INCEIF Knowledge Repository (INCEIF University)
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Proposing an organization framework for the Shari'ah Secretariat of Islamic banks in Bangladesh
No full textShari'ah Secretariat plays a significant role in assisting Shari'ah Supervisory Boards (SSBs) in their role in achieving Shari'ah compliance in Islamic banks (IBs). The key objective of the study is to develop a demographic framework of the Shari'ah Secretariat for the IBs in Bangladesh. The study applied qualitative case study research. The data have been collected from 17 respondents through semi-structured interviews from IBs and professional experts in Bangladesh. This study proposes a full-time Shari'ah Secretariat and several departments for further enhancement of the Shari'ah functions in IBs in Bangladesh. The framework proposed in this study covers the formation, functions, composition, qualification, reporting line, independence, remuneration and terms of appointment of the Shari'ah Secretariat to set a uniform benchmark for all IBs in Bangladesh. It is anticipated that the outcomes of this research will assist to further strengthen the Shari'ah governance of IBs in Bangladesh. This research contributed to the national and global regulatory authorities and IBs by proposing a Shari'ah Secretariat framework for the smooth functioning of the IBs in Bangladesh. The framework proposed in this study covers the formation, functions, composition, qualification, reporting line, independence, remuneration and terms of appointment of Shari'ah Secretariat
Innovating a waqf-linked sukuk framework to finance the development of idle waqf land in Malaysia
No full textThe funding conundrum for idle waqf land in Malaysia has been with us for a long time and there is need to find a feasible, effective and adequate solution for the issue. In other parts of the world, sukuk have been used to a limited extent to develop waqf land. Although Malaysia is a leading jurisdiction for sukuk issuances, we have not seen it happen here. The objectives of this study are to: examine the legal and regulatory framework in Malaysia to develop waqf land; investigate the existing constraints facing the development of idle waqf land in Malaysia; evaluate the replicability of existing sukuk structures used in other parts of the world to develop waqf land in Malaysia; and propose a framework for waqf-linked sukuk in Malaysia considering its unique legal and regulatory framework for waqf. This research adopts a qualitative research method. Further, interviews have also been conducted with subject matter experts to understand and explore the practical aspects of the research topic. The findings of this research indicate that there are several constraints facing the development of Waqf land in Malaysia including non-uniformity of the administration and management of waqf across the states, lack of governance in waqf administration and critically, dearth of funding. Due to the unique legal framework and waqf governance in the country, the sukuk models used so far in other jurisdictions to finance the development of waqf land cannot be fully replicated in Malaysia. However, it is found that a potential solution in the form of a unique waqf-linked sukuk as a means to raise financing for the development of idle waqf land in Malaysia is viable. The proposed waqf-linked sukuk framework is designed to facilitate the issuance of a waqf-linked sukuk within the existing laws and regulations governing sukuk in Malaysia, and is designed to appeal to the widest range of investors to ensure the highest possibility of a successful issuance. It also introduces the concept of cash waqf, at the option of the investor, to the capital and returns of the sukuk, to address the challenge of sustainability of funding of the waqf institution. The waqf-linked sukuk framework represents a potential framework to be relied upon by the stakeholders in the waqf ecosystem in Malaysia to support the funding requirements related to the development of idle waqf land. Positive outcome is expected from the implementation of this framework. This is due to the advantageous nature of utilizing sukuk to raise funding in an efficient and sustainable manner. Additionally, this dissertation opens the door for more research to explore sukuk as one of the main instruments to finance waqf projects
The impact of reading habits and their antecedents on the subjective well-being of Malaysian youths
No full textThe well-being of youths is a crucial concern, and the pandemic has further expatiated their well-being There is a need to foster positive well-being among youths experiencing a rapid developmental change in their lives and choosing their environments which can be accomplished through reading. The goal of this study was to determine the perceived influence of reading attitude, perceived behavioural control, and subjective norm on adolescents' reading habits and the relationship between reading habits and subjective well-being among youths aged 15 to 24 in East and West Malaysia. The current study used a survey questionnaire gathered from 813 responders from East and West Malaysia and the analysis utilized AMOS-Structural Equation Modeling. The data reveal that reading attitude and subjective norms positively and significantly influence reading habits, although perceived behavioural control has a detrimental effect. In addition, the findings support the mediation of reading habits in the relationship between reading attitude and subjective well-being and between perceived behavioural control and subjective well-being. This study would provide educators and policymakers with insight into the most effective strategies for instilling good reading habits in youths by transforming the curriculum and what happens inside the classroom to provide much-needed valuable classroom time to engage youth in reading
