INCEIF Knowledge Repository (INCEIF University)
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The Fed dodges a bullet - for now
No full textWhat a month March had been. Over a three-week period, four mid-size US banks had to be rescued and one large Swiss bank had to be folded into another. Meanwhile, a German bank had to suffer serious erosion of its equity value. It started with Silicon Valley Bank (SVB) needing to be rescued following a run by its depositors, on news of its loss of some US$2 billion (RM8.8 billion) from the sale of US government bonds it had been holding. It appears that SVB was holding a huge portfolio of long-dated government bonds - a clear case of a serious duration mismatch. Surprisingly, no one, not even the banking regulators, seemed to have been watching interest rate risks, even as the US Federal Reserve had been raising rates rapidly. Rising rates affect the value of items on a bank's balance sheet. Both assets and liabilities are affected, with the impact being determined by the duration of each item. Given the intermediation function of banks, the duration of assets is invariably longer than that of liabilities, a large part of which would be deposits. Thus, a bank holding large amounts of long-dated bonds would have a disproportionately large asset side duration and. accordingly, a large duration gap, making it highly susceptible to even small interest rate rises
Exchange rates matter for long-term wage growth, productivity and national well-being
No full textOf late there has been much hand wringing about the performance of the Malaysian ringgit. The ringgit's depreciation has been steady and sustained against several key currencies, in particular the US dollar. Indeed, there is cause for concern as exchange rates do matter for the long-term well-being of a nation. The experience of countries like Japan, South Korea, Taiwan and China show that cleverly managed exchange rates can be the enabler for national growth and prosperity. Yes, a nation needs much more than just exchange rate policies to succeed. But a well-formulated exchange rate regime can enhance competitiveness, incentivise the right type of industry formation, enable the macroeconomy to evolve as needed and optimise allocative efficiency. On the other hand, an ill-conceived exchange rate regime can stunt economic progression and nudge countries into a low-value-added, low-income trap
The role of technology in effective distribution of zakat to poor and needy
No full textZakat (alms) is the third pillar of Islam. In zakat management, different countries adopt different approaches. As such, the effectiveness of zakat management depends on the way it is managed. With industry 4.0, technology has become an integral part of the lives of human. Technology has no religion and Islam does not prohibit the use of technology for benefcial purposes. Therefore, to enhance zakat administration, technology can be utilized. The classical zakat management process has three stages. The frst stage is the zakat collection stage where the zakat administrator will collect the zakat from its payers and then will keep that money collected in a separate account as a trust. The second stage is managing the received zakat fund in an effective way so that the benefit of the zakat will be enjoyed by its recipients mentioned in the Quran (legal recipients) in an effective way. The fnal stage is where the zakat is distributed to the selected legal recipients
Impact of house price on economic stability: some lessons from OECD countries
No full textDespite having abundant literature blaming a faulty financial system and exuberant price expectations as the primary causes of housing bubbles, there is a lack of research that looks at the impact of house price instability on the economy. This study aims to fill this gap by thoroughly examining the connection between house prices and economic output, and the effect of house price volatility on economic stability. Drawing from long-spanning quarterly data from 17 OECD countries from 1970 to 2019, the study develops and tests economic growth and volatility models to uncover significant insights. The empirical results show that house price returns have a significant asymmetric impact on economic growth, with negative returns having twice the effect of positive ones. Moreover, the results indicate that house price volatility significantly contributes to economic instability. In light of these findings, the paper concludes with valuable policy recommendations to enhance the housing market and improve overall economic stability. This study provides a compelling argument for the importance of closely monitoring and regulating the real estate market in order to maintain a healthy and stable economy
Shariah screening and corporate governance: the case of constituent stocks of Dow Jones US Indices
