Journal of Islamic Monetary Economics and Finance (JIMF)
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Strengthening Zakah Compliance among Indonesian Muslims through the Role of Institutional Capabilities
Full text linkThis study examines the mediating role of institutional capabilities in the complex interplay between zakah regulation, leadership, and entrepreneurial competencies, aiming to understand their collective impact on the augmentation of zakah compliance. To this end, a questionnaire was distributed to 833 Indonesian Muslims who actively contribute zakat to official institutions, and the data are analyzed using partial least squares structural equation modeling. The findings underscore the pivotal role of institutional capabilities as a mediator between zakah regulation, leadership, and entrepreneurial competencies, with entrepreneurial skills exerting the most notable influence on zakah compliance. Further, perceived taqwa emerges as a robust influencer of compliance, while zakah regulation demonstrates a dual impact on both compliance and institutional capabilities. Additionally, the study advocates for prioritizing the development of entrepreneurial competencies within zakah institutions, aligning regulations with institutional growth, and nurturing perceived taqwa to fortify zakah compliance on a global scale. Departing from conventional approaches, this study adopts an innovative method by evaluating the efficacy of zakat institutions through institutional capabilities, particularly focusing on entrepreneurial competencies. The introduction of institutional capabilities as a mediating factor signifies a departure from the traditional framework, providing a novel perspective on the evaluation of resource reallocation and strategic direction
Board Oversight and Dividend Policies in Malaysian Shariah-Compliant Companies
Full text linkA stable dividend policy is often in the best interests of both the company and its shareholders. Considering the importance of dividend policy, we examine the determinants of dividend payment in Malaysian Sharia-compliant listed firms and the moderating role of board directors. To this end, we apply a static-panel model using data of Malaysian Shariah-compliant listed firms from 2014 to 2020. We find that ROA (Return on Asset) and Price-Earnings ratio (PER) have a significant positive impact on the dividend payout ratio (DPR). On the other hand, NAV (Net Asset Value) shows a negative and significant relationship with the DPR. Our findings also reveal that the board of directors significantly and positively influence the decision to pay dividends. The findings of the study hold significant importance for corporations in determining a suitable dividend policy that can ensure the sustainability of a consistent dividend payout and ensure their organization's financial stability, particularly in Malaysian-listed Shariah-compliant firms
The Influence of Financing Model and Credit Risk on Financial Stability (Study of Islamic Rural Banks in Java Island)
Full text linkThis study examines the impact of profit-sharing financing and profit-margin financing on financial stability of Islamic Rural Banks (IRBs) in Java Island and incorporates credit risk as an intervening variable. Utilizing a panel dataset of 90 registered IRBs operating in Java Island from 2011 to 2021 and applying path analysis, we find that profit margin financing has a significant negative impact on the financial stability of IRBs, both directly and indirectly through its association with credit risk. In contrast, profit sharing financing shows a positive and significant direct effect on financial stability. This result implies that profit margin financing may pose a greater risk to the financial stability of IRBs than profit-sharing financing. The study highlights the need for IRBs to carefully manage their financing strategies, taking into consideration the potential risks associated with profit margin financing. Effective risk management practices are crucial for mitigating credit risk and ensuring the overall stability of IRBs. The research emphasizes the importance of a selective approach in providing profit-sharing financing to mitigate potential risks. It also underscores the significance of striking a balance between profitability and credit risk management to ensure the long-term stability of IRBs
Corporate Attributes and Bankruptcy Prediction: The Case of Listed Halal Food and Beverage Companies
Full text linkThis study investigates the relationship between corporate attributes and the probability of bankruptcy among halal food and beverage companies in five countries: Indonesia, Malaysia, Pakistan, Saudi Arabia, and the United Arab Emirates (UAE). Analyzing data from 56 firms from 2008 to 2021 using static panel data method, we find that the working capital period (cash conversion cycle), leverage, and firm growth increase the probability of bankruptcy for these companies. In contrast, liquidity, profitability, and firm size reduce bankruptcy probability. The findings reveal essential firm attributes that can guide the management of halal food and beverage firms, relevant regulators, and potential investors in ensuring the firms’ long-term viability
The Adoption of Islamic Finance by Cameroonian SME Entrepreneurs: Are There Gender Disparities?