Future of Islamic finance in the post-COVID era in Africa
No full textCOVID-19 was first considered to be a health crisis. However, the containment measures implemented by the respective governments of countries around the world led to an economic crisis which eventually led to a human crisis. It is said that due to the pandemic, the global poverty clock has turned back 30 years (Kharas and Hamel, 2020) and the impact of it in different countries depending on their level of development is affected. It is reported that COVID-19 virus has been found in all African countries, but the number of cases recorded is fewer which could be due to lack of capacity to test and report positive cases (United Nations, 2020). Apart from the health issues faced, other issues such as: scarcity of food and medical supplies; inability to work leading to loss of income; and the emergence of a debt crisis leading to political instability (United Nations, 2020). The main difference between the financial crisis of 2018 and the pandemic is that the pandemic crisis has affected more than just the financial sector and includes real economic activities like farming and trading (Muhammad and Ismail, 2020)
Harmonisation of contract law: how far have we gone - and where are we going?
No full textThe law of contract is a significant area of commercial law, which is a substantive law. Common law principles of contract law are used in many countries in the world especially by those countries that were British colonies. This is the case in Muslim countries as well. Since the sixteenth century, Muslim countries were ruled by the British, and since then, the Islamic legal system in these countries slowed its progress, and the application of English law became a common practice up until today. Islamic law's application was reduced to personal matters of Muslims. However, due to the institutionalisation of Islamic finance, the adoption and application of Islamic law in commercial transactions have been revived, and research in this regard has gained momentum. For the sake of sustainable development of Islamic finance globally, law harmonisation between Islamic law and common law has been viewed as an important aspect that requires attention
COVID-19 pandemic and 'Kita Jaga Kita': appraisal of social responsible practices of Islamic banking institutions in Malaysia
No full textThe COVID-19 outbreak has caused unprecedented upheavals to the global economy at a scale never seen before in the history of humankind. While governments around the world grappled for the right panacea to address the socio-economic disruptions faced by their nations, the pandemic uncovered new outlook and opportunities. This inevitably compelled the global economies to revisit and reshape their thinking, re-prioritize, re-plan and start implementing initiatives that are more sustainable, resilient, and social in nature. In this regard, banking system plays a vital role in strengthening and sustaining the economy of a country. In doing so, it must ensure that it facilities and supports the recovery measures as announced by its respective government for the survival of the nation particularly the bottom sector of the society during this challenging time
The nexus of financial development, institutional quality and environment: do Islamic countries differ?
No full textThis paper attempts to examine the relationship of financial development with environmental quality, incorporating the role of institutional quality. There are three objectives of this study which are: to examine the impact of financial development on environmental quality and to ascertain the existence of Environmental Kuznets Curve (EKC); to examine the role of institutional quality in the relationship; and to highlight differences, if any, between Islamic countries and non-Islamic countries on the said relationship. This research applies generalized method of moments (GMM) for estimation which is the most suitable estimator to manage the unobserved fixed-effects and endogeneity issue between dependent and independent variables. Average 3-years data is used from World Development Indicator of World Bank and ICRG database of 72 countries globally and with period ranging from of 1980 to 2012. The dependent variable is environmental quality while independent variables are financial development, GDP per capita, energy use, trade openness and institutional quality. The results from the GMM estimation suggests that financial development have significant impact on environmental quality. However, the direction of the impact is inconsistent, depending on the type of emission. In addition, there is an evidence of EKC relationship between environmental quality and income. Energy use has a significant and positive impact on environmental quality, although trade openness has no significant impact on environmental quality. The study further analyses the role of institutional quality on these relationships and proves that institutional quality does play a role in reinforcing financial development to improve environmental quality. Nonetheless, the degree of impact varies with the strength of the institutional quality
