International Journal of Economics, Management and Accounting
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THE X-EFFICIENCY OF THE SUDANESE ISLAMIC BANKS
Get PDFImportant changes have taken place in the Sudanese banking industry since 1989. The transformation of the banking industry to conform to the Islamic principles has put the spotlight on the performance of the Islamic banks in Sudan. This study investigates the X-efficiency (technical and allocative) of these banks. The study used the basic Stochastic Frontier Approach (SFA). This is accomplished by decomposing the error term into two components, namely random noise (vi) and possible inefficiency (ui). The empirical results tend to suggest that banks in the sample had low levels of X-efficiency. This implied that the Sudanese Islamic banks were not optimizing their inputs usage. However, the results also showed that the inefficiency in the Sudanese Islamic banks could be more associated with inputs wasting (technical inefficiency) rather than choosing the incorrect input combinations (allocative inefficiency). The study has several important policy implications to offer, one of which is that it could be taken as a guideline for the Sudanese government to chart a policy on banking deregulation and mergers. Moreover, the study provides some information and identifies the source of X-inefficiency, which could, in turn, be used to assist banks’ managements to overcome the problems of inefficiency.JEL classification: G21Key words: X-inefficiency, Islamic banks, Stochastic Frontier Approac
A CRITICAL APPRAISAL ON THE CHALLENGES OF REALIZING MAQASID AL-SHARIAAH IN ISLAMIC BANKING AND FINANCE
Get PDFIslam harbours an economic vision that holds the key to a social order capable of providing social justice along with economic prosperity. This vision is deeply inscribed in the objectives of shariah, also known as maqasid al-shariah. Consequently the doctrine of Islamic economics entered debates over the social-welfare role of Islam. It has somehow pursued the goal of restructuring economies according to perceived Islamic teachings and principles. Its most visible practical achievement is the