INCEIF Knowledge Repository (INCEIF University)
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Demonstrating the efficacy of risk sharing structures in infrastructure financing
No full textInfrastructure is the backbone of modem economies; an adequate and efficient public infrastructure is essential for nations to achieve their economic growth objectives. Although the need and role of infrastructure are well recognized, little attention has been paid to the risks and pitfalls of the current infrastructure financing structures. The enormous infrastructure deficit and the increasing instances of debt restructurings, infrastructure project failures and expensive government bailouts, present enough reason for a deeper thought and action towards making infrastructure financing more robust. Through the thesis, the researcher sheds light on the problems related to such forms of financings and presents the case for an alternative model to finance infrastructure developments ..
Trade-finance complementarity and carbon emission intensity: panel evidence from middle-income countries
No full textThis paper examines the complementarity/substitutability of international trade and financial development in the mitigation of carbon emissions for a panel sample of 62 middle-income countries from 1991 to 2010. Applying the bias-corrected LSDV estimator, the paper yields interesting results. For the full sample, international trade and financial development play an interactive and complementary role in reducing CO2 intensity of energy use. That is, the environmental benefit of international trade is materialized only if a country has a well-developed financial market. Likewise, financial development is beneficial to the environment only in a highly open economy. Having stated these, the analysis also uncovers evidence that these results may be different across levels of income or across regions. The results bear important policy implications for the abatement of the environmental problem in the middle-income countries
Central bank of the Maldives launches strategic plan 2018-22
No full textThe Strategic Plan 2018-22 (the Strategic Plan) of the Maldives Monetary Authority (MMA), the central bank of the Maldives, was launched on the 23rd July 2018. In his inauguration speech, the MMA's governor, Ahmed Naseer, stated that the new strategic action plan for the next four years aims to revolutionize the payment system in the Maldives. The MMA's vision is to become a credible, independent and contemporary central bank committed to maintaining price stability and promoting inclusive, sustainable economic growth. The MMA's mission is to promote the international value and stability of the Maldivian rufiyaa, develop a secure and efficient payment system in the Maldives and foster a sound financial sector conducive to the orderly and balanced economic development of the Maldives. The Strategic Plan was launched by Minister of Finance and Treasury Ahmed Munawar and Minister of Tourism Moosa Zameer and comprises six major objectives
Waqf-shares: a fundraising scheme for community development projects and humanitarian
No full textThe waqf-share scheme is a 21st century Islamic social finance tool that has been used successfully in Muslim and Muslim-minority countries (Cizakca, 2000). It is a fundraising scheme organized by a charitable institution that issues "waqf-shares" for sale to different contributors for various projects. Since a waqf-share is a movable waqf, it has to follow the strict conditions of waqf in terms of its irrevocability, its inalienability, and its perpetuity. This means that contributors cannot sell or transfer their waqf shares; they can only receive and hold a waqf-share certificate as evidence of theircontributions to the project if the created waqf is public waqf
The Maldives's HDFC Amna growing rapidly
No full textShariah compliance offi cer of HDFC Amna, the Islamic window of Housing Development Finance Corporation (HDFC) now holds approximately 22% of the loan portfolio of HDFC, where its total loan portfolio stands at over MVR1.4 billion (US$88.98 million). Azmeen also said that HDFC Amna is expected to dominate the market by 2020, provided that the growth level remains steady. The main reason for the growth of HDFC Amna is the increase in the number of awareness activities on Islamic finance in the Maldives that have enlightened the 100% Muslim population about the importance of using Islamic finance transactions
Shariah stock screening and optimal capital structure: need for a rethink?
No full textThe capital structure decision is a highly important one for corporations. Capital structure refers to the combination of debt and equity (and other hybrids) that a company uses to fund itself. Going by finance theory, each corporation has its optimal capital structure. This optimal mix of debt and equity maximises the firm's market value by minimising its weighted average cost of capital. As debt is always cheaper than equity and has a tax shelter advantage, a firm's cost of capital reduces as it uses more debt in lieu of equity. However, risk increases as the proportion of debt increases. It is this trade-off between risk and return/value that gives rise to a minimal point for cost and a corresponding maximum for firm value. Thus, one firm's optimal debt-equity ratio may be 40/60 (40% debt and 60% equity) while another's 20/80 and so on
Causality between macroeconomic forces, exchange rate and the Shari'ah index: empirical evidence
No full textThis paper aims to investigate whether Shari'ah stock index, exchange rates and macroeconomic forces in Japan have any long run relationship or not. If the relationship exists, does the Shari'ah stock index lead or lag? The paper is likely to be the first study that investigates the causal relationship of aforementioned variables and the Shari'ah Index in Japan. Current literature on the topic in different countries gives either contradictory or inclusive results. This study will try to fill two gaps, one relating to Japan, and another relating to Islamic Indices. It employed quarterly data from 2007 to 2017. Auto-Regressive Distributed lag (ARDL) time series technique is applied to conduct the study. This technique is free of major limitations of the conventional cointegrating tests as they suffer from the pre-test biases involved in the unit roots and cointegration. The empirical evidence tends to suggest that both in the short- and long-run, money supply, exchange rate, and GOP have a significant relationship with Japan's Shari'ah stock prices ..
Funding development infrastructure without leverage: a risk-sharing alternative using innovative sukuk structures
No full textMuslim developing countries like many of their conventional counterparts suffer serious indebtedness. Amongst the 57 OIC countries, only the six Gulf cooperation Council countries have positive fiscal balances. The other 51 OIC nations have government budget deficits. Nineteen of these 51 countries are classified by the World Bank/IMF as HIPC (heavily indebted poor country). That government expenditure exceeds government revenues is a fairly common characteristic of developing economics. It is typically the result of the need to fund development. As matters now stand, there are two key problems with this. First, the budget shortfall is typically met by way of interest-based borrowing. Second, as domestic capital accumulation is usually insufficient, governments have to resort to borrowing in foreign currency
Do ethics imply better governance? The case of Islamic and socially responsible equities
No full textThere are different ways through which debt exerts pressure on managers to align their interests with those of shareholders. For instance, it does this by reducing free cash flows (Jensen, 1986; Stulz, 1990), by increasing monitoring by debt holders (Ang, Cole, & Lin, 2000) and by increasing takeover threats (Williams, 1987). In this respect, another line of arguments indicates that good corporate governance is associated with lower agency issues (McKnight & Weir, 2009; Rashid, 2016). As per this view advanced by La Porta, Lopezde-Silanes, Shleifer, and Vishny (2000), both debt and governance mitigate agency conflicts and essentially play the same role; therefore, they can be good substitutes for each other
The tangibility of intangibles: what drives banks' sustainability disclosure in the emerging markets?
No full textAt a time where the global economy is facing ‘secular stagnation’ due to a decline in investments and an ageing population, the emerging economies are among the fastest growing markets that could potentially offer viable solutions to global economic growth and sustainable development in the 21st century. Over the next three decades, global economic power will continue to shift from developed economies in North America, Western Europe and Japan to existing and newly emerging economies. The economies of Mexico and Indonesia are projected to be larger than those of the UK and France by 2030 (in purchasing power parity terms) while Turkey’s may become larger than Italy’s. Malaysia has great potential for long-term sustainable growth while Nigeria could be the fast-growing large economy by 2050 (PwC 2015)