Journal of Islamic Monetary Economics and Finance (JIMF)
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Waqf Fundraising Management: A Proposal for a Sustainable Finance of the Waqf Institutions
Get PDFThis paper studies the theoretical structure of financing for Islamic philanthropy in the form of waqf or endowment by looking at the past and present forms of waqf. Waqf is expected to play a more important role to tackle current social and educational issues, where financial sustainability has become one of the greatest challenges faced by waqf institutions. Using the content and thematic analysis approaches, this paper reviews the practice of successful waqf institutions and summarizes the features that are significant to a successful waqf fundraising and management. The paper analyses three models that are suitable for innovation and management of waqf fundraising: Venture Philanthropy of Waqf Model (VPWM), Value-Based Capital Model of Waqf (VBCM), and Social Enterprise Waqf Fund Model (SEWF). The paper then investigates the possibility of applying the Management by Objectives (MBO) framework to improve the overall management of waqf institutions. The discussions are hoped to be able to contribute towards developing a better fundraising and management of waqf institutions
Designing Fitrah Money: A Maqasidic Discourse
No full textAcademic efforts in concocting a plausible alternative to fiat regime often staggers given inherent constrictions of Islamic jurisprudence and economic technicalities. Despite passionate advocacy of Muslim scholars, the campaign for gold dinar and silver dirham runs into allegations of being simplistic, anachronistic, regressive, unnecessary, and sub-optimal. Shunning the popular Maqasidic and historical approaches in debunking these claims, this paper highlights the need for a return to basics, the default factory settings as designed by God, and trowels a fitrah approach in evaluating gold and silver. As such, we proffer an open-minded approach in formulating an Islamically congruent currency and decry obstinate fixation with gold and silver, which hardly serve the best interests of ummah
Evaluation of Takāful Operators’ Efforts in Realising Maqasid al-Sharīʿah
No full textTakāful has emerged as a Sharīʿah-compliant alternative to conventional insurance, which is embedded in realising its underlying maqasid (goals or objectives) of Sharīʿah. Contrary to previous studies that attempted to provide evidence that takāful products are compliant with the Sharīʿah in practice of takāful operators (TOs), this paper seeks to take a different approach to investigate their compliance with the fulfilment of the three broad categories of maqasid al-Sharīʿah. In light of the theoretical perspectives of maqasid, each objective was operationally defined for statistical analysis. Six TOs from Malaysia were selected, and five-years’ data (2011-2015) have been collected from World Bank’s websites and annual reports. Secondary data were analysed through balanced panel data approach. Hausman test results indicate that fixed effect model is more appropriate in explaining the explored phenomena. Taxes paid by TOs were found to have a significant positive impact on economic growth and poverty alleviation while payment of zakah found to have a negative impact. The prohibition of riba (interest) should not be the only decisive difference between Islamic finance and its conventional counterpart. Islamic banks (IBs) and TOs are accountable toward Allah, and thus their activities should be directed toward the fulfilment of maqasid al-Sharīʿah. While earlier published literature has explored efficiency and profitability of TOs, the current paper has attempted to focus on the ability of TOs in serving the maslaha (public interest/common good of the community)
Evolution in Waqf Jurisprudence and Islamic Financial Innovation
Get PDFThis paper aims to analyse the evolutionary process in the jurisprudential structure of modern waqf (Islamic endowment) and underlines the scope of Islamic financial innovation through the mechanism of waqf. The paper proposes the innovative models of parallel waqf, waqf-based social and financial instruments, waqf-based ṣukūk, micro-takāful, and waqf-based commodity bank. The research adopts the qualitative approach and employs socio-legal research methodology for the analysis. The paper relies on desk-based research. Compared to the classical structure of waqf which was confined within the domain of a perpetual charitable institution, this paper finds that modern waqf has ushered in several new dimensions into its fold. Modern waqf is in the process of re-evolution. Waqf, in the current scenario, has evolved into a financial product, a property-conveyance tool, an instrument of contract, an investment tool, a risk mitigation mechanism and an incorporated entity. The scope of this paper is limited to analysing the jurisprudential evolution of waqf and its impact on the Islamic finance industry. It does not seek to discuss the overall role or impact of waqf on the society as a whole. This paper also does not endeavor to compare and contrast the mechanism and modalities of other philanthropic institutions vis-ā-vis waqf. This paper examines the jurisprudential underpinnings of waqf and their implications and applicability to the Islamic finance industry. The paper draws on the process of how the mechanism of waqf has already been employed to develop various innovative Islamic financial products and how this process can be a catalyst for further innovation in the Islamic finance industry. The main contribution of the paper is encapsulated in the analysis of how the jurisprudential structure of the modern waqf has been evolving in the last few decades to accommodate the modern needs of Islamic finance. It further enumerates a few innovative Islamic financial products which can be developed by exploiting the available flexibility in the evolved version of modern waqf
