INCEIF Knowledge Repository (INCEIF University)
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An overview of the Malaysian economy: its intercultural diversity and business environment
No full textMalaysia has witnessed strong sustained growth over the last three decades, growing at an average annual rate of 5.8%. This sustained growth performance has been accompanied by significant structural shifts in the economy, reflecting the transformation of the Malaysian economy amid the changing global and domestic environment
What factors explain stock market retardation in Islamic countries
No full textStock markets have been recognized in literature as a source of financial development and economic growth. Notwithstanding the recent trend of the stock market development in emerging countries, some argue that Islamic countries' stock exchanges are still infantile. The central aim of this research, therefore, is to investigate factors impeding stock market development (SMD) in Islamic countries. We explore a panel annual data of 11 main Islamic countries vis-à-vis the developed countries for the period of 1996–2011. The findings show that all of our concerned macroeconomic determinants play a major role in the developed countries. On the other hand, financial openness has substantially less contribution in Islamic countries, while the financial intermediary development plays a major role. The results are also indicative of the need for the Islamic countries to improve their legal environment and economic freedom. Lastly, we also attempt to measure the integration level, where the findings tend to indicate a relatively lower and unstable pattern of integration for the Islamic countries, suggesting the impact of volatile inflows
Linear and non-linear Granger causality between oil spot and futures prices: a wavelet based test
No full textThis study is the first attempt to investigate both the linear and non-linear Granger causality between wavelet transformed spot and futures oil prices. Our findings consistently indicate bidirectional causality between the spot and futures oil markets at different time scales, under linear and non-linear causality assumptions, and also during the recent financial crisis. Our results tend to shed further light on the ongoing controversy over the relative price discovery role played by spot market as opposed to futures market in oil price fluctuations, especially during periods of high uncertainty
Shariah governance framework gaps and issues
No full textThe ultimately concern of Islamic Financial Institutions is the conduct of their business in accordance to the principles of Shariah. In light of this concern, The Shariah Governance Framework was introduced into the system. The framework outlines the establishment of the Shariah Review, Shariah Risk Management, and Shariah Audit as well as strengthening the roles and responsibilities of Board, Management and the Shariah Committee. The Shariah governance established in an Islamic Financial Institutions adds an additional layer of governance to the existing corporate governance structure of the Institutions. The present article discusses the industry gaps and issues in implementing the Shariah Governance Framework by Islamic Financial Institution with suggestions on addressing these issues from interviews and discussions of relevant industry practitioners.The findings of the interview reflected differences in implementation adopted by the financial institutions, the lack of experience of Shariah officers in various areas and, also the Shariah Committees members
Capital adequacy and lending and deposit behaviors of conventional and Islamic banks
No full textCapital adequacy plays an important role in determining banking activities. A bank must hold a minimum level of capital to ensure sufficient funds to buffer against unexpected losses or adverse shocks. This study analyzes and compares Islamic and conventional banks in 14 Organization of Islamic Conference (OIC) countries from 1999 to 2009. The empirical evidence suggests that capital requirements have a significant impact on the deposit and lending behaviors of the 52 Islamic banks (IBs) and 186 conventional banks (CBs) in the sample. There is a strong positive relationship between capital requirements and deposit and loan growth for both IBs and CB
Should Malaysian states have a fresh approach to waqfs? A proposal for a model waqf enactment
No full textThis research aims to determine whether current legal structures (secular or religious) are sufficient to enable the proper functioning of waqf in Malaysia; and if not, whether there is need for changes or innovations to be introduced within the existing legal structures to allow waqf to operate in its modern form in Malaysia
Corporate governance and maqasid Shariah: an empirical study on management practices of takaful operators in Malaysia
No full textThe development of the takaful industry in Malaysia has seen tremendous growth since its inception and has emerged as an important component of the Islamic financial system in Malaysia. Being an Islamic institution, the takaful business has to adhere Islamic rules and regulations, incorporate maqasid shariah, uphold the Islamic corporate governance and at the same time achieve its business goals. This study looks into the current practices of governance of takaful in Malaysia an links it with maqasid Shariah by assessing the three main stakeholders namely, the takaful operators, the takaful agents and the policy holders. Data were elicited through interviews from the respective parties. From the study participants and agents accordingly viewed that takaful operators are handling their activities in accordance to maqasid of Shariah. The interviews also indicated that each takaful operator has its own processes, policies and procedures and are conforming their activities to Shariah. The basis of these policies are established in line with the Shariah Governance Framework and each process is done with the aim to achieve the maqasid of Shariah. It was also found there was a loose relationship between takaful operators and their agents. Takaful operators normally places their trust on their agencies to hire and to monitor their agents even though the agents will actually represent the takaful operators. Conformity to Shariah in every activity and transaction is indeed pertinent to a takaful operator. Hence in this respect a sound governance or rule must be established to strengthen the agent, agency and takaful operator relationships. Such action benefits stakeholders in protecting their interest hence achieving maqasid of Shariah
The role of ethics in economics and business
No full textQuite apart from the distinct dichotomy of man's life into the secular and spiritual, conventional economics is still plagued with undue emphasis on the positive at the expense of the normative treatment of the subject. 'What is' becomes the norm, in fact, the rule rather than 'what ought'
Daily traders' and institutional investors' wealth effect upon sukuk and conventional bond announcements: a case study of Malaysian firms using event-study methodology and wavelet analysis
No full textThe last decade has witnessed a rapid expansion of Islamic financial instruments with a notable proliferation of Islamic investment certificates called sukuk. In spite of the expansion, research to appraise their growth implications remains limited. This paper investigated the structural differences within sukuk and conventional and their implications on investor return reactions. It also looked at the investors' different decision making time horizon dimensions in response to the respective debt security's announcement. Our sample consisted of 158 conventional bonds and 129 sukuk issuers between 2000 and 2013. Event-study methodology and wavelet analysis were used resulting in three major findings. Firstly, market investors perceived sukuk and conventional bonds as different financial instruments. Variations in investor reactions persisted when each sub-category of sukuk and conventional bond were examined separately. Lastly, firm value and shareholder wealth were affected in different ways upon the issuance announcement of of a specific sukuk or conventional bond. Specifically, the equity-like features within convertible bonds and partnership-based sukuk negated institutional investors' wealth, but were due to different 'dilution' arguments. Sukuk created unique wealth effects for corporate issuers, day traders and institutional investors in comparison with conventional bonds
Factors influencing market penetration of takaful industry in Malaysia (1985-2008)
No full textThis research provides insights into the factors influencing Takaful penetration rate of the Malaysian Takaful industry for the period 1985-2008. Its objective is to identify the factors that influence the market penetration from the perspective of Takaful participants. Data was collected through a survey and was analyzed using SPSS software. Employed techniques was Cross Tabulation & Chi-Square tests. It was found that the factors influencing Takaful penetration were age, gender, religion, marital status, education, income, awareness, product varieties, and knowledge of staff and agents of Takaful. The research findings suggest the need to increase product varieties, training of staff and agents to enhance their product knowledge, technical and Shariah knowledge as well as to intensify the level of awareness