INCEIF Knowledge Repository (INCEIF University)
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Do profit-sharing investment account holders provide market discipline in an Islamic banking system?
No full textMarket discipline is one of the main pillars of stability and resiliency in the banking system. The mechanism of market discipline primarily relies on the role of depositors who receive timely information and act accordingly through their respective accounts. In this study, we use generalized method of moments panel technique for 44 Islamic banks across different regions to research the presence of market discipline in the global Islamic banking system, focusing on the behaviour of the PSIA holders and their role in the governance of Islamic banks. These results have a significant policy implication in reviewing the framework governing the Islamic banks
Real exchange rate response to inward foreign direct investment: empirical evidence from Canada as pure floating exchange rate regime
No full textThe flows of foreign investment are the fundamental elements in the economic growth of countries within the globalization process of economy. Canada has a highly-developed economy, advanced technological infrastructure that will allow them to attract flows of FDI. This study makes an attempt to test the possible directions of causality between exchange rate and flows of foreign direct investment in Canada for the period of 1970 to 2015. The methods applied are the error corrections and variance decompositions techniques including LRSM. To the best of my knowledge, there has not been any study on this issue using this technique. Our findings on this study suggests that the direction of causation between FDI and exchange rate as expected ..
The application of Rule 78 in vehicle financing by Islamic banks in Malaysia
No full textAl-Ijarah Thumma al-Bay' (AITAB) is an innovative product designed for vehicle financing. Since its inception, AITAB has been a popular product due to the heightened demand by customers. Although AITAB is popular, it is not without condemn especially on the issue of using Rule 78, which is similar to conventional Hire-Purchase practise. This paper, attempts to address the issue of using Rule 78 which affects the customers in the case of default. A case study is used to compare the use of Rule 78 and simple profit rate methods on repaying the principal amount and the profit rate by the customer. The discussion is based upon the case on vehicle financing for three years and the impact on the defaulter on the thirteenth month of financing. The result shows the customer pays higher amount in the case of default using the Rule 78 in financing compared to simple profit rate method
Protection of investment account holders in Islamic banks in Malaysia: legal and accounting in Malaysia
No full textThe Islamic banking industry in Malaysia is governed by the Islamic Financial Services Act 2013 (IFSA). This legislation marks another step in the evolution of the Islamic banking industry in Malaysia. Among its unique components, it re-classifies deposittaking products into two, namely Islamic deposits and investment accounts. The distinction has brought about a significant impact on the role that Islamic banks have traditionally been playing. The move from purely a credit intermediary to a mixed credit-and-investment intermediary is expected to promote real economic growth and development. In IFSA, investment account is defined as an account under which money is paid and accepted for the purposes of investment. This must be in accordance with the Shariah on terms that there is no expressed or implied obligation for the Islamic bank to repay the money in full or with any profit. This definition is instrumental as it explicitly distinguishes the character of an investment account from an Islamic deposit account as the latter guarantees return of the capital with or without a profit. This definition embeds statutorily the true spirit of Shariah-compliant investments, namely profit and loss sharing in musharakah, profit sharing and loss bearing in mudarabah and fee-based in wakalah bil istithmar
Sustainable and responsible investment: the case study of sukuk ihsan issuance
No full textThis case study examines the issuance of sukuk ihsan, viewing it as the within the context of the first sustainable and responsible investment in Malaysia rather than simply a plain investment itself. Sustainable and responsible investment have focused primarily on Sustainable Development Goals (SDGs), and in doing so, sukuk is blend with sustainable and responsible investment goals in making sukuk more relevant and competitive in capital market. I examine issuance of sukuk Ihsan with view of ensuring that sustainable and responsible investment sukuk characteristics is able to meet contemporary practice that will make it attractive for prospective buyers, thus improving the affordability of sustainable and responsible investment sukuk in the future. The purpose of this project paper is to study the relationship between sukuk ihsan issuance with the notion of sustainable and responsible investment sukuk. It is found that case study approach is suitable technique for this project paper. It is an appropriate methodology for Sukuk Ihsan because it is the first sustainable and responsible investment sukuk product that has been introduce in the Islamic financial markets
Other sectors of Islamic finance
No full textThis chapter presents the general overview of the concept, market development, and industry practices of the other sectors in Islamic finance, focusing on waqf, Islamic wealth management and Islamic microfinance. The key challenges are deliberated for each sector to provide some insights as to which areas the stakeholders of Islamic finance may address in order to sustain the industry development
Islamic banking at crossroads: issues and challenges
No full textThe slides highlight: 1) importance of Islamic finance; 2) components of Islamic finance; 3) anatonomy of Islamic finance; 4) Islamic banking in Malaysia
The bank lending channel of monetary policy transmission in a dual banking system
No full textThis paper examines the impact of monetary policy on bank lending in a dual banking system, i.e. Malaysia. Making use of an unbalanced panel data set of 38 Islamic and conventional banks covering mostly 2001-2014, we find evidence that variations in monetary policy affect lending growth of Islamic banks and, to some extent, conventional banks. The results further reveal that, in comformity with studies using aggregate Islamic financing data, the Islamic financing growth reacts more strongly to monetary policy changes
Islamic banking: performance and financial stability
No full textThe rapid emergence of Islamic banking as an alternative banking model as well as its alleged resilience during the global financial crisis have captivated much interest. While the "Islamicity" and "efficiency" issues of Islamic banking to cover a variety of performance metrics as well as to address its contributions to financial stability and economic performance. It is generally argued that, for the Islamic banking system to be a viable banking system to the present so-called "conventional" system, not only its relative stability but also its economic and financial roles must be demonstrated
Zakah: a social financial institution for just and equitable distribution of wealth (successful cases from the past and the present)
No full textThe slides highlight: 1) to show how the institution of zakah, which is one of the socio-financial institutions, can collect huge amount of funds to be redistributed to the less fortunate and hence not only narrowing the gap between the rich and the poor but eradicating poverty on annual basis while eliminating riba from Muslim society; 2) current scenario poverty in Muslim countries; 3) current situation of zakah in Muslim countries; 4) current successful cases in Sudan and Malaysia