Journal of Islamic Monetary Economics and Finance (JIMF)
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Investigating Zakat Payment of Thai Muslims
Get PDFThis study examines Zakat payment among Thai Muslims whose wealth exceeds the minimum threshold (Nisab), thus are obliged to pay Zakat. It attempts to assess whether the amount of Zakat paid fulfils the requirement and to determine the amount of Zakat overpaid or underpaid, based on 2.5% of zakatable wealth, as measured by income from different sources. Using 460 questionnaires collected from Thai Muslims aged 15 years old and over who pay Zakat in 2015, this study employs a two-part model, in which the first part analyses the probability of fulfilling or not fulfilling an obligation to fully pay Zakat using the Multinomial Logit method of estimation, while the second part deals with the amount of Zakat overpaid/underpaid by using the Ordinary Least Square. It is found that the probability of fulfilling the required Zakat will increase and the amount of Zakat underpaid will decrease, if a person pays Zakat more than once a year, or the value of net assets of a person increases. In addition, for those whose Zakat payment is already higher than the amount required, trust and accountability of intermediate institutions or individuals who manage Zakat will positively affect the amount of Zakat overpaid considerably. Therefore, official organisations responsible for collecting, and distributing Zakat at the community, provincial, regional as well as national levels should be established with integrity, transparency, and good governance so that people would be encouraged to pay more Zakat and the lives of those in need can be lifted accordingly
Does Fractional Reserve Banking System Exist in Indonesian Islamic Banking?
Get PDFFractional Reserve Banking is the banking and financial system that have been applied in most countries around the world. This research aims to look at the impact empirically and at the contributions given from the components of fractional reserve banking against inflation that occurs in Sharia Commercial Banks and Sharia Business Unit. The fractional reserve banking components covered in these studies are statutory reserve requirement, total deposit, total financing, Mismatch Ratio, and Total non-performing financing. This research is using VAR VECM and ECM as analysis tools and also collecting secondary data from OJK that spanned from June 2014 to September 2018. The results of this research have found that Indonesian Islamic bank is doing the fractional reserve banking system (FRBS). Furthermore, the largest contributor of FRBS in Sharia Commercial Bank (BUS) is the Statutory Reserve Requirment while in sharia Business Unit the results showed that Third Party Fund and Mismatch ratio gives the greatest contributions against inflation. Interestingly, the UUS has greater contribution and shock to the inflation if we compare to the BUS. To prevent the effect of it in the future, controlling mismatch and introducing the irrevocable investment account might be the solutions
Alternative of Monetary Policy Indicator: Panel Data Analysis from Islamic Banks in Malaysia
Get PDFThe monetary policy indicators such as monetary aggregates, interest rates and Monetary Condition Index (MCI) are the traditional monetary policy indicators used in order to obtain early indication of the impact of monetary policy. These indicators could function as appropriate monetary policy indicators that will provide information to the monetary policy makers. The development in Islamic financial system however creates a challenge to find a monetary policy indicator, which is in conformity with Islamic teaching. Therefore, this paper is aimed to examine the future growth of nominal GDP as an alternative variable for monetary policy indicator in Islamic monetary system. The investigation will benefit from data of 17 Islamic banks in Malaysia which implement full fledge or Islamic windows scheme spanning from 2005 to 2010. GMM system method is used to analyze the data in hope to validate the appropriateness of the alternative monetary policy indicator. The result suggests that the future growth of nominal GDP is significant as monetary policy indicator and could be applied by the central bank in implementing the monetary policy especially in the dual banking system
THE Integration of Islamic Commercial and Social Economy through Productive Waqf to Promote Pesantren Welfare
Get PDFA pesantren (Islamic boarding school) as an Islamic educational institution based
on self-financing system has implemented waqf as a pillar of its development and
become a potential waqf asset development. The productive waqf is considered as
a key instrument for providing funds to actualizing its educational program. Since
both productive waqf and pesantren emphasize sustainability, and since productive
waqf can assist to support the process of education in pesantren, the study aims to
investigate an integrated Islamic social and commercial economy model applicable in
