human rights in Pakistan a couple of decades ago.A graduate of Masters and Law from Karachi University and honorary recipient of a PhD in Philosophy from Sri Lanka, Mr Ansar Burney, Advocate started his noble mission in 1980 by setting up the â€Å"Ansar Burney Trust†, â€Å"Prisoners Aid Society† and â€Å"Bureau of Missing and Kidnapped Children/Persons† in Karachi, Pakistan. During his education he was a very prominent student leader, and as such, always raised his voice for justice, human dignity and civil rights.This landed him in a lot of trouble on several occasions with the military government of the time. In 1977, Ansar Burney, then aged 20, was arrested on charges of delivering speeches against martial law and favour of democracy and sentenced for 8 months rigorous imprisonment by the Martial Law Court. Upon release in 1978, the Martial Law Authorities once again arrested him and sent him to Karachi Prison for 2 more months’ detention. In 1979 he was again arrested for the third time and detained for a month.During these periods of detention in different Pakistani prisons, Mr Ansar Burney witnessed the miserable conditions of prisons and their prisoners. He met many people who were locked up for years and years without ever having committed a crime; forced into detentio n with false criminal charges. That was the time that he decided to help those in need and in 1980-81 after completing his law degree, Mr Ansar Burney, Advocate, started working on human rights issues such as to bring reforms in prisons and get the release of innocent and illegally confined prisoners.He also started working against slavery and against human trafficking. The Ansar Burney Trust International was set up as a non-governmental, non-political and non-profitable human and civil rights organisation. Its main objective was to struggle for the release of innocent persons who were kept in prisons or in mental asylums illegally or without any justification, and for justice, peace, anti-human trafficking and to create awareness against human trafficking and HIV.As a result of his continued and selfless efforts for the past so many years, Mr Ansar Burney has so far been able to secure release of more than 900,000 (Nine hundred thousand) innocent prisoners who were illegally impri soned in Pakistan and abroad; some released after as much as 50 to 55 years of illegal confinement. Some were even born in prisons and mental asylums where they grew up and lived as prisoners or patients for 35 to 40 long years of their lives; only released and rehabilitated with their families and society because of the hectic efforts of Mr Ansar Burney and the Ansar Burney Trust.Mr Ansar Burney also met AIDS affected prisoners and noticed homosexuality that was very common in prisons and Mental Assylums for that reason he also started creating awareness against HIV positive (AIDS). He started visiting prisons, Madrasas (Muslims Religious Schools) and prostitutes and started giving them education/lectures and also started working practically to create awareness and also providing them safety/protection against HIV. The Ansar Burney Trust also providing medical help to AIDS prisoners and HIV positive people in Pakistan.Mr Ansar Burney is also working against female circumcision in A frican, some Arab and Asian countries and raising his voice to create awareness against female circumcision as its a worst kind of human rights violation against female. The â€Å"Ansar Burney Trust† has also arranged release of around almost 20,000 (twenty thousand) persons from mental asylums and mental wards of prisons. These were not mental cases but were kept in these asylums in inhumane conditions by influential persons due to their own vested interests.Mr Burney has also been successful in tracing out around 300,000 (Three hundred thousand) children through his Bureau of Missing Persons who were safely delivered to their families. These include children who were set free from bounded labour camps, underage child camel jockeys and young girls who had been sold away or trafficked for prostitution. Once established, the Mr Ansar Burney Trust also started their struggle to fight against the inhumane and degrading treatment of women in Pakistan and abroad.With a purpose to bring those who abused women to justice, Ansar Burney has fought several cases for the cause of women’s rights and one of the success stories has been the closure of several women â€Å"mandis† (like animal markets for the sale of girls) in Pakistan. The Ansar Burney Trust’s continued efforts became fruitful when Ansar Burney once again succeeded in getting the release of thousands of slaved underage children from ‘Modern day Slavery’. These children were from the ages of 3 years to 10 years old only.These underage children as ‘Child Camel Jockeys’ were on slavery in the Middle Eastern countries almost 16 to 17 hours a day and were living in private prisons. During their slavery these underage children were getting just two biscuits a day as food so that they should not gain weight. After the release of these children Mr Ansar Burney sent them back to their respective countries for their rehabilitation. In 2005 The State Department of t he United States of America declared and awarded an award of ‘International Human Rights Hero’ to Mr Ansar Burney that was presented to Mr Ansar Burney by the Secretary of State.Ansar Burney Trust also able to get released trafficked young girls from prostitution in Middle Eastern and European countries. Mr Burney has also sent/taken humanitarian aid to different parts of Pakistan as well abroad. During the drought in Pakistan, Mr Burney personally visited several affected areas and supervised the humanitarian aid operation to the region by the ABT. Mr Ansar Burney stumbled upon the use of Hindu â€Å"Haris† (Bonded Labourers) as slaves in the interior Sindh Province of Pakistan.After some hectic efforts and persistence, the Trust was successful in freeing around 7,000 â€Å"Haris†; a 160 of who in danger of being attacked by their previous owners were taken in by the Trust and relocated to a more secure location. Currently, Mr Ansar