Title: Evaluation of non-performing financing of non-oil sectors: a case of Bahraini Islamic banks

Authors: Monsurat Ayojimi Salami; Adel Mohammed Sarea; Harun Tanrivermis

Addresses: Department of Real Estate Development and Management, Faculty of Applied Sciences, Ankara University, Cebeci, Çankaya, 06590, Ankara, Turkey ' Department of Accounting, Finance and Banking, College of Business and Finance, Ahlia University, 10878 Manama, Kingdom of Bahrain ' Department of Real Estate Development and Management, Faculty of Applied Sciences, Ankara University, Cebeci, Çankaya, 06590, Ankara, Turkey

Abstract: This study investigated the speed of adjustment of non-performing financing in several sectors in Bahrain. This study used ANOVA, Johansen cointegration, and VEC models. The equality of mean test showed the mean difference between economically contributing financing and non-performing financing in Bahrain. The Johansen cointegration result revealed evidence of one (1) cointegration between each sector under consideration, supporting the weak-form efficiency market hypothesis. The findings revealed that some non-performing financing in Bahraini non-oil sectors made greater efforts to re-establish equilibrium in the face of a short-run shock. In contrast, some others adjusted at a relatively slow pace. However, some non-performing financing showed no indication of the rate of adjustment. These findings were further illustrated graphically using the Impulse response function graph. The findings suggested that the Bahrain Islamic finance industry should reduce nonperforming financing even further because most of the speeds of adjustment are either slow or non-existent.

Keywords: evaluation; non-performing financing; non-oil sectors; Bahrain; Islamic banks.

DOI: 10.1504/IJAAPE.2024.135533

International Journal of Accounting, Auditing and Performance Evaluation, 2024 Vol.20 No.1/2, pp.43 - 68

Received: 02 Apr 2022
Received in revised form: 02 Jul 2022
Accepted: 10 Aug 2022
Published online: 18 Dec 2023 *

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