Journal of Islamic Monetary Economics and Finance (JIMF)
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Assessment on the Islamic Banking Market Share Projection by Bank Indonesia and Proposed Methods
No full textIndonesian Islamic banking market share projected by Bank Indonesia is an integral part in developing the industry in the country. By setting a projection which will then be used as a benchmark / target, Islamic banks can make a necessary program to attract new customers which eventually increase its asset. If the increase of the asset is significant,the Islamic bank market share may increase. The problem is that the current projection by Bank Indonesia seems to be off target. It means that the projection is pretty much above the actual value. This paper attempts to utilize two projection methods namely Spline and Auto-ARIMA which we think can provide a better result. This study uses the monthly data covering period since January 2006 until December 2012. The result shows that our projections, especially using Spline method, are closer to the actual value of the Islamic banking industry market share. It means that the gap between the projection and the actual value of market share is lesser than the gap on the Bank Indonesia calculation. Moreover, this study argue that, the projection of the Islamic banking market share made by BI will not be achieved unless with government support. So far, government has not made any policy which deposit some of the national budget in the Islamic bank. This study calculates that if government regularly depositing 1% of total National Government Budget in Islamic banks, the projection of Islamic banking market share made by BI will be acheived. As a conclusion, the role of government is very significant in developing the Islamic banking industry in Indonesia
Promoting Inclusive and Sustainable Growth with Sharia Economy amid the Age of Digitalization and Global Uncertainty
Full text linkThis paper is based on a keynote speech delivered at The 10th International Islamic Monetary Economics and Finance Conference (10th IIMEFC). As a keynote contribution, this article does not include a formal abstract
The Discipline in the Making: Appraising the Progress of Islamic Economics
No full textIslamic economics is currently moving from a mere discourse on economics in Islamic perspective towards becoming a distinct science of Islamic economics. There is a systematic effort from Islamic economic scientific community to develop a discipline of Islamic economics marked by a complete body of knowledge, clear subject matter, methodology/methodologies to appraise theories and continuous growth and accumulation of knowledge. This could be done if the scientific community put strong effort in explicating all the necessary foundations of science and achieve consensus on certain important aspect of discipline. In this paper we attempt to historically survey the development of Islamic economics towards becoming a distinct discipline, evaluate the current practices a adopted by the Islamic economics’ scientific community in settling up problems, and outlining forward agenda in order to achieve this discipline status
Religion and Green: The Dual Power of ESG and Shariah-Compliant Stocks in Brand Values of Malaysia, Indonesia, and Saudi Arabia
Full text linkThis study examines the differential impact of Environmental, Social, and Governance (ESG) factors and Shariah compliance on brand value and stock returns across Malaysia, Indonesia, and Saudi Arabia using a sample of 1,474 publicly listed Shariah-compliant firms. Using panel data regression, quantile-on-quantile regression, Granger causality, and FGLS methods, we find that ESG factors significantly enhance brand value and stock returns in Malaysia and Indonesia, with stronger effects than conventional stocks, especially under positive investor sentiment. However, in Saudi Arabia, ESG factors are insignificant, and Shariah compliance alone drives financial performance, indicating that alignment with Islamic principles is a prerequisite for market impact in this context. The quantile-on-quantile analysis further shows that ESG and Shariah compliance yield stronger effects at higher quantiles of brand value, benefiting firms with greater brand equity. These results validate the signaling theory, highlighting ESG and Shariah compliance as mechanisms to reduce information asymmetry and enhance investor confidence in Islamic financial markets. For policymakers, this study underscores the need for robust ESG and Shariah compliance standards, advocating transparent reporting to foster market trust and attract sustainable investment, particularly by advancing a Shariah-compliant green economy in Saudi Arabia and beyond
Sustainability-Based Islamic Corporate Governance and Islamic Banks’ Multi-Performance: Evidence from Indonesia
Full text linkThis study develops a Sustainability-based Islamic Corporate Governance (SICG) index that integrates the roles of the Shariah board, regular board, and sustainable board and examines how it impacts multi-dimensional performance of Islamic banks. It employs a sample of 15 Islamic commercial banks in Indonesia from 2010 to 2023. The findings reveal that governance elements have a positive impact on particularly financial performance, while its influence on social performance is limited. For environmental and sustainability performance, a positive impact is primarily observed in the roles of the regular and sustainable boards. Further analysis through the Paris Agreement interaction confirms that most of these findings are consistent and support the role of SICG in enhancing various performances of Islamic banks. These results highlight the need for Islamic banks in Indonesia to transition toward SICG and suggest that policymakers facilitate this transformation by developing relevant regulations and guidelines to align governance structures with broader sustainability objectives.
