INCEIF Knowledge Repository (INCEIF University)
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Globalization and Islamic finance: convergence, prospects, and challenges
No full textThis is an extremely valuable book written by three highly qualified scholars whose credentials for writing such a book are difficult to match. The timing of the book is also perfect, having come at a time when the worst financial crisis in living memory has intensified the quest for reform of the international architecture. The proposals made by the authors should go a long way in not only reforming the system but also in accelerating the move towards financial globalization and convergence of the conventional and Islamic financial systems
Duration gap and net worth risk for Islamic and conventional banks: a comparative cross country analysis
No full textThis paper undertakes a comparative analysis of the Duration Gap and Net Worth (NW) risk of Islamic Commercial Banks (ICBs) and Conventional Commercial Banks (CCBs). Though Islamic banks work on interest-free principles, the vast majority of the world’s ICBs operate within dual banking systems. The inevitable flow of funds between the two banking systems and the common customer base implies that ICBs would have the same exposures as CCBs. Our sample consists of a total of 60 commercial banks from nine Islamic countries. These were made up of 30 ICBs and 30 CCBs. Each ICB had a CCB pair of approximately equal asset size in US $ terms
Elder abuse in Malaysia
No full textThe purpose of this research is to formulate a legal framework to resolve the issue of elder abuse which is a malicious act prevalent in the Malaysian society, which people do not know how to recognise. The methodology employed is library based research. The focus of this research is to analyse the different types of elder abuse and to identify the ways in which society can be educated in the matter and to find out the most suitable solution to this problem. It is argued here that like child abuse, elder abuse is also a problem in our society where attention must be given and the victims of this 'crime' must also be given protection and the offenders must be punished. The Islamic point of view in this matter will also be discussed. The outcome of this research is to devise a legal framework to legally recognise this as a crime and to find solutions to remedy this problem particularly in Malaysia, by referring to the laws of other jurisdictions which have already formulated laws regarding the matter
Economy
No full textBeing Muslim implies concern with the ethics of social justice. This extends as fully to economic relations as to all other aspects of one's life. Ethical concern here springd from the very basic principles of Islam, such as the giving of alms (zakat) and the prohibition of usury (riba), as essentials of a just economic order..
Performance of Islamic and conventional exchange traded funds in Malaysia
No full textETFs have attracted many investors as one of the most innovative products of financial engineering. By virtue of the nascent nature of MyETF-DJIM Titan 25 and FBM 30ETF in Malaysia, comparative performance studies are essential during a financial crisis. MyETF is different from FBM 30ETF in terms of investment scope and Shariah governance structure. While MyETF has achieved its objective in tracking its index, FBM 30ETF has failed in this respect. Despite its higher total risk, MyETF performed better than its index. The same applies in the case of FBM 30ETF. Although MyETF has bigger net assets, economies of scale, and better diversification, the performances of the two funds are lacklustre and similar, with FBM 30ETF performing somewhat better. Notwithstanding their success to outperform their respective benchmarks, both ETFs had comparable negative performance, with decline in prices and NAV. The negative returns have caused abnormality in their measurements
Dubai financial crisis: causes, bailout and after - a case study
No full textThis paper explains the circumstances that led Dubai to the current financial crisis that still lingers. It analyses the steps taken at various stages by the city state to ameliorate the situation including the bailout help the UAE Government eventually granted. It spotlights the role international rating agencies played in aggravating the situation and demands that their activities be brought under regulatory nets now being strengthened across the world in the context of ongoing global meltdown. Finally, it warns of challenges Dubai may be facing in years ahead and what could be done to pre-empt them. The argument is cast with a backdrop of the economic position of UAE in the Middle-East and happenings at the global level in the arena of finance; mainstream and Islamic
Model uncertainty and asset return predictability: an application of Bayesian model averaging
No full textWe investigate model uncertainty associated with predictive regressions employed in asset return forecasting research. We use simple combination and Bayesian model averaging (BMA) techniques to compare the performance of these forecasting approaches in short-vs. long-run horizons of S&P500 monthly excess returns. Simple averaging involves an equally-weighted averaging of the forecasts from alternative combinations of factors used in the predictive regressions, whereas BMA involves computing the predictive probability that each model is the true model and uses these predictive probabilities as weights in combing the forecasts from different models. From a given set of multiple factors, we evaluate all possible pricing models to the extent, which they describe the data as dictated by the posterior model probabilities. We find that, while simple averaging compares quite favorably to forecasts derived from a random walk model with drift (using a 10-year out-of-sample iterative period), BMA outperforms simple averaging in longer compared to shorter forecast horizons. Moreover, we find further evidence of the latter when the predictive Bayesian model includes shorter, rather than longer lags of the predictive factors. An interesting outcome of this study tends to illustrate the power of BMA in suppressing model uncertainty through model as well as parameter shrinkage, especially when applied to longer predictive horizons
Comment on "International and regional cooperation: Asia's role and responsibilities"
No full textAsia's role and responsibilities in international and regional cooperation, depicted by Drysdale and Armstrong (2010), can be understood best in the context of the postcrisis trans-Pacific rebalancing. Asia has been in the thick of the global economic crisis, given its extensive financial and trade exposure to the West. Asia is an integral part of not only the problem but also the solution, for it can play a pivotal role in the postcrisis rebalancing exercise, just as it had contributed to the global imbalances in the first place
What it takes to embrace Islamic finance
No full textThe question we hope to answer is what are the preconditions needed to embrace Islamic Finance? The term Islamic Finance must be underlined by Shariah, otherwise there is no Islamic Finance. It encompasses banking, insurance (takaful) wealth planning, capital and money markets. In fact, it includes also the personal, public and corporate finance. In fact, it also includes international finance. Shariah is essentially the Islamic law that covers all aspects of life for Muslims. Its main objective is to provide what is good and beneficial to society and prevents what is harmful and bad for society. This is only achievable by commanding what is good and forbidding what is evil. It is to create a just and fair environment for all. Justice and fair dealings is the ultimate objective
Introduction
No full textThere are two basic approaches to Islamic economics and finance: Shari' ah compliant and Shari'ah based. The former is relatively easy and therefore dominates. It involves looking at the West for viable economic or financial institutions and instruments. After identifying these, it reverses engineering and dismantles them into their essential components. This is followed by the introduction of additional transactions, trying to make each component comply with the Shari'ah. It can then claim to have invented a new instrument that is Shari'ah compliant