Full text linkThe recent surge in the global asset value of Islamic finance has pushed Cameroonian policymakers to consider this mode of finance as an important element of the national financial inclusion strategy. This study examines the factors that influence the adoption of Islamic finance by SME entrepreneurs on the one hand and gender differences in adoption on the other hand in Cameroon, a non-Muslim-dominated African country. Based on a sample of 1,358 SME entrepreneurs, a simple logistic model is adopted to analyze the determinants of the decision to adopt Islamic finance while the Fairlie decomposition is afterward employed to test for gender disparities vis-a-vis the adoption of this mode of finance. Results of the logistic regression show that the need to abide by the Sharia law, awareness, attitude, intention, location, and gender positively and significantly affect the decision to patronize the Islamic mode of financing by Cameroonian SME entrepreneurs while subjective norms and age exert negative effects. The results of the Fairlie decomposition show that there exists a mean difference of 8% to the disadvantage of female entrepreneurs concerning the adoption of Islamic finance and that this gap is widened by religious motivation, awareness, intention, and location. Policymakers are encouraged to enhance the level of Islamic finance awareness of SME entrepreneurs, and the sharia compliance of Islamic finance institutions by obliging them to operate under the guidance of qualified sharia boards. These policies should be supported by the implementation of accompanying measures, such as the eradication of societal norms that restrict women's ability to use Islamic finance services
How Does Islam Support the Green Economy? A Study on Turath Perspective
Full text linkThis study addresses how Islam supports a green economy using a thematic analysis of the turath. The results show that Islam strongly supports the implementation of the green economy. The green economy has been a part of Islamic teachings long before its conception in this modern era. In Islam, there are the four main goals of the green economy, namely creating an economy that is inclusive and fair, environmentally friendly, resources sustainable, and resources efficient. Islam can provide guidance and for solutions to all human problems, including those related to the economy and environment. As a policy recommendation, the Government and related parties can leverage on a religious approach to develop a green economy by for examples including Islamic values as well as involving Islamic institutions and Islamic figures in the National Green Economy Development Roadmap such that its goals can be better achieved
Board Structure and Islamic Bank Stability: A Standalone Risk Committee Moderating Effect
Full text linkThis study investigates the impact of board attributes on the stability of Islamic banks and whether the presence a standalone risk management committee (SARC) moderates their relation. Applying the feasible generalized least squares (FGLS) regression as well as the two-step system generalized method of moments (GMM) estimator for robustness to a panel sample of 43 Islamic banks across 15 countries over eleven years from 2010 to 2020, we document evidence suggesting that board meetings, board gender diversity and foreign directors do not influence the stability of Islamic banks. Conversely, board members holding doctorate degrees (PhDs) significantly and negatively affect the stability of Islamic banks. In addition, the presence of SARC significantly improves the stability of Islamic banks. The study further finds that SARC partially and positively moderates the effects of board members with PhDs and foreign directors on the stability of Islamic banks
Informal Economy, Islamic Finance Development, and Sustainable Development in Muslim-Majority Countries
Full text linkThe paper focuses on the impact of informal economy and Islamic finance development on sustainable development using a panel dataset of 15 Muslim-majority countries from 2016 to 2022. The results based on the feasible GLS and panel quantile regression methods reveal that Islamic finance development has a positive impact on sustainable development. Meanwhile, the informal economy has a negative impact on sustainable development. Assessing the components of Islamic finance development, we further note that only quantitative development/financial performance and knowledge indicators are effective in achieving sustainable development. Besides these key results, GDP per capita, trade openness, and foreign direct investment emerge to be positive factors while the natural resource rents a negative factor in sustainable development. We reason that low productivity and precarious working conditions associated with informal economy may have hindered economic, social, and environmental wellbeing. The positive contribution of the Islamic finance development especially those related to Islamic financial performance and knowledge sharing to sustainable development hints the importance of further development of the Islamic financial sector in these countries. 
Islamic Financial Inclusion and Economic Growth in OIC Countries: Panel Quantile Regression Analysis
Full text linkThis study examines how Islamic financial inclusion contributes to economic growth across different quantiles within the OIC countries. Sarma’s method is used to construct a novel index of Islamic financial inclusion (IIFI) and a quantile regression with fixed effects approach is applied to data spanning the period 2015 to 2020 from 25 OIC countries. The findings reveal that Islamic financial inclusion contributes positively to economic growth in the OIC countries across different segments of the GDP per capita with the impact being consistent across all segments. By expanding the network of Islamic banks and enhancing the technological infrastructure for financial access, policymakers can harness the transformative potential of Islamic finance to promote sustainable economic growth and development in the OIC countries
A Bibliometric Analysis and Mapping Study of Risk Management in Islamic Financial Institutions
Full text linkThis paper performs a bibliometric analysis on risk management in Islamic financial institutions (IFIs), identifying significant research themes, influential authors, as well as emerging trends from 2003 to 2024. A systematic search strategy identifies 524 relevant publications from the Scopus and Web of Science databases. Using techniques from network analysis, science mapping, and performance analysis with the help of VOSviewer software, we find that 2020 and 2021, with 86 and 97 papers, are the most productive years in both databases. University of New Orleans and International Islamic University Malaysia are significant institutions. The most prominent journal is the International Journal of Islamic and Middle Eastern Finance & Management, which garners the highest number of citations. The Journal of Islamic Accounting and Business Research has the highest number of publications. Malaysia is a significant contributor to this field. Moreover, research on risk management in other sectors has been scant, concentrating solely on Islamic banking. Relying on particular databases and English-language publications could have eliminated relevant non-English research