International Journal of Economics, Management and Accounting
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AL-DAWUDI: A NORTH AFRICAN MALIKITE OBSERVER OF THE ECONOMIC DISORDER UNDER THE FATIMID REGIME
No full textThe present paper contextualizes the North African Malikite scholar Abu Jacfar Ahmad ibn Nasr al-Dawudi's views in his interdisciplinary work, Kitab al-Amwal, which typifies the interaction of economics, politics, religious ethics and jurisprudence. This study gives us a considerable insight into the main causes of the economic crisis under the Fatimid regime. This article has a bipartite division in the main. The first part is an introduction to al-Dawudi and his book, its coverage, methodology, sources, and influence to the reader. The second part analyzes his economic views on major issues, such as 'individual economic behaviour,' 'the rights of the needy to the private possessions of the affluent,' 'the poverty line versus the solicitation line,' 'the legal status of the conquered lands,' and the 'economic offenses and anti-corruption policy.'JEL Classification: B110, B310, N370, N470, P59
EXPORT EXPANSION AND IMPORTED INPUT INTENSITY IN THE MALAYSIAN MANUFACTURING SECTOR
No full textThe objective of this paper is twofold. First, it aims to evaluate the export performance of Malaysian manufacturing industries and the intensity of their imported input usage. Secondly, this paper aims to examine the validity of various claims that increasing demand for imported inputs in Malaysia has been mainly to cater for the export-oriented industries. This study found that more resource-based industries were export-oriented compared to the non-resource-based industries. It is also found that almost 70 percent of the manufacturing industries were highly imported input dependent, and that 93 percent of these industries were non-resource-based. Domestic-oriented industries were generally more highly dependent on imported inputs compared to the export-oriented industries. The analysis for the non-resource-based industries showed a positive relationship between export share and imported input content. The relationship, however, was negative for the resource-based industries.JEL Classification: F140, L600, L70
CREATION OF MONEY AND THE ROLE OF CENTRAL BANK IN AN ISLAMIC FRAMEWORK: A SIMULATION FOR PAKISTAN
No full textThe paper attempts to formulate, in the context of an Islamic economy, a practical model through which monetary management could be practiced in the absence of interest rate. Having developed the model, it has also been applied to the case of Pakistan to simulate a complete process of monetary management with interest-free banking. Four steps are envisaged in this process: assessment of demand for money; determining the size of the outside and the inside money; quantifying needs of the major claimants of money; and actual process of money creation and distribution. The simulated results for Pakistan's economy for 1996-97 point to a relatively more efficient and economical monetary management as it reduces dependence on base money, provides for interest-free consumption loans, meets fiscal requirements without resorting to interest-based borrowing, and also caters to the requirements of the private sector by providing more credit than was actually recorded for 1996-97.JEL classification: E40, E50, E60, P40Key words: Money, Islamic economics, Pakista
DEVELOPMENT OF MUDARABAH INSTRUMENTS: UNDERSTANDING THEIR PROFITABILITY, SECURITIZATION AND NEGOTIABILITY ASPECTS
Get PDFThis paper attempts to examine the securitization, negotiability and profitability aspects of three types of mudarabah instruments; namely, asset-enfaced mudarabah instruments, currency-enfaced mudarabah instruments representing monetary contributions and currency-enfaced mudarabah instruments representing real assets. This paper begins with a distinction between riba (usury) and profit and concludes that an exchange of currency-enfaced mudarabah instruments in varying amounts entails riba while an exchange of asset-enfaced mudarabah instruments will generate legitimate profits. The current practice is to issue currency-enfaced mudarabah instruments but treat them as asset-enfaced mudarabah instruments. This position is analyzed and policy implications are drawn for future development of mudarabah instruments.JEL classification: G10, P43, Z12Key words: Mudarabah instruments, Islamic finance, Financial instrumen
JURISTIC VIEWPOINTS ON BAYC Al-CINAH IN MALAYSIA: A SURVEY
Get PDFIn Malaysia, Sharicah scholars at the supervisory levels have advocated bayc al-cinah as a mode of finance. Under the label of al-bayc, the contract of bayc al-cinah contains interest-bearing features, such as earning a contractual return without the implication of risk and value-addition. Seeking a broader consensus on the permissibility of bayc al-cinah is thus critical. This study shows that Malaysian Sharicah scholars outside the supervisory bodies do not fully support bayc al-cinah. The survey indicates that bayc al-cinah can be applied under a state of darurah or when the maslahah of the Muslim people is under threat, which is not the case in Malaysia. Since Sharicah scholars in Middle-Eastern countries have condemned bayc al-cinah, it is crucial that a diversification policy is pursued to invite greater participation of global Islamic funds in Malaysia.JEL classification: G10, Z12Key words: Islamic financing, Bayc al-cinah, Rib
