INCEIF Knowledge Repository (INCEIF University)
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Size, correlations, and diversification: new evidence from an application of wavelet approach to the emerging Islamic mutual fund industry
No full textDespite the rapid growth of Islamic finance in recent years, there has been relatively little work done on the emerging Islamic mutual fund industry within the broad field of Islamic finance. As far as the authors' knowledge, this paper is the first attempt dedicated to understanding the correlation between different sizes of the young and rapidly growing Islamic mutual fund industry at different investment horizons. Major part of economic time series analysis is done in time or frequency domain separately. Wavelet analysis can combine these two fundamental approaches, so we can work in the time-frequency domain. Using wavelet coherence, we have gained valuable insights into the continuous dynamics of correlation between small, medium and large size Islamic mutual funds at different investment horizons for reaping the benefits of portfolio diversification in particular and keeping contagion risk at bay
Islamic economics and Islamic finance in the world economy
No full textThis paper places the articles in this special issue in the contexts of Islamic economics and finance research. It highlights the foundations of Islamic economics, which are in practice manifested in Islamic finance. Then, the paper brings up three key issues in Islamic finance today: the Islamicity of Islamic banking, real contributions of Islamic finance, and Islamic finance in the present monetary framework. While there are some promising theoretical and empirical findings pointing to positive contributions of Islamic finance, there is still a need for Islamic finance to distinguish itself from the conventional finance and to further demonstrate its real effect
Default risk of SME's in Malaysia: the role of religion
No full textBank financing is an important external source of financing for SMEs. However, banks often considered SMEs as riskier than large enterprises and therefore use various tools to mitigate their risks in SME lending / financing such as imposing collateral requirement, higher pricing and credit rationing. This may limit access to finance for the SMEs. By understanding SME default risk better, banks may reduce or eliminate the collateral requirement, lower the pricing or avoid credit rationing thus improving access to finance for the SMEs. Studies have considered various risk factors and their impact on default. However, none, to the best of my knowledge has considered religion as a risk factor. Religion has been shown to influence individual decision-making that affects economic outcomes. Thus, this thesis postulates that religion may have an effect on SME default risk too. The thesis examines religion from four perspectives; as a loan characteristics i.e. Islamic financing and conventional loan, as a firm characteristic i.e. Muslim and non-Muslim owned SME, as a brand and religiosity ..
Sukuk innovation needs to go further
No full textSukuk, which is probably Islamic finance's most popular product, has of late gone through a fair bit of innovation. As opposed to their earlier structures which were nothing but Shariah-compliant straight debt, some of today's sukuk come with a variety of features. Broadly speaking, there are two broad thrusts in the innovation that have taken place. First, the use of embedded options for better risk management/proling. Second, innovation seeking to overcome limitations like the need for physical underlying assets. Though options - especially the exchange-traded variety - are still anathema to a majority of the fuqaha (Shariah scholars) fraternity, their use within sukuk structures appears to be booming. A wide range of sukuk, originating from diverse geographic jurisdictions, come with embedded options
The measurement model of performance determinants: a case study of Islamic insurance (takaful) in Malaysia
No full textThe study aims to investigate the measurement model of four constructs, namely, spirituality at the workplace (SP), Islamic spirituality (ISP), organizational commitment (OC) and organizational citizenship behaviours (OCB). The study aims to contribute new knowledge to the existing literature whereby performance determinants comprising these constructs, serve to improve employee well-being which ultimately improves organizational performance. Using disproportionate stratified random sampling, the survey data used for this empirical research were drawn from 482 employees working in takaful agencies in Malaysia. After yielding an instrument to measure SP, ISP, OCB and OC, principal component analysis (PCA) using SPSS and confirmatory factor analysis (CFA) using AMOS were carried out
The less developed states are converging to the richer state in Malaysia: an empirical investigation with some robust results
No full textThe present paper addresses the question whether the less developed states, namely; Kedah, Kelantan, Pahang, Perlis, Sabah, Sarawak and Terengganu are converging with the richer state of Selangor, using unit root test and cointegration approach to test for income convergence for the period 1970-2013. We tested convergence on per capita real GDP for the states involved and the results suggest that the less developed states have been converging to the state of Selangor for the period under study. We also identify two convergence clubs among the states. In this respect, the state government has an important role to play in enhancing growth by continuously providing stable economic environment for investment and other productive economic activities. Without the Five-Year Malaysia Plans, this convergence phenomenon could not have been achieved in Malaysia. To ensure further convergence can take place at a faster rate in the future, government efforts and policies to foster narrowing states' income disparity has to be enforced further
