Journal of Islamic Monetary Economics and Finance (JIMF)
Not a member yet
331 research outputs found
Sort by
Social-Commercial Interconnection: Lessons from Bank Muamalat Indonesia & Baitulmaal Muamalat Affiliation
Get PDFThis research aims to explore the model of interconnection between the Islamic Bank and Zakat Management Organisation, as the two represent the implementation of Islamic economics in Indonesia. Using the Group Method of Data Handling (GMHD) tool to discern the strength of the relationship between the two representative entities, Bank Muamalat Indonesia and Baitulmaal Muamalat, it also followed the hyper postphenomenology approach to sharpen the result by obtaining essential confirmation from key informants with respect to determining the ideal model. The result showed a robust and reciprocal correlation between the account variables and its influence was statistically significant. Furthermore, it was interpreted as an effort to improve the image of the banking system while providing added value, forms of corporate responsibility and a spirit of service to customers. The results led to convergence on the formulation of the ideal model, which depends on the moral intentions of the owners of capital, government alignment and the literacy of directors, control needs and public awareness. Thus, it bridges the findings of previous studies and recommends a model that inseparable moral economic instruments.
ACKNOWLEDGMENT
This publication was made possible by the award from Bank Indonesia Institute. The author is grateful to the reviewers, Prof. Dr. Raditya Sukmana and Prof. Dr. Dian Masyita, for their guidance in refining this paper. Thanks to Mr. Donny Setiawan for improving the writing and to BMI, BMM, BAZNAS, Ministry of Religion Affairs RI, STEI SEBI, UIN Jakarta, and all colleagues, for supporting this research
Islamic Endogenous Money: Evidence from the Islamic Banking System in Indonesia and Malaysia
Get PDFThis paper proposes a theoretical model of endogenous Islamic money and empirically analyses the endogeneity of Islamic money supply under fiat and fractional reserve systems. The causal relations between Islamic money and macro and financial variables are assessed using the autoregressive distributed lag (ARDL) model and error-correction modelling (ECM). The results suggest that the greater the maturity and the larger the asset share in the Islamic financial system, the better the endogeneity of money. They also reveal that the profit and loss sharing system can connect the economy to money, minimise the exogenous potential of the fractional reserve requirement system, and eliminate the exogenous feature of the fiat money system. Accordingly, the study argues that an Islamic endogenous money system can be developed in fiat and fractional reserve banking systems
How Has the COVID-19 Pandemic Affected the Real and Monetary Sectors in Indonesia?
Get PDFThis study aims to find empirical evidence for the effects of the Covid-19 pandemic on the Indonesia real and monetary sectors. The real sector condition is represented by fluctuations in the farmer exchange rate in ten provinces; this rate has direct and indirect effects on farmers’ welfare. On the other hand, the condition of the monetary sector is illustrated by shifts in the consumer confidence index due to fluctuations in Islamic and conventional financial system indicators. We used a panel regression model to examine the farmer exchange rate and a binary logistic regression model to examine the consumer confidence index. The results statistically demonstrate that the pandemic conditions have affected both the real sector and the consumer confidence index of the Islamic financial sector. However, the pandemic has not affected the consumer confidence index of the conventional financial sector. This phenomenon exists because of the speculative action from conventional investors in taking risks and opportunities, which are forbidden in the Islamic context. The indicator which shifts the conventional consumer confidence index is the composite stock index (IHSG), while the Islamic consumer confidence index is shifted by changes in the Islamic money market rate, the Jakarta Islamic index and the Islamic banking capital ratio. Our empirical findings conclude that, in such a critical situation, the behaviour of conventional and Islamic consumers is totally different, thus influencing consumer confidence in each sector
Islamic Banking Development and Financial Inclusion in OIC Member Countries: The Moderating Role of Institutions
Get PDFThis study argues that the effect of Islamic banking development on financial inclusion is enhanced when there exist better quality institutions. A cross section dependency test, cointegration test, causality test, and system GMM (generalized method of moments) are applied to achieve this objective. Employing panel data from 30 Organisation of Islamic Cooperation (OIC) member countries over the period 2013-2018, the analysis suggests that Islamic banking promotes financial inclusion. Furthermore, it documents evidence which suggests negative and significant coefficients of the interaction between Islamic banking development and institutional quality. This means that Islamic banking development works well in promoting financial inclusion in countries with low institutional quality. 
