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Takāful demand: a review of selected literature
No full textPurpose
This paper aims to provide a systematic review of literature on the demand for takāful (Islamic insurance) from articles published from January 2009 to June 2019. The review aims to synthesise and segment previously published research to identify the gaps and provide future research direction.
Design/methodology/approach
A systematic review of the literature was conducted. Past research was analysed, and content comparisons based on research focus, context and methodology were evaluated.
Findings
It was found that not much has been written and published on takāful demand in quality journals. The first two articles were published in 2009, but it was only in 2017 that coverage of the topic rapidly expanded. Although no article was found to have been published in 2018 on takāful demand, there was one published article on the topic in 2019. This paper also found that not much attention has been given to takāful demand from the corporate sector.
Research limitations/implications
The defined rule for document searching and selection excluded out-of-scope documents that might be relevant. Furthermore, as this paper concentrates exclusively on articles published in English journals, the possibility that other relevant works do appear elsewhere in a different language is not denied.
Practical implications
Factors determining takāful demand are provided, and general directions are discussed, which managers can use to develop market share further.
Originality/value
Such an extensive review of literature on takāful demand has not been done before. Other than revealing ambiguities, gaps and contradictions in the literature, this paper sketches an avenue for further research. It also provides information and guidance for other researchers wishing to embark on research on takāful demand.
DOI: https://doi.org/10.1108/IJIF-03-2019-004
An analysis of maṣlaḥah based resolutions issued by Bank Negara Malaysia
No full textPurpose
This study aims to examine the resolutions issued by the Sharīʿah Advisory Council of Bank Negara Malaysia (SAC-BNM), which have recognized maṣlaḥah (public interest) as the basis of ruling to see the extent of its usefulness to the public and the extent of its adherence to the maṣlaḥah parameters. The study will also look into the opposing opinion to identify the basis of rejection and overall implication on Islamic finance based on opposing opinions of SAC-BNM and other bodies of collective ijtihād (juristic interpretation).
Design/methodology/approach
The study uses a qualitative approach by analyzing the SAC-BNM resolutions, which have been resolved based on maṣlaḥah. The study also applies the comparative approach by comparing the fatwa (Sharīʿah pronouncement) issuing bodies of Malaysia and the Gulf Cooperation Council countries. Furthermore, the secondary data is obtained from sources such as uṣūl al-fiqh (theory of Islamic jurisprudence) books, papers and relevant internet sources.
Findings
The study found that SAC-BNM’s resolutions are in line with some of the major maṣlaḥah parameters mentioned in the uṣūl al-fiqh sources i.e. must not contradict with the Qurʾān and the Sunnah. While looking at the other two criteria of being in line with ijmāʿ (consensus) and having a general impact, such resolutions might not fulfill the criteria of valid maṣlaḥah considering, respectively, the stand of collective ijtihād or the impact on the group of customers and institutions.
Originality/value
Most available shari’ah (Islamic law) research considers the perspective of fiqh (Islamic jurisprudence) while analyzing the issue of maṣlaḥah. This study aims to conduct analysis based on uṣūl al-fiqh. Moreover, maṣlaḥah itself is a broad concept, which can be abused. Hence, this study discusses the parameters of maṣlaḥah to understand the validity of an important juristic tool in Sharīʿah.
DOI: https://doi.org/10.1108/IJIF-09-2018-010
Islamic Financial Services Act (IFSA) 2013 and the Sharīʿah-compliance requirement of the Islamic finance industry in Malaysia
Full text linkPurpose
This paper aims to observe the development of the Sharīʿah governance framework (SGF) and practice in Islamic financial institutions (IFIs) in Malaysia.
Design/methodology/approach
The study is a qualitative-based research. It uses various documents and content analysis approach to understand and analyze the structure, process and practice of SGF in IFIs in Malaysia.
