Journal of Islamic Monetary Economics and Finance (JIMF)
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Economic Output, Monetary Policy Transmission and the Role of Islamic Banks: Evidence from Pakistan Dual Banking System
Full text linkUsing co-integration analysis, this study evaluates the role of Islamic banks in monetary transmission and the economic growth of Pakistani economy. More specifically, it investigates the role of Islamic bank deposits and financing in the transmission of monetary policy impacts to the real economy. The findings suggest that Islamic bank financing and deposits play key roles in Pakistan's monetary transmission process. The bank lending channel has the potential to become a major channel of monetary transmission in Pakistan's economy. The bank lending channel highlights the significance of Islamic financial institutions in disseminating the effects of monetary policy across the economy. Therefore, more efforts should be made to establish a more effective Islamic money market, which might offer Islamic banks with an alternative funding source
Determinants of IPO Oversubscription on Islamic Stocks: Evidence from Indonesia
Full text linkThis study aims to investigate factors that affect IPO oversubscription on Islamic stocks. Using data of 202 IPOs indexed from Indonesia Sharia Stock Index, this study uses ordinary least squaresand quantile regression to test the formulated hypothesis from 2011 to 2020. This study finds that issue price and issue size negatively affect IPO oversubscription. Meanwhile, firm size and raw return positively affect IPO oversubscription. The findings of this study offer implications forcompanies especially related to go public subscription. This study can be reference for investors as well when engage in IPO related activities for Islamic stocks
Addressing Accountability and Transparency Challenges in Waqf Management Using Blockchain Technology
Full text linkThis study identifies how blockchain technology can address accountability and transparency challenges in waqf management system by using institutional theory and Islamic institutional logic. An interpretative qualitative research approach is employed, with case studies of Malaysian public university waqf administrators, and data analysis is performed using open, axial, and selective coding. The findings suggest that in terms of coercive isomorphism there are two transparency challenges related to blockchain solutions in the waqf management system: 1) errors in the issuance of receipts (process), which are expected to be overcome by blockchain solutions in the form of individual network technology and ID identifiers; and 2) difficulties in waqf distribution (process), which are predicted to be solved by blockchain solutions in the form of controlling tools, public ledgers, and obtaining waqf distribution data. In normative isomorphism, there are two accountability challenges with blockchain solutions in the waqf management system: 1) difficulties in controlling waqf activities (process), which are expected to be overcome by blockchain solutions which allow internal control; and 2) decisions on waqf distribution (output), which should be solved by blockchain solutions which allow awareness among stakeholders of waqf distribution. In mimetic isomorphism, there is one accountability challenge in the process which has blockchain solutions in the waqf management system, namely system integration, which is predicted to be overcome by a blockchain solution related to traceability. The contributions of the study include extending institutional theory and Islamic institutional logic, and providing blockchain best practices for waqf institutions in addressing accountability and transparency challenges
The Effects of Islamic Microfinancing, Human Capital, and ICT Usage on Women Micro-Entrepreneurs’ Performance in Malaysia
Full text linkThis study examines the influences of Islamic microfinancing, human capital development, and information and communication technology (ICT) usage on the performance of Malaysian women micro-entrepreneurs funded by an Islamic microfinance institution (IMFI). It considers Amanah Ikhtiar Malaysia (AIM) as the study setting and adopts a quantitative approach involving 120 women micro-entrepreneurs. The questionnaire was distributed to women micro-entrepreneurs in Selangor state employing a convenience sampling method. The model was analysed utilising the partial least squares structural equation model (PLS-SEM). The findings indicate that Islamic microfinancing, human capital, and ICT usage positively influence the performance of women micro-entrepreneurs. The empirical findings enhance the literature by extending the resource-based view (RBV), a soft theory in the organisational theory literature, by incorporating Islamic microfinancing in the context. It is hoped the study will assist IMFIs and governments in strengthening infrastructures, developing comprehensive business strategies, and educating women micro-entrepreneurs about the possibilities of the digital economy for long-term business sustainability and development
Religiosity and Saving Behavior: A Preliminary Investigation among Muslim Students in Indonesia
Full text linkThis study examines the relationship between religiosity, saving intention, and saving behavior among Muslim university students in Palembang, Indonesia. A quantitative research approach is employed for this study. We gather data from a total of 103 respondents aged between 18 and 22 years and apply the partial least square path modelling (PLS-PM) technique. We find religiosity to be significantly related to saving intention and behavior. In addition, saving intention and saving behavior are significantly and directly related. Meanwhile, according to Cohen’s convention, the effect size of the association between religiosity and saving intention and behavior is small
Promoting an Inclusive Economy: The Relevance of Sustainable Development and Islamicity Prosperity Index
Full text linkInequalities and social exclusion are the consequences of imbalanced economic growth, prompting the World Bank to establish new targets for eradicating extreme poverty and promoting shared prosperity. Surprisingly, the contemporary solution methods are consistent with Shari'ah's objectives. Stressing the importance of balanced growth, this study aims to quantify prosperity sharing in 28 developed and 14 developing nations by reshaping the notion of sustainable development from an Islamic perspective. The study examins four pillars of prosperity namely Faradh (social responsibility), Shura (social participation), Al Adl Wal Ihsan (social equilibrium) and Ummah (social cohesion) to capture the essence of prosperity sharing. It begins with a thorough literature review as the basis for designing and developing the dimensions and indicators, followed by an adequacy test of the indicators using Principal Component Analysis (PCA). Then, the study employs panel data regression analysis to identify the determinants that have a significant impact on the shared prosperity indicator (s). The results show that all of the pillars (Faradh, Shura, Al Adl Wal Ihsan, and Ummah) have a significant outcome, confirming that the strength of the association between the variables is strong and adequate as proxies for each pillar. Finally, an Islamicity Prosperity Index is developed, which is a multidimensional index (iPI) to measure prosperity sharing in developed and developing countries
Do Islamic Cryptocurrencies Provide Diversification Opportunities to Indonesian Islamic Investors?