A COINTEGRATION ANALYSIS OF MALAYSIAN TERM STRUCTURE
Get PDFThis paper demonstrates the existence of cointegrating relationships between the Malaysian short and medium interest rates (interbank rates), namely one-week, two-month, six-month and twelve-month rates, with the spread defining the cointegrating vectors, particularly by using the ‘pre-crisis’ sample period. Using this sample period, the Johansen approach is applied and results of the test imply that the spreads between interest rates form a basis for cointegration space. It is found that two error correction models, which use spreads as the error correction terms, are stable over this ‘pre-crisis’ sample period. They pass most of the diagnostic tests and it is also found that a non-linear structure existed in one of the models. The result is strengthened with the tests of stability which confirm that there is no structural change between the sample periods. The results of cointegration and error correction analyses also support the validity of the expectation hypothesis. For the long-run, the longer-term interest rates are playing a greater role as equilibrium attractors and this supports the long-to-short version of the expectation hypothesis. Similarly, in the short-run, causal impact runs from long- to short-term interest rates and further confirms the hypothesis.JEL classification: C32, E43.Key words: Term structure, Expectation hypothesis, Cointegratio
THE FINANCIAL CRISIS: COMMENTS FROM ISLAMIC PERSPECTIVES
Get PDFI plan to summarize the discussion of my three eminent colleagues along the following framework (incorporating the Islamic perspective): (i) What is the root cause of the current subprime crisis? (ii) What is the impact of the crisis on the global economy? and (iii) What lessons do we derive from the ongoing crisis to restructure the Islamic financial architecture and to improve the economic status of the underprivileged? All three colleagues discuss issues (i) and (iii). Dr. Chapra is the only exception shedding some light on issue (ii). My perspective is slightly different from all three, as I have been trained as a theorist in financial economics especially focusing on the twin issues of asset pricing and financial contracting. I will therefore emphasize on the areas of my expertise and not comment on issues relating specifically to monetary economics, where I have no exposure. Likewise, I will not comment on the issue of bayc al-dayn (sale of debt), which is highly debatable and needs to be re-analyzed in the light of the Qur’OEn, Sunnah and modern financial economics.JEL classification: Z12, G10, K00Key words: Islamic economics, Islamic banking, Maqasid al-Shariah
STABILITY OF LONG-RUN MONEY DEMAND FUNCTION: EVIDENCE FROM MALAYSIA
No full textSTABILITY OF LONG-RUN MONEY DEMAND FUNCTION: EVIDENCE FROM MALAYSI
ISLAMIC ECONOMICS AND FINANCE, THEN AND NOW: A FIQHĪ-CONOMIC PERSPECTIVE ON ITS DOCTRINES AND DEBATES
No full textEach economy functions within a particular social framework, defined by its moral philosophy and legal system. What makes an economy Islamic is Shari'ah, the moral/legal discourses of the classical fuqaha, which defined the economy of classical Islam, shaped its micro and macro institutions, and modulated its actual performance. This economy, which was virtually effaced during the age of European colonialism, has become, in the post-colonial era, both a symbol and basis for revivalist movements in their attempts to re-Islamicize their economies and polities.  Taking the economy of classical Islam and its fiqhi-conomic foundations as a point of departure and reference, this study generally aims at overviewing the salient features of the modern Islamic economy, its performance criteria and theoretical justification as envisioned in Islamic Economics, viewed as a science. In particular, it critically narrates the mainlines of the ongoing debate among Muslim scholars, and juxtaposes three main doctrinal approaches advanced by Muslim economists, viewed from the vantage point of efficiency and justice, the sine qua nonof that economy: namely, those of what I nominatively categorize as Reformist Traditionalists (Neo-Taqlidis), Islamic Modernists/Rationalists (Neo-Kalamis), and Neo-Conservative Muslim Secularists. In Section 1, I present a portrait of what I have called the fiqhi-economy of classical Islam: its philosophy of social harmony and related moral doctrine of economic justice as fairness ('adl qua qist), as well as its micro- and macro-economic institutions, and their underlying economic doctrine of socially embedded markets (suqs) à la Polanyi (1957). It serves as a backdrop for dialogically representing the modern (especially the post-colonial) debate on Islamic Economics, and Islamic finance, in the following sections: In section 2, the two polar disputational groups, the Reformist Traditionalists vs. the Muslim Secularists; in section 3, the Islamic Modernists; and in 4 the study concludes by delineating some fundamental commonalities and differences in their respective doctrinal positions. In general, the approach I follow is historicist and comparative-institutionalist; and the mainline argument follows the time-honored classical method of induction by example à laAristotle. As such, the study and its conclusions are bounded by the limitations of this methodology. JEL classification: B4, K00, N20, P5 Key words: Islamic economics, Islamic finance, Fiqhi-Conomic metho