INCEIF Knowledge Repository (INCEIF University)
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A reality check: the slow progress of digital transformation in Islamic social finance (ISF)
No full textIt is true that significant progress in poverty alleviation and social empowerment has been made over the last 30 years. For OIC member states, the percentage of the population living below the poverty line has decreased by almost half, from 41.1% in 1990 to 22.4% in 2011. However, as populations increase, the number of people suffering from hunger, malnutrition and disease remains considerable. The 'OIC - 2025 Programme of Action' stresses, in Article 1.6, that Member States must transform their approach through "effective utilization of Islamic social finance (Zakat, Waqf) at national and intra-OIC level" in order to address poverty. It is quickly forgotten that the celebrated 17 social development goals (SDG's) were established as a result of unaccomplished targets in the MDGs or Millennium Development Goals. UNICEF warned at the advent of the 17 SDGs in 2015 that despite rapid progress in poverty alleviation, the most marginalized children in the world's poorest populations remain so. Sub-Saharan Africa didn't meet the goal for extreme poverty reduction, with not a single country achieving the goals set for maternal mortality rate reduction. As much focus shifts to ISF, its role in reducing these nightmarish rates has increased substantially
The effect of bank concentration and financial development on economic growth and income volatility: evidence from the OIC countries
No full textAlthough the well-functioning financial structure is, in general, a key to long-term sustainable economic growth and overall stability, the debate on the relationship between financial development and economic growth remains non-fading. The theoretical literature provides startlingly different and sometimes conflicting views on the finance growth nexus. In addition to this non-fading debate on finance - growth nexus, the degree of banking competition attracted increasing attention in recent years. Banking consolidations, merger and acquisitions, fuelled by overall banking deregulations and the lowering of economic barriers led to structural changes within the banking and financial environment. This prompted concerns among some observers over the potential for monopoly power in local banking markets. In short, there are two major, but contradicting, views. On one side, there are those who support competitive banking structure as it promotes competitive market practices that lead to efficiency. On the other, there are also those who argue that banks with monopolistic power (bank concentration) may spur economic growth as they are more capable of information collection, screening and monitoring borrowers ..
Conclusion
No full textIslamic finance industry has grown rapidly over the last few years, where the 2018 Islamic Finance Development Report by Thomson Reuters reported that the year on year growth by of 11% to US3.8tn of assets by 2023 (Thomson Reuters, 2018). Realising the importance of the industry, this book examines various issues on Accounting and Governance of Islamic financial institutions. In fact, the unique feature of Islamic financ that is based on the shariah principle warrants critical examination on various issues relating to accounting of Islamic financial transactions. Basically, business dealings are prohibited to contain component of riba (interest), gharar (uncertainty) and maysir (gambling/speculation), and trading of actual assets and share the risk between participants are encouraged. Thus, scholars posited different views as to whether the key concept of current accounting principles such as time value of money, substance over form, principles of probability and accrual basis are permissible. The book also covers accounting issues on various Islamic finance products and Shariah governance of Islamic financial institutions
Application of Shariah governance framework in Islamic financial institutions
No full textThis chapter provides discussion on a study that investigates the perceptions on shariah governance practices among Malaysian Islamic financial institutions. The chapter explores the effectiveness of implementation of Shariah Governance Framework among Malaysian IFIs with the focus on their level of commitment, the challenges and suggestions to further improve the effectiveness of implementation of this framework. The system of corporate control, effective and efficient governance that is consistent with shariah guidance has been an important agenda for Islamic Financial Institutions (IFIs) since the existence ofIslamic Finance in Malaysia. This is especially important in light of rapid growth in Islamic Finance industry not only in Malaysia but globally. The well-functioning Islamic finance industry can only be sustained if there is good corporate governance practice by IFIs that comply with the shariah guidance
The Maldives celebrates crystal anniversary of Islamic finance
No full textAmana Takaful Maldives celebrated its 15th anniversary of Islamic finance by honoring key institutional and individual stakeholders who assisted in the development of Islamic finance with awards of appreciation on the 11th July. The governor of the Central Bank of Maldives was the chief guest. Apart from myself, the other individual award recipient was Fathimath Shafeega, former CEO of Capital Market Development Authority, who is currently a board director of the Maldives Islamic Bank (MIB)
Islamic monetary economics and institutions: theory and practice
No full textThis edited volume explores theoretical and empirical issues related to monetary economics and policy in the Islamic financial system. Derived from the Conference on Islamic Monetary Economics and Institutions: Theory and Practice 2017 held in Male, Maldives, the enclosed papers highlights several option for authorities and regulatory bodies regarding monetary policy and regulation, as well as discussing how Islamic monetary policy effects growth, financial stability and resilience to shocks in practice. The inter-linkage between Islamic monetary policy and other markets are also explored. The subject of Islamic economics has gained considerable attention in the last four decades with the emergence of Islamic financial institutions around the world. This phenomenon has motivated economists to develop a comprehensive theoretical framework of modern monetary economics for Islamic economic system. An important characteristic of the Islamic economic system is the abolition of interest from the financial system. Islamic monetary economics is distinguished from conventional monetary economics due to the absence of interest ..
