INCEIF Knowledge Repository (INCEIF University)
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The application of ju'alah in Islamic finance: the Malaysian perspective
No full textJu'alah is one of the least researched types of Shariah contracts used in Islamic finance. The objective of this paper is to explore the current and potential applications of Ju'alah with specific reference to Malaysian Islamic banking, takaful and the Islamic capital market. This paper establishes that there is potential for using Ju'alah in Islamic finance as a primary and/or secondary contract. It also establishes that Ju'alah can be used in takaful, though it is not being currently used for this in Islamic banking and the Islamic capital market in Malaysia. It is anticipated that the findings of this paper will improve understanding of the practice of Ju'alah in the Malaysian Islamic finance industry
The nexus between oil price and Islamic stock markets in Africa: a wavelet and multivariate-GARCH approach
No full textThe goal of this paper is to address the relationship between crude oil-price changes on some selected African Islamic indices, using daily data from May 4, 2011, to January 25, 2018. We employed three main techniques: MODWT, CWT, and multivariate-GARCH-DCC, to analyze whether these markets have any diversification opportunities. Our findings reveal that, first, the results of MODWT shows Egyptian Islamic index leading all indices. Second, CWT results show that investors would gain diversification benefits in almost all markets (except South Africa) and enjoy the benefit that comes with long-term investments. Third, we observed low correlations between the Egyptian and Tunisian Islamic indices, with oil-price returns suggesting diversification benefits in these markets. Of all the Islamic stock markets, Tunisia's has the lowest volatility with the crude oil index. Investors holding a portfolio of these stocks can afford to have exposure in crude oil-related assets and achieve maximum diversification benefit
Islamic banking and income inequality: a comparative study between Islamic and conventional banks in OIC countries
No full textUnited Nation Development Project (UNDP)'s Human Development Report 2019 shows the top 1% of the economic elite of the rich and poor countries, made huge gains over 1980-2016. As result, the top 1% alone received 27% of income growth over the period, compared with 12% received by the bottom 50%. There has been a universal concern on wealth and income distribution. The income gap between the rich and poor is staggering and will get worse with every global crisis that tends to come every ten odd years like the COVID-19 pandemic currently hitting the globe. The objectives of the study are (1) To evaluate the impact of Islamic banking development on Income Inequality. (2) To compare the impact of Islamic and conventional banking development towards income inequality.In doing so, a panel data analysis is conducted by taking the data of seven OIC countries from the period of 2001 to 2015. The main variables in consideration are income inequality based on Gini coefficient produced by Estimated Household Income Inequality (EHII) of University of Texas Inequality Project (UTIP) and banking development (both Islamic and conventional) represented by total banking asset. While the controlled variables are economic growth as measured by real Gross Domestic Product per capita (RGDPC) and inflation as measured by Consumer Price Index (CPI). Robustness test is done by substituting total banking deposit as a measure of banking development. A total of 8 regression models are designed consisting of Pooled OLS, Random Effect and Fixed Effect estimators. The estimated findings suggest that both Islamic banking development and conventional banking development have a positive relationship towards income inequality
Gender diversity in corporate boards of Malaysia - does it really matter?
