INCEIF Knowledge Repository (INCEIF University)
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How to expand the role of Islamic banking in trading
No full textEver since the establishment of Islamic banks in the 1970s, the difficulty in executing actual buy and sell transactions as the Quran commanded in the verse "Allah has permitted al-bay but prohibits riba" (Al-Baqarah 275) has spurred the industry into using questionable products that resemble interest-bearing loans as evident now in tawaruq munazzam and earlier in bay al-enah. Much of this unfortunate development in Islamic banking has to do with its deposit-taking function. Doing so requires the bank to follow stringent Basel Accord capital requirement against any risky positions it took in the business such as equity, leasing and trading positions. The trading business, namely buy and sell is the focus of this discourse. In addition to high capital charges, it is also besieged by inventory costs that can escalate bank overheads. These two problems can justify the lack of interest in the buy and sell model also known as murabaha by purchase order (MPO) or true sale murabaha financing (TSMF) as it requires the bank to hold risk of ownership of the purchased asset before making the credit sale to the customer
Women empowerment in Islamic finance industry
No full textWomen empowerment is often associated with feminism. The moment a woman voices out issues on gender equality, there is a general perception that she is talking about compromising of quality and competency and arguing for undue career development and its progression in favour of women. This is indeed not the case and this is not what women are advocating for
Weapon to end poverty: closing the gender wealth gap with Islamic wealth management
No full textWomen represent more than half of the world's population, and make 40% of the world's labour force. Yet, according to the World Bank, they hold just 1% of the world's wealth. The sizable gender wealth gap is even more stark for women in developing countries, where they are more likely than men to do unpaid work, or be out of the workforce, more likely to work in industries with lower average pay, and less likely to be in high-paid senior positions, according to the World Economic Forum's Global Gender Gap Index 2017
Comment on "US trade policy in the Trump administration"
No full textNoland (2018) has done a remarkable service, not only putting the subject matter in perspective, but also pin-pointing some of the risks and pitfalls, and what these mean for the USA and the rest of the world, notably Asia. For starters, the US policy changes will affect all its trading partners, even if these are purely domestic, given the size of the US economy and its extensive connectivity, what more if it involves trade policy. For one thing, it is most unfortunate that the policy changes are premised on flimsy grounds, and for another, it is also questionable that such policy responses represent solutions
Unraveling the financial contagion in European stock markets during financial crisis: multi-timescale analysis
No full textThe article investigates the evidence of financial contagion and market integration in selected European equity markets during nine major crises across regions. The focus is to identify whether (i) contagion evidence is pure or fundamental and (ii) dynamic evolution of integration is in the short run or long run. Wavelet decomposition in both its discrete and continuous forms is used. The findings reveal the following: (i) prior to the subprime crisis, contagion effects generated short-term shocks. The most recent US subprime crisis, however, reveals the evidence of fundamental based contagion. (ii) We find increasing short-run and long-run stock market integration, driven by several stages of the establishment of Economic and Monetary Union (EMU), questioning the ultimate benefits of formal entry into EMU membership
Maldives Islamic Bank to expand outreach in 2018
No full textMaldives Islamic Bank (MIB) is the first and only fully-fledged Islamic bank operating in the country since 2011. It started with only one office in the capital Male and over the years, it has expanded to other parts of the country. The latest branch is the Fuvahmulah branch opened on the 24th December 2017 at Gn. Fuvahmulah. This newly opened branch offers a complete range of banking products and services compliant with the Islamic Shariah, including deposit and investment accounts, consumer and business financing facilities, trade finance, remittance, electronic banking and other ancillary services. The branch is headed by a branch manager and supported by six experienced staff
Determinants of capital structure: evidence from Shari'ah compliant and non-compliant firms
No full textMany Muslim individual and institutional investors seek to invest only in stocks that are compliant with the Shari'ah (i.e. Islamic law). Among others, Dow Jones addressed this demand and has developed their proprietary screening methodologies to identify Shari'ah compliant firms (SC). One key factor that distinguishes SC firms from their non-compliant peers (SNC) is that the former is not allowed to cross the leverage threshold of 33%. Due to the restrictions imposed on them, it is expected that SC firms exhibit different capital structure compared to the SNC firms. The purpose of this initial comparative study is to analyze the most reliable debt determinants identified in the literature on both firm types. This study utilizes static panel data techniques on the sample consisting of SC and SNC firms from 7 countries and 7 industries over the years 2004-2014. Our study is inconclusive and it shows that most of the determinants do exhibit different effects among both firm types. Depending on the leverage measure, the effect of different independent variables on firms' capital structure varies. A uniform effect can be exerted for debt determinants profitability for both leverage measures, and growth opportunities, firm size and tangibility for market leverage only. Our robustness tests reveal that the impact of some debt determinants on firms leverage remains consistent. The coefficient sign and significance suggests, that the capital structure decision of both firm types, both are better explained by the Pecking Order Theory for book and by the Trade-Off Theory for market leverage, respectively
The effects of loan and financing portfolio diversification on bank returns and risk in dual-banking systems
No full textThe issue of whether banks should diversify or focus their portfolios is theoretically and empirically open to debate. Traditional wisdom in banking argues that diversification can reduce risk and improve retums. The theory of corporate finance, however, contends that diversification increases earnings volatility, write-downs and write-offs, agency problems and inefficiency. While the former suggests that banks should be as diversified as possible, the latter recommends that banks should focus their activities. In an attempt to test these arguments, numerous empirical studies have been conducted - primarily on conventional banks in single-banking systems from developed economies and large emerging market countries. However, there is no consensus thus far as there is evidence supporting both arguments. In other words, no single strategy can be uniformly applied across banks from different countries ..
Financing strategies for apparel start up business: a case study of RS Frenzy
No full textThis book was written in a case study appraoch which has been successfully proven as an effective tool in teaching and learning process, particularly at the postgraduate level. Its function is to business scenarios, and relevant issues faced by aspiring entrepreneurs. Therefore, building on real case studies developed from the apparel and clothing industry's setting and supported by the authors' own experiences, this book hopes to stimulate the interests and passions in case study writing for the further development of effective learning approaches through case studies among students, academics, and practitioners ..
Comparison of methodologies of Shari'ah stock screening: the case of SAC SC Malaysia, FTSE Yasaar Dubai and Dow Jones Islamic market indices
No full textOn average the Islamic finance industry has grown by almost 20% per annum, a compound annual growth rate of 17% from 2009 to 2013 (IFSB, 2013) with its current assets estimated to be worth USD 2 trillion and is set to reach USD 5 trillion in year 2020. This paper aims to analyse three Shari'ah screening methodologies namely Securities Commission (Malaysia), FTSE NASDAQ Dubai Shari'ah Index Series and the Dow Jones Islamic Market Indices. A sample of 30 companies comprising Shari'ah and non-Shari'ah stocks invested by the Malaysian institutional funds were analysed. Our analysis shows that out of the 30 samples stocks, only eight companies passed the screening using the criteria of the three providers. The limitations of the study is the non-availability of detailed information such as type of bank accounts and debts, hence assumption made is that the cash are placed in conventional accounts unless indicated