Findings
It is found that the Central Bank of Malaysia, Bank Negara Malaysia, has attempted to develop a comprehensive framework of Sharīʿah governance for IFIs in Malaysia. The framework governs the practice of the industry, covers stakeholders’ scope of duties and responsibilities and provides details on processes and procedures in the operations of IFIs to achieve the objective of Sharīʿah compliance. To maintain the relevance of the SGF to the needs of the industry, the framework has also been updated recently in 2017. The amendments aim to strengthen the effectiveness of Sharīʿah governance implementation within the Islamic finance industry.
Originality/value
This study attempts to comprehensively examine the evolution of the SGF Sharīʿah governance framework for IFIs in Malaysia. The Malaysian model of the SGF is unique and could be emulated by other countries in developing the Islamic finance industry in their respective jurisdictions.
DOI: https://doi.org/10.1108/IJIF-12-2017-005
Behavioural Intention of Zakat Participants Towards the Zakat Fund in Morocco
Full text linkPurpose ― Currently, there is neither a formal zakat system nor a zakat institution in Morocco. However, in recent years, discussions have intensified regarding the establishment of a national zakat fund in the Kingdom. In this regard, the paper attempts to fill the gap by examining the factors determining the intention of Moroccans to pay their zakat obligations to the national zakat fund.
Design/Methodology/Approach ― The present study adopts a quantitative research design based on the theory of planned behaviour (TPB). A relevant questionnaire was designed and distributed to zakat believers in Morocco. Structural equation modelling (SEM) was used to analyse the data collected.
Findings ― The study found that most of the zakat believers have basic knowledge of zakat as a religious obligation and that there is a need for proper education on zakat. Additionally, among the variables studied, only attitude has a significant positive impact on the intention of Moroccans to pay their zakat obligations to the zakat national fund.
Originality/Value ― This study is unique in nature as it is the first study to explore individuals’ intention in Morocco to pay their zakat obligations to a national zakat fund based on the TPB.
Research Limitations/Implications ― The primary limitation of this research is its scope. The study focuses on individual contributors only. Further studies might target businesses and Islamic financial institutions as potential donors.
Practical Implications ― The paper suggests some recommendations aiming to increase confidence in the zakat fund and building a positive attitude among the muzakkīs (zakat payers)
Preference shares: analysis of Sharīʿah issues
Full text linkPurpose
The purpose of this paper is to analyze the different features of preference shares from accounting and Sharīʿah perspectives. It also aims to study Sharīʿah issues arising from preference shares and to subsequently propose solutions for identified issues that will help in structuring Islamic preference shares.
Design/methodology/approach
The paper uses a qualitative method by analyzing relevant documents and literature to understand the subject matter and Sharīʿah-related issues.
Findings
The paper finds that several features of conventional preference shares, such as capital guarantee, loss sharing disproportionate to capital contribution, fixed profit, profit guarantee and waiver of rights before realization of profit, make them a Sharīʿah non-compliant instrument.
Research limitations/implications
The paper is conceptual in nature; however, it provides directions for future empirical research.
Originality/value
The paper provides a practicable solution to structure Sharīʿah-compliant preference shares.
DOI: https://doi.org/10.1108/IJIF-07-2017-000
Factors Influencing Charitable Giving in Malaysia: An Islamic Perspective
Full text linkPurpose ― This study aims to discover how Islam, as a religion, influences its believers to contribute in the form of gifts, donations or charity, generally referred to as tabarruʿ.
Design/Methodology/Approach ― Structural equation modelling analysis was used to investigate the online questionnaire responses from 402 Muslims who have contributed to charity.
Findings ― The study finds that only targhīb (reward) and tarhīb (threat) have a significant positive relationship with tabarruʿ, while iḥsān (excellence) and ukhūwah (brotherhood)―despite showing positive influence―are not significant. It also highlights that the influences of targhīb and tarhīb are more robust when the respondent has a higher level of education.
