INCEIF Knowledge Repository (INCEIF University)
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Finance-growth nexus: insights from an application of threshold regression model to Malaysia's dual financial system
No full textThe purpose of this paper is to test the growing converging views regarding the destabilizing and growth-halting impact of interest-based debt financial system. The views are as advocated by the followers of Keynes and Hyman Minsky and those of Islam. Islam discourages interest rate based debt financing as it considers it not very conducive to productive activities and human solidarity. Likewise, since the onset of the crisis of 2007/2008, calls by skeptics of mainstream capitalism have been renewed. The paper applies a threshold regression model to Malaysian data and finds that the relationship between growth and financial development is non-linear. A threshold is estimated, after which credit expansion negatively impacts GDP growth. While the post-threshold negative relationship is found to be statistically significant, the estimated positive relationship at lower levels of financial development is insignificant. The findings provide support to the above views and are hoped to guide monetary authorities to better growth-promoting policy-making
Socioeconomic development and its effect on performance of Islamic banks: dynamic panel approaches
No full textIslamic banks are highly incorporated with social issues because of their rules and regulations. Profit not only depends on its own return and investment but also on trust, moral issues which may be more related to banking profitability. To test these gaps, this chapter attempts to investigate the socioeconomic factors along with bank-specific factors of global Islamic banks using dynamic GMM and Quantile regression. The dataset used in this study involves 55 full-fledged Islamic Banks from 24 countries across the globe. The results suggest that Return on Assets (ROA) is significantly positive to bank-specific factors such as credit risk has and statistically negative to cost-to-income ratio.
Available in physical copy and e-book (Call Number: HG 187.4 M174
Distress resolution in Islamic finance: issues, challenges and the way forward
No full textThe slides highlight the issue facing in Islamic finance industry, limited liability in Islamic law, and discussion and analysis of the study
Doing well while doing good: the case of Islamic and sustainability equity investing
No full textSustainability trends present risks and opportunities for companies and various stakeholders. Profits can be derived from doing good: Islamic sustainability equity in vesting offers competitive risk-return profiles at the levels of individual asset and portfolio of global assets particularly during economic expansion, equity bullish and subprime crisis periods. Islamic finance industry should proactively drive main stream sustainability investing
On sukuk insolvencies: a case study of East Cameron partner
No full textAn effective and universally acceptable legal, regulatory, and insolvency framework for Islamic finance in general and sukuk in particular is currenly lacking. Of particular concern is the question of how a secular court may protect the rights of sukuk holders. East Cameron Partner (ECP) sukuk is an interesting case where many of issues in sukuk insolvencies have been highlighted. The current study is concerned with the background of ECP sukuk issuance, its insolvency, its filing for bankruptcy under Chapter 11 of the United States' Bankruptcy Code and the behaviour of the US bankruptcy court towards the issue of the ownership of the sukuk holders..
Which creates more value for investors in equity funds: being socially responsible or Shariah compliant?
No full textThis thesis is structured into three essays. The first essay provides evidence on the comparative risk-return profile and investment style of SCFs and the SRFs. As the long list of literature claims the superiority of these funds during the crisis period, the validity of this claim is also examined using a larger sample and a longer analysis period. The findings of this research can be summarized as follows; first, both types of funds underperform the market suggesting there is cost attached to ethical and religious based investment but SCFs, to some extent, manage to do better than the SRFs. Second, in terms of investment style, SRFs investments are biased towards small capitalized stocks whereas SCFs do not follow any specific strategy ..
Financialization of the economy and income inequality in selected OIC and OECD countries: the role of institutional factors
No full textThroughout the world, the income gap between the rich and the poor has continued to widen. It has been reported that income inequality is spiraling out of control and this is a dangerous trend that pose significant threat to the global sustainability. Several factors have contributed to this widening income gap, among which is financialization of the economy (much faster growth of the financial sector than in the real sector of the economy through rapid growth of debt and large increases in financial sector profits). The aim of the study is to examine the prevalence of income inequality in Organization for Islamic Countries, (OIC) countries and examine how it differs from Organization for Economic Corporations and Development (OECD) countries. In this study, Generalize Method of Moments (GMM) was used in the data analysis. The study employs two sets of financialization data. The first financialization indicators are: Bank profit (BPROF), market capitalization of listed firms (MCAP), stock value traded (STD) and financialization aggregate (FIN_AGG). While the second indicators are: Rate of growth of finance relative to real GDP (RFING), rate of growth of debt relative to Gross domestic product (GDP) (RDEBT). Private sector credit (PCR) and financialization aggregate (FIN_AGG). For a robust test, the study employs securities under banks asset (SEC). Using overall sample (data from both countries OIC and OECD), the result of the study confirms financialization is one of the major causes of income inequality in the studied countries. Also, the findings revealed that income inequality is higher in OIC than in OECD countries. Using the first financialization dataset, the study reveals a more detrimental effect of financialization on inequality in the overall sample than in OIC countries
The nature of money in modern economy - implications and consequences by Stephen Zarlenga and Robert Poteat
No full textReforming the contemporary monetary and financial system has come under the limelight with the onset of the last international financial crisis. Zarlenga and Poteat focus on the elimination of credit money and the return of the exclusive right of issuing money to the government as a key to reforming the system. In this comment, I argue that they are right, but reform should be wider and more comprehensive. My arguments are inspired by al-Jarhi's model of an Islamic monetary system (1981)
Introducing the Shariah investment agreement: compatibility with common law
No full textThere is a misfit in applying multilayered and opaque tijarah contracts for investment purposes. Such misfit has contributed to the divergence between Shariah and Common Law and caused tremendous problems and systemic legal risks to Islamic finance. This dissertation introduces the Shariah Investment Agreement which is based on bay' and meant for investment purposes. It has been carefully drafted to ensure that it is Shariah compliant and can be applied in Common Law jurisdictions as well. It is intended to pave a clear route to harmonious convergence between Shariah and Common Law ..
Dispelling the myth of a value premium: contrary evidence of Malaysian crony capitalism
No full textThis paper contradicts the existence of a universal value anomaly by studying Malaysia, a country with a unique institutional setting. We investigate this counter-example to attribute the anomaly to: 1) the leverage effect of value firms; 2) the investment pattern of growth firms; 3) the economic environment. We find that the value premium cannot be ascribed solely to risk as it is time varying and dependent on the attributes of the companies. Our results illustrate that small cap value firms perform relatively well during favourable economic conditions. In contrast, large cap growth firms perform better than their counterparts (i.e., large cap value firms) in economic upturns as they are preferentially awarded projects to revive the nation's growth