Journal of Islamic Monetary Economics and Finance (JIMF)
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Stability of Islamic Bank Efficiency in Indonesia and Malaysia: Has COVID-19 Made Any Difference?
Full text linkThis study examines whether COVID-19 has affected the stability of Islamic banking efficiency in Indonesia and Malaysia using the Data Envelopment Window Analysis (DEWA) using data from 2017 to 2022. The findings indicate that Islamic banks in Malaysia exhibit a higher level of efficiency and stability as compared to their counterparts in Indonesia across all three efficiency measures, namely Technical Efficiency (TE), Pure Technical Efficiency (PTE), and Scale Efficiency (SE). In addition, the findings show that Islamic banks in both countries have stable efficiency performance over the period under investigation and hence the Covid-19 pandemic has not affected their efficiency levels. From the analysis, we further note that financing and labor costs are the main sources of inefficiency in Malaysian Islamic banks while fixed assets and operating revenue contribute the most to Indonesian Islamic banks’ inefficiency
Purchase Intention of Halal Local Beauty Brand during COVID-19: The Role of Influencers’ Credibility and Halal Awareness
Full text linkBy applying the Stimulus-Organism-Response (SOR) model, this study investigates whether influencers’ credibility and halal awareness influence customer’s perceived value which, in turn, affects their purchase intention. Gathering data using an online survey and applying the SEM-PLS method, we find that influencers' credibility and halal awareness have a positive effect on the customer’s perceived value for local Indonesian halal beauty products. In addition, the perceived value also affects customers purchase interest. The results related to halal awareness emphasizes the role of halal certification in the customer’s purchase intention. This study provides valuable insight to the halal local beauty industry to improve the marketing strategy and contributes to the theoretical literature in the field of management and marketing
Islamic Finance, Growth, and Volatility: A Fresh Evidence from 82 Countries
Full text linkIslamic finance has gained significant attention during the past decades. Many countries are striving to become Islamic financial hubs. The asset-backed nature of Islamic financial instruments and products adds more reliability to financial transactions. Yet, the impact of Islamic finance penetration on economic growth is unclear. While the existing studies have focused mainly on Islamic banking penetration, which is mostly centered around Muslim economies, we study the relationship considering a global sample of 82 countries, including Muslim and non-Muslim countries, from 2012-2020. We employ the System Generalized Method of Moments estimator for potential issues of endogeneity, heterogeneity, and serial correlation. Employing the novel Islamic finance development indicator by Thomson routers, we find that Islamic finance stimulates the overall economy and lessens volatility. Digging deep into the study, we find that this impact is more prominent in Muslim majority countries. These findings are robust to different econometric estimators and sample specifications. Since integrating Islamic financial principles into the country's overall financial system brings extra growth and lower economic volatility, it is recommended that the Islamic banking sector, Islamic insurance sector, Islamic money, and capital market instruments be expanded to boost overall economic growth and control volatility
The Effect of Islamic Financial Development and Human Development on Income Inequality: Does Islamic Finance Kuznets Curve Hold in the OIC Countries?
Full text linkIncome inequality is evident in all countries regardless of the level of development or income status. Islamic financial system has Shariah-compliant financial instruments that, when properly utilized, can facilitate equitable income distribution in the OIC member countries. This study examines the effect of Islamic financial development and human development on income inequality in the OIC. The study also analyzes the validity of the Islamic finance Kuznets curve hypothesis. We employ FMOLS and DOLS estimators with data from 20 OIC member countries covering the period from 2012 to 2022. The results show that Islamic financial development and human development promote equitable income distribution. The findings also confirm the validity of the Islamic finance Kuznets curve hypothesis. Thus, to reduce the income gap in the OIC, Islamic financial institutions should expand further via for examples innovation in Shariah-compliant Islamic financial products and services. In addition, policymakers should prioritize policies and programs that can promote Islamic financing and improve human development in the OIC member countries.  
Perception and Intention to Participate in Microtakaful Scheme among Indonesians: An Application of Ajzen's Theory of Planned Behavior
Full text linkThis study examines the intention of Indonesian Middle of Pyramid (MOP) and Botton of Pyramid (BOP) and their intention to participate in microtakaful products. The study develops an extended theory of planned behavior (TPB) model and uses structural equations modelling (SEM) to analyze data gathered from 428 respondents. Responses are obtained through a combination of online surveys and traditional paper-based distribution of questionnaires. The findings show that there is a high intention to participate in microtakaful among the respondents, with the subjective norm, price, and knowledge having positive influences on the intention to participate in microtakaful products. Meanwhile, compatibility is shown to have a positive influence on the attitude toward microtakaful, and normative belief has a positive influence on the subjective norm. However, the result shows that relative advantage has a negative influence on the attitude toward microtakaful, and attitude and price show a negative influence on the intention to participate in microtakaful products. Generally, there is a positive intention toward microtakaful among the respondents; however, knowledge and pricing are important factors that hinder the development of the microtakaful industry in Indonesia. These findings provide valuable information for the Indonesian microtakaful market and other Islamic micro institutions
Designing a Waqf-Based Agricultural Financing Model
Full text linkLimited access to financing, followed by the difficulty in the absorption of crop yields, is still a fundamental problem for farmers. This study proposes an integrated agricultural low-cost financing model based on cash waqf along with its parameters and risk mitigation. The proposed model is developed from a literature review underpinned by in-depth interviews with 17 experts (regulators, academia, and practitioners), followed by a Focus Group Discussion, and finally validated by the key experts. Findings reveal that cash waqf fund could be used as a low-cost financing with several risk mitigation procedures to finance farmers who have hardship accessing financing. Through institutional engineering, a nazhir (overseer) will involve a specialist vehicle in developing a value chain to facilitate off-takers ready to buy farmers' crops at competitive prices. The proposed model employs Mudharaba-Salam and Ijara schemes. The associated risks can be mitigated by a comprehensive feasibility study, using takaful/guarantee or reserve funds and financial restructuring. This model is expected to improve farmer welfare and national food security and deepen inclusive Islamic financial products in the agricultural sector
Financial Sustainability of a Firm: Debt-Based or Equity-Based Financing to Pursue?
