Journal of Islamic Monetary Economics and Finance (JIMF)
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Retakaful Contributions Model Using Machine Learning Techniques
Full text linkDriven by the need to manage risk by the newly created Moroccan Takaful operators, the Moroccan Insurance and Social Welfare Control Authority has authorized the Central Reinsurance Company to create a ReTakaful window for the purpose of reinsuring Takaful operations. Nevertheless, the main challenge is determining the appropriate ReTakaful model for the Moroccan Islamic insurance sector by ensuring compliance with Shariah. With this in mind, this article aims to determine the optimal ReTakaful contributions model for the Moroccan Takaful industry via Machine Learning algorithms. We select the best model by comparing the performance of each algorithm. The achieved results of this study demonstrate the potential of using Machine Learning algorithms to compute ReTakaful contributions that are more suitable for Takaful operators and more optimal for the ReTakaful operator
Financial Performance: Sustainability, Size, Shariah, and Sector Effects in Muslim-Minority Stock Exchanges
No full textSustainability and halal stocks have become increasingly popular in the digital and globalized world after the COVID-19 pandemic, even in Muslim-minority developed countries. This study examines whether there exist sustainability, size, Shariah compliance, sector, and stock exchange effects in financial performance. We collect the cross-section data for 2022–2023 covering 270 public-listed companies. These include earning-per-share (EPS) representing performance, market capitalization representing firm size, and business sectors from Compustat, halal status and level from Musaffa, and Environmental, Social, and Governance (ESG) rating and risk representing sustainability from Sustainalytics. Using the partial least square structural equation model (PLS-SEM), we discover the significance of sustainability and size but the debatably significant moderating effect of Shariah, sector, and stock exchange on performance. We explain these findings by the Stakeholder Theory and Resource-Based View. These results should prove beneficial to managers in backing their green and Shariah compliance strategies for financial performance
The Interconnectedness Pattern of Cryptocurrencies and Islamic Investment Classes
Full text linkThis study explores the dynamic co-movement of Islamic asset classes and cryptocurrencies for the period 01 March, 2017 to 15 June, 2022 by employing Wavelet methodology. The Islamic investment classes are represented by Islamic equities, Islamic Socially responsible investments, Real estate investment trusts and Sukuk. The results reveal that in normal times, there is negligible co-movement of both the asset classes. By contrast, both the investment classes exhibit significant spillover effect during the health crisis period. An important implication from these findings is that both the asset classes offer diversification opportunity during normal times but not during extreme times
Investigating the Determinants of Cash Waqf Intention: An Insight from Muslims in Indonesia
Full text linkThis study looks at the factors that influence the Indonesian Muslim to perform cash waqf based on a modified Theory of Reasoned Action (TRA) framework. Using primary data from islands in Indonesia, as many as 436 respondents, and the partial least square approach, the paper finds that religiosity contributes positively to waqf literacy. Subject norms and religiosity also affect the attitude of Muslims in waqf. Religiosity is the most potent factor in influencing the attitude of Muslims in waqf. The variable of waqf literacy also affects the attitudes and intentions of Muslims in waqf. Finally, trust also affects the attitudes and intentions of Muslims in waqf
Risk Sharing between Unrestricted-Investment-Account Holders and Shareholders of Islamic Banks: Implications on Stability and Resilience
Full text linkThe allocation of profit and loss to the unrestricted investment account holders (URIAHs) is a fundamental principle of Islamic banking where both the URIAHs and the Shareholders participate in funds mobilization through a risk-sharing arrangement. The study investigates the risk adjusted return received by both the unrestricted investment account holders and shareholders as well as the level of risk sharing between them for Islamic banks in Nigeria, Sudan, Bahrain and Qatar using financial ratio analysis, difference in mean t-test and Var-at-Risk (VaR) methodologies. The paper concludes that, contrary to the findings of many previous studies, the unrestricted investment account holders receive lower risk adjusted returns than the Shareholders do and at a higher risk in some of these countries and also the Central Banks impose a risk sharing value (the alpha factor) which is always different from the actual computed value of the risk sharing parameter for the banks and these are the likely potential sources of instability in the Islamic banks of these countries
Bank Resilience and Political Institutions: Do Banking Business Models Matter?