Originality/Value ― To the best of the authors’ knowledge, only a few studies on the influence of religion on charitable behaviour have been carried out. So far, no study has looked at the determining variables from the standpoint of Islam.
Research Limitations/Implications ― Due to constraints of time and research funding, the sample population was not drawn from all states in Malaysia. The sample was restricted to Malaysians in Sabah, Malaysia.
Practical Implications ― This study highlights that non-profit organisations in Malaysia, especially those from an Islamic background, should be able to organise their fundraising strategies with an emphasis on the factors of targhīb and tarhīb
The Curious Case of Ribā’s Muted Role in Bank Selection Criteria Among Muslims in Klang Valley, Malaysia
Full text linkPurpose – Arguably, the most significant difference between conventional and Islamic banking is the prohibition of ribā (interest)—besides gharar (uncertainty) and maysir (speculation). Naturally, it is questioned whether ribā is the make-or-break selection criterion for Islamic banking customers in Malaysia. Consequently, this study examined the moderating effect of ribā knowledge on the nexus between the already widely researched bank selection criteria (i.e., service quality, corporate reputation, cost and benefits, and technology) and bank selection among Malaysian Muslims.
Design/Methodology/Approach – This research is quantitative, cross-sectional and non-experimental. It uses structured questionnaires to acquire and understand bank selection criteria and the moderation effect of ribā among Malaysian Muslims. The sample comprised 244 Muslim customers with loan/financing accounts in banks in Klang Valley, Malaysia. This study uses exploratory factor analysis and structural model analysis for data analysis.
Findings – The findings reveal three criteria—notably, corporate reputation, cost and benefits, and technology—that exhibit a significant correlation with bank selection. Despite the strong injunctions against ribā, it failed to moderate the relationship between bank selection criteria and bank selection. Additionally, the subsequent importance-performance test indicates that ribā knowledge holds lower significance compared to the three significant criteria. Therefore, the authors believe there is a strong possibility that Malaysian Muslims, specifically in Klang Valley, may not factor the prohibition of ribā into their banking selection decisions.
Research Limitations/Implications – The items measured for knowledge of ribā have not been widely tested and are not designed to assess the level of religiosity of the respondents nor the awareness of Islamic law behind the prohibition of ribā. Nevertheless, this paper provides insight into the level of knowledge about ribā among Muslims in Klang Valley, Malaysia and its possible moderating effect on bank selection. Future research could extend this work and examine the knowledge of ribā with respect to the level of respondents’ religiosity and/or the awareness of Islamic law behind the prohibition of ribā.
Practical Implications – Religious authorities, non-government organisations and Islamic banks could leverage these insights by uplifting and broadening public education, especially for the Muslim community, on the actual meaning of ribā and its implications in their lives and the hereafter.
Originality/Value – The lack of studies focusing on the subject of ribā, its practice in conventional banking, and its prohibition in Islamic banking has often been overshadowed by research studies on adoptions and perceptions of Islamic banking and finance, which may have led to the negligence of its importance in choosing Islamic banking over conventional banking among Muslims in Malaysia
Legal Challenges in Establishing the Islamic Capital Market in Uzbekistan
Full text linkPurpose: This study aims to identify legal hurdles preventing the penetration of the Islamic finance industry in Uzbekistan and formulates vital policy recommendations to develop a regulatory framework for the industry.
Design/methodology/approach: A library research method and legal analysis is employed to study a range of legal matters varying from banking and capital market legislation to some newly introduced laws. Additionally, issues pertaining to Islamic finance in the tax law and the civil code of the nation are scrutinized.
Findings: The finding of the paper shows that there exist some legal barriers hindering the complete implementation of the Islamic finance industry. They are not only in one area of national legislation but also exist in various parts of the legal system. Accordingly, the Uzbek government is recommended to develop a sound legal and regulatory framework that provides a favourable environment for the activities of Islamic finance institutions.