Burney and the Ansar B urney Trust have been working round the clock to put a stop to the smuggling and trafficking of children and young girls and their use as camel jockeys and prostitution in the Middle East, to date, a 1100 children some as young as 3 years to 12 years of age have been released from camps in the UAE alone.In 1984, the Chief Martial Law Administrator of Pakistan, General Mohammad Ziaul Haque, twice offered Mr Burney the position of Federal Minister of Pakistan; an offer Mr Burney refused in order to stay impartial and unaffiliated and to continue his human rights work without any political reservations or activities. Since then he has on several occasions been offered ministerial and political positions but he has refused, re-emphasising the Trust’s nature as a truly independent and non-political organisation.However, he took charge as Federal Minister for Human Rights in the non-political interim set-up in 2007. On November 16, 2007, Ansar Burney was sworn in as Pakistani Feder al Minister for Human Rights — to head the newly established Human Rights Ministry of Pakistan, first such ministry in the history of Pakistan. He managed the Human Rights Ministry with a sense of duty and great passion. However, positive attention is not all Mr Burney has received. His work has resulted in the making of many enemies.He has been attacked several times and continually receives death threats. His name is on the â€Å"Terrorist Hit List† which was leaked into newspapers from Pakistani Intelligence Agencies. Ansar Burney Trust offices have been attacked and employees killed. Members of the Burney family have also been attacked and severely injured. Ambulances of the Trust have been fired upon, burnt and stoned by persons against whom Mr Burney has fought human rights cases. The attacks continue to this day.In relation to his human and civil rights work, Mr Ansar Burney, has attended hundreds of National and International conferences, groups and forums. In recognition of his great human and civil rights work, he has received well over 200 awards and medals from home as well as from abroad. On 23rd March 2002, he was conferred with Pakistan’s National Civil Award â€Å"Sitar-i-Imtiaz†, the first national award in the history of Pakistan in the field of human rights. Mr Ansar Burney was declared an ‘Anti-Human Trafficking Hero’ in 2005 â€Å" by the United States, State Department.Ansar Burney, in March 2008, elected as Expert Adviser on Human Rights in the United Nations Human Rights Council Advisory Committee at Geneva, one out of 18 elected from throughout the world. Whenever a natural calamity such as earthquake or flood hits Pakistan, ‘Ansar Burney Trust’ is there to lend a helping hand. Mr Ansar Burney and his wife Shaheen Burney take pride in helping others. They derive pleasure by sharing smiles and restoring honour and dignity to downtrodden people. Mr Ansar Burney, Advocate got married with Shaheen on May 28, 1981 and they have three children Fahad Burney, Raheel Burney and daughter Sana Burney.Trust: Established in 1980 by Ansar Burney, Advocate in the Pakistani port city of Karachi; the Ansar Burney Trust was the first organization to introduce true human rights in Pakistan. With a mission to work as a non-political, non-governmental and non-profitable organization, we started our fight against all forms of injustices, cruel inhuman and degrading treatment, child abuse, cruelty to women and other more subtle forms of human and civil rights violations without any discrimination or affiliation. The Ansar Burney Trust headed by Mr.Ansar Burney is a network of human rights organisations working for the deliverance of justice, better treatment of human beings and for the rights and freedoms of civil liberties. Our work is to raise awareness, provide free legal advice and services and humanitarian assistance where needed. Our mission began with the establishment of th e â€Å"Prisoners Aid Society† in 1980. Since then we have been involved in bringing reforms in Police Stations, Prisons and Mental Institutions; and work for the aid, advice, release, rehabilitation and welfare of the illegally and unlawfully detained prisoners and mental patients.We also work for the rehabilitation and welfare of the families of these unfortunate human beings purely on humanitarian grounds in the greater interest of justice and humanity without any affiliation or consideration for any political party, group or activities. Since its inception in 1980, the Ansar Burney Trust has shown a marked and steady progress in achieving the vowed objectives and has started a number of centers for various projects in Pakistan and abroad.The Trust also publishes newsletters and human rights reports with the purpose of spreading awareness of issues and to try and get more and more people involved. Campaigns: Prisoners released: The Ansar Burney Trust has been working for t he cause of justice for the past 25 years and in this time has been successful in getting the release of around 700,000 confined persons from various sites around the world. These have included persons locked up for up to 37 years on fake charges or those confined in mental institutions to rot their entire lives away even though they are perfectly sane.Our work started in 1980 with this cause of persons confined in prison and mental institutions in Pakistan – a country which since independence in 1947 has yet to have a legal system where justice is delivered to the common man. The courts and police are used as a tool by the influential individuals to remove and put away opponents Torture in custody is extremely common and innocent persons are forced to admit to crimes they never committed. Persons arrested on suspicion of crimes are forgotten in police lock-ups or sent to prison without charge or court hearings for entire lifetimes.Innocent people are arrested and locked away by the police in order to fulfill their orders of connecting a crime to an individual; in some cases without their families even being informed of their arrest or imprisonment. No legal advice or service is ever provided. Prisons are filthy and