ACKNOWLEDGMENT
The paper is supported by sponsorship from the Indonesia Endowment Fund for Education (LPDP), whose sponsorship has played a crucial role in facilitating the research process. The authors deeply appreciate this support and are grateful for the opportunities it has provided. The authors also gratefully acknowledge the valuable comments provided by the journal's editors and reviewers
Factors Influencing Muslim Preference for Islamic Banking in Russia
Full text linkThis study analyzes factors influencing preference of Muslims in Russia to choose Islamic Banking. This is important as Russia has recently introduced Islamic banking into their national banking system. Modified Theory of Planned Behavior is used to structure the empirical model which is analyzed using SMART PLS4 with PLS-SEM method. Using data gathered from 476 respondents, the result shows that attitude, perceived behavioral control, and religiosity have significant influences on intention, and intention significantly influences the behavior of choosing Islamic Banking in Russia. However, subjective norms and trust are not significant. Educational campaigns incorporating norms and Islamic values, along with developing a special regulatory framework to ensure Sharia compliance, are recommended. Future studies may explore additional variables to enhance understanding of Islamic Banking practices in Russia
How ASEAN4 Conventional, Islamic, and ESG Indices React to Twitter Market Uncertainty?
Full text linkWe investigate the time varying return spillover of ASEAN4 asset classes from four countries including Thailand, Philippines, Malaysia and Indonesia, and Twitter based market uncertainty measure, using daily data from 01-Sep-2014 to 21-Apr-2023. The estimations are performed using TVP-VAR approach. The results reveal that the dynamic connectedness of ASEAN4 markets fluctuates significantly. It peaked during bearish periods (2015-2016 and 2020) and remained low during market booms (2017-2018 and 2022). Islamic and ESG indices exhibit patterns similar to conventional indices. Indonesia and Malaysia emerge as net shock transmitters until the pandemic, with Thailand becoming a net transmitter post-COVID. Thailand’s role shifts between receiver and transmitter based on economic conditions relative to other ASEAN countries. Twitter Market Uncertainty Index (TMUENG) primarily remains a receiver, with limited impact on ASEAN4 Conventional, Islamic, and ESG indices. The findings are robust to a battery of robustness tests and carry important policy implications for investors and policymakers
Revisiting the Concepts of Money, Profit, and Interest from the Perspective of Value and Diminishing Marginal Utility
No full textThis article is a theoretical article that attempts to clarify the inherent meanings of the concepts of profit and interest, i.e. two important concepts in finance, particularly Islamic Finance. These are age-old concepts in economics that still draw confusion among people. Profit comes from trade and interest comes from lending and borrowing activities. While the former is much encouraged in Islam, the latter is strongly forbidden. Nonetheless, in today’s monetary and financial circumstances, the market interest rate is being used as a benchmark for the Islamic profit rate, drawing criticisms from many quarters that both are indeed one and the same. Using the fundamental economic concept of marginal utility, this paper attempts to clarify the fundamental difference in these two concepts and their implications for modern finance, particularly Islamic finance. Indirectly in the process, the paper also clarifies the concepts of money and riba.
 
Islamic Finance's Role in Social Equity and Poverty Alleviation: Trends and Gaps
Full text linkThis study investigates global research trends on the role of Islamic finance in promoting social equity and poverty alleviation. Using bibliometric and content analysis methods, we analyze publications on the subject from Scopus from 1991 to 2025 using Rstudio, VOSviewer and Excel to identify key authors, institutions, and journals and to perform a thematic analysis. The results show increasing academic interest, with publication peaking from 2020 onwards. Leading contributors are M. Kabir Hassan and Universiti Utara Malaysia (UUM) for respectively authors and institutions. Dominant themes include zakat, waqf, Islamic microfinance, and financial inclusion, alongside emerging areas like Islamic fintech and productive zakat. Despite its growth, the field remains fragmented, with gaps in governance, regional representation, and long-term impact assessments. Future research should focus on integrating Islamic finance with national poverty strategies, addressing gender disparities, and leveraging technology for greater financial inclusion. This study provides a comprehensive roadmap for scholars and policymakers, contributing to a deeper understanding of Islamic finance as a tool for fostering social equity and poverty alleviation
New Dimensions of Islamic Theory of Ethical Behaviour: An Empirical Investigation
Full text linkThis study examines factors that explain ethical behaviours of young lecturers in two Malaysian universities. To this end, we develop an Islamic theory of ethical behaviour (ITEB) incorporating piety, vicegerency, accountability, ethical behaviour and religious satisfaction as key factors, the measurements of which are validated by Shariah scholars, and apply the theory to a sample of 496 young lecturers. Employing Partial Least Squares – Structural Equation Modelling (PLS-SEM) with SmartPLS4.0 software, we reach the conclusion that all ITEB factors are significantly related to the ethical behaviour. Among them, vicegerency is likely the strongest driver of ethical behaviour, followed by accountability and piety. Ethical behaviour and religious satisfaction are also significantly related. This study offers the ITEB as a meaningful framework for upstanding ethical conducts through the lens of young lecturers.
ACKNOWLEDGMENT
This write-up is funded by Islamic Economics Research and Innovation Fund (IERIF) 2024, INCEIF University, ISRA Research Management Centre (ISRARMC/IERIF/AWARD/2024/BATCH 1/63), Malaysia