Responsiveness of Social Values and Real Gross Domestic Bruto on Money Demand in Indonesia
Get PDFThe purpose of this study was to determine the effect, estimates shocks and determine the contribution of , social values, real GDP currency, demand deposits wadi'ah, Mudaraba savings, deposits mudaraba and Islamic Bank Returns to money demand in Indonesia. Real GDP and social values theoretically able to increase money demand using each mechanism. Money demand represented by M2 with a composition comprising of fiat money, wadiah demand deposits, mudaraba savings and mudaraba investment deposits completed Islamic Bank return as balancing cost in Money demand. The research method used in this research is comparative quantitative. This research utilizes 8 (eight) variable which then unit root test, determining Lag Optimal, Cointegrate-Test, VECM Estimates, Impulse Response Function and Variance Decomposition are carried out. The results of VECM estimation showed that real GDP, fiat money, wadiah demand deposits, sharia return, mudaraba savings and mudaraba investment deposits are significantly influencing the amount of Money demand in long term. In short term, social values significantly influencing the amount of money demand in Indonesia. The results of Impulse response showed that real GDP positively responded by the M2. Then, social values positively responded, fiat money positively responded, wadiah deposits positively responded, mudaraba savings negatively responded, mudaraba deposits positively responded and sharia return positively responded by the M2IS. Variance decomposition results showed that social values has the biggest contribution, then followed by demand deposits wadi'ah, mudaraba deposits, mudaraba savings, currency, real GDP and return sharia smallest
Revisiting Analysis of the Root Causes on Financial Crisis in Islamic Perspective
Get PDFSteady financial system stability is important in an economy. The financial crisis showed a constantly recurring problem that has not been resolved completely. Macroprudential policy which became the term savior after the subprime mortgage crisis was essentially a temporary not eliminate the root causes of the problems of the financial crisis. This study attempts to revise the root causes of the financial crisis in the perspective of Islam by using three approaches namely Vector Error Correction Model (VECM), Error Correction Model (ECM), and Distributed-Lag Autoregressive (ARDL). The result of this study that the consistence of ribâ (interest rate) variable as the main factor of crisis; ribâ increases the inflation and decreases the growth. The IRF (impluse response function) result and FEVD (forcast error varian decomposition) show 21.87% interest rate (INT) increases the inflation and decreases the growth by 9.5%, while profit-loss sharing (PLS) variable contributes to decreases the inflation by 0.02% and increases the growth by 0.61%, reciprocally with ECM approach that interest rate (INT) has positive effect to inflation and negative effect to growth (financial crisis) vice versa PLS sicnificantly has negative effect to inflation and positive effect to grwoth, whereas ARDL approach shows that PLS increases the grwoth at long and short run but also increases the inflation at long run. Another conventional variabels consistantly contribut to financial crisis acording to all aproachs; volatile food (VFP) and administred price (ADM)
Proposing a Model for Entrepreneurship Development: The Role of Entrepreneurs’ Cash Waqf Intention
Get PDFThis paper aims to propose a model of entrepreneurship development by focusing on the role of cash waqf intention as a mediator on the relationship of cash waqf awareness, religiosity, attitude towards act, subjective norms, perceived behavioral and entrepreneurship development. By enhancing the theory of planned behavior, a structured question was designed to survey 459 Nigerian entrepreneurs. SEM analysis was used to test the theoretical framework and to propose a model of entrepreneurship development in Nigeria by means of Waqf. Result shows that the most important variables to explain entrepreneurs’ cash waqf intention for business growth are cash waqf awareness and attitude towards cash waqf. It is argued in this research that the presence of high level of cash waqf awareness and the attitude towards cash waqf can play an important role in achieving business growth. The paper extends the applicability of the theory of planned behavior, cash waqf awareness and religiosity in investigating the effect of cash waqf intention for business development.