Full text linkThis study examines whether Islamic gold-backed cryptocurrencies (Onegram and X8X) provide any diversification benefits to the Islamic investors of Indonesia. We study the co-movements between return and volatility of cryptocurrencies and Indonesian Islamic equity indices during the pre-COVID-19 and COVID-19 periods. We employ Multivariate Generalized Autoregressive Conditional Heteroscedastic-Dynamic Conditional Correlation (M-GARCH-DCC) and Continuous Wavelet Transforms (CWT) for this study. We find that the COVID-19 crisis enhanced the spillover effect among the Islamic gold-backed cryptocurrencies and Islamic equities. We also provide evidence that Indonesian investors may invest in cryptocurrencies to minimize the equity sector risks during the pandemic. Our results bear significant implications for portfolio diversification strategies for Indonesian investors
How Do Corporate Sustainability and Pandemic Affect Cash Holdings in Muslim Countries?
Full text linkWe investigate how corporate sustainability (Environmental, Social, and Governance-ESG) influences cash holdings of non-financial firms in Muslim countries from 2003 to 2021. Using panel models, we find that firms with lower ESG hold more cash over the entire period, which aligns with the agency and precautionary motives of cash holdings. We also note that the negative relation between ESG and cash holding is not affected by the COVID-19 pandemic. Looking at individual countries in the sample, we note a positive relation between ESG and cash balances for Saudi Arabia. Meanwhile, similar to the full sample, their relation is negative for firms from Malaysia and Turkiye. Finally, the ESG and cash policies of firms in different industries tend to vary. Overall, firms in Muslim countries use cash holdings as a substitute for corporate sustainability without any changes in the COVID era.
Acknowledgment
The authors would like to thank Bank Indonesia Institute, Bank Indonesia, for the funding that made this study possible
Performance of Conventional, Islamic, and Socially Responsible Investment (SRI) Indices during COVID-19: A Study of Indonesian Stock Market
Full text linkThis paper investigates (i) the volatility of Indonesian Islamic, SRI, and Conventional equities, (ii) their serial correlation, and (iii) their dynamic correlation and relationship during the COVID-19 pandemic. Using MGARCH-DCC, our findings suggest that the Islamic index is most volatile but performs more efficiently than the others and exhibits no co-movement with Conventional and SRI during the Pandemic crisis. The study empirically shows the resilience and efficiency of the Islamic stocks in Indonesia during the Pandemic. These findings provide valuable and practical recommendations on portfolio diversification for investors and offers policy implications for regulators interesting in and dealing with impact or responsible investing.
Acknowledgment
The authors would like to thank KNEKS for the academic writing workshop series that made this study possible
Loan Portfolio Composition of Islamic and Conventional Banks Pre- and Post-COVID-19 Pandemic: Case of Indonesia
Full text linkThis study investigates how the Covid-19 pandemic has affected the loan portfolio composition of Indonesian Islamic and conventional banks. By using a sample of 108 conventional and 9 Islamic banks, we find that conventional banks issued more consumption loans during the sample period. On the contrary, Islamic banks granted more investment loans than consumption loans. In addition, given limited support from the central bank, Islamic banks still increased their contribution to investment loans portfolio more rapidly during the COVID-19 pandemic. These results support the view that Islamic banks provide funding to long-term investment projects and may contribute more to sustainable economic growth. This finding could have policy implications for both Islamic banks and the government. Despite the fact that Islamic banking is in its infancy in Indonesia, it provides funding for the real economy. Regulators may assist the Islamic banking sector in developing risk management capacity in various sectors, including agriculture, manufacturing, trading, distribution, hotels, and restaurants. Furthermore, implementing a well-integrated policy framework that includes monetary, fiscal, and financial services can also assist in optimizing the momentum of economic recovery after the pandemic despite global supply disruptions, the Russian-Ukraine war, and climate change