Major sukuk defaults: Shari'ah compliance appraisal
No full textThis thesis examines the major sukuk defaults that have been experienced to date in the Islamic capital market. The total major cases that have been witnessed, according to Syed Ali (2016), are 10 major cases. A further dig by this study found that they are actually 11 major cases in total. Due to constraints and data availability, only 6 major cases were sampled. While previous studies have discussed sukuk defaults from many perspectives, few attention have, so far, been given to issues in sukuk default from a Shari'ah perspective. This study investigates some of the issues with the 6 major cases sampled from a Shari'ah perspective. Hence, the contribution of this research is germane from that angle. Data relating to each case were gathered using secondary data. The methodology adopted in analysing issues in the light of the objectives of this study, and in presenting the findings and conclusion is the inductive analysis approach ..
Malaysia's Islamic Financial Services Act 2013 and Shari'ah governance: an analytical approach
No full textShari'ah compliance is the raison d’etre for the existence of Islamic banking and finance industry. A robust Shari'ah compliance can be achieved through an effective Shari'ah governance system. In view of its importance, Malaysia has in the last three decades developed robust legal and regulatory framework that aims to accommodate and facilitate the evolution of Shari'ah governance structure in its Islamic banking and finance industry. The implementation of the current Shari'ah governance framework has guided and assisted the Islamic banking and finance industry in mitigating the cost of Shari'ah risk in their operations and business. As a result, consumers' trust and confidence in the banking and finance sector is secured and sustained. Based on this background, this chapter explores the historical development of the Malaysian Shari'ah governance infrastructures that took place before and after the promulgation of the Islamic Financial Services Act in 2013 (IFSA). The implications of IFSA on the Shari'ah governance system are hereafter analyzed. In general, IFSA has shifted the Shari'ah governance landscape into a more meaningful governance through its inclusivity and uniformity approach
Do market structures, ownership, and risks matter for profitability and shareholders' value of Islamic banks in the GCC region?
No full textThis research aims to examine the relationship between Islamic banks' profitability and shareholders' value with the market structures, ownership structures, and financial risk factors, and to test for any differences in these performances between the Islamic and conventional banks. The impacts of both market and ownership structures and financial risks of banking performance is recognized globally and critical for the banking industry. The market and ownership structures are considered pertinent as they indicate competitive environment in which banks can lower costs, extend access to finance, and build effectiveness while garnering impacts of the financial risks will promote financial stability. In addressing the research questions and research objectives this study utilized balanced panel data of a sample of 60 commercial banks out of which, 17 are Islamic banks from the GCC countries during 2003-2015 periods. Four models were formula ted and estimated for each performance indicator using the PCSEs technique based on the results of diagnostic tests ..
Islamic finance withstands the winds of political change in the Maldives
No full textThe Maldives is a small island nation with a 100% Muslim population that is exemplary in its attempt to develop a fully-fledged Islamic finance industry. From only one Takaful company operating in the Maldives in 2003 under a conventional license, now in 2018, there are 13 institutions dealing with Islamic financial services, proving the ever-growing demand for Islamic finance in the Maldives