INCEIF Knowledge Repository (INCEIF University)
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Revival of waqf for socio economic development (successful cases worth attention)
No full textThe paper "Revival of waqf for socio economic development (successful cases worth attention)" presented at the International Seminar and the 2nd Journal of Islamic Monetary Economics and Finance (JIMF) 2016, Grand City Convex, Surabaya, Indonesia
Implication of hawalah in Islamic finance practice
No full textThis article aims at examining the concept of Hawalah and its contemporary applications in banking sector. For this purpose, the authors examine the conceptual and literal meaning of Hawalah and scrutinise its applications in two Malaysian banks. While Bank A is a dual bank which offers both conventional and Islamic banking, Bank B is a full-fledged Islamic bank. Results indicated that there is a general lack of awareness about the concept of Hawalah used by both banks. Although there is strong awareness of Islamic Shariah's strong prohibition on taking interest, the staff members are uninformed about the underlying concepts of Hawalah. In addition, the authors found that the hawalah-based services offered by both banks were not significantly different from conventional banks' products and services. It is recommended that further research can be conducted to find out the reluctance among the Islamic banks to name remittance system by using the term hawalah
Are there profit (returns) in Shariah-compliant exchange traded funds? The multiscale propensity
No full textThis paper is the first attempt to investigate the multiscale tendency of the co-movement and cross-correlation of nine Islamic Exchange Traded Fund (ETF) returns across the global developed and emerging markets using both wavelet coherence and wavelet MODWT methods. The wavelet coherence results tend to indicate consistent co movement between most of the ETF returns especially in the long run. The study also uncovers evidence of wide variation of co-movement across the time-scales during the global financial crisis and the Euro debt crisis. Strong co-movement can be observed during the global financialcrisis, both for the medium term investors and long term investors. The paper studies the relationship between different ETF returns using wavelet multi-resolution analysis. The cross-correlation analysis also shows certain significant and positive correlations between the ETF returns, especially during the period of global financial crisis. The findings from these two recent dynamic time-scale decomposition methodologies have important policy implications for both risk management and investors’ investment policy
Housing development finance corporation of the Maldives to issue its second sukuk
No full textThe Housing Development Finance Corporation (HDFC) of the Maldives is getting ready to issue their second sukuk in the last quarter of this year. The HDFC sukuk will be based on the mudarabah structure which was used in the country's debut listed corporate sukuk issued in 2013. In the Maldives, due to the absence of laws to create SPVs and due to the absence of trust law, inter alia, the Sukuk issued in the jurisdiction have some challenges in aligning the legal structure of sukuk to international practices adopted in other jurisdictions. Notwithstanding such limitations, the country successfully issued its debut corporate sukuk in 2013
Military expenditures and economic growth in selected developing countries: causality analysis using panel error-correction approach
No full textThis paper examines the causality between military expenditures and economic growth for twenty selecteddeveloping countries. In this paper we test for Granger long-run causality employing the Panel Error-Correction Model (ECM) framework using annual data for the period 1970 to 2005. Military expenditure is measured using the logarithm of the ratio of military expenditures to gross domestic product (milex); while economic growth is proxied by the logarithm of real GDP per capita (rgdppc). Causation (as well as cointegration) is inferred from milex to rgdppc, in a panel setting using the Pooled Mean Group (PMG) estimator proposed by Pesaran et al. (1999) when the Error-Correction (ECM) term is significant in an equation with rgdppc as dependent variable. On the other hand, Granger causality is said to run from rgdppc to milex, when the ECM term is significant in an equation with milex as dependent variable. However, before testing for cointegration or causality, the order of integration of both time-series in a panel setting was tested using the three standard panel unit root tests (Levin et al., 2002; Im et al., 1997; Maddala and Wu, 1999). Our PMG results suggest that the ECM term is significantly different from zero in a model when milex is the dependent variable but not otherwise. The result implies that there is cointegration between military expenditures and economic growth, on average, for all the selected developing countries
Leverage, sensitivity to market risk, volatility and contagion: multi-country evidence of Shari'ah stock screening
No full textConstructing a portfolio or investing in the stock market, without taking into account the firms' debt level is likely to render the control of returns, volatility and systematic risk ineffective. This study focuses on the European stock market which has suffered badly during the 2008 global financial crisis. It is within this context that the role of firm leverage and its relationship to risk and returns are explored. This innovative empirical study tests the leverage effect (on volatility, systematic risk, value at risk and returns) in terms of Shari'ah stock screening, and evaluates it applying random portfolio analysis, wavelet coherency and panel dynamic GMM techniques ..
