INCEIF Knowledge Repository (INCEIF University)
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The constitutionality of Shariah Advisory Council of Bank Negara Malaysia (SAC) vis-a-vis JRI Resources Sdn. Bhd. v. Kuwait Finance House (Malaysia) Berhad
No full textIn a recent landmark case, JRI Resources Sdn. Bhd. v Kuwait Finance House (Malaysia) Berhad, the Federal Court, the apex court in the judicial system of Malaysia, decided that the ascertainment of Islamic law by the Shariah Advisory Council of Bank Negara Malaysia (SAC) is binding on the judiciary and is not tantamount to a judicial decision. Of the nine panel judges, four judges dissented, arguing against the legality and constitutionality of the SAC. The dissenting judges argued that the SAC has been vested with judicial power by section 57 of the Central Bank of Malaysia Act 2009; hence, this section is unconstitutional and invalid and needs to be struck down. This brief write-up will shed some light on key issues underlying this historic judgment. Before that, let us take a quick look at the impetus that spurred the establishment of the SAC
The potential of application of technology-based innovations for zakat administration in India
No full textIndia is the home country for many Muslims and effective management of zakah is essential to the country. In this era of technology, it is imperative to fuse technology with zakat to ensure that the classical zakat administration approaches are upgraded to the uruf or customary practices of the society. The objective of this paper is to find out the potential of using technology in upgrading zakat administration in India. This is a qualitative approach where the primary sources such as zakat administration laws in India and secondary sources such as journal articles and published reports on the subject are analysed to derive conclusions. The findings of this paper suggests that the innovations such as rice ATMs, mobile applications, applications made with blockchain technology, artificial intelligence and big data can also play a vital role in the effective management of zakat in India. It is anticipated that the outcome of this research will assist the zakat administrators in India to adopt technology in this regard
How Sudan attracted retail investors through sukuk shehama
No full textThe issuance of sukuk in Sudan started since 1998 as an alternative Islamic instrument for liquidity management. In 1998 the Central Bank of Sudan established the Sudan Financial Services Company SFSC as the SPV with the aim to manage the issuance of these sukuk. The main objective of this company is to achieve sustainable economic and social development through the provision of Islamic financial services, and satisfying the desires of the society
Empowerment of refugees using Islamic social finance instruments in a western context: exploratory study in the Netherlands
No full textThis thesis examines the role that Islamic social finance instruments can play to support the refugee crisis and its effects, faced by the Muslim community in the Netherlands. This research is the first study that is focused on Islamic social finance for refugee empowerment and integration in the Netherlands. The study highlights the entire journey of a refugee in the Netherlands, its challenges, the role of non-profit organizations as well as the opportunities for Islamic social finance. This thesis presents the Dutch Zakat and Waqf Institute (DZWI) model as a proposal to integrate zakat and waqf into the mainstream philanthropy sector in order to empower refugees. DZWI enables the Muslim community to fulfil their responsibility ofempowering refugees and concurrently reverse the anti-Islam sentiment
Does the tax undermine the effect of remittances on shadow economy?
No full textThere are considerable studies regarding the contribution of international migrants' remittances to economic growth while there is a lack of studies which investigate the effect of remittances on shadow economy. The authors explore empirically the effect of remittances and its interaction effect with tax on shadow economy by using panel data covering the period 2004-2015 and applying the GMM method for 141 countries. Their empirical model, in which a remittance-recipient government, operating in tax environment of some regimes (imposition of different levels and kinds of taxes), predicts a negative effect of remittances on shadow economy, is mitigated by a higher tax regime. In other words, the paper argues that a well-established negative correlation between remittances and shadow economy has been weakened by tax rule. The study contributes to the current literature on public policy that gives importance to know the causes of shadow economy and boost remittances effect. The authors' baseline results are robust to various computations of macroeconomics variables, institutions variables and freedom variables
Non-linearity in Islamic finance - growth nexus: evidence from Malaysia
No full textThe mainstream belief that finance contributes positively to an economy has been challenged in view of financial crises that hit economies worldwide, while the notion that Islamic finance is more stable than conventional finance has been criticised as the structure often mimic conventional financing. Amidst the rapid development of Islamic finance in Malaysia, the question of whether it contributes positively to the economy is never resolved. The present paper uses 'Islamic financing' and 'Islamic deposits' as proxies to analyse the relationship between Islamic financial development and economic growth. By employing vector error correction method (VECM) and variance decomposition (VDC) analyses within the framework of autoregi'essive distributed lag (ARDL), the study documents a demand-following relationship where economic growth leads to Islamic financial development. Next, this study extends prior literature by applying non-linear autoregressive distributed lag (NARDL) model to relax linearity and symmetrical assumptions ..