pesantren. This will ensure utilization of the combined resources of productive waqf
and pesantren in promoting pesantren welfare. The study focuses on 263 operational
chief, assatidz or teacher, musyrif, musyrifah or santri companion and santri or students
in Pesantren in Java and Sumatra using. Structural Equation Modeling (SEM) adopted
to examine the relationship among the five constructs i.e., productive waqf, business
unit, project financing, human resource and pesantren welfare. While the reliability
and validity are established, the structural relationship between the constructs reveals
that the integrated model has a strong relationship with the pesantren welfare in
many ways. In relation with business unit and profitable commercial activities, human
resources have its significant role to assist pesantren tries its level best to realize
developed productive waqf. Specifically, the result shows all five constructs have
significant impact in promoting pesantren welfare, which suggests that the model as
well as the instrument should be further implemented in pesantren
Developing Fintech and Islamic Finance Products in Agricultural Value Chain
Get PDFTo meet the global population needs, it is projected to at least eighty billion dollars in investment per year to support the food security until 2050. It is widely known that the agriculture financing growth has stalled due to many reasons. Islamic finance has potential to spur the growth of agriculture financing to promote global food security. Meanwhile, agriculture in Indonesia is still nowhere to its potential. It is hindered by an inefficient and underdeveloped downstream segment, low access to financial and technology. This is a huge opportunity for Islamic finance in helping to bridge the gap through value chain finance approach as one of the strategies to reduce risk and give socio-economic spill-over effect along the chain. Islamic finance can promote agricultures sustainability and a more efficient process with FinTech enabled platform. The multiple case study proposes a sharia compliant community-based financing model in agricultural value chain practice with FinTech enabled platform. The result is this model integrating all actors from different market segmentation (landowners, suppliers, farmers, brokers, retailers, investor) into an Islamic value chain financing platform. However, determining buying intention, partnership establishment, and technology infrastructure are pivotal for its future implementation
Proving Al-Maqrizi’s Concept of the Determinants of Inflation: Cross Border Analysis
Get PDFThis research discusses the determinants of inflation according to Al-Maqrizi, one of
Ibnu Khaldun’s disciples. He argued that inflation is caused by natural and human
error factors; the latter include government corruption and the excess supply of
non-metal money. This study conducts a critical review of the work of al-Maqrizi,
ighatsatul ummah bi kasyfil ghummah, supported by a panel data regression of
cross-country data related to rates of inflation, rates of corruption and the number of
natural disasters. The empirical data show that the rate of inflation is positively related
to human error factors: corruption, tax and money supply. The results indicate the
relevance of al-Maqirizi’s postulates to the modern day economy. However, natural
disasters are not proven to be a significant factor for inflation at the country level. This
paper contributes to the importance of the study of classical Muslim scholars’ thinking
in order to understand current economic problems and ways of solving them
Muslim Customer Behavior in Halal Food Online Purchasing
Get PDFTo meet the global population needs, it is projected at least eighty billion dollars in investment per year to support the food security until 2050. Arguably, the agriculture financing growth has stalled due to many reasons, while Islamic finance has the potential to spur the growth of agriculture financing to promote global food security. Meanwhile, agriculture in Indonesia is still nowhere to its potential. It is hindered by an inefficient and underdeveloped downstream segment, low access to financial and technology. This is a huge opportunity for Islamic finance in helping to bridge the gap through value chain financing approach as one of the strategies to reduce risk and provide socio-economic spillover effect along the chain. Islamic finance could promote agricultures sustainability and a more efficient process with FinTech enabled platform. The multiple case studies propose a sharia compliant community-based financing model in agricultural value chain practice with FinTech enabled platform. The result is this model integrating all actors from different market segmentation, including landowners, suppliers, farmers, brokers, retailers, and investors into an Islamic value chain-financing platform. However, determining buying intention, partnership establishment, and technology infrastructure are pivotal for its future implementation
The Halal Aspect and Islamic Financing among Micro, Small, and Medium Enterpises (MSMEs) in Yogyakarta: Does Berkah Matter?