Full text linkThis study examines the potential of utilizing equity-based financing by companies in achieving financial sustainability as compared to debt-based financing. To this end, a conceptual framework of equity-based financing over debt-based financing is developed to provide an understanding of the concept of equity-based financing. Subsequently, this study analyses the credit risk exposure between equity and debt for selected sectors in Malaysia. More specifically, a Monte Carlo method is employed to examine the feasibility of the equity-based financing model in fostering the financial sustainability of companies through simulation of equity-based and debt-based financing models from the global financial crisis (GFC) period to the Covid-19 phase. This study finds that equity-based financing can reduce credit risk exposure when returns are tied to the company’s performance. The findings also show that equity-based financing can achieve financial sustainability regardless of any economic events. To conclude, equity-based financing can thus be a viable capital financing option for companies because it can contribute to long-term financial sustainability.
Acknowledgment
The authors would like to thank the Department of Higher Education, Ministry of Education Malaysia, for the funding that made this study possible
Is Islamic Banking Performance in Malaysia Truly Better than Indonesia?
Full text linkThis article analyzes the performance of Islamic banking in Malaysia and Indonesia using a comprehensive evaluation framework. Malaysia is known for its leading role in Islamic finance, while Indonesia has faced criticism for slower growth. The study argues that assessing Islamic banking performance solely based on financial metrics is insufficient and proposes a broader framework based on the Maqasid Shariah (objectives of Islamic law) for a more objective standard. Using data from 2010 to 2019, the study constructs a Maqasid Shariah Index of Islamic Bank (MSI-iB) and adopts a T-test as well as a panel data model to evaluate their performance. The index includes five sub-indices representing different aspects of the Maqasid Shariah framework. Results show varied scores among Islamic banks in both countries with no statistical difference between the two countries, but with Indonesia leading in religiosity and intellectuality dimensions and Malaysia leading in the posterity dimension. These results challenge the perception that Malaysia's Islamic banking performance is inherently superior to Indonesia's based solely on financial metrics. Considering the Maqasid Shariah framework is crucial to evaluating Islamic banking performance, highlighting the significance of non-financial indicators. The study concludes that a comprehensive perspective is necessary, incorporating both financial and non-financial factors, to assess overall performance
Bibliometric Analysis of Shariah-Compliant Capital Asset Pricing Models
Full text linkThis study conducts a bibliometric analysis of the literature on shariah compliant asset pricing based on Scopus-indexed publications. The data on publications are collected employing a search string encompassing various keywords related to Islamic finance and asset pricing. Simple statistical techniques are applied, complemented by the utilization of VOS viewer software to analyze document trends by year, country, source, and patterns of collaboration among authors, co-citations, and keywords co-occurrence. The bibliometric analysis reveals a proliferation of publications across 127 journals, with the Pacific Basin Finance Journal being the most prominent. Collaboration among authors spans 56 countries, with Malaysia emerging as a key contributor. Notably, keywords like "Islamic finance" and "Shariah-compliant" have seen increased importance in recent years. The statistical results demonstrate a substantial surge in Scopus-indexed publications related to Shariah-compliant compliant Capital Asset Pricing Models, particularly in the past five years, reflecting the growing popularity and research opportunities within Islamic finance and asset pricing
Sustainable Development Goals, Herding, and Risk-Averse Behavior in Muslim Countries
Full text linkThis study examines the impact of Sustainable Development Goals (SDGs) on behavioral biases, namely herding and risk-averse behaviors, in Sharia-compliant stocks. It also explores the mediating effect of investors' sentiments on the relationship between SDGs and behavioral biases. Adopting panel data and quantile regressions, we find that SDGs 4, 8, 10, 11, and 13 significantly and positively correlate with stock returns in Indonesia, Kuwait, Oman, and Qatar. However, SDG 7 is the only SDG goal that is significant to Saudi and UAE stock returns. The results imply a complete mediation as the SDGs have caused changes in investors' sentiment and subsequently triggered the investors to herd and become risk-averse. The impact of SDGs is more pronounced in the upper and lower quantiles of Indonesia, Saudi, and UAE stock returns, as well as the median quantile of Bahrain, Kuwait, Oman, and Qatar stock returns. The results of this study can benefit policymakers, regulators, and practitioners in identifying the best SDG practices to assist Sharia-compliant stocks in Indonesia and Gulf Cooperation Council (GCC) countries to attain better stock returns and improve investors' sentiments and behaviors. The results can also assist governments in weighing the impact and benefits of adopting SDGs in different Muslim countries