Originality/value: Unlike some previous studies, this paper specifically examines the legal barriers faced by the Islamic finance industry in Uzbekistan, shows some of its implications, and provided relevant policy recommendations.
Practical implications: Following the recommendations of this paper by the Uzbek government could increase investment flow into the economy from both other countries and local people.
Research limitations/implications: Due to the general scope of the study its findings are mainly based on secondary (rather than primary) data and a review of previous literature. Hence, it makes the finding and recommendations of the study broad in perspective.Purpose: This study aims to identify legal hurdles preventing the penetration of the Islamic finance industry in Uzbekistan and formulates vital policy recommendations to develop a regulatory framework for the industry.
Design/methodology/approach: A library research method and legal analysis is employed to study a range of legal matters varying from banking and capital market legislation to some newly introduced laws. Additionally, issues pertaining to Islamic finance in the tax law and the civil code of the nation are scrutinized.
Findings: The finding of the paper shows that there exist some legal barriers hindering the complete implementation of the Islamic finance industry. They are not only in one area of national legislation but also exist in various parts of the legal system. Accordingly, the Uzbek government is recommended to develop a sound legal and regulatory framework that provides a favourable environment for the activities of Islamic finance institutions.
Originality/value: Unlike some previous studies, this paper specifically examines the legal barriers faced by the Islamic finance industry in Uzbekistan, shows some of its implications, and provided relevant policy recommendations.
Practical implications: Following the recommendations of this paper by the Uzbek government could increase investment flow into the economy from both other countries and local people.
Research limitations/implications: Due to the general scope of the study its findings are mainly based on secondary (rather than primary) data and a review of previous literature. Hence, it makes the finding and recommendations of the study broad in perspective
Editorial
Full text linkبسم الله الرحمن الرحيم
In the Name of Allah, Most Gracious, Most Merciful
THE ROLE OF INDEXING FOR A JOURNAL
Islamic economics, banking and finance is still a niche area of research. The number of journals publishing Islamic finance literature has grown since the first academic journal dedicated to Islamic finance was launched in 1983 by King Abdulaziz University in Saudi Arabia. Yet, it should be recognised that the number remains small compared to their conventional counterparts. There are only a few specialised academic journals that publish literature in areas related to Islamic accounting, economics, business, banking, finance and management. As at September 2023, less than ten such journals are Scopus-indexed and only one is included in Clarivate Analytics’ Web of Science Social Sciences Citation Index (SSCI).
Indexation of a journal in prestigious databases is a reflection of the journal’s quality and impact. Indexed journals are recognised as authoritative sources of information and are considered of higher scientific quality than non-indexed journals. By getting indexed and abstracted in major indexes and databases, journals gain international visibility and become more accessible to their readers. This paves the way for published articles to be seen by more readers and cited more often by scholars. Therefore, the more visible a journal is, the more authors’ articles will be seen, read and cited and the greater the opportunity for the journal to contribute to the wider scholarly community within its field of specialisation.
A major index is Scopus, Elsevier’s abstract and citation database. Scopus-indexed journals have been evaluated and accepted by the Scopus Content Selection and Advisory Board (CSAB) for meeting rigorous quality and impact criteria. Scopus’ minimum assessment criteria include peer-reviewed content, regular and timely publication, relevance to an international audience, and ethical publication policies. Scopus-indexed journals are further categorised into four quartiles within their specific subject area. Quartile 1 (Q1) consists of the highly-ranked journals, having the highest level of quality and impact. It is then followed by Quartile 2 (Q2), Quartile 3 (Q3) and Quartile 4 (Q4).
SSCI, another highly-regarded index that ranks the most prestigious journals in the social sciences stream, forms part of the ‘Web of Science Core Collection’, which also comprises the Science Citation Index Expanded (SCIE), Arts & Humanities Citation Index (AHCI) and Emerging Sources Citation Index (ESCI). The Web of Science Core Collection recognises only journals that demonstrate high levels of editorial rigour and best practices.
