Journal of Islamic Monetary Economics and Finance (JIMF)
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House Price Changes and Islamic Bank Stability: Evidence from Malaysia
Get PDFIn this paper, we examine the relationship between house price and Islamic bank
stability in Malaysia. In particular, in relating to Islamic bank stability to Malaysian
house price changes, we evaluate the nature of the relationship from the perspective
of nonlinearities. The Autoregressive Distributed Lag (ARDL) model is applied to a
sample that consists of 9 Islamic banks in Malaysia for the period of 2000-2016. Our
results indicate that there is an inverted U-shaped relationship between house price
and Islamic bank stability in the long run. Meanwhile, the relationship is insignificant
in the short-run. To put it differently, initially, the higher house prices, the more stable
the bank. Then, the impact of house prices on bank stability becomes negative when
house prices surpass the threshold point. As far as the bank-specific characteristics
are concerned, the cost to income ratio is found to significantly and negatively related
to the bank stability. Such a result has policy implications in which it is crucial for
achieving balance in the housing market, and efficiently managing the cost is equally
important to ensure Islamic bank soundness
Consumer Purchasing Behavior of Halal Cosmetics: A Study on Generations X and Y
Get PDFThe halal economic industry is currently developing not only in Indonesia, but also on the global level. The global economic sector is not only limited to the sharia financial sector and halal food, but also halal cosmetics. The increasing number of Muslim population in the world has caused the increasing demand for halal cosmetics, as many other factors influencing the demand for halal cosmetics. The purpose of this study is to examine the influence of halal knowledge and Islamic religiosity toward customer behavior that is mediated by consumer attitude. Data were collected from questionnaires distributed to respondents in Surabaya, Sidoarjo, and Gresik, East Java, Indonesia. 145 respondents were identified as generation Y, while 40 as generation X. Primary data were analyzed by PLS. The results showed that halal knowledge and Islamic religiosity had a significant effect on consumer behavior perfectly mediated by attitude. Such results give implication to the halal cosmetics company to design appropriate marketing strategies in order to increase Indonesian exports for halal products, so it could help the national economy
Financial Inclusions, Financial Stability, and Income Inequality in OIC Countries: A GMM and Quantile Regression Application
Get PDFThis paper examines the relationship among financial inclusion, financial stability,
and income inequality in some selected Organization of Islamic Corporations (OIC)
countries. Data were analyzed using dynamic panel estimation and quantile regression
for 47 OIC countries during 2006 - 2016. The results of dynamic GMM reveal that
financial inclusion has a positive and significant effect on both financial stability and
income inequality. This implies that increased financial access helped narrow the gap
between the rich and poor as well as provided financial stability in OIC countries.
Therefore, policy makers should strive to design policies that will make financial
services more available and affordable to the masses. Thus, it is safe to conclude that
availability of both Islamic and conventional finances in OIC countries contributes
positively to the development of the countries
How Feasible Is a Convertible Ijarah Contract for SME Financing?: A Simulation Approach
Get PDFIslamic financial institutions have relied for decades on margin-based contracts to
provide financing for the business sector, despite the basic idea that Islamic finance
is expected to provide an equity-based or a profit and loss sharing (PLS) contract.
This fact raises the need to encourage the use of a margin-based instrument with an
innovative scheme that allows for conversion of the contract into a PLS-based contract.
Moreover, we propose a convertible ijarah contract to fill this need. A convertible ijarah
contract is an ijarah (rent) contract that is convertible to a PLS contract according to
the Islamic financier’s decision. In this study, we simulate three scenarios of project
financing with (a) murabaha as a margin-based contract, (b) musharaka as a PLS
contract and (c) a convertible ijarah contract. The aim is to evaluate whether the
convertible ijarah contract will provide a higher return for the financier compared to the
other contracts. The main input of the simulation is nine sectors of Indonesian SMEs’
financial performance. We found that when the financial performance of Indonesian
SMEs was measured by short-term financial performance, the convertible ijarah
contract outperformed the murabaha contract for all sectors but did not outperform
the musharaka contract, except for low-margin sectors. However, when the financial
performance of Indonesians SMEs was measured by long-term economic performance,
we found that the convertible ijarah contract outperformed the murabaha contract and
musharaka contract for almost all sectors.
