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April 8, 2026Journal of Islamic accounting and business research0 citations

Quarter century of Islamic banking in the GCC region: what drive investment accounts’ return?

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AHAsma HkimiCarthage CollegeRGRihab GrassaHigher Colleges of Technology

Key Points

  • The study aims to identify the factors affecting the returns on unrestricted investment deposit accounts in Islamic banks within the GCC region.
  • Utilized a GLS model for analysis
  • Studied 30 Islamic banks in the GCC
  • Focused on data from 2005 to 2021
  • UIA returns are positively correlated with bank size and age, and influenced by macroeconomic factors.
  • Negative impacts observed from the number of block holders and the COVID-19 pandemic.
  • Ownership concentration and repo rates also play a significant role in determining returns.

Abstract

Purpose This paper aims to investigate the factors driver for return on unrestricted investment deposit accounts (UIA) in Islamic banks (IBs) across the Gulf Cooperation Council (GCC) region. Design/methodology/approach The authors address the research question using a GLS model for 30 IBs operating in the GCC region over the period 2005–2021. Findings The results reveal that UIA returns are positively influenced by bank size, bank age, ownership concentration, repo rate, global financial crisis and the weight of Islamic banking assets of the total in the country. However, UIA is negatively affected by the number of block holders, Islamic deposit weight in the country and the Covid-19 pandemic crisis. Research limitations/implications This study is limited to the GCC region and excludes other parts of the Middle East and the Far East, which may limit the universality of the findings. This study deepens understanding of determinants of return on GCC IBs’ UIAs. It highlights bank characteristics, ownership structure and macroeconomic factors as contributors to the performance of UIAs, bridging gaps between theory and practice in Islamic finance. The results emphasize the influence of external shocks, such as COVID-19, on UIAs returns, suggesting a need for more resilient and responsive financial strategies in Islamic banking. This research provides a foundation for future comparative investigations in other regions. Practical implications Overall, the findings of this paper are significant, highlighting that UIA mirrors the profit and loss sharing principle intrinsic to Islamic banking. These insights are crucial for policymakers, regulators and financial institutions in the GCC, as they illuminate the dynamics of investment deposit remuneration practices within the Islamic banking framework. Originality/value The findings of this paper are significant, highlighting that the return on an unrestricted investment account mirrors the profit and loss sharing principle intrinsic to Islamic banking. These insights are crucial and helpful for policymakers to protect the investment account holders’ rights, regulators when providing new standards and financial institutions in the GCC, as they illuminate the dynamics of investment deposit remuneration practices within the Islamic banking framework.

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Cite This Study

Hkimi et al. (2026) studied this question.

synapsesocial.com/papers/69d5f13674eaea4b11a7acd5https://doi.org/10.1108/jiabr-02-2024-0068
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