INCEIF Knowledge Repository (INCEIF University)
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Tradable and non-tradable rights: Islamic law of contracts perspective
No full textIslam advocates the protection of all types of rights. However all the types of rights were not directly regulated by Shari'ah but the principles of Shari'ah can be construed to provide support for such protection. To the best of our knowledge, there is no paper which efficiently talks about the tradable and non-tradable rights that provides a framework which can be used to evaluate any new type of right from its tradability point of view. This paper attempts to examine the tradability of rights from Islamic law perspective by using library research method (qualitative assessment)
Financial performance, profitability and wakalah fees of general takaful companies: a multi-country study
No full textThis study identifies the internal and external factors affecting the investment performance, profitability and wakalah fees of general takaful companies operating in Saudi Arabia, Malaysia, UAE, Qatar and Pakistan using an unbalanced panel data set of consisting of 53 companies. Two investment performance measures, namely net investment income and investment yield, are utilized to capture different aspects of the takaful investment operations. Profitability is measured by the profit before tax of takaful companies
Which creates more value for investors in equity funds: being socially responsible or Shariah compliant?
No full textThe mutual fund industry has seen rapid growth in the last two decades or so as an alternative investment scheme. The growth of the mutual fund industry saw a jump of 13% from the year 2012 to 2013 as assets under management (AuM) increased from 68.7 trillion in 2013 (Boston Consultancy Group, 2014). As far as regional growth is concerned, it has slowed down in most of the emerging markets but increased steadily in MENA and Asian countries. Its growth has varied in Australia, Asia, Japan, the Middle East and Africa and North America and varied from 14 percent to 20 percent. As far as Europe and Latin America is concerned, the average growth rate has been 8% and 7%, respectively
The role of Islamic asset classes in the diversified portfolios: mean variance spanning test
No full textThis study investigates both conventional and Islamic investors' problems as to whether the inclusion of Islamic and conventional asset classes may expand the frontier of their respective portfolios. Our sample covers the global U.S. portfolios and Malaysian portfolios with multiple asset classes, as well as the portfolios with a specific asset class in several regions. This study uses the recent mean variance spanning test in multiple regimes, which not only accounts for tail risk but also identifies the source of value added (tangency portfolio or global minimum variance). For intra-asset allocation, our findings tend to show that both Islamic and conventional fund managers of a specific asset class can benefit from conventional and Islamic asset classes, respectively, in several regimes. For inter-asset allocation, conventional institutional investors cannot obtain any value added from Islamic asset classes. On the contrary, the U.S. Islamic institutional investors can expand their tangency portfolio by investing in U.S. TIPSs and REITs, and reduce their global minimumvariance by allocating in U.S. high-yield bonds. Moreover, the Malaysian Islamic institutional investors can obtain risk reduction by investing in conventional bonds only in the high term premium regime. For the remaining asset classes, the opportunity sets are sufficient for Islamic investors to invest complying with Shariah rules. We provide some policy implications for the global Islamic financial industry
Tax evasion and financial development in ASEAN-5
No full textThe estimated total tax evasion as reported by the Tax Justice Network in 2011 is in the excess of USD3.1 trillion or about 5.1% of world's GDP. Tax evasion is a crime and tax revenue losses have negative consequences to the government ability to fueled economic growth by providing enough public infrastructure and other services. In this study we have estimated the share of tax evasion to the official economy for five ASEAN economies, namely; Indonesia, Malaysia, the Philippines, Singapore and Thailand for the period 1980-2013. Tax evasion was calculated from the estimated size of the shadow economy using the modified-cash-deposits-ratio (MCDR) approach suggested by Pickhardt and Sardia (2011). We investigate the contention made by Blackburn et al. (2012) and Bose et al. (2012) that financial development can mitigate tax evasion - higher level of financial development lead to lower level of tax evasion. Employing the pooled mean group estimator (PMG), our results show that there is a non-linear long-run relationship between tax evasion and financial development in ASEAN-5 economies, an inverted U-shaped curve, suggesting that at lower (higher) level of financial development commensurate with higher (lower) level of tax evasion. One policy implication from this study is that the financial sector in ASEAN-5 economies can play an important role in reducing tax evasion by improving the accessibility to financing and to the credit market
Political connections, Shari'ah compliance and firms' performance - the Malaysian experience
No full textBusinesses and politics are two important blocks for the economic growth of any country. This dissertation focuses on the determinants of the performance of the listed firms in the case of Malaysia with the analysis and impact of political connections and Shari'ah compliance on the performance of the listed firms for the year 2000-2014. The research also focuses on the performance of firms having political affiliations and who also attain the status of Shari'ah compliance as per the rule book of the Securities and Exchange Commission of Malaysia. The results of our study shows, certain firm-specific ..
Global financial shocks and stock market co-movements: an analysis of correlations of Islamic stock markets
No full textThe study investigates the impact of the global financial shocks on the correlations between the stock market and interest rate on the one hand and that between conventional and Islamic stocks on the other. The countries investigated are Malaysia, Indonesia, the U.S., Japan, the U.K., Kuwait, Saudi Arabia, Qatar with the sample period from December 2004 to December 2012. Changes in correlations for different time scales or investment horizons levels with wavelet analysis were tested. It was found that correlations among Islamic and conventional stock markets in non-shock periods tend to be ..
Financial risk exposures of the airlines industry: evidence from Cathay Pacific Airways and China Airlines
No full textThis study explores the long run and dynamic relationships between the stock price of Cathay Pacific Airways and China Airlines against key determinants of financial risks exposure confronting the airline industry, which include interest-rate, exchange rate and fuel price risk exposures for the period of January 1996 to December 2011. The (Johansen & Juselius, 1990) cointegration technique was employed to detect any long time trending relationship followed Vector Error Correction Model (VECM) and Vector Auto-Regression (VAR). The generalised forecast error variance decomposition and the generalised impulse response function were employed to comprehend the effects of theses financial risk exposures. Our empirical results suggest that exchange rate movements have a substantial impact, compared to the fuel price and interest rate exposures against the stock price of the analysed airline. Our findings play a pertinent role in the determination of the respective airlines foreign vulnerability and financial policies which would be helpful for industry players and policy makers from a financial stability perspective
The risk sharing philosophy of Islamic finance
No full textEconomists typically divide the overall macro economy into two sectors, the real sector and financial sector. The real sector represents the productive capacity of the economy and produces the goods and services that accounts for a nation's GDP (Gross Domestic Product). The financial sector on the other hand serves to provide the financing needed by the real sector to produce the goods and services. Islamic economics requires that all financial returns be anchored in real sector returns. For an economy to function optimally, both the real and financial sectors need to function optimally
Applications in Shariah financial planning
No full textThe internationalization of Islamic finance in Europe and other parts of the world spurns us to believe that our Shariah Registered Financial Planner (Shariah RFP) programme is relevant to meet market demands. In Malaysia, Islamic finance is growing exponentially. This new Shariah RFP text module features fully updated information to reflect the current changes in the market sphere. First written by industry leading practitioners in 2008, the work has been further enhanced to correctly reflect the exponential changes Islamic finance has undergone over the recent years as the industry has seen the introduction of many new Islamic financial products in the market place