For inclusion in SSCI, SCIE and AHCI, journals within the respective category (i.e., social sciences, sciences, and arts and humanities) must meet both rigorous quality criteria and impact criteria. If a journal meets only the quality criteria, it enters the ESCI.
Journals which enter ESCI are further evaluated for impact and are then included in either SCIE, SSCI or AHCI. Although there is no absolute rule, journals that fall within Q1 and Q2 are much more likely to be assessed for positive impact. According to the Web of Science Journal Evaluation Process, the quality criteria include:
· ISSN· Journal title· Journal publisher· Website address and functionality· Content access· Peer review policy· Contact details· Scholarly content· Content relevance
· Article titles and abstracts in English· Clear language· Timeliness of publication· Publication volume· Journal format· Publication ethics statement· Bibliography· Appropriate citations to the literature
· Editorial affiliation details· Editorial board composition· Author affiliation details· Author distribution· Grant support details· Validity of statements· Adherence to community standards
ISRA International Journal of Islamic Finance (IJIF) is Scopus-indexed, and its latest quartile as at 5 September 2023 is Q1 (Development), Q2 (Finance) and Q2 (Economics and Econometrics). It is also included in ESCI, beginning with Vol. 9 No. 1 (2017). The ongoing challenge for IJIF is to maintain its rank within the top quartiles in Scopus by continuing to increase the number of citations of its published articles.
IJIF’s final hurdle is to meet the Web of Science’s impact criteria so that it can be considered for inclusion in SSCI. These impact criteria include:
Comparative Citation Analysis — this benchmarks IJIF’s impact factor against existing SSCI journals.
Author Citation Analysis — this checks that IJIF’s authors are regularly publishing in other SSCI journals.
Editorial Board Citation Analysis — this checks that IJIF’s Editorial Advisory Board members are regularly publishing in other SSCI journals.
Content Significance — this checks that significant and original contributions to the field are being published with regularity.
Obviously, the challenge remains for IJIF to attract highly-cited papers, high profile authors whose work attracts citations, articles that discuss hot and emerging trends, and original research that contributes to the body of Islamic finance knowledge, among others. Necessary measures will be taken at the level of IJIF to improve its impact on the Islamic finance community.
IJIF Volume 15 Number 3 September 2023
This issue of IJIF publishes nine articles that have been long awaiting publication. We thank the authors for considering the publication of their articles with IJIF despite the long wait. The delay was regretfully caused by the pagination constraints we faced when publishing with our last publisher. These are the articles published in this journal’s issue and the main gist of their arguments:
An Empirical Investigation of the Factors Affecting Perceptions of University Students in Pakistan on the Usage of Islamic Equity Crowdfunding by Iqra Sarfraz, Huma Ayub and Abida Ellahi. This article finds project innovativeness, return on investment, and perceived informativeness, among others, to be the key factors that influence investors’ willingness to invest in Islamic equity crowdfunding platforms.
Maqāṣid Entrepreneurial Finance: An Islamic Approach to Small Business Capital Structure Theory by Wida Purwidianti, Bambang Agus Pramuka, Rio Dhani Laksana and Wiwiek Rabiatul Adawiyah. This article determines five factors that influence capital structure decisions of small businesses based on maqāṣid al-Sharīʿah.
Model Design of Sociopreneurship: Halal Based-Development of Micro, Small and Medium Enterprises Through Zakat Institutions by Siti Nur Azizah, Annisa Nur Salam and Ahmad Zaenal Arifin. The zakat institutions’ model of sociopreneurship proposed in this article aims at fostering MSMEs that develop halal products so that they can evolve from being zakat recipients to being zakat payers.
Malaysian Consumer Income and Spending Behaviour During the COVID-19 Pandemic: An Insight from Maqāṣid al-Sharīʿah by Nur Alisya Nabila Ros Hisham, Shahrina Ismail and Sharifah Fairuz Syed Mohamad. This study relates spending behaviour to awareness of maqāṣid al-Sharīʿah during COVID-19.
