INCEIF Knowledge Repository (INCEIF University)
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Towards understanding the structure of Islamic economic system in solving the current economics and financial crisis
No full textIslam is not just a religion of worship; it is a comprehensive discipline that includes all aspect of sciences including economics. It provides many institutions that have to function in parallel in order to meet a just and a welfare society for all. The current global economics and financial crises urged economists to search for alternative institutions to solve these crises. This brings in the question of whether the Islamic economic system is capable of solving such crises or not. The main objective of this paper is to present the different Islamic institutions within the structure of the Islamic economic system, and to show their roles in handling the current economics and financial crisis. This research uses both primary and secondary sources. Data collected from primary sources includes text from the Quran and ahadith from the Sunnah (saying of the Prophet (pbuh), while data collected from secondary sources includes books, articles, journals besides websites and e-books. The expected finding of this research is to give a comprehensive structure of the Islamic economic system, as provided in Quran and Sunnah. This in turn will open the door wider from more researchers to study and to examine the different institutions within the structure of the Islamic economic system in depth which God/Allah (swt) provided to serve all mankind in the best wa
Shari'ah issues in Islamic capital markets: sukuk
No full textThe purpose of this paper is to ascertain the prevailing Shari'ah issues in Islamic capital markets, particularly sukuk. Common features of conventional bonds are replicated in Sukuk via late penalty payment upon default, trading of debt-based sukuk, purchase undertaking in equity-based structures and ownership status in asset-based transactions. These features pose Shari'ah concerns and are discussed in the paper from the perspective of current practices and views of scholars by compiling various references that reveal the diversity of the Shari'ah. The paper does not claim to provide solutions to the issues of debate; rather it engages in providing an analysis of these Shari'ah issues. The four issues covered are certainly not exhaustive; more issues are expected to creep up as sukuk structures continue to evolve over time. The paper provides value by shedding light upon the discussed issues and it also highlights the need for a balance between growing the sukuk market and upholding Shari'ah in all aspects when structuring sukuk
Foreign exchange exposure and impact of policy switch - the case of Malaysian listed firms
No full textThis article undertakes an in-depth study of the foreign exchange exposure of Malaysian listed firms. We examine several issues related to firm-specific and overall exposure, including an evaluation of the efficacy of adopting a hard-peg on such exposure. Our sample consists of 158 listed firms and spans the 16 year period, 1990–2005. A multivariate model using four bilateral exchange rates is used to determine firm level exposure while panel data analysis using a random-effects Generalized Least Squares (GLS) model is used to determine system-wide or aggregate sample exposure. We find a total 71% of our sample firms to have significant exchange rate exposure, a rate substantially higher than that reported for most countries, especially developed ones
Determinants of flood fatalities: evidence from a panel data of 79 countries
No full textThere is available evidence from different parts of the world that floods and storm account for about 67 percent of the natural disasters. While, earthquake, landslides, drought, extreme temperature, wildfire and volcano eruptions contribute to the remaining 23 percent. In many developing countries, the frequent occurrences of natural disasters, particularly floods are not uncommon. Yearly recurrence of floods bring devastate economies. The objective of the present study is to investigate factors that can mitigate the impact of floods on human fatalities and damages. We use a panel of 79 countries for the period of 1981-2005 and employ the two-step system GMM estimator to show that the level of economic development, population, investment, openness and education impact flood fatalities, total people affected and total cost of damages
Action with acceleration II: Euclide Hamiltonian and Jordan blocks
No full textThe Euclidean action with acceleration has been analyzed in Ref. 1, and referred to henceforth as Paper I, for its Hamiltonian and path integral. In this paper, the state space of the Hamiltonian is analyzed for the case when it is pseudo-Hermitian (equivalent to a Hermitian Hamiltonian), as well as the case when it is inequivalent. The propagator is computed using both creation and destruction operators as well as the path integral. A state space calculation of the propagator shows the crucial role played by the dual state vectors that yields a result impossible to obtain from a Hermitian Hamiltonian. When it is not pseudo-Hermitian, the Hamiltonian is shown to be a direct sum of Jordan blocks
Economic development and Islamic finance
No full textIslamic finance has been practiced in some form since the inception of Islam, its practice in modern financial markets became recognized only in the 1980s, and began to represent a meaningful share of global financial activity only around the beginning of this century. In recent years, significant interest in Islamic finance has emerged in the world's leading conventional financial centers, including London, New York, and Hong Kong, and Western investors are increasingly considering investment in Islamic financial products. The organizing principle of Islamic finance in an Islamic economy is transaction based on exchange, where real asset is exchanged for real asset. By focusing on trade and exchange in commodities and assets, Islam encourages risk sharing, which promotes social solidarity. The features of an Islamic economy will change the behavior of society. There will be greater consultation; hence there will be no impulsive-compulsive reaction in financial dealings. At the same time, the labor force in an Islamic economy will work under a rule of trust and full understanding of contracts and obligations. Workers also share in the gains achieved through the risk, based on productive efforts, which is a better incentive system than a fixed wage. Workers will be treated with respect, which reflects the importance of human dignity in Islam
Was bail-out a success? Evidence from the investment-cash flow relationship
No full textThe 1997-1998 Asian financial crisis affected the balance sheets of many Malaysian firms, which increased the financial constraints on such firms. To counter the impacts, the Malaysian government carried out various directed policy measures known collectively as the bail-out policy. The present paper examines the success of the policy to reduce the financial constraints. The present paper uses panel estimation methods to analyze the relationship between firms’ investments and their cash flows. The sample of study is split into two subsamples, consisting of the periods before and after the financial crisis, respectively. The success of the policy is measured based upon the easing of financial constraints faced by Malaysian firms. Using annual financial data, consisting of unbalanced panel from the period of 1988 to 2005, the results found favour the bail-out policy. This finding indicates the success of the bail-out policy to reduce the severity of financial constraints
The Maldives: a unique breeding ground for Islamic finance
No full textThe Maldives is a small island nation and also the lowest country in the world, with a maximum natural ground level of only 2.4 meters, situated in the Indian Ocean. The country consists of more than 1,900 coral islands which are geographically dispersed in the sea, spreading over some 90,000 square kilometers
Comment on “Industry-specific real effective exchange rates and export price competitiveness: the cases of Japan, China, and Korea”
No full textSato et al. (2013) represents a significant contribution to the literature. The novelty of their paper lies in the construction of a new dataset on industry-specific real effective exchange rates (REER) on a monthly basis from January 2005 to the present. The authors have convincingly demonstrated that REER differs not only between countries, but also across industries, a finding that would have slipped through the net of aggregate data analysis. The authors have used the industry-wise producer price index (PPI), instead of consumer price index (CPI), not only because the latter includes nontradables, but also because the former tends to vary across industries, reflecting interindustry differences in costs arising from differences in their exposure to exchange rate changes. In this context, industries with large import content are more sensitive to exchange rate changes than those with a large domestic content. It, thus, makes considerable sense to use the industry breakdown PPI data. However, exchange rate changes, in purchasing power parity (PPP) terms, can only be explained by the inflation differential. According to PPP, a currency with a relatively lower inflation rate would appreciate vis-à-vis currency with a higher inflation rate. Seen in these terms, one might still argue that CPI is more relevant for explaining exchange rate appreciations and depreciations, be they in nominal or real terms