Islamic banking, Islamic capital market, and takaful: the Shari'ah and common law harmonisation analysis
No full textIslamic finance is one of the prominent sectors driving the Malaysian economy. As at 2020, the market share of Islamic finance in Malaysia stood at 18.4 percent out of the total global Islamic financial assets worth USD 2.7 trillion. Among the key drivers facilitating industrial growth is its enabling legal and regulatory framework, which creates a conducive and comprehensive ecosystem. This chapter examines how the conventional legal and regulatory framework is harmonised with the Shari'ah requirements in three Islamic finance focal areas - Islamic banking, Islamic insurance (takaful), and Islamic capital market (ICM). Malaysia's harmonisation journey is not free from any legal tussles, though, in hindsight, the issues and challenges faced in the adaptation process have pushed the Islamic finance industry to be more innovative and proactive in finding solutions to remain relevant and competitive. This chapter begins with an introduction, and then it proceeds with the legal discussion on the issue of jurisdiction for Islamic banking, ICM, and Islamic insurance. The crux of this chapter is the discussion on five important subjects that depict the intriguing harmonisation development as well as the relevant issues and challenges faced in positioning the Shari'ah requirement within the conventional setting. These subjects relate to the Shariah Advisory Council (SAC), the Islamic Financial Services Act 2013 (IFSA), the decline of equity-based financing, conditional hibah in takaful products, and compensation for breach of wa'din Islamic profit rate swap
The need to eliminate mismanagement and corruption in Islamic social finance institutions
No full textDuring the COVID-19 pandemic, it became apparent that Islamic social finance (ISF) must be institutionalised due to inadequacies of Islamic commercial finance in providing adequate financial solutions to achieve financial inclusion. As such, the convergence of ISF with Islamic commercial finance is emerging while institutionalisation of ISF is gaining momentum globally. However, so far, there is no comprehensive governance code enacted to regulate the ISF institutions to guide them in the offering of their financial products and services within the parameters of Shari'ah, which include avoidance of corruption. Therefore, the objective of this research is to explore the existing mismanagement and corrupt practices found in managing the ISF and to recommend ways to overcome them. To meet its objective, this study adopts document analysis as its research methodology to review and discuss the selected management and corrupt practices of ISF institutions reported worldwide. It is anticipated that findings of this paper would assist policymakers, standard-setting bodies for Islamic finance, and ISF institutions to realise the significance of adopting good governance practices to take ISF to the next level. Further research could be undertaken to study the effectiveness of adopting good governance practices by ISF institutions and the implications of adopting such practices
Islamic blended finance for circular economy impactful SMEs to achieve SDGs
No full textIn this research, we present a framework for blended Islamic finance for impactful small and medium enterprises (SMEs) to achieve sustainable development goals (SDGs). The blend results from discussing the pertinent perspectives that underlie the motives of philanthropy, private sector activities and public sector facilitation. The consensus of these three stakeholders on the impact criteria is an essential precondition for the blend to happen. Therefore, we first developed the consensus-based impact criteria for SMEs, namely, 4Zeros & SS (zero-waste, zero-emissions, zero-interest, zero-foreclosures and service to society). After that, we adopted a financial engineering approach to design products by blending the three motives. Financial contracts could be incentive compatible and effective if these three motivations are recognized and brought together. The purpose of our research is to offer such incentive-compatible structures that can mobilize funding for impactful SMEs, save cost as well as generate revenue for self-sustainability. In the contract design, the private sector provides finance, the philanthropist pays the costs of funds, the public sector facilitates, and the impactful SME gets subsidized financing. Since the blended nature of the contract provides a social subsidy to fund the cost element of the financing, the proposed structure creates a win-win result for the blending parties. While financial institutions expand into the SMEs sector for profitability, blended Islamic finance will attract additional resources toward enhancing development impact. Through the philanthropic component, SMEs, on the other hand, will access the source of social subsidy that will relieve the burden of the exorbitant commercial rates. The funding structure will reduce risk perception and spur growth. Consequently, this collaborative and innovative contract design will contribute to achieving multidimensional human development, as enshrined in the Maqasid al-Shariah, and the SDGs. Impactful businesses must integrate environmental, social and governance best practices as well as national development goals. Hence, the proposal offers several benefits and prospects of extended use for other consensus-based purposes such as low-cost housing, solar panelling, health, education, etc