No full textShariah screening discards the firms that belong to impermissible business sectors (or sin industries) and follow capital structure with high debt and current assets. This study tests whether the firms passing Shariah screening have better (or worse) governance quality as compared to firms not subjected to Islamic screening. The screened firms may have lesser governance quality as they cannot use debt to discipline managers or achieve optimal capital structure. On the contrary, they may be better governed as these firms get higher presence of institutional investors and better analyst coverage. This paper provides comparison of governance quality of Shariah compliant (SC) firms in United States by using proprietary dataset of Dow Jones US Indices. The screened firms offer ground for a natural experiment as they pass negative ethical screening and meet financial criteria for the inclusion in the index. The findings suggest that the SC firms have lesser governance quality than Shariah Non-Compliant firms. The lower level of governance can be attributed to lower Size, lower Profitability, higher Dividend Payout, higher Total Risk and lower Free Cash Flow. Various robustness tests are performed to validate the findings and the results remained robust. These findings provide useful insights about the governance mechanism of SC firms that are emerging as an important alternative investment class in the last two decades
Developing a social security micro-takaful model for gig economy workforce
No full textThe gig economy is a relatively new trend that has not yet been researched or documented significantly. The term "gig economy" refers to labor markets that offer contract-based, temporary, on-demand work and focus primarily on completing specific tasks. This research attempts to conduct a literature review on the risks that gig workers experience and the variables contributing to their lack of protection. In addition, the paper presents an idea for a model of takaful that would apply to gig workers. In addition, the study details the policy implications for the various stakeholders
Case for a centralized database for waqf administration in Malaysia
No full textThe aim of this paper is to evaluate the various existing models of waqf in practice and determine their applicability within the context of Malaysia. This study was undertaken to investigate the practicality, feasibility, and potential success of implementing a centralized database for the administration of waqf. The research process involved extensive desktop research and thorough benchmarking analyses. Additionally, the study delved into the identification of obstacles and challenges. To provide comprehensive insights, case studies were meticulously compared and contrasted. The findings of this study indicate that the establishment of a centralized national Waqf database would significantly enhance the efficiency and effectiveness of Waqf operations and administration. Furthermore, it would contribute to the enhancement of integrity and transparency within the system. Following this line of thought, the adoption of such a system aligns with the principles of maqasid al-Shariah, ultimately safeguarding the reputation of Islam
A comparative analysis of Shariah governance framework of Islamic bank in Malaysia and Pakistan
No full textThe aim of this paper is to investigate the differences between the contemporary Shariah governance frameworks of Malaysia and Pakistan. The study also examines the ways in which the Shariah governance frameworks of both countries can complement each other. This research concludes that the SGF principles of both countries under discussion abide by the AAOIFI and IFSB guidelines regarding SGF. Many aspects of the SGF of Malaysia are similar to the SGF of Pakistan. For example, both structures need to further develop the ethical aspect. While the similarities are plentiful, a few differences can be found between the two as well. This research provides insights to policy makers, regulators, and practitioners on approaches in governance policy and an assessment of the governance scope adopted by Malaysia and Pakistan via their respective SGFs. The SGFs have also been assessed for their conformance to international standards, including the AAOIFI and the IFSB
Tajdid al-nazar fi qadaya mustajidat fi al-tatbiqat al-mu'asirat lil ijarat al-muntahiyat bi al-tamlik
No full textAn abstract is written in Arabic
Maldives Islamic Bank�s customer deposits reach MVR5.5 billion (US$355.74 million) in Q1 2023
No full textIn the financial report of Maldives Islamic Bank (MIB) published for Q1 2023, it is reported that during the said quarter, total assets of the bank reached MVR6.59 billion (US355.74 million) from MVR5.14 billion (US194.69 million) recorded as net receivables from financing activities at the end of Q1 2023 compared with MVR2.82 billion (US6.7 million) by the end of the quarter, compared with MVR96.21 million (US2.74 million), compared with MVR20.94 million (US0.12) from MVR0.93 (US2.37) from MVR34.81 (US$2.25) in the same period