INCEIF Knowledge Repository (INCEIF University)
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Inclusion of Islamic socio financial institutions for the unbankable hard core poor (a model worth attention)
No full textThe hard core poor are neither bankable nor covered against risks. Whilst micro-finance seems to solve financial inclusion for this group to some extent, albeit at very high costs, very little have been done to provide sufficient cover against risks of all sorts for this group. Some attempts at developing micro-takaful are actually in the pipeline, however, very little concrete and practical solutions have emerged so far. It is of course well-known that Islamic Social Financial Institutions (ISFI), namely zakah, waqf, infaq and qard-hassan are meant to directly benefit the less fortunate in society, but little has been done to ensure that they directly benefit from these institutions. The main objective of this paper is to show how the ISFI can be synergised to overcome this problem. The paper is also intended to show how the ISFI can be integrated within a Micro-Finance Model for alleviating poverty, assisting in providing the basic needs for the hard core poor such as food, shelter, education and health care. Research Methodology - this paper uses both primary and secondary sources. Data collected from primary sources include text from the Quran and from the Sunnah of the Prophet (pbuh), while data collected from secondary sources includes books, articles, journals, annual reports, and websites. Expected findings - Drawing lessons from some existing successful cases there, the expected findings for this paper is to draw the attention from policy marker, researchers to find ways and means how to integrate the ISFI into a viable Micro-Finance Model that will achieve such noble mission at the present time
Islamic social finance: relevance and recognition with responsibility
No full textThe consistent growth of the global Islamic banking and finance has provided a niche market with solutions and financial inclusion through a well-defined Islamic ethos. Unfortunately, Islamic finance has been criticised for having diverted from its core principles of socio-economic empowerment and upliftment. As in mainstream interest-based finance, Islamic financing and advances rely on the customers' credit-worthiness and the ability to repay, inevitably supporting those with good credit standing to improve their financial status. But, how has Islamic finance improved the lot of the downtrodden? What about the ethical, socio-economic tenets that Islamic finance has so vociferously espoused? We are perhaps at the brink of a new era in Islamic finance, driven by a global appetite for socially responsible and ethical investment created by the hype from the UNPRI 61 and the more recent UNSDG 172
The business case for sustainability: business can find opportunities in the SDGs
No full textThe slides outline: 1) the importance of social and environmental sustainability in Malaysia; 2) strengthening the roles and impact of Islamic finance through "value-based intermediation"
Poverty alleviation via microfinance using the concept of mudharabah
No full textPoverty has been a long outstanding crisis at global scale and poverty alleviation has become one of the primary national developmental agendas. Conventional microfinance programmes have received growing attentions due to its capability to improve standard of living and social inclusiveness. Arguably, however, these conventional microcredit programmes do not effectively alleviate poverty as the borrowers remain into an interest-base debt cycle which may worsen the financial burdens. Meanwhile, Islamic microfinance by way of mudharabah financing is equity based financing structure which is perceived to have a fair borrower-lender agreement. It promotes an effective wealth redistributive mechanism to reach the poor, to encourage their participation in productive real economic sectors. This not only alleviates poverty, but also enhances standards of living. This research discusses the applications of conventional and Islamic microfinance models currently practiced globally and proposes an enhanced mudharabah microfinance model to be adopted
Determinants of wellbeing: a cross-country study with a special focus on Malaysia
No full textGDP, often the proxy to measure progress in policy implementations, does not fully reflect the wellbeing of a nation, although it may be one of the contributing factors. Applying an estimation model based on panel data of 22 sample countries, we illustrate that wellbeing in general can be improved with intrinsic growth, influenced by economic stability, demand composition and sectoral composition. Additionally, key economic and quality of life factors - such as, broader income distribution, lower housing prices, lower infant mortality, effective health expenditure, higher education attainment and broadband access - are significant to households ..
A game-theoretic investigation of compliance to Islamic rules of behaviour
No full textThe breakdown of trust and cooperation as well as the failure of institutions to govern effectively can be attributed as the critical causes of the global financial meltdown. This research will extend the behavioural investigation into testing the level of adherence towards these rules of behaviour in the members of society - specifically separated into two groups, Muslims and non-Muslims. This research will analyze the comparative behaviours of Muslims and non-Muslims using selected games (from the body of published work on behavioural and experimental games). The experimental games will be carried out on test subjects in Singapore as well as in Malaysia from diverse backgrounds ..
Faraid as Islamic inheritance laws: socio-economic impact on investments
No full textFaraid is the legal science that determines the way the estate of an adherent to Islam is to be dealt with and distributed upon his/her death. It is a fundamental part of Shariah law that deals with wealth re-distribution in a society, and it is obligatory to make a will as per this provision or to be decided by a court if the person dies without a will. This revelations-based system ensures that wealth is not hoarded in the hands of a few but distributed equitably among the members of one's family and beyond also to society with a larger view to mitigate the income inequality gap. In Islamic inheritance law, there are eight classes of heirs in accordance to their priority to inheritance. This chapter discusses the rules, procedures for implementing this law, the impediments thereof, social and economic impact of the system and the practical issues in effective implementation of this system
Wealth purification
No full textFinancial planners are usually well familiar with terms like wealth creation, wealth accumulation, wealth protection and wealth distribution. However, the term wealth purification is something unique to Islamic wealth management and planning and it may look strange to those not familiar with this concept. According to Islamic injunctions, everything that human beings are bestowed with is a gift from Almighty God. Wealth is one such precious gift that can be used for material success in this world as well as eternal salvation in the afterworld. For this purpose, certain obligations are imposed upon the wealth that is accumulated by a person in legal way
Risk-taking behavior and capital adequacy in a mixed banking system: new evidence from Malaysia using dynamic OLS and two-step dynamic system GMM estimators
No full textThis study is the first attempt to investigate the relationship between the level of risky assets and capital level in a mixed Malaysian banking system covering 83 months starting December 2006. The results of dynamic OLS (DOLS) indicate positive relationship between capital ratio (CAR) and risk weighted asset ratio (RWA) in the long run. Furthermore, the causality analysis based on panel VECM and two-step dynamic System GMM indicates unidirectional causality from CAR to RWA. Our results further suggest that higher capital growth and capital buffer provide an extra cushion for the Malaysian banks to pursue relatively riskier financial activities, and the nature of risk taking behavior of Islamic banks follows that of the conventional banks
The impact of competition on banks efficiency: do business model and corporate governance matter: evidence from dual banking system
No full textIslamic banking industry has unprecedentedly witnessed a rapid growth since its inception four decades back in the late 1970s. However, the prospect of this flourishing industry is fast becoming gloomy in recent years. The growth of Islamic banking almost matches the conventional banking, and their products are hardly distinguishable. Although the market growth slows down in the aftermath of the global financial crises in 2008, the Islamic banking market has witnessed increasing competition. Islamic banks become more competitive and they managed to increase their market share meanwhile, conventional banks have successfully responded to the challenge by launching Islamic windows and subsidiaries. The increasing competition is considered as one of the main challenges that face Islamic banks, specifically, their performance