Journal of Islamic Monetary Economics and Finance (JIMF)
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The Use of Social Media in Banks to Engender the Empowerment of Women and Their Financial Inclusion in Arab Countries
Get PDFThis study aims to classify and interpret the interacted communications between banks and users on social media and understand the role of these digital platforms to enhance woman empowerments and financial inclusion in banks in Arab countries. 100 users of banks’ social media were selected from 5 leading banks in 5 Arab countries and their interactive utterances were classified, analyzed and interpreted. Content analysis tools were applied. The study reveals these key results: First, the use of social media in banks entails two-fold empowerment dimensions that are mutually beneficial for Users and Banks. Second, both flows of utterances either from “User to Banks” or “Banks to Users” demonstrate that the highest ratios of the shared content are more closely associated with financial inclusion dimensions than user’s empowerment aspects. Third, women are found more engaged in social and emotional involvements than men who show a relatively higher interest in banks’ financial services and products. It is also found that Banks use social media to raise social and economic themes that support women in the region. However, the second and third results imply a gender gap in financial inclusion since females still lag behind. This study is different by highlighting the power of banks’ social networks to trigger important gender and economic development themes in a highly conservative society and contribute to literature by analyzing and interpreting the shared content from three extensive outlooks which yield ample details and draw implications for banks’ management and social media policy makers and regulators
Online Payment: Individual Characteristics and Digital Financial Inclusion in OIC Countries
Get PDFDigital financial inclusion (DFI) is a prominent issue in the digital era, since it focuses on the use of technology to serve unbanked people at low cost. The adoption of mobile money platforms that allow users to make efficient peer-to-peer and real-time transactions is one aspect of the DFI agenda. This study aims to investigate the determinants of mobile money usage using data derived from the 2017 Global Financial Inclusion survey conducted by the World Bank and Gallup and applying probit regression and the Heckman selection model to check robustness. Even though access to a financial institution is relatively low, the percentage of mobile money usage in Organisation of Islamic Cooperation (OIC) countries is slightly higher than in non-OIC countries and worldwide. The rate of adoption of mobile money is higher for individuals making online transactions, with more educated and more prosperous males tending to be more included in the use of digital financial services. The U-shape hypothesis for the relationship between age and the use of mobile money is not supported. Our research contributes to the theoretical development of the Unified Theory of Acceptance and Use of Technology 2 in illustrating the use of mobile technology. The empirical results are recommended for use by practitioners, regulators and policymakers in creating and fostering a sound ecosystem for digital finance development
Progressive Financing in Indonesian Islamic Microfinance Institutions: Improved Monitoring or Distinctive Commercialisation?
Get PDFMicrofinance institutions (MFIs) play pivotal roles to providing financing and services to micro and small enterprises (MSEs) in Indonesia. Islamic MFIs, which follow Shariah principles in their operations, aim not only to provide financing, but also to improve the socioeconomic conditions of poor people. There is heightened interest in the factors influencing the development of MFIs, such as relationship lending. This study aims to explore the effectiveness of such lending and the uniqueness of the implementation of social purpose in Islamic MFIs. The paper adopts a quantitative methodology, using cross-sectional survey data from 1,001 microloan borrowers from five MFIs, three of which are Islamic MFIs which provided financing in 13 regions in Indonesia in 2018. The results show that Islamic MFIs do not differ in the implementation of relationship lending. Furthermore, there is a likelihood that they are able to be more focused on profit-oriented transactions ensuring sustainability, due to their unique characteristics, as they have Baitul Maal with the social instruments of zakat, infaq and sadaqa to provide social-oriented transactions to improve outreach to the poor. The study enhances our understanding and adds knowledge to the existing literature on Islamic MFIs, especially in Indonesia
A Meta-Analysis of Islamic Microfinance: Case Based Evidence from India
Get PDFThis study examines Islamic microfinance as an important contributor to both the economic and human development of India. We are aware that conventional microfinance products have flourished in India; however, these products do not fulfil the needs of all Muslim clients. Taking small glimpses of Islamic microfinance (IMF), we can say it is working successfully in Muslim countries. From the meta-analysis we classify the literature into seven categories, viz. social benefits, religious values, business enterprises, poverty alleviation, sustainable development, rural development and economic development. The contribution of research papers has risen across the literature review and there has been a sharp rise in new facts pertaining to Islamic microfinance in India. As a diagnostic check, all seven factors of the meta-analysis of IMF contain evidence for the case study of India. Bait-un-Nasr is an urban co-operative credit society, located in Mumbai, India that has practised all of the factors extracted by the meta-analysis. This paper provides a roster of emerging projects accompanied by a comprehensive review of literature that will be useful to both academicians and practitioners for studying existing research and contemporary future research
Can Islamic Microfinance Alleviates Poverty in Indonesia? An Investigation from the Perspective of the Microfinance Institutions
Get PDFThis study examines the poverty alleviation efforts undertaken by the Islamic microfinance institutions (IMFIs) in Indonesia. We focused on the role played by the IMFIs in view of their direct involvements in the process of dealing with the borrowers, and their better understanding about the financial inclusion agenda as well as the financial guidelines and regulations issued by the relevant authorities. In methodology, a total of 34 managers of Baitul Maal wat Tamwil (BMTs) were taken as respondents from the Jakarta, Bogor, Depok, Tangerang and Bekasi (JABODETABEK) areas. A two-step approach was adopted in arriving at enriching findings: first, a survey questionnaire was distributed to the respondents, and subsequently, an in-depth interview was conducted to outline data related to the model design. The findings of this study highlight specific dimensions to improve financial inclusion among the poor. Apart from providing important inputs for better decision-making for the BMTs to further enhance its role in poverty alleviation, this study suggests a variety of strategies to warrant success of poverty alleviation efforts by BMT
