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Audit committee and auditor independence: the Malaysia case
No full textThe efforts towards better corporate governance practices of firms in the Malaysian capital market were started by the Securities Commission (SC) as early as 1996 in three-phased shift disclosure-based regulations (DBR). During Phase 1 (1996-1999: Flexible/Hybrid Merit Based Regime), the emphasis was to regulate on disclosure, due diligence and corporate governance. Phase 2 (January 2000: Partial DBR) still focused on corporate disclosure, due diligence and corporate governance, but included focus on promotion of accountability and self-regulation. In Phase 3 (2001 onwards: Full DBR) the SC enforced high standards of disclosure, due diligence and corporate governance as well as exercise of self regulation and responsible conduct ..
Introduction to sukuk Islamic debt securities markets
No full textThis book is the outcome of a joint effort of a number of senior practising professionals as well as leading research scholars and educators in Islamic finance. The result is a reliable book on the subject of sukuk securities. Though this type of security is new ro modern Islamic finance, it has its historical roots some centuries earlier as a novel instrument developed in the Turkish Empire based on earlier practices of government treasuries to raise money. Sukuk securities were first offered just about 20 years ago as part of a slew of new Islamic financial products to fund activities mostly over a finite horizon, since these are financing contracts priced not by using interest rates but by using returns on profit sharing- based contracts and asset- backing for the finance provided
Prohibited elements in fiqh al-muamalat: causes that invalidate transactions
No full textThe word riba is derived from the root Arabic verb rabwun which literally means: to grow, expand, increase, inlfate, excess. The technical meaning of the word riba is 'a premium' that must be paid by the borrower to the lender along with the principal amount as a condition for the loan or for an extension in its maturity
Disaggregated consumer prices and oil price pass‐through: evidence from Malaysia
No full textThe purpose of this paper is to analyze the oil price pass‐through into consumer price inflation for a developing country: Malaysia. The focus is on whether aggregate consumer prices and different consumer price components or sub‐price indexes are related in different ways to oil price in the long run and in the short run. The analysis adopts the Phillips curve framework augmented to include the oil price. In modeling, a proper consideration is given to the integration and cointegration properties of the variables under consideration. Moreover, the asymmetric effects of oil price changes are also examined. The paper finds evidence for a long run relation or cointegration of the oil price with only the aggregate consumer price and food price indexes. Moreover, in the short run, the oil price changes have significant bearings on the consumer price inflation, the food price inflation, the rent, fuel and power price inflation and the transportation and communication price inflation. In addition, the short‐run asymmetry in the oil price – food price inflation is also evident. Finally, the authors observe the neutrality of the medical care and health price index to the oil price changes. The result that the inflationary consequence of oil price hikes is likely to work mainly through the food prices has important implications on the effects of oil price changes on the poor and policy directions to contain inflation. The paper contributes to existing literature that has a predominant focus on the inflationary effect of oil prices at the aggregate level by looking at the relations between oil price and disaggregated good prices in the long run, short run, or both
Firms' credit ratings and corporate governance in Malaysia: the importance of independence and financial competency for the board and the audit committee
No full textIn the first two-thirds of the 1990s, Malaysia experienced rapid economic growth at an average annual Gross Domestic Product (GOP) growth of 8.5%; due to its financial liberalization policy that encourage greater participation of foreign direct investment and strengthening condition of exports. This rapid growth came to a halt with the onset of Asian financial crisis in mid-1997. During that time, the combination of sudden reversals in the net capital flow, exchange rate depreciation/devaluation, crash in stock market, fire sales on asset, corporate distress, and credit contraction lead the economy into recession
The relationship between corporate governance practices and auditor independence
No full textThe accounting profession plays a major role in facilitating good governance, accountability and transparency among corporate participants, and more importantly. It has become the 'gatekeeper of financial truth' (A-Kadir, 2000), Indeed, the role played by auditors was deemed to be the financial aspect of corporate governance. Good financial reporting is critical to effective functioning of the capital market
Financial market risk and gold investment in an emerging market: the case of Malaysia
No full textThe purpose of this paper is to examine the relation between gold return and stock market return and whether its relation changes in times of consecutive negative market returns for an emerging market, Malaysia. The paper applies the autoregressive distributed model to link gold returns to stock returns with TGARCH/EGARCH error specification using daily data from August 1, 2001 to March 31, 2010, a total of 2,261 observations. A significant positive but low correlation is found between gold and once‐lagged stock returns. Moreover, consecutive negative market returns do not seem to intensify the co‐movement between the gold and stock markets as normally documented among national stock markets in times of financial turbulences. Indeed, there is some evidence that the gold market surges when faced with consecutive market declines. Based on these results, there are potential benefits of gold investment during periods of stock market slumps. The findings should prove useful for designing financial investment portfolios. The paper evaluates the role of gold from a domestic perspective, which should be more relevant to domestic investors in guarding against recurring heightened stock market risk
Origination, issuance, marketing and listing of sukuk securities
No full textThe first Malaysia sukuk as a new Islamic financial debt security was issued as a private sector issue by Shell Company (M) Bhd, and raised RM125 million (US$45 million) in 1990. However, sukuk had been introduced earlier in Saudi Arabia and Pakistan back in the 1980s, but the debut of the 1990 issue was after the institutional development of the market for sukuk in several locations in the Middle East and Southeast Asia, and which is now in major financial centres such as in London and Zurich
Maqasid al-Shari'ah and the foundational requirements in developing Islamic banking and finance
No full textIslamic finance attempts to rearrange the modern financial practices to be in line with Shari'ah principles and requirements. The industry has grown considerably over the last three decades and has a global reach. We contend that this trend is being driven not only by operational compliance with the requirements of Islamic law but also because of the objectives and values it promotes. Islamic banking and finance (IBF) was intended to bring an Islamic vision of the economy to the financial sphere in an effort to realize human wellbeing (maslahah) and a just and fair order of society. Financial practices are to be arranged to meet those objectives. Adherence to maqasid al-Shari'ah as the grand objective of Islam is necessary for developing genuine and indisputable �Islamic� finance. The �Shari'ah-compliant� title carries the expectation of a financial system and practices that are truly based on all the tenets of the Shari'ah, namely the 'aqidah, Islamic legal principles (al-ahkam al-shar'iyyah) and ethics (akhlaq), and that serve the noble goals prescribed by Islam (maqasid al-Shari'ah). However, recently there have been growing debates about the extent to which the objectives of the Shari'ah are being realized in the Islamic financial industry. It is argued by some that satisfying the minimum legal requirement of Shari'ash compliance is not sufficient
Financial derivatives: markets and applications in Malaysia
No full textThis book is designed specifically for a first course in derivatives. It has been written with the beginner in mind and assumes no previous knowledge or familiarity with derivatives. Written in an informal, easy to read style, it guides readers through the challenging and complex world of forwards, futures and options. As rhe first book of its kind on Malaysian financial derivatives, the emphasis on local condition enables easier understanding