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Editorial: Writing Quality Journal Articles
Full text linkThe year 2024 was marked by the rebranding of ISRA International Journal of Islamic Finance (IJIF) to International Journal of Islamic Finance and Sustainable Development (IJIFSD) following the collaboration between INCEIF University and the Islamic Development Bank Institute (IsDBI) for the publication of the journal. The rebranded title reflects a broader journal scope that includes not only the different segments of the Islamic finance industry but also covers the discourse on sustainability and sustainable development. Volume 16 Number 4 December 2024 presents the second issue published under the new title. This issue covers the following seven articles that address varied topics which fall within the scope of IJIFSD:
‘Navigating Credit Risk in Islamic Banks: A Multidimensional Analysis of Non-Performing Loans’ by Jaizah Othman and Dina Zaki Gabbori. This article addresses the issue of credit risk management in Islamic banks located across 30 countries, particularly examining traditional bank-specific and macroeconomic factors, along with under-researched areas such as the institutional environment, product development and AAOIFI membership, as determinants of non-performing loans (NPLs) in Islamic banks.
‘The Impact of Customer Perception and Religiosity on Satisfaction with Car Ijārah Financing in Pakistan: The Mediating Effect of Clarity and Accuracy’ by Farooq Ahmad Bajwa, Ishtiaq Ahmad Bajwa, Shabir Ahmad, Faiq Mahmood and Muhammad Usman Javed. This study extends the existing literature by incorporating religiosity into the customer satisfaction model for car ijārah It focuses on existing customers from the Islamic banking sector in Pakistan that availed of car ijārah financing compared to previous studies which considered random samples of customers who may or may not have used the product.
‘Analysing the Effects of Third-Party Funds and Financial Ratios on Muḍārabah Financing’ by Anna Zakiyah Hastriana. This research analyses Indonesian Islamic banks’ financial statements from 2014 to 2023 to investigate the relationship between some specific financial indicators such as third-party funds (TPF), capital adequacy ratio (CAR), non-performing financing (NPF), and net profit margin (NPM) and muḍārabah (profit sharing) financing. It adds value to the literature by considering factors which have not been extensively studied before.
‘Protecting the Well-Being of Households: Delineating a Social Takāful Fund Initiative for Positive Social Impact’ by Norazlina Abd Wahab, Mohamad Yazid Isa, Rosylin Mohd Yusof, and Wan Ahmad Najib Wan Ahmad Lotfi. This study examines an innovative social takāful fund (STF) initiative developed by the Islamic Business School–Universiti Utara Malaysia (IBS–UUM) in collaboration with FWD Takaful Berhad in Malaysia. This fund currently addresses the economic uncertainties and vulnerabilities of the marginalised communities in the State of Kedah before its programmes can be extended to other states. It positions takāful as a comprehensive community empowerment strategy to enhance social well-being and sustainable development.
‘A New Crowdfunding Model for Financial Inclusion Based on Donations and Interest-Free Debt: A Fuzzy Agent-Based Simulation Approach’ by Youssef Lamrani Alaoui, Adil El Fakir, and Mohamed Tkiouat. This study adds to the Islamic crowdfunding literature by introducing a new hybrid model that integrates donations with interest-free loans. It explores the impact of this design on crowdfunding platform success and the well-being of micro-entrepreneurs, using an agent-based perspective.
‘Exploring the Determinants of Financial Well-Being: An Empirical Study in Muslim-Majority Countries’ by Aneu Cakhyaneu, Mumuh Muhammad, Rofiq Anwar and Emre Selçuk Sari. This article contributes to the literature by examining the determinants that influence financial well-being in Muslim-majority countries, drawing from data from the World Values Survey. The measures of financial well-being involved factors such as feeling of happiness, financial satisfaction, religiosity, income, and education levels.
‘Islamic Framework for Sustainable Development’ by Kausar Yasmeen, Kashifa Yasmeen and Salem Al Abri. This article uses the systematic literature review approach to propose a comprehensive framework that integrates Islamic principles with the Sustainable Development Goals (SDGs). It seeks to fill the literature gaps by encapsulating the principles of Islamic economics in their entirety, drawing on environmental, social, and economic perspectives, including sustainable transport, green banking, urban planning, and conservation when examining the issue of sustainable development.
To conclude, we wish all our readers a pleasant year-end and we look forward to more discussions on Islamic economics, banking, finance and sustainable development in our next issues, in sha Allah.