hugely over populated. Prisoners are beaten and tortured regularly. There are never enough courts, resulting in waiting times for a hearing taking upwards of several years. Justice in Pakistan is a privilege for the rich.The situation is even more horrific in Mental Institutions – where just as in prisons – many sane innocent persons are confined and declared insane to keep them quite or lock them away due to enmity with powerful individuals. Mental Patients have never been thought of as human beings by either the government or the people in charge of the institutions. They were often beaten and made to sleep on the ground under the open sky without any clothes or blankets. They were tied to trees or posts so they are unable to run away. They were barely fed, sometimes being forced to feed and live in their own feces.Women patients were raped on a regular bases, many times giving birth inside the institution to children who were then also raised their; growing up to be mentally instable themselves. Other times – mental patients were tied to poles, trees or posts near religious shrines in the hope they would heal themselves. If they had no where to go, they were stoned to death by mobs unable to understand their condition. There has never been any justice for these people from the courts, which have always worked under the influence and pressure of the governments and the police.Human Rights were totally unheard of, until 1980, when Ansar Burney founded the Ansar Burney Trust. Having been locked away in prison himself, Ansar Burney witnessed the miserable conditions in which prisoners were living and set about immediately to help them. He began by visiting the many prisons and mental institutions in Pakistan to find persons confined on fake charges, locked away without charge or persons who had been framed. He also began to raise his voice for reforms in Prisons and Mental Institutions. In the past 25 years, the Ansar Burney Trust has made great achievements for this cause.Through surprise inspections and representatives in prisons and mental institutions, ABT monitors that no prisoner or patient is abused. We have successfully lobbied for better living conditions and food, separate prisons for men and women, education and training for prisoners, put a stop of tying of mental patients and children in chains and have successfully managed to remove place of birth as prison for children born in prisons. Entertainment and a better atmosphere is created at various sites around the country when ABT arranges parties and entertainment for prisoners and patients.Due to our lobbying and donations, better medical equipment and staff are now working in prisons and institutions – of fering better medical service to prisoners and especially patients. Mental patients locked in prison due of lack of space in hospital were sent back for better care. Women prisoners and patients who would before have given birth in confinement with only each other to help are now under the supervision of women nurses – after Ansar Burney presented this matter to the Prime Minister of Pakistan.Staff of the Ansar Burney Trust visited and met female prisoners and patients to investigate charges of sexual abuse – drastically leading to a reduction of rapes in prisons. We successfully lobbied to ban female prisoners being dealt with by male staff. Non Muslim prisoners unable to perform their religious duties are now provided what they need in order to perform their religious commitments. In the month of Ramadan, non-Muslim prisoners are now arranged food for by ABT so they were not forced to fast.The Ansar Burney Trust has appointed 84 people in various jails and mental asy lums to take care of mental patients and prisoners. One of our achievements over the years has been the collection of data we have gathered on Pakistani prisoners confined in different Jails around the world due to various misunderstandings. The Trust provides legal advice and services to many such persons and arranges for their repatriation when released. Similarly the Trust has also been able to get release of a number of foreign nationals from Pakistani Jails and sent them to their respective home countries on Trust's expenses.Since we began our mission in 1980, the Ansar Burney Trust has been involved in bringing reforms in Police Stations, Prisons and Mental Institutions; and work for the aid, advice, release, rehabilitation and welfare of the illegally and unlawfully detained prisoners and mental patients. We have also worked for the rehabilitation and welfare of the families of these unfortunate human beings purely on humanitarian grounds in the greater interest of justice an d humanity without any affiliation or consideration for any political party, group or activities. For hose with no where left to go or those not yet ready, the Trust has established a center where they receive accommodation, food, medical attention and freedom. Children Rights: When a people lack commitment, drive and zeal to better the condition of our fellow human beings, the over riding emotion is that of apathy particularly towards the under privileged. But our ever-enterprising statesmen have found a way: down the line they express â€Å"profound grief† and â€Å"deep sorrow† alongside heartfelt platitudes for the grieved family. No matter what the tragedy the attitude is that of indifference; even if the subjects are innocent children.Looking at the statistics, Pakistan has one of the largest populations of the young in the world – with nearly 45 percent of its one hundred and fifty million people being under the age of 15. But it has no policy for childre n. Hundreds of thousands of infants under four years of age die each year mostly from readily preventative diseases. Amongst the fortunate few who are spared the tragedy, many waste their lives in the throes of extreme poverty. Still worse, an increasing number of children get lost or are abducted; and then there are those whose ntire future is blighted because they are imprisoned, or born in jails and mental asylums and have to spend a considerable time of their lives there. Many a times, this