Islamic vs Conventional Funds within the Family: Selectivity Skills and Market Timing Ability
Get PDFABSTRACT
The aim of the study is to compare the performance of Islamic mutual fund (IMF) and conventional mutual fund (CMF) within the same family, in addition, to examine the performance of fund family in Malaysia for the period from 2007 to 2018. The study used eight measures of performance, raw returns, excess returns, Sharpe ratio, Treynor ratio, Jensen alpha, Carhart four-factor model as selectivity models, In addition to Treynor & Mazuy (TM) and Hendrickson & Merton (HM) as market timing models. The study contributes by investigating and compares the performance at the family level. The results reported that IMFs exhibited some fund selection ability over CMFs. However, both types of funds displayed poor market timing ability. At a fund family level, the results show the fund families exhibited good fund selections skills, at the same time, fund family still exhibited poor market timing ability. The novel result of this study that the difference in performance between Islamic and conventional funds shrank compared to the results of previous studies. Due to the common advantages offered by the families for both types of funds. The findings are important to investors because the results provide new evidence about the fund families' performance. Most investors follow the top-down approach, where mutual fund investors initially choose fund families before deciding which funds to hold. In addition, the results are important for managers to decide which types of funds that they may issue in their own families, so that they can perform well in the future
Sustainability-Disclosures and Financial Performance: Shariah Compliant vs Non-Shariah-Compliant Indonesian Firms
Get PDFWe investigate the impact of sustainability-performance disclosure (SPD) on firm performance on a cross industry sample of 71 firms over the period 2011-2018. We also compare the relationship between shariah compliant firms (SCFs) and non-shariah-compliant firms(NSCF). To control for possible issues of unobserved heterogeneity, endogeneity and autocorrelation, we use the system generalized method of moments approach. We found that disclosure of sustainability performance increases a firm’s financial performance. Firms which disclose information on their sustainability practices were found to have higher earnings on assets and equity, which clearly supports the argument of information asymmetry. In the comparison of shariah-compliant and non-shariah-compliant firms, it was found that SCFs are at an advantage by being shariah compliant and that disclosure of sustainability performance increases the financial performance of such firms, whereas for non- shariah-compliant firms, the impact was found to be negative. One of the main findings from the research is that while firms’ involvement in corporate sustainability activities is encouraged, they also need to disclose any related information to their stakeholders, general public to capitalise on this investment, in return for a good reputation and consider going shariah complaint. Our study further recommends that the management of firms in Indonesia should focus on shariah compliance and consider sustainability-practice and sustainability-performance disclosures with a positive mindset, recognising them as means of gaining an advantage rather than as an obligation
Exploration of Agent-Based Simulation: The Multiplier Effect of Zakah on Economic Growth
Get PDFZakat plays an undeniably significant role in social life. The enforcement of zakah in early Islamic history is evidence that it is a powerful tool for fostering economic growth. The economy under the reign of Caliphate Umar Ibn Abdul Azis even achieved a surplus, with no one having the right to receive zakah. Recent studies have attempted to link the role of zakah and economic growth qualitatively by arguing that zakah can contribute to economic development. However, the extent to which it has a multiplier effect on economic growth has not been examined. Considering this research gap, this study examines such an effect on economic growth, as represented by Gross Domestic Product (GDP). To capture the full impact of zakah on aggregate production, two scenarios are conducted, namely the economy with and without zakah. The simulation results show that zakah can promote aggregate production. On the other hand, the economy experiences lower aggregate production when there is no zakah. An agent-based computational model (ABM) simulation is employed to run the simulation. The application of ABM in this study is intended to introduce the use of computational study as an alternative method of developing research in Islamic economics
Zakat and SDG 6: A Case Study of BAZNAS, Indonesia
Get PDFRecent zakat distribution by the National Board of Zakat, Republic of Indonesia (BAZNAS), such as the construction of private lavatories for underprivileged households, have contributed to the idea that zakat promotes the sustainability of clean water and sanitation (SDG 6). However, this notion demands detailed academic explanation to better understand it systematically. This paper thus aims to explore the degree to which the toilet construction project has benefitted its recipients. This case study of BAZNAS’s project in Kendel, Boyolali, Indonesia, employs a qualitative approach based on participatory observation and semi-structured interviews. The findings explain the perspectives of local community after receiving the assistance, including the identification of reduction in numbers of local people affected by diarrhoea. This information may validate the relationships between health, water and sanitation. Furthermore, the findings capture the involvement of local government in the project execution. Thus, social and practical implications are revealed by this study. This study pioneers the establishment of scholarly-based evidence about the programme of individual toilet construction executed by BAZNAS, and about the perspectives of its recipients in the wake of receiving the aid
Do Workers’ Remittances Promote Economic Growth? A Case Study of Pakistan
Get PDFThis study investigates the role of workers’ remittances in promoting economic growth in Pakistan, using data from 1976-2017. Remittances are an important source of Sharia-compliant (mostly) FX inflows, which may contribute to the economic development of many Islamic and non-Islamic economies. Nonetheless, they are more relevant to Islamic economies, as they could potentially reduce the requirements of interest-based FX financing from donor agencies and/or from global capital markets. The impact of workers’ remittances on the economic growth of Islamic developing economies remains a little explored area. Our research, which employs a case study of Pakistan, is first in this direction. We used the GMM estimation procedure to obtain efficient estimates in the presence of endogeneity and simultaneity bias. Our estimates show that an increase in remittance inflows positively affects the economic growth of Pakistan. The increase in per capita GDP could be primarily due to an increase in the consumption of low-income recipients. It is likely that this consumption demand promotes investment activity; however, the study could not establish the impact of remittances on such activity