Allah (SWT) is the Bestower of success, and He knows best
AI Applications for Fiqh Rulings in Islamic Banks – Shariah Committee Acceptance
Full text linkPurpose ‒ The objective of this paper is to study the acceptance of applications of AI in the fiqh ruling process of Islamic banking, among Shariah committees (SC) members of Islamic banks
Design/Methodology/Approach ‒ This is a qualitative study using focus group interviews with ten SC members from different Islamic banks. Following the interviews, a thematic analysis of the transcribed data was conducted using computer-assisted qualitative data analysis software (CAQDAS).
Findings ‒ The participants were generally receptive towards the utilization of AI tools in the fiqh ruling process at Islamic banks. The participants recognize the potential of AI smart assistants for improving the efficiency and effectiveness of the fiqh ruling process. However, they raised some concerns and expectations that need to be addressed.
Originality/Value ‒ The novelty of this research comes from sourcing first-hand perspectives of SC members of Islamic banks in Malaysia. Being the end users of AI systems for the fiqh ruling of Islamic banking, it is important to understand their perceptions, concerns, and expectations
Research Limitations/Implications ‒ The size of focus group was limited to ten participants to optimize group size and composition in order to allow adequate participation by each group member. Further sampling from more SC members may elicit additional findings
Practical Implications ‒ The first-hand views from the target users provides valuable input for initiatives developing AI systems for the fiqh ruling process of Islamic bankin
Editorial
Full text linkبسم الله الرحمن الرحيم
In the Name of Allah, Most Gracious, Most Merciful
RESEARCH QUALITY AND IMPACT
Excellence in research quality and consideration of the practical and social impact as well as the original contributions to the field of knowledge are important determinants in the evaluation of a manuscript for publication. Journals seek to publish manuscripts of high quality to increase their readership, attract high calibre authors, and importantly, increase their impact through more citations, thus getting them to be included in high-ranking index databases.
A study by Margherita et al. (2022) specifically examined what represents quality in research practice and what are its characteristics. The authors proposed a multi-dimensional understanding of research quality and found 66 quality attributes that can be grouped into three aspects in the conduct of research:
the research design: this relates to the conceptualisation of the research, its aims, methodology and assumptions, and would include attributes such as objectivity, interdisciplinarity, stringent argumentation, etc.
the research process: this relates to the execution of the research activities, and would include attributes such as clarity, coherence, rigourousness, thoroughness, originality, conformance to ethics, etc.
the research impact: this relates to the influence on academia, practitioners and the society, and would include attributes such as usefulness, novelty, generalizability, dissemination potential, social/political/educational/practical significance, etc.
While the above study presents a comprehensive framework for determining research quality, historically, quantitative evaluation of academic research quality (and productivity of authors) has been based on an analysis of the number of publications and their received citations, measured by an author’s H-index. The H-index, short for Hirsch index, was developed by J.E.Hirsch as a quantitative metric to provide ‘an estimate of the importance, significance, and broad impact of a scientist’s cumulative research contributions’ (Hirsch, 2005, p. 16569). It includes an assessment of both the quantity of publications (by taking into account the number of papers published) and an approximation of the quality of those papers (by assessing their impact on the target audience, measured by the number of citations to these articles)
Philanthropic Impact of Investing Via Waqf-Featured Unit Trust Funds: Determinant Factors Influencing the Participation in Waqf Unit Trust Funds in Malaysia
Full text linkPurpose — Waqf unit trust funds are a form of value-based impact investing that combines financial investment with philanthropic goals through waqf (Islamic endowment). This study uses the theory of planned behaviour (TPB) to investigate the factors that influence people’s intentions to participate in waqf unit trust funds in Malaysia. Furthermore, the study investigates the function of religion as a moderator in predicting an individual’s intention to engage in waqf unit trust funds.
Design/Methodology/Approach — Four hundred and four completed survey questionnaires have been obtained. Descriptive analysis and Partial Least Square–Structural Equation Modelling (PLS-SEM) are performed to analyse the data.
Findings — The findings show that an individual’s intention to engage in waqf unit trust funds is influenced by attitude, subjective norms, perceived behaviour control, and moral norms. Furthermore, religiosity influences the relationship between moral norms and the intention to join in waqf unit trust funds.