· Developing an Islamic Business Model: A Case for Agricultural Value Chain Finance in Agrobank, Malaysia by Aris Anwaril Muttaqin, Muhammad Adib Samsudin, Ahmad Dahlan Salleh, Azlin Alisa Ahmad and Akhmad Syakir Kurnia. This article is a case study of the agricultural value chain finance business model implemented by Agrobank in Malaysia.
Investor Sentiments, the COVID-19 Pandemic and Islamic Stock Return Volatility in Indonesia by Maulidya Firdaus Irwaningtyas, Puji Sucia Sukmaningrum and Sulistya Rusgianto. This research focuses on the sentiments of Islamic stock investors in the context of COVID-19 and examines Islamic stock return volatility.
A Theoretical Analysis in Choosing Between Profit-Loss Sharing and Interest-Based Contracts: A Simple Game Model by Reza Gholami, Aisyah Abdul-Rahman, Fathin Faizah Said and Nor Ghani Md Nor. This study finds four major factors that determine participants’ choice between profit-loss sharing contracts and interest-based contracts.
Impact of COVID-19 on the Behaviour of Islamic and Conventional Investors: Evidence from the Indonesia Stock Market Crash 2020 by Faris Azzam Shiddiqi and Akhmad Akbar Susamto. This article compares COVID-19’s impact on conventional and Islamic stock markets in Indonesia and the role played by the panic index on stock market returns.
Lack of Profit-and-Loss Sharing Contracts in Moroccan Islamic Banks: An Investigation during the Coronavirus Pandemic by Dalila Tarriko and Abdelati Hakmaoui. This article highlights the institutional and operational challenges and COVID-19 repercussions that affected implementation of PLS contracts in Morocco.
We thank our readers for their support and wish them an insightful read.
Allah (SWT) is the Bestower of success, and He knows best
Ṣukūk on blockchain: a legal, regulatory and Sharī’ah review
No full textPurpose
This paper aims to explore issues arising from ṣukūk (Islamic bonds) on blockchain, including Sharīʾah (Islamic law) and legal matters.
Design/methodology/approach
A qualitative methodology is used in conducting this research where relevant literature on ṣukūk was reviewed. Through a doctrinal approach, the paper presents analyses on the practice of ṣukūk and ṣukūk on blockchain by discussing its legal, Sharīʾah and regulatory issues. This culminates in a conceptual analysis of blockchain ṣukūk and its peculiar challenges.
Findings
This paper reveals that digitizing ṣukūk issuance through blockchain remedies certain inefficiencies associated with ṣukūk transactions. Indeed, structuring ṣukūk on a blockchain platform can increase transparency of underlying ṣukūk assets and cash flows in addition to reducing costs and the number of intermediaries in ṣukūk transactions. The paper likewise brings to light legal, regulatory, Sharīʾah and cyber risks associated with ṣukūk on blockchain that confront investors, practitioners and regulators. This calls for deeper collaboration in research among Sharīʾah scholars, lawyers, regulators and information technology experts.
Research limitations/implications
As a pioneering subject, the paper notes the prospects of blockchain ṣukūk and the current dearth of literature on it. The paper would assist relevant Islamic capital market entities and authorities to determine the potential and impact of blockchain ṣukūk in their respective businesses and the financial system.
Practical implications
Blockchain ṣukūk will assist in addressing issues inherent in classical ṣukūk and in paving the way to innovative solutions that will facilitate and enhance the quality of ṣukūk transactions. For that, ṣukūk would require appropriate regulatory technology to address its governance and regulation peculiarities.
Originality/value
Integrating ṣukūk with blockchain technology will add value to it. The paper advances the idea that blockchain ṣukūk revolutionises ṣukūk and enhances its practice against known inadequacies.
DOI: https://doi.org/10.1108/IJIF-06-2020-012