The effects of corporate social performance on credit risk
No full textIn the aftermath of the Global Financial Crisis of 2008-2009 , there has been increased scrutiny in the way that credit rating agencies (CRAs) have conducted credit risk analysis. Through the UN-supported Principles for Responsible Investments (PRJ), a growing number of investors and CRAs have collaborated to enhance the systematic and transparent consideration of environmental, social and governance (ESG) factors in the assessment of corporate creditworthiness. While there exists a burgeoning literature that examines the relationship between corporate social performance (CSP) and credit risk, there are several prevailing issues. Firstly, previous studies of CSP have relied on measures which do not account for the differential materiality of ESG issues across different industries. Taking into consideration ESG issues that are material from a value creation perspective would allow for better integration with financial markets. Secondly, the majority of previous studies exploring the CSP-credit risk relationship have not used market-based measures of credit risk ..
Portfolio diversification for Turkish investors in Southeast Asian countries: empirical evidence based on MGARCH-DCC and wavelet
No full textThis study is an initial attempt investigating the extent to which portfolio diversification benefits are available at different investment horizons to Turkish conventional and Shari'ah compliant investors in Southeast Asian conventional and Islamic stock markets. We apply multivariate-generalized autoregressive conditional heteroscedastic (MGARCH-DCC) and Wavelet techniques on daily data spanning from 2007 to 2018. The findings tend to suggest that Turkish investors would likely not invest in Singapore stock markets. At the same time, investing in stock indices of Indonesia and Thailand present moderate diversification benefits overall. The results highly recommend that Turkish conventional and Islamic investors would rather opt for Malaysia stock markets for higher diversification benefits, especially for the short-run investment horizons up to 16 days, as well as for long-term investment periods exceeding 128 days. In addition, Turkish conventional investors could also consider investing in Thailand Islamic equities in short-run holding periods up to 16 days. As for the medium investing horizons from 16 to 128 days, it is advised to avoid investing in all the equities because of very low diversification benefits for Turkish investors ..
Liquidity risk management in Islamic banks: evidences from Malaysia
No full textAfter the global financial crisis, there are discussions in terms of liquidity risk management of banks, and in this context, many new tools, regulations, and mechanisms have been introduced by regulatory authorities. Islamic banks are also being governed by these tools and regulations. Liquidity risk is one of the important issues that needs attention in terms of resilience of Islamic banking sector. It can be defined as a shortcoming to cover financial liabilities and its management is related to managing the expected and unexpected cash outflows. A scrutiny of this important issue in an Islamic banking context is crucial to promoting efficiency, growth, and resilience of the Islamic financial industry
Accounting for musharakah mutanaqisah home financing
No full textThis chapter provides the discussion on accounting issues for musharakah mutanaqisah (MM) home financing in the case of Malaysia. Though the MM mode of financing has addressed the 'ambiguities and risk issues in conventional mortgage financing and the controversy that surrounds other financing packages like al Bai Bithaman Ajil and Bay al Inah (Mydin-Meera & Abdul-Razak, 2009), there are some practical issues in operating this mode of financing, as Islamic banks operate this type of contract more closely to conventional practice, thereby lacking the spirit of the contract itself ..