Research Implications and Limitations — Findings from this study which focuses on Muslims’ involvement in recently established waqf unit trust funds can be used by the waqf unit trust managers in Malaysia to develop appropriate marketing strategies in encouraging Muslim participation in waqf unit trust funds. Participation in waqf unit trusts is not limited to Muslims; hence, future studies can be conducted to cover a wider base of respondents among non-Muslims
Empowering the Future of Cash Waqf through Digitalisation: An Insight into the Philanthropic Intention of the Indonesian Muslim Community
Full text linkPurpose — This research explores the dimensions of perceived iḥsān (altruism) and trust, utilising a framework rooted in the Unified Theory of Acceptance and Use of Technology (UTAUT), to comprehensively explore the intricate motivations and ethical considerations underlying individuals’ engagement with digital waqf platforms.
Design/Methodology/Approach — Structural Equation Modeling (SEM) was applied to analyse primary data collected from 202 Muslims residing in four cities in Indonesia.
Findings — The investigation unveiled that performance expectancy, social influence and perceived iḥsān significantly impact the intention of digital waqf usage. On the other hand, trust affects a person’s intention, shaping their behaviour to donate through digital waqf platforms. In contrast, effort expectancy does not affect the intention to engage in waqf through digital channels, and facilitating condition do not affect user behaviour.
Originality/Value — This study introduces a novel approach by incorporating perceived iḥsān and trust dimensions into the UTAUT model to achieve the objective of this research. In particular, it offers unique insights into the disbursement of cash waqf among Muslims via digital platforms (e.g., online channels).
Practical Implications — The study emphasises that individuals from the low middle-class demonstrate empathy and mutual support in the face of financial limitations. The article offers valuable recommendations to the government, aligning with Indonesia’s Golden 2045 goal. These recommendations encompass the implementation of advanced digitisation in waqf management, integration of waqf data into robust financial management systems, and intensified educational campaigns aimed at raising public awareness on cash waqf, particularly among the younger generation
Impact of Corporate Social Performance on Financial Performance: Evidence from Islamic Banks, Conventional Banks and Social Banks
Full text linkPurpose — This study aims to assess the impact of banking models on the relationship between corporate social performance (CSP) and corporate financial performance (CFP) in determining a viable model for sustainable banking.
Design/Methodology/Approach — The study uses a cross-country sample of 117 financial institutions across 36 countries over an 8-year observation period between 2013 and 2020. To address heterogeneity and endogeneity issues, the authors use the System Generalised Methods of Moments (GMM) estimation models. The study also constructs a novel CSP Index as the independent variable for the research. This CSP Index comprises six indicators reflecting dimensions of financial inclusion and intermediation, serving as proxies for sustainable banking.
Findings — The findings reveal that the distinct banking models have a significant impact and can alter the direction of the CSP-CFP relationship. Specifically, the conventional banking (CB) model exhibits a statistically significant negative association between CSP and CFP. Conversely, the Islamic banking (IB) model emerges as a promising avenue for sustainable finance, indicating that increased corporate social responsibility (CSR) activities within Islamic banks (IBs) lead to greater profitability. This difference arises from the inherent strengths of the IB system in conducting financial intermediation and inclusion activities.
This contrasts with the CB model’s reliance on debt-based instruments, which exacerbates risk and detrimentally impacts financial performance. The findings also show that the social banking (SB) model has a significant effect on the CSP-CFP relationship.
Originality/Value — The findings give new insights into the longstanding debate on the CSP-CFP relationship by examining the impact of banking models. Introducing a novel CSP Index, characterised by its objectivity and verifiability, addresses the prevalent issue of bias inherent in the CSP indices of previous studies
New Issues in Temporary Muslim Endowments (Waqf)
Full text linkPurpose — This study aims to discuss several examples of temporary Islamic endowments (waqfs) in the modern period, arguing that jurists and Muslim endowment managers should utilise them more widely to adjust to current societal circumstances and open the door for new ways of caring for those in need.
Design/Methodology/Approach — It employed textual analysis of legal opinions related to temporary waqfs, outlining the positions of scholars on both sides of the issue, including a presentation and analysis of their evidence.
Findings — The research findings show that temporary waqfs are an essential means of renewable and sustainable economic support, where wealthy people endow their money for religious gain and to help others in need.
Originality/Value — Unlike some previous studies, this article specifically examines modern and contemporary forms of temporary endowments and demonstrates some of their effects in supporting the economy and the needy in society.
Practical Implications — Following this paper’s recommendations, those with funds and everyone who can create an endowment should support endowment institutions in modern ways and in different areas of temporary endowments, which would be very beneficial in eliminating poverty and supporting the economy.
