The Adoption of AAOIFI Standards by Islamic Banks: Understanding the Microeconomic Consequences

Round 1

Reviewer 1 Report

Article:  The Adoption of AAOIFI Standards by Islamic Banks: Understand What the Microeconomic Consequences

After reviewing this article, I think it is potential for publication but the authors should revise as comments below:

- In the introduction, the authors need to highlight the new contributions as well as the research gaps clearly. I found that the authors presented the differences of this study from a few previous studies but were not convincing. For example, you say that "The related literature measures the impact of accounting standards' adoption on one country (Zeghal et al., 2011), whereas this study uses data across 20 different countries". Studying in multiple countries instead of one is neither a new contribution nor a research gap. Multi-country performance does not mean more than one country value. If you think this is true, you must prove it. Or you say that “Most of the previous studies apply their 76 investigations to conventional banks (Chen et al., 2015b), whilst this study uses data for IBs”. Are there differences between IBs and CBs? Please explain more by reviewing Nguyen (2021).

- The authors need to introduce related theories in section 2.

- Earning management and performance most depend on corporate governance structure and the adoption of accounting standard also depend on corporate governance structure. Therefore, in the literature review and hypotheses development, the authors should review more previous studies relating to corporate governance.  I suggest that the authors review and cite the previous studies as follows: Dobija et al. (2022); Nguyen (2022); Agarwal (2020) Dang and Nguyen (2021); … (see reference)

- In section 4.3 , the author must introduce the estimation method and explain why it is appropriate. I think fixed effect should be better OLS.

- The author should provide the VIF value for variables

- This study completely lacks robustness tests. I therefore strongly suggest that the authors implement a robustness test using another measure, the GMM estimation method or something else....

-  There are some typos and grammatical errors, you must check it again carefully.

- AAOIFI needs to be explained before abbreviating

References

Dang, V. C., & Nguyen, Q. K. (2021). Internal corporate governance and stock price crash risk: evidence from Vietnam. Journal of Sustainable Finance & Investment, 1-18. doi:10.1080/20430795.2021.2006128

Dobija, D., Hryckiewicz, A., Zaman, M., & Puławska, K. (2022). Critical mass and voice: Board gender diversity and financial reporting quality. European Management Journal, 40(1), 29-44.

Nguyen, Q. K. (2022). Audit committee structure, institutional quality, and bank stability: evidence from ASEAN countries. Finance Research Letters, 46, 102369.

Agarwal, S. (2020). Literature review on the relationship between board structure and Firm Performance. International Journal of Business Ethics in Developing Economies, 9(2).

 

 

Author Response

For the comment 1 about the introduction: we consider this comment by adding and updating the contributions of this study  

For the  comment 2: In section 2; we focus on how AAOIFI developed and theories used to explain this development. But, in developing the hypotheses, we linked with theory such as agency theory 

For the comment 3 about the role of CG in our debating: We consider  this issue by adding about how CG effect on the adopted standards' benefits 

For the comment 4 about your recommended references: We added all the references that you recommended in addition to other 20 related references to updated the whole debating in the paper. Many appreciate for this comment

For the comment 5 related to the updated analysis model: Again many thanks for this comment as we used GMM model for testing the 4 model and the result developed and become better than before with OLS model.

For the comment 6 related to enhancing the language of the paper and remove the errors: The whole paper is edited by expertise who developed the level of writing and removed all the grammatical errors.

For the comment 7 for the additional analysis: We support our analysis by robustness analysis which support our results.  

Author Response File: Author Response.pdf

Reviewer 2 Report

The paper has some originality in presenting the AAOIFI and the Microeconomics impact. the results are promising. 

Please recheck the implications on banks and governments policies. 

Author Response

For comment 1 related to the implications of the study: We consider this comment by developing and adding several implications for our study related to its impact over the banks and governments as well as theoretical implications 

For comment 2 about the adopted method: We consider this comment by applying new analysis which is GMM which enhanced our results. 

For comment 3 related to the level of English: Expertise developed and edited our paper and remove all grammatical errors and developed the level of writing.

For comment 4 for the references used in the paper: We updated the references for the paper by using more than 20 related and updated references to support our debating as well as our analysis 

For comment 5 for the analysis and conclusion: We developed our analysis by linked with the adopted theory as well as literature in addition to develop our conclusion by including the main result as well as implications for this study and several future research 

Author Response File: Author Response.pdf

Reviewer 3 Report

1. The introduction needs to be improved, especially the significance must be improved and specified.

2. The literature review section should be updated with new studies.

3. The data sample and frequency should be cleared. 

4. The methodology is outdated and can be improved with the newly emerged sophisticated tool rather than OLS.

5. Results should be interpreted correctly and should be supported by theory and literature. 

Author Response

For comment 1 related to developing introduction: We consider this comment by developing this section and supporting our debating in addition to clarify the significance of this study. We also modify the uniqueness of this study by adding more points.

For comment 2 related to updated literature: We consider this comment by adding more than 25 updated paper to support our debating and analysis. Many thanks for your comment 

For comment 3 related to sample: We added table 1 that contains banks in each country as well as % in addition to the total observations for each country 

For comment 4 related to adopted method: We used GMM model instead of OLS which developed and enhanced our result. 

For comment 5 related developing the result: We consider this comment by enhancing the analysis section and for each result, we linked with adopted theory and previous works. 

Finally, we developed the language by expertise who editing the whole paper and developing the level of English 

Author Response File: Author Response.pdf

Round 2

Reviewer 1 Report

This version is better and can be published