is not due to any fault of their own but because their mothers are patients, are serving a sentence or awaiting trial. Thousands are lost or kidnapped each year, with many finding themselves bought, abused and used in bonded labor camps all over the country. Hundreds are trafficked to foreign destinations for the purposes of drugs smuggling and to be used as camel jockeys.Many more are forced into beggary, trained and used in criminal activities and some are even killed – for their bod y organs fetch a high price in Pakistan and abroad. Hundreds of young girls are also abducted, bought and sold all over Pakistan. They are locked away in private prisons, forced into prostitution and trafficked abroad for use in drugs smuggling and for the thriving sex trade (particularly in the Middle East). The Ansar Burney Trust has been working for the protection of these children for over 25 years under our â€Å"Bureau of Missing and Kidnapped Children†.In this time, we have managed to locate and rehabilitate around 100,000 children. These included children who were set free from labor camps, those released from prisons, children who had been lost, child camel jockeys and young girls who had been sold away for prostitution. We have brought reforms in prisons, prosecuted those who abused children and recently – the Ansar Burney Trust has also successfully been able to convince the governments of the UAE and Qatar to ban the use of children as camel jockeys. Human trafficking: Human Trafficking is a horrendous crime that has destroyed the lives of millions of people around the world.It has involved the abduction, cruel and inhumane treatment, humiliation, serious injury and even death of innocent men, women and children. It is a big â€Å"business† in many parts of the world, especially South Asia, from where thousands of people are either smuggled or trafficked each year – for purposes of drugs smuggling, to be used for slave labor and young girls and women forced into prostitution. Many are lured with the false promises of a better life, a better future – never expecting what they will actually be put through.Those unwilling are abducted, young children bought from their parents and young girls bought and sold in markets. The Ansar Burney Trust began its struggle for the release and welfare of many such victims 16 years ago; starting with the plight of women and children used for the purpose of drugs smuggling. Drug Smu ggling: Every year, hundreds of women and children are forcibly used for the purpose of drugs smuggling to various destinations around the world. In many of the instances, they are forced to carry the drugs in capsules inside of their bodies.Abducted or bought from open markets, these women and children are threatened, beaten, starved and even warned with the death of family members if they hesitate in any way. In some instances, young children of the women involved are kept behind with the smugglers to insure full cooperation. The women, along with the kids, are then given new identity cards where they are shown as a family and given bags full of drugs to be transported to various sites across the country. At other times, the women are paired with men and shown in new passports as a married couple and the children are shown as their kids.They are then forced to swallow and place capsules full of drugs inside their bodies for transportation to foreign countries; where even after ful l cooperation and delivery of drugs, they are likely to be sold for prostitution and slave labor. Or if caught, they then face prison and even the death sentence. On several occasions, the Ansar Burney Trust has fought for the welfare of such persons; some of whom were released from Middle Eastern countries where they had been sentenced to death for crimes they were forced to commit.One such case involved children as young as five years old, who were arrested along with some women carrying capsules filled with drugs inside their bodies – all were sentenced to death – finally released after an investigation by the Ansar Burney Trust and appeals to the Saudi leadership. In this regard, members and volunteers of the Ansar Burney Trust visit various prisons and review case details of many South Asian prisoners in Middle Eastern Countries.In Pakistan, we work to locate and prosecute the men responsible Humanitarian aid and relief activities: Relief Activity Earth Quake in N . Pakistan: During the recent earth quake disaster in Northern Pakistan, the Ansar Burney Trust provided aid worth over $1 million (USD) to the effected people, in the form of warm tents, warm clothes and blankets, food rations and clean drinking water, tools used for digging, medicines, crockery, gas and oil cookers, cash and products for women's personal hygiene.The Trust is currently working on the construction of homes, mosques and schools for villagers on high mountains Free legal advice: The Ansar Burney Trust since 1980 has been offering free legal advice and services to all those who need it. We have a team of lawyers, including women, who are available 7 days a week to help those in need. It is through our legal team, that the Trust has been able to secure the release of hundreds of thousands of people around the world and to fight for justice for men, women and children

How the internal factors of the islamic banking affected their performance - Free Essay Example

Sample details Pages: 25 Words: 7632 Downloads: 8 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? 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? Don’t waste time! Our writers will create an original "How the internal factors of the islamic banking affected their performance" essay for you Create order 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 â€Å"Top 500 Islamic Financial Institutions† 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 â€Å"Allah forbids riba†. 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 Mohamed‘s 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; liabilities†¦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, liabilities†¦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