Get PDFThe development of Halal industry points out an amazing result around the world, including Indonesia. Surprisingly, the biggest contributor for its growth is Micro, Small and Medium Enterprises (MSMEs). In order to improve its significant contribution, the combination of Halal MSMEs and Islamic financing becomes very crucial. Nevertheless, there is still a lack of awareness of the concept and of intention from MSMEs regarding the penetration of Islamic financing. Therefore, this study investigates the determinants affecting the MSMEs’ desire for utilizing Islamic financing from the Islamic financial institution and encouraging Halal MSMEs to adopt Islamic financing in all business activities. A survey was conducted on 58 MSMEs in Yogyakarta, Indonesia by employing self-administered questionnaire as the main approach for data collection. By using Structural Equation Modeling- Partial Least Square (SEM-PLS) analysis, this study reveals that from the variables examined, Cost Benefit and Halal Awareness are the two factors that have impact on the Use of Islamic Financing. In addition, Cost Benefit and Reputation are the two variables that have direct impact on the Attitude of MSMEs toward Islamic Financing. Interestingly, this research also finds that Berkah as the key component in Islamic financing will be gained by MSMEs when they use Islamic financing instrument, and, thus will encourage Halal MSMEs’ intention to reuse Islamic financing. Moreover, service quality and competitiveness are very crucial to maintain the customer satisfaction. In addition, preaching Berkah as key component in Muslim life is an important agenda in the future development of Halal Industry, especially in MSMEs sectors
Examining the Outreach of Islamic Charity Based Microfinance Programmes: Empirical Evidence from Indonesia
Get PDFOne of the advantages of using Islamic social funds is the increased ability of microfinance institutions to provide financial services to the poor. This study aims to (1) investigates the characteristics of the clients of the Islamic Charity Based Microfinance (ICBM) program; (2) test whether the clients ICBM program are more vulnerable than the non clients group (3) discuss the rationale of why poor excluded from the zakat based microfinance program. The study was conducted in the microfinance program at zakat institutions namely Baitul Maal Muamalat (BMMI), BAZNAS, and Baitul Maal Beringharjo (BMB). A total of 236 respondents including clients and non-clients of three case study institutions were participated in this study. The data is analyzed using binomial logit model to evaluate factors affecting clients participation in ICBM programs in Indonesia. The findings show that clients and non-clients of ICBM have a similar demographic profile and the majority ICBM clients live above the national poverty line, yet they live perilously close to the edge of the poverty line. Using logistic regression, this study found that the higher the client’s income level, the higher the probability of their being selected in the program. This findings contradict with the existing Islamic microfinance literature that claim ICBM institutions in general could demonstrate a capacity to extend their services more widely to the poorest if Islamic charity is the main source of microfinance funding. This study suggests some possible barriers to include the poor in the microfinance including institutional selection policy and self exclusion factors
THE Microenterprising Size and Acceptance of Islamic Health Insurance (Takaful) in Northwestern Nigeria
Get PDFApplication of Theory of Planned Behavior (TPB) in Islamic Health Insurance (takaful) acceptance revealed mixed findings. Hence, the need for a moderating variable to explain the conflicting results. This paper examines the moderating role of size of microenterprise among the TPB variables. To achieve this end, quantitative methodology adopted through distribution of research questionnaires among the participants of the study. Results indicate that attitude, social influence, perceived behavioral control and size of microenterprises significantly influence Islamic Health Insurance (takaful) acceptance intention among microenterprises in northwestern Nigeria. The findings also revealed that size of microenterprise moderates the effect of social influence on Islamic Health Insurance acceptance intention, but it failed to moderate the influence of attitude and perceived behavioral control on Islamic Health Insurance acceptance intention in same context. It implied that size of microenterprises does not matter most in Islamic Health Insurance acceptance; nonetheless, the finding contributes to the Theories of Reasoned Action and Planned Behavior as it provides evidence on the significant moderating role of size on the effect social influence on Islamic Health Insurance acceptance intention among microenterprises