No full textThe journey of gender inclusion in Malaysia began in 2004 when the government pushed for 30% of decision making positions in the public sector to be filled by women. This was achieved in 2010. In 2011 the Securities Commission of Malaysia (SC) in its Corporate Governance Blueprint encouraged listed companies to develop gender diversity policies and to disclose its implementation toward achieving 30% target of women in their boards by 2015. However, this target was not achieved because of a number of factors, most important among them was that gender inclusion was only a recommendation and not a practice to be complied by listed companies. Besides, there was limited supply of women who were ready to join boards of listed companies as independent directors. Institutions directly and indirectly involved or connected with developing career opportunities for women up to board level were at their infancies (LeadWomen Malaysia established in 2011, and 30% Club Malaysia in 2013). At the same time recruitment of qualified directors especially independent directors to meet listing requirements took precedence over the female directors
Pitfalls of the dual-banking system: the unbreakable future of Islamic banking
No full textIslamic banking institutions are established to provide an alternative financing arrangement that uses trading (al-bay) as opposed to usury in their business. The banking modality however is still based on the deposit-taking function where deposit funds are used by banks to make loans. Deposit funds are in essence loans acquired from depositors who can make withdrawal on call, thus bank faces withdrawal risk and also potential bank run under economic shocks
Challenges facing Malaysia in expanding its Islamic fintech landscape & possible remedies
No full textDespite being a dynamic hub for the Islamic financial products and services, Malaysia's Islamic fintech landscape does not meet expectations. With a number of challenges such as stringent regulations, lack of adequate funding, shortage of a skilled workforce, fierce conventional competitors etc. the future growth and progress might only remain an unfulfilled dream if they are not addressed timely. This paper is aimed at critically discussing these challenges faced by such companies. Also it aims at proposing potential measures to overcome the highlighted issues. But in order to validate the mentioned challenges and the potential remedies, an interview based approach is employed. The top and middle management of five full-fledged Islamic fintech companies were interviewed with the aim of ensuring whether the mentioned challenges actually exist or not. And whether the proposed solutions are practicable. Based on the findings from the interviews, it is observed that almost all the mentioned challenges are recognized by the companies. Although not all were in consensus regarding every issue, but in general they saw the challenges as legitimate. The proposed solutions were also well received and recognized as beneficial for the companies. Another finding from the interviews was additional challenges the companies saw as worrisome, such as lack of awareness and technological ignorance among the masses. The paper concludes with the recommendation for the relevant authorities to address the highlighted issues with seriousness. Further research may be carried out to provide solutions for the additional issues pointed out by the companies
Introduction to Islamic social finance
No full textThese are the slides presented by Associate Professor Dr. Aishath Muneeza entitled "Introduction to Islamic social finance" at Islamic Economics Winter Course 2020, Bogor, Indonesia
Identifying the determinants of corporate sukuk yield spread: evidence from Malaysia
No full textSukuk has become one of the main instruments for corporate to raise fund nowadays. Aside from its ability to reach a wider range of investors, being part of an ethical investment game adds to its global acceptance. With the total outstanding reached USD 434.8 billion in 2017 worldwide, the sukuk market has become more conceptually and practically complex. As they have been traded side by side with conventional bonds which both are grouped in the same asset class-fixed income, there is a suspicion whether both spreads are explained by the same determinants or not. Ideally, sukuk spread should behave differently because they conform with Shariah requirements at all time. Therefore, this paper takes an opportunity to unveil what are the determinants of sukuk spread, focusing on Malaysian corporate sukuk issued from a period of 2010-2017. Our cross-sectional analysis offers interesting findings. Common determinants of bonds spread such as credit rating, tenure, and issuance amount significantly determined sukuk spread. In addition to that, sukuk main features such as sukuk structure (asset-based and asset-backed) and underlying Shariah contracts also significantly explained the spread, with the exception of Mudharabah and Wakalah. Findings suggest that Shariah requirements are priced and reflected accordingly in the spread. Other material findings include high proportionate difference of spread for asset-based sukuk against asset-backed sukuk, where intuitively can be understood that the latter is safer investment than the latter. Based on the findings, the study proposes two initiatives to the policymakers: (i) to encourage the corporate issuer to issue more asset backed or hybrid sukuk in order to promote social well-being and economic sustainability and (ii) to explore valuation and pricing mechanism specific to sukuk according to underlying structures, Shariah contracts, and assets
Comment on "Protectionism under Trump: the China shock, deplorables, and the first white president"
No full textThe USA under Trump has departed from its long-cherished tradition of being a leading proponent of liberal trade policies to a new norm that seeks comfort in protection-ism. Noland (2020) provides a deep insight into the political economy that explains the sudden reversal of US trade policies since 2016. In addition to furnishing an excel-lent literature survey which sheds considerable light on the issues at hand, Noland delves into an econometric analysis of the voter preferences, in which the explanatory variables are economic, demographic and cultural factors, with interaction terms
People's wellbeing: a strive to meet maqasid al-Shariah
No full textThere is wide consensus that the ultimate objective of government policies is to improve the quality of people's lives. The reality, however, is that the impact of government policies tends to be measured rather in terms of GDP growth as proxy for progress. The debate about growth vs. development is not new as the distinction between these concepts was recognized since the 1970s. GDP growth has often been understood in terms of improvement in the quality of life. However, further research is indicating that inequality affects sustainable growth (Berg and Ostry 2011), which in turn reduces the ability to improve the quality of life. This is the case of many OECD nations where household income of the richest segment grew faster than that of the poorest (OECD 2011a). Thus, the redistribution of income and wealth should not be regarded as a substitute but a complement to economic growth (Mat Zin 2008)