New murabahah-based product and Islamic finance panel discussion in the Maldives
No full textOn the 2nd May 2018, the Bank of Maldives (BML) Islamic announced the launch of a new personal financing product whereby applications for this product will be processed within seven days and customers will pay the price of the goods in monthly installments. It is stated on the official website of BML Islamic that customers can now shop for electronics, furniture or home appliances from any of the authorized dealers and pay in monthly installments with BML Islamic Personal Financing. The financing amount is from MVR15,000 (US6,331.91) for this product, there is an option to enjoy a lower rate, if security is added
Belt and road initiative and Islamic financing: the case in public private partnership (PPP) infrastructure financing
No full textChina is currently building a network with more than 80 countries across Asia, Africa, Europe, and Oceania initiating "One Belt and One Road". The main focus of the Belt and Road Initiative (BRI) is in infrastructure transportation, and energy. Countries with majority of Muslim population are involved in BRI and in some ofthese countries Islamic finance is being adopted. The public-private partnership (PPP) model is an important way of infrastructure financing which has potential in reducing government financial pressure by improving operation efficiency, service quality and societal benefits. World Bank report (2018) has discussed flexibility of Islamic financing and the cracking potential of PPP to incorporate with Islamic finance. Existing financial institutions , such as the World Bank and Asian Development Bank have accumulated rich experience in the field of PPP mode of infrastructure financing. However, the newly established Asian Infrastructure Investment Bank (AIlB) dedicated to the development ofinfrastructure for the supporting of BRI has still not established a model in line with Islamic finance principles. China and Islamic countries can seek common cooperation based on PPP models consistent with Islamic financial system. This paper aims to contribute to the literature for a better understanding of the great potential of China link with Islamic countries to help to boost BRI ..
Issues in Islamic equities: a literature survey
No full textThis article reviews the current literature on Islamic equities. Our survey indicates that the bulk of articles is quantitative or empirical in nature, with a notable dearth of theoretical works. Among the common research themes explored by these articles are comparative performances of Islamic equities visa-vis their conventional counterparts, comparisons of Islamic portfolios with SRI funds, and empirically articulating portfolio diversification benefits associated with Islamic equities. In addition, numerous articles discuss idiosyncrasies of Shari'ah compliant stocks and portfolios under subthemes such as volatility, risk factors, and performance attributes. This survey also includes articles addressing efficiency perspectives, calendar anomalies, and issues in Shari'ah stock screening norms. We summarize general findings and offer suggestions for future research. Literature surveys on Islamic equities are few and far between, and this article, to date, represented the most recent and comprehensive attempt at that
Islamic finance regulations in Malaysia: a macro maqasidic approach
No full textThe research aims primarily to identify the main macro objectives of Shari'ah (macro maqasid) that the regulators are supposed to imbue in the Acts and guidelines governing Islamic Financial Institutions. Focusing on Malaysia, the research starts with the conceptual framework of Islamic finance regulations, which addresses the objectives enshrined in the Acts and guidelines promulgated. After exposing the overall environment of Islamic finance in Malaysia, the research discussed some obstacles of regulations, namely harmonization between Shari'ah and law and its potential impact on the realization of maqasid al-Shari'ah. In order to give a glimpse on further obstacles, the research briefly discussed the governance framework, the prudential and risk management regulations, and the Shari'ah standards in terms of maqasid compliance. The research found that the Malaysian expertise in Islamic regulation is very commendable but no free from criticism as some are deemed maqasid non-compliant. More importantly, the research delineated the macro maqasid entrusted with the regulators to observe and imbue in the regulations of Islamic finance. The research found that Islamic finance regulations are not completely independent from conventional ones, let alone the independence from international regulatory regimes and practices. This should call for the propounding of a theory of maqasid specific to Islamic finance focusing on regulations at macro-economic level. The study recommends the operationalization of the macro maqasid at the regulatory level first before operationalizing them at the level of Islamic financial Institutions