 
Banking the Unbanked: A Perceived Recipes for Poverty Eradication Program: Induction of a New Islamic Microfinance Model in Nigeria
No full textThis study focuses on efforts to enhance financial inclusion program through the educational orientation development in the Nigerian Islamic finance industry. A Closed User Group (CUG) consisting of Muslims across Nigeria financial educational induction program formed the study sample. The formation of the CUG sought to establish an Islamic compliant financing model that would be effective at the grassroots level in the wake of the failure of microfinance programs to deliver the much needed poverty eradication. To this end, we developed a questionnaire and conducted a financial management induction and education workshop over a period of three days. On the third day, participants were given a questionnaire, from which the results showed that proper education and adjustment to the current available model of microfinance would bring about poverty eradication and that in terms of educational traits building of staff within a typical Islamic financial institution. Future research should look into transformation of personality vices affecting financial institutions as a whole. 
Dual Monetary Instruments’ Impact on the Performance and Stability of Jakarta Islamic Index
No full textThe monetary instruments and capital market are closely related as these tools are operating in the money market. The influence of the monetary policy to the stocks and indexes’ performance has been the research interest in the previous literature. The monetary policies along with its’ instruments are transmitted not only in banking lending channel to affect the economic growth but also in the balance sheet channel. However, the conventional tools and policies are not adhering the sharia tenets. Hence, the sharia-compliance monetary system is emanated in Muslim majority countries, including Indonesia. Additionally, this establishment of policy is coupled with the emergence of the Islamic capital market in Indonesia. Thus, the analysis of the impact of either Islamic or conventional monetary system on the Islamic capital market in Indonesia that represented by the Jakarta Islamic Index (JII) is essential to look at its’ furthers effect on financial market growth. This study examines the impact of the Islamic and conventional monetary variables on the performance of the Jakarta Islamic Index in Indonesia. It also investigates the stability of the JII under the occurrence of the shock derived from the monetary instruments. Monthly closing value of the JII, conventional or interest rate, Islamic policy rate, and monetary base are assessed to address the research objectives in this paper. This study employs the VAR-VECM and Granger analysis to analyse the phenomenon. The monetary policy transmission mechanism through the financial market channel is the main channel that will be investigated in this paper. The study comprises of introduction, literature review, methodology, and lastly the discussion and conclusion
Fundamentals of Integrated Commercial Bank in Macroeconomic and Sharia Perspective in Indonesia
No full textThis research analyses the fundamentals of integrated commercial bank in macroeconomic and sharia perspective in Indonesia. Based on the calculation of Vector Autoregression (VAR), the impact of macroeconomic variables (Jakarta Stock Islamic Index / JKSII, Indonesian Stock Price Composite Index / JKSE, Crude Oil Price, and Exchange Rate) on stock prices of commercial banks vary. These shocks indicate an indirect price transmission through exchange rate channels and economic growth. From the Structrural Time Series Model (STSM), JKSII, JKSE, and commercial bank share price prediction will generally increase at the end of 2017 and 2018. This will generate hope and benefit for policy maker and business actors in the banking, finance and sharia sectors. In general, the ARMA-ARCH/GARCH model with dummy variables found negative impact of “Fasting Period and Eid Al-Fitr” on return of JKSII, JKSE, and commercial bank stock price. This indicates a cycle of stock price decline that occurs when consumers spend more money to purchase goods and services. However, this cycle of stock price declines is only temporary because the recovery of the world economy and the increase in demand for goods and services in the future can be a pull factor for stock prices (demand factor). Policy makers and stakeholders related to the financial system, banking and capital markets, especially the sharia sector need to see the movement of conventional bank stocks and “Fasting Period and Eid Al-Fitr” as they move in the opposite direction for a certain period.