Issues in Islamic finance: starting up an Islamic financial institution in China
No full textInterview session with Daud Vicary Abdullah, President & Chief Executive Officer of INCEIF on "Issues in Islamic finance: starting up an Islamic financial institution in China"
Contagion and interdependence across Asia-Pacific equity markets: an analysis based on multi-horizon discrete and continuous wavelet transformations
No full textOur study attempts to discover contagion amongst the Asia-Pacific equity markets (Japan, Hong Kong and Australia) during twelve major crises around the world. We apply both discrete and continuous wavelet decompositions to unveil the multi-horizon nature of co-movement and lead–lag relationship. We find that shocks were transmitted via excessive linkages, with the Asian crisis as the most influential in relation to a sudden stop. We also find that the subprime crisis revealed fundamentals-based contagion, due to the strengthening fundamental linkages, with a dominant role of the Japanese market. Finally, we find low co-movements in the short run, suggesting a partial convergence across the market
Portfolio diversification benefits of Islamic investors with their major trading partners: evidence from Malaysia based on MGARCH-DCC and wavelet approaches
No full textPrevious studies have investigated the interdependence of Malaysian stock market with its major trading partners without taking into account the time-varying correlations and different investment horizons of the investors. The main objective of this paper is to make the initial attempt to study the extent to which the Malaysian Shari'ah (Islamic) investors can benefit from portfolio diversification with the Shari'ah indices of their major trading partners (China, Singapore, Japan, United States and Thailand). The relevant time-varying and timescale-dependent techniques such as, Multivariate GARCH-dynamic conditional correlation, the continuous wavelet transform and the maximal overlap discrete wavelet transform are applied. Findings tend to indicate that the Malaysian Shari'ah investors who make their investments with the major trading partners like China and Singapore may not reap great diversification benefits for almost all investment horizons but may reap moderate benefits arising from Thailand and Japan up to the investment horizons of 32–64 days and longer. The evidence further suggests that the portfolio diversification benefits are greater if the Malaysian Shari'ah investors invest in the US Shari'ah stock index excepting the long investment horizons. The stock holding periods exceeding 32 to 64 days contain minimal benefits of portfolio diversification. As a policy implication, the Malaysian Shari'ah investors should carry out the reassessment of their stock exposures and investment horizons more frequently in order to gain from portfolio diversification with their trading partners
Additional Tier 1 capital Instruments under Basel III: a Shari'ah viewpoint
No full textThis research aims to compare the regulatory capital instruments for Islamic banking institutions (IBIs) - in particular the qualifying Additional Tier 1 (AT1) capital instruments - as defined by Basel III, Bank Negara Malaysia (BNM) and IFSB-15 (issued by the Islamic Financial Services Board). Principally, the research examines the Shari'ah issues, especially related to subordination, arising in equity-based contracts when used for structuring AT1 capital instruments. In particular, it examines the mudarabah sukuk issued by the Abu Dhabi Islamic Bank (ADIB) in 2012. The study finds that the most appropriate Shari'ah contract that would be suitable for structuring AT1 capital instruments would be musharakah. The present study is considered an original attempt in examining an under-researched topic relating to Basel III and its Shari'ah perspective. The study will be an important reference point to Islamic banks when structuring AT1 capital instruments