Full text linkThis paper investigates the effect of political institutions on bank stability of dual banking countries. Applying the two-step GMM approach to a panel sample of Islamic and conventional banks from 2005 to 2020, we arrive at the following results. First, we observe that the quality of political institutions leads to more stable banking system, which is in line with the view that quality political institutions improve the transparency, thereby reducing adverse selection and leading to overall improvement in the banking stability. Second, when we look at components of political institutions, we document the significance of the voice and accountability dimension in enhancing bank stability. Finally, as a side result, we find evidence that competition leads to stability for Islamic banks. These findings are robust to several robustness tests. The implications of our findings are provided in the paper
Indonesian Low-Income Households’ Acceptance of Microtakaful in East Java
Full text linkThis research investigates the inclination of economically disadvantaged households in East Java, Indonesia, towards microtakaful adoption, utilizing an extended Theory of Planned Behavior (TPB). Analyzing data from 304 respondents through online and face-to-face surveys, the study reveals a significant demand for microtakaful among low-income households. Behavioral intention is positively influenced by factors such as attitude, subjective norms, price, and knowledge, with price being the most critical determinant. Notably, a substantial number of respondents from low-income backgrounds express positive intention toward microtakaful. The study underscores the importance of microtakaful providers raising awareness, offering affordable structures, and highlighting microtakaful's value as a risk management tool. By employing an advanced TPB model, this research offers profound insights into the perceptions and behavioral tendencies of East Java's low-income households regarding microtakaful. The findings suggest actionable strategies for providers to enhance outreach and participation among this vulnerable group, contributing to improved financial inclusion and resilience
Muslim Women Switching Intention to Halal Cosmetic: Push-Pull-Mooring Model Application
Full text linkThis study focuses on the factors that contribute to switching intentions from non-halal cosmetics to halal cosmetics by Muslim women in Indonesia. Using a questionnaire and purposive sampling, we compile data from a total of 236 women who use halal cosmetics and then apply the SEM-PLS for data analysis. The results show that the pull effect significantly affects Muslim women's intention to switch to halal cosmetics and is moderated negatively by switching costs. By contrast, the push effect doesn’t significantly affect the intention to switch to halal cosmetics. In addition, halal awareness and switching costs directly affect Muslim women's switching intentions from non-halal to halal cosmetics.
Acknowledgment
The authors would like to thank Bank Indonesia Institute, Bank Indonesia, for the funding that made this study possible
The Islamic Banking Customers’ Intention to Use Digital Banking Services: An Indonesian Study
Full text linkThis study examines factors that influence Indonesian Islamic banking customers’ behavioral intention to utilize digital banking services using the Unified Theory of Acceptance and Use of Technology (UTAUT 2). The factors examined include effort and performance expectations, social influence, facilitating conditions, price value, hedonic motivation, habits, trialability, and spiritual motivation. The study also examines whether Islamic lifestyle moderates the roles of social influence, habits, and spiritual motivation in the tendency to utilize Islamic digital banking. Gathering data from 195 Indonesian millennials and utilizing the partial least squares structural equation modeling (PLS-SEM) method, we find that not all factors have a positive effect on the propensity to utilize Islamic digital banking services. The performance expectations, social influences, price values, habits, and Islamic lifestyles all have a strong favorable effect on the desire to use digital banking. Meanwhile, the facilitating condition, hedonic motivation, trialability, and spiritual motivation only slightly affect the intention to use digital banking. Finally, the paper notes that absence of Islamic lifestyle’s moderating role
Islamic Bank Customers’ Adoption of Digital Banking Services: Extending Diffusion Theory of Innovation
Full text linkThis paper examines the factors that drive non-users of digital banking services rendered by Pakistani Islamic banks to adopt digital banking using the Diffusion theory of Innovation (DOI). We gather data from 208 Islamic bank customers who do not use digital banking services. Findings of the study reveal that adoption of digital services offered by Islamic banks are largely decided by relative advantage, technology self-efficacy and complexity. All the factors above are influential in determining the digital banking adoption by non-users. The finding serves as an essential input to banks and policy makers in expanding the adoption of digital banking services of Islamic banks.
Acknowledgment
The authors would like to thank Bank Indonesia Institute, Bank Indonesia, for the funding that made this study possible