Research Limitations/Implications — Due to the limited scope of the study, its findings are limited to contemporary jurisprudential issues related to temporary endowments. Hence, it is related to the Islamic economy and steps for strengthening it in Muslim societies
Safe Havens Characteristics of Islamic Stock Indices During Bearish and Bullish Markets: A Case of Developed and Developing Countries
Full text linkPurpose — This study examines the performance of Islamic and conventional indices during bullish (positive) and bearish (negative) markets while the economic and financial conditions are different.
Design/Methodology/Approach — This study uses GARCH (1,1) and wavelet-assisted cross-spectral, cross-correlation analyses to investigate the performance of Islamic and conventional stock indices and study the presence of safe havens, which reflect low volatility in the indices during times of market turbulence, for investors during bearish and bullish periods from 2019–2021.
Findings — The paper finds that there is high and persistent volatility in Islamic indices in bullish markets, while in bearish periods the Islamic indices show low volatility persistence; and conventional indices were highly volatile during crisis periods. Also, the impact of news shocks on Islamic indices was intense before COVID-19, while after that news, shocks had a high impact on the conventional indices. The wavelet coherence analysis shows that there is high coherency between Islamic and conventional indices in developed countries but in developing countries, the opposite prevails.
Originality/Value — The study is the first to use both Generalised Autoregressive Conditional Heteroskedasticity (GARCH) and wavelet coherence models for examining Islamic and conventional stock indices during bearish and bullish markets, especially in the COVID-19 pandemic era.
Practical Implications — The results conclude that there are safe havens present in Islamic indices in both developing and developed countries, especially the United States (US), the United Kingdom (UK), India, and Indonesia, while in other countries the presence is weak. Both GARCH and wavelet coherence models show the same results regarding the presence of volatility and safe havens for investors in different countries
Factors Affecting Students’ Intention to Donate Cash Waqf: The Mediating Role of Literacy in Indonesia
Full text linkPurpose - This paper analyzes the factors that influence the intention to donate cash waqf among students with waqf literacy as a mediating variable.
Design/Methodology/Approach - Using structural equation modeling (SEM-PLS) to test the proposed model, based on a sample of 80 Islamic Economics students at public and private universities in Bandung Indonesia
Findings - The findings show that first, the intention to give cash waqf to students is affected by the level of education and the level of religiosity, while the variable access to information media is not significant; second, the literacy level of cash waqf among students is influenced by the level of education and access to information media, while the level of religiosity is not significant; and thirdly the level of cash waqf literacy does not mediate the influence of education level, level of access to information media and level of religiosity on cash waqf intentions.
Practical implications - This study highlights the important role of education level in increasing the level of literacy and cash waqf intentions for students. The implication is that universities are invited to offer innovative patterns of waqf education and training. By providing a clear understanding of cash waqf awareness among college students, this research can assist in designing appropriate literacy educational campaigns.
Originality/Value - This study is the first to study factors affecting the students' intention of cash waqf: the mediating role of literacy with literacy as a mediating variable. This research study can assist in designing appropriate educational literacy campaigns
Interbank Rate & Monetary Policy: Evidence from Dual Banking System of Developing Countries
No full textThis paper examines the role of credit channel in transmitting the effects of monetary tightening in Pakistan and Malaysia, countries with a dual banking system including both Islamic and conventional banks. Two-step system-generalized Method of Moments estimator is applied to investigate the impact of tight monetary policy on banks’ credit expansion using an unbalanced bank-level panel dataset. In several ways, this study differs from previous empirical studies. First, while previous empirical studies of the impact of monetary policy on the banking system have focused on countries with conventional banking systems, the focus of this is on two countries with a high share of Islamic banks, namely Pakistan and Malaysia. There is very little evidence concerning economies with a dual (Islamic and conventional) banking system. Most previous related studies on dual banking systems use only the conventional VAR approach. However, we use a two-step system-generalized Method of Moments approach. Our results reveal that both types of banks significantly cut their financing in periods of tight monetary policy, confirming the existence of a credit channel in Pakistan and Malaysia. The findings indicate that IBs are less responsive than conventional ones to tight monetary policy. Moreover, our results provide evidence that large-sized and more liquid IBs and CBs are less responsive to monetary policy tightening in both countries. In brief, our results highlight significant differences between the two types of banks reflecting the distinctive features of Islamic banks. Therefore, policymakers may consider the type of banking, bank size, and liquidity position while devising monetary policy instruments to effectively manage credit supply in a dual-bank system