Testing The Effect of Some Internal Factors On the Return of the Financing Portfolio of Islamic Banks"An Applied Study in The Damascus Securities Market"

Abstract

The financing return attracts the attention of departments in banks because of its connection to the financing and investment decisions taken. Banks are sensitive to the sources of their funds due to the specificity of their dealings with money as deposits and investments. Therefore, they must harmonize the internal sources of their funds with the external sources, represented by deposits, according to the form that allows them to reduce risks and increase returns. The financing policies followed by bank departments, which are based on many factors, including the size of deposits, the financing structure, and financing risks, contribute (positively or negatively) to the returns of the financing portfolio.

Therefore, the study aimed to demonstrate the impact of some internal factors (the size of investment deposits, the size of financing risks, the size of internal financing, the size of current accounts and capital adequacy ratio) on the return of the financing portfolio of Syrian Islamic banks. To achieve the objectives of the study, the descriptive approach was relied upon in studying the literature. It also adopted the analytical approach by testing hypotheses and analyzing quarterly data derived from the annual reports of all Islamic banks operating and listed on the Damascus Securities Exchange during the period between (2011-2021) based on the standard program E-views 10.

The study found a positive moral effect in the short term at a significance level of 5% for the index of the size of investment deposits and the capital adequacy ratio on the rate of return on the financing portfolio in Syrian Islamic banks. It also showed a positive significant effect in the long term at a 5% significance level for the index of the size of investment deposits and the internal financing ratio on the rate of return on the financing portfolio. While the study showed a negative moral effect in the long term at a significance level of 5% for the financing risk index and the capital adequacy ratio on the rate of return on the financing portfolio in Syrian Islamic banks during the study period.

The study concluded by presenting a set of recommendations, the most important of which is directing Islamic banks to diversify the components of their financing portfolios by using multiple financing formulas, financing different economic sectors, and not focusing financing on specific regions, because this diversity reduces the possibility of exposure to risks.