Understanding the Impact of Institutional Factors on Asnaf Sustainability: A PLS-SEM Approach
Get PDFThe study looked at the level of sustainable development, whether the institutional factors or often, the demographic changes over time, that might have an impact. The data was meticulously collected through 427 returned questionnaires among zakat recipients in eleven districts of Kedah, Malaysia, and it was thoroughly analysed using Partial Least Square – Structural Equation Modelling (PLS-SEM). This study found that the asnaf receives very minimum assistance and that can hardly empower them. Accordingly, it’s imperative that the fund needs to be geared towards long term productive use. The results support that the institutional contributory performance (ICP) having a positive effect, and the level of sustainable development of zakat recipients (SDZR) do increase after receiving zakat, but there are issues that need careful addressing. The study further examined the moderating role of demographic factors, such as earnings, age, marital status and gender, and witnessed that after zakat, all parameters improved, though individual moderating variables yet to show any significance. The study initiated a newer dimension through incorporating before-zakat and after-zakat scenarios in examining the comparative impact on SDZR, and likewise understanding the recipient’s level of Islamic self-actualisation
Impact of Islamic Banking Inclusion on SME Employment Growth in Nigeria
Get PDFDespite the considerable resources devoted to SMEs by Islamic banks worldwide, and Nigeria in particular, there has been no rigorous empirical evidence regarding the effectiveness of Islamic banking inclusion on employment growth in SMEs globally. This study fills this gap by analysing the effectiveness of access to Islamic banking financing in promoting MSME's growth in Kano Metropolis, Nigeria. We focus on the impact of the credit lines facilitated by Jaiz Bank Plc in fostering firms’ growth measured in terms of employment. A survey based on a quasi- experimental approach was employed and the data were collected by means of a questionnaire distributed to a sample of 385 MSMEs' beneficiaries and non-beneficiaries of Islamic bank financing in Kano Metropolis, Nigeria. Using difference-in-difference and propensity score matching techniques to deal with selection bias, the study found significant positive effects on MSMEs’ employment growth. In addition, the paper highlights the important role of Islamic bank financing in mitigating the unemployment crisis in Nigeria. The paper recommends that improvement of the Islamic banking system by employing PLS financing, especially Musharaka, could foster MSMEs' financial inclusion and job creation
Why Do Muzaki Pay Zakat Through Institutions? The Theory of Planned Behaviour Application
Get PDFThis research investigates the factors that influence the intention of paying zakat maal through zakat institutions. By paying zakat in such a way, muzaki can support zakat institutions in eradicating poverty through a broader and deeper distribution of zakat funds. However, the realisation of zakat collection remains low compared to its potential, which means that the number of muzaki who pay zakat through institutions also remains limited. The research applied the extended theory of planned behavior (TPB) framework with knowledge, trust, and perceived ease of use as additional variables to address the issue in question. Subsequently, an online questionnaire was conducted using the purposive sampling method, which generated 383 respondents. The primary data were examined using the PLS-SEM method. Based on the results, all the proposed hypotheses were accepted. Considering that paying zakat via institutions provides a better way to assist rightful recipients, various suggestions are made to zakat managers, policymakers, and muzaki. The research highlights a new perspective by examining the intention of paying zakat maal through institutions with the additional variables of knowledge, trust, and perceived ease of use
Does Digital Financial Inclusion Matter for Bank Risk-Taking? Evidence from the Dual-Banking System
Get PDFThis paper examines the nexus between digital financial inclusion (DFI) and levels of bank risk-taking, using a sample of 283 commercial banks (Islamic and conventional) from six countries over the period 2011 to 2019 and deploying panel-corrected standard errors, two-stage least squares-instrumental variables and dynamic panel two-step generalized method of moments estimators. The findings suggest that Islamic banks take more risks than their counterpart conventional banks. The empirical evidence also indicates that an increase in the DFI index score reduces the overall level of bank risktaking and increases that of banking stability for commercial and conventional banks compared to Islamic ones. A strong association between DFI and bank risk-taking suggests that DFI not only reduces the default risk, leverage risk and portfolio risk of banks, but also increases financial mobility in the sample countries. Consequently, an inclusive digitalised banking industry ensures sustainable economic growth, which is likely to help maintain financial sustainability in times of crisis such as the Covid-19 pandemic. Our results are shown to be robust by various robustness checks. The study contributes to both the Islamic and conventional banking, as well as the digital financial inclusion, literature. The findings of the study provide various policy implications for policymakers and standard-setters in the countries examined
An Assessment of the Intention to Accept the Shariah-Compliant Crowdfunding Mode of Financing in Borno State, Nigeria
Get PDFMicro-, small and medium-sized enterprises (MSMEs) face numerous obstacles, such as a lack of funding, which hinder their growth and expansion. They must have access to long-term funding to improve and modernise their operations competitively. This study aims to incorporate Shariah-compliant crowd funding among MSMEs in Borno state in Nigeria. It applies partial least squares structural equation modelling (PLS-SEM) on a sample of 341 MSMEs and recommends the need to educate and enlighten them about the benefits of Islamic crowdfunding. The study also recommends the need to produce guidelines that will help develop a legal and regulatory framework for the incorporation of crowdfunding into corporate financing structures. Finally, it is recommended that religious leaders at various levels organise educational programmes on the importance of Shariah-compliant crowdfunding
Advancement and Setback in Islamic Banking Productivity in ASEAN: Do Technological Changes Matter?
Get PDFThis study applies Data Envelopment Analysis (DEA) to measure the efficiency level of 24 Islamic banks in four ASEAN countries (Indonesia, Malaysia, Brunei Darussalam and Thailand) over the 2010-2019 period. Specifically, this study uses the Banker, Charnes and Cooper (BCC) model as a basic approach in DEA with variable return to scale assumption. The Malmquist index was also employed to explain whether the changes in Islamic banks’ efficiency and productivity is affected by the efficiency changes or technological changes. According to the Malmquist index scores on total factor productivity (TFP) change, 17 of the 24 Islamic banks (or 70.8 percent) achieved an improvement in productivity over the research period, with Thailand recording the highest productivity level increase. Overall, the most productive Islamic bank was Affin Islamic Bank Berhad. Finally, it was observed that there was a productivity growth in the last two years of the period, namely 2017-2018 and 2018-2019. The productivity change was driven more by efficiency than by technology, implying that Islamic banks in ASEAN countries must improve the technological aspect