Kami menemukan bahwa kontrak ijarah konversi mengungguli kontrak murabahah dan
 
The Impact of Halal at Thayyib and Consumption Ethics on Economic Growth: An Economic Tafsir of Al-Baqarah 168
Get PDFThis study investigates the contribution of Islamic banks and Islamic windows to the growth of the Nigerian economy. Data were obtained using structured questionnaires. 379 copies of questionnaires were administered based on the sample size obtained via the use of Taro Yamane formula. 367 questionnaires were successfully retrieved. Variables such as deposit activities, loan activities, and perception of bank employees were also adopted as explanatory or independent variable and dependent variable respectively. To support the study hypothesis were also formulated. For the analysis, measures of central tendency (tables, frequency and percentages) and inferential statistics (Logit Regression) were used. The result revealed that the variables (i.e. deposit and loan activities) have a positive impact on the growth of Nigeria’s economy because the probability values of the variables (P=0.003 and 0.019) were less than alpha (α =0.05) level of significance. In other words, this implies that Islamic banks and windows have largely supported private consumption, business investments of its customers, aid government spending via sharia bonds (sukuk) to fund developmental projects of its customers. The study concludes that Islamic banks and windows have contributed towards the growth of the Nigeria’s economy. Furthermore, the study recommends that there is need for creating the necessary legal framework to ensure its smooth operations, intensify efforts on creating public awareness, rolling out more sharia compliant products that can take care of the peculiarities that exist in business environment and training and retraining of staff on effective Islamic banking
Qard-Al-Hassan as a Tool for Poverty Alleviation: A Case Study of the Fael Khair Waqf Program in Bangladesh
Get PDFThe central focus of the Islamic economic system is on socioeconomic justice and the
overall welfare of society, especially at the bottom of the pyramid segment. Qard-al-
Hassan, alongside zakat and sadaqah, is one of the instruments for the redistribution
of income and wealth from the rich to the poor in Islam. In 2007, Bangladesh was
struck by super cyclone SIDR, leaving 3,406 people dead. Moreover, SIDR caused
unprecedented damage to homes, crops and livelihoods. The Fael Khair Waqf (FKW)
Program came as a response to the urgent need to assist the victims of the cyclone and
initiated an interest-free micro-loan (Qard-al-Hassan) scheme to restore the livelihoods
of a large segment of the victims and to lift them out of poverty. While investigating
the effectiveness of Qard-al-Hassan in poverty reduction, this paper also examines
the FKW program as a case study. Analysis was conducted of 1600 households using
an independent sample t-test and logistic regression to investigate to what extent the
program has been effective in reducing poverty. The findings of the logistic analysis
are that the probability of being poor for FKW participants is around 1.46 times lower
than for non-participants. Moreover, the Qard-al-Hassan of FKW lowers the cost of
borrowing significantly and hence participants can accumulate more assets, which
might help them to improve their economic status. Overall, the effectiveness of the
program implies that development practitioners and researchers should promote the
outreach of Qard-al-Hassan so that the extreme poor can easily avail themselves of the
services
Sharia-Compliant Credit Card Exposure and Utilisation in the Growing Digital Economy
Get PDFMany cashless payment tools have been introduced into the Indonesia market in
the form of electronic money cards. The Sharia-compliant credit card is a traditional
electronic payment tool, but is provided by only two Islamic finance institutions among
the many in Indonesia. The increase in Sharia-compliant credit card transactions over
time may mean banks are exposed to non-performing risk. Customer behaviour varies
in the use of such cards, and this may cause unpredicted results with regard to card
performance. Therefore, the purposes of this study are: 1) to identify the behaviour
of Sharia-compliant credit card users and 2) to analyse the factors which influence
this behaviour. The primary data were gathered by distributing questionnaires with a
total sample of 170 respondents and were analysed by employing structural equation
modeling. The research shows that gender, age, and education influence perceived
behaviour control, and that expenditure influences subjective norms. Customers’
attitudes, subjective norms and perceived behaviour control are proven to influence
their intentions, while customers’ intentions, perceived behaviour control and income
influence their behaviour when using Sharia-compliant credit cards. For further
sustainable inclusive growth, issuers should pay attention to education for specific
audiences
Socio-Demographic Determinants of Credit Rationing at Baitul Maal wa Tamwil in Indonesia
Get PDFThis study seeks to identify credit rationing socio-demographic determinants to Islamic microfinance to achieve welfare improving goals in three Bottom of the Economic Pyramid (BOP) regions: Yogyakarta, East Lombok and Makassar, South Sulawesi, Indonesia. Another primary focus of this study is to highlight the suggested solutions from Islamic microfinance practitioners to overcome the challenges in the practice of credit rationing assessment. 2,650 borrowers at the BOP in 26 Islamic Microfinance Institutions (MFIs) in Indonesia were selected based on cluster sampling and purposive sampling methods. A questionnaire is adapted from several previous studies. Multinomial logistics regression is used in this paper. Results show that the determinant of credit rationing based on socio-demographic factors, reflecting certain socio-demographic factors that include age, gender, account balance, dependents, salary, monthly income, formal education, access to financing facility in the previous year, distance, and years of saving, has significant influence on the probability of getting financing. Thus, in order to reduce the credit-rationing problem, the major implications from this study are that Baitul Maal wa Tamwil (BMT) should enhance the participation of women, using monthly income rather than salary determinants, provide credit plus financing and realize a one village one BMT program. The solutionswould enhance the participation of BOP borrowers at BMT
Modelling SMEs’ Behavioral Intention to Adopt Islamic Crowdfunding-Small and Medium Enterprises (ICSMEs) Model as a Source of Financing in Malaysia
Get PDFThe present study has proposed Islamic Crowdfunding-Small and Medium Enterprises (ICSMEs) model to assist SMEs in meeting their need to access external financial services in Malaysia. Upon the proposed model, this study examines the behavioural intention of SMEs to use ICSMEs model. The primary data are collected from the survey administered to SMEs in the Klang Valley (n=250) and the analysis is conducted using Partial Least Squares (SmartPLS). Furthermore, the model has been validated its acceptance in the field by adopting the Technology Acceptance Model (TAM). This study has revealed that both the perceived usefulness and perceived easy to use are found to have a positive impact on the behavioral intention of SMEs to use ICSMEs model, which later assist them to access to financial services in Malaysia. Furthermore, perceived easy to use has a positive relationship and direct effect with perceived usefulness of SMEs to use the ICSMEs model. The findings of this study can be used to develop a specific framework in which to examine other components of using the ICSMEs model’s behavior and to plan appropriate intervention strategies to increase financial accessibility by SMEs
Halal Governance in Indonesia: Theory, Current Practices, and Related Issues
Get PDFConsidering Indonesia’s target to lead halal industry worldwide, the discussion
upon the current practices of halal governance in the country is critical to get into a
comprehensive insight. Several major drawbacks within the previous studies on this
topic is found along the followings. There has never been a study that has specifically
discussed the term of halal governance substantively or comprehensively investigated
the subject matters in Indonesia. Driven by this gap, we set out to review halal
governance practices in Indonesia by employing a qualitative method of documentary.
In doing so, the present paper firstly discusses the substantive materials upon lines
of defense in halal governance that covers the four themes, which the present paper
particularly reviews as the current practices in Indonesia. From the present discussion,
this paper offers the novelty on the explanation of lines of defense in halal governance,
and that of the current practices in Indonesia along with the related issues presently
associated with it. In addition, this paper further delivers the applicable advises for
the improvement of the practices. This study is relevant for the stakeholders of halal
industry including the domestic government agencies, practitioners and academics