INCEIF Knowledge Repository (INCEIF University)
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The possibility of application of salam in Malaysian Islamic banking system
No full textThis research aims to explore the theoretical nature of salam contract in depth, the extent of its use in the banking arena of Malaysia and to test the theoretical feasibility of its future application by the Islamic banks in Malaysia by suggesting an Islamic banking product structure based on salam contract. Salam contract is more susceptible to risks than the rest of the Islamic commercial contracts used by the Islamic banks in Malaysia and none of the Islamic banks in the country utilize this type of contract as a mode of financing. However, the research indicates that a feasible banking product based on salam contract could be formulated to help poor farmers in the country. To prove this a new model product based on salam contract to help farmers is created by the authors and the pros and cons of the product with the risk mitigating ways are explored. It is found that theoretically, this product is workable. This research will complement the knowledge based on practical applicability of salam and is targeted to the Islamic financial Institutions in Malaysia, who are the prospective beneficiaries
Islamic finance: from education to implementation. INCEIF behind some of industry's best talents
No full textThe practice of Islamic banking has become a fast growing and widespread phenomenon, not only in the Muslim countries, but also in non-Muslim countries as well, such as the UK, US, Switzerland, and Singapore. The transformation from a conventional form of banking to a banking system based on interest-free finance has generated a great deal of interest in terms of calling for human capital development in the field to ensure sustainability and good performance in the Islamic financial industry. With its announcement as a leading international and regional hub for Islamic finance, Malaysia has become one of the Muslim countries which had placed strong focus on human capital development in Islamic Finance by developing many training and educational centers, such as the Securities Industry Development Corporation (SIDC); the Islamic Banking & Finance Institute Malaysia (IBFIM); the International Centre for Leadership in Finance (ICLIF); the International Centre for Education in Islamic Finance (INCEIF) and the International Shari'ah Research Academy for Islamic Finance (ISRA). The main objective of this paper is to provide a tracer study of INCEIF-CIFP first graduates and to determine their employability in the field of Islamic finance, locally and internationall
The Shariah process in product development and approval in ICM
No full textProduct innovation and enhancement in business and finance is an important aspect for the development and growth of the Islamic finance industry. However the flexibility provided by Shariah in product development should be understood within the norms of Shariah rules, principles and framework. The following discussion will encompass two major dimensions, namely product development and product approval in Islamic capital market
Budget deficits and inflation in thirteen Asian developing countries
No full textIn this study we attempt to determine the long-run relationship between budget deficit and inflation in thirteen Asian developing countries, namely; Indonesia, Malaysia, the Philippines, Myanmar, Singapore, Thailand, India, South Korea, Pakistan, Sri Lanka, Taiwan, Nepal and Bangladesh. Using annual data for the period 1950-1999 our Granger causality within the error-correction model (ECM) framework suggest that all variables involved (budget deficits, money supply and inflation) are integrated of order one. Our ECM model estimates indicate the existence of a long-run relationship between inflation and budget deficits. Thus, we conclude that budget deficits are inflationary in Asian developing countrie
Assessing the growth potential for takaful - insights into Malaysia and the family takaful market
No full textThe term "Family Takaful" means "guarantee the family" which is more apt than the term "Life insurance", simply because no one can guarantee his own life, what more other people's life. What an individual participates in when he takes up a family takaful is to ensure that when he is indisposed, his immediate family will receive the benefits of the takaful that he has participated in. The benefits will be in three different forms, the accumulated contribution that he has made over the years, the profit that the accumulated contributions have earned and the takaful coverage that he has pledged to participate in
The paraphernalia of Islamic banking
No full textIslamic banking is booming in the world today. Though Malaysia adopted Islamic banking in 1983, today it is the leader of this industry. The success of the Islamic banking industry depends on the nature and the behavior of the instruments utilised. Generally there are three kinds of instruments offered in an Islamic bank. They are debt based instruments, equity based instrument and lease based instrument. The most sizzling debate over the industry player is on finding out the types of instrument which are closer to the teachings of Shariah. The objective of this paper is to deliberate over this issue and to find out the reality about this
Test of arbitrage pricing theory on the Tehran stock exchange: the case of a Shariah-compliant close economy
No full textThis paper provides weak evidence in support for the application of Arbitrage Pricing Theory (APT) on the Iranian stock market in the Sharia is the sacred law of Islam faith.) based close economy. Tests conducted using the principal component analysis and canonical correlation model showed that at least one to three factors that can explain the cross-section of expected returns in this market. Financial and economical sanctions possibly explain the negative stock market returns which reflect the reaction of investors to the announcement of sanctions. Overall, the results suggest that there are four groups of macroeconomic variables in the test period that affect stock returns for the test period, 1991 to 2008, but the significance of these factors is not consistent over time. In general the findings document a weak applicability of APT in this market
Unleashing the potential of the waqf as an economic institution in Malaysia: policy, legal and economics reforms
No full textThe claim of this thesis is that the waqf is not just a religious institution, but is an economic institution capable of contributing to economic growth. Accordingly, this thesis enquires into three questions: what factors led to this centralization process in Malaysia and its undesirable results, why we should care to change the situation, and what would be the solution to enable the waqf to achieve its full economic potential in this country. The objective of this thesis is to find a modern and efficient governance framework for waqf institution in Malaysia so that it can fulfill its intended purpose ..
Zakah from salary and EPF: issues and challenges
No full textThe beginning of the 1980's witness a new approach of collecting zakah on monthly bases in some of the Muslim countries such as Sudan, Pakistan and Malaysia. At first, this creates an ambiguous situation amongst Muslim scholars as to its legitimacy, since the payment of zakah is known to be given on annual bases and once it reaches the nisab (the minimum assigned). Recently, a consensus has been given amongst contemporary Muslim scholars that it is lawful to pay the zakah on monthly basis. Malaysia is one of the countries that start implementing zakah deduction on monthly basis through participating in a scheme called the Salary Deduction Scheme. This raises the question on some of the conventional created funds, such as the Employees Provident Fund (EPF), and whether zakah is applicable on them or not. The main objective of this paper is to study the Shariah aspect not only on the validity of the payment of zakah on monthly salaries in Malaysia but the validity of the payment of zakah on other funds such as the EP
Epistemology of finance: misreading Smith
No full textBefore the inception of the Islamic finance industry, there was what could be called a “market failure” in the conventional financial system. There was substantial unmet demand for Shari’a-compliant financial products. Islamic finance grew out of conventional finance to meet this demand. Muslim scholars writing mostly since the 1970s about Islamic finance focused on development of an Islamic finance system; they not only emphasised elimination of riba contracts but urged their replacement with risk-sharing contracts. The practitioners, most of whom had been operating in the conventional finance space, were however interested in developing ways and means of finance that, while Shari’a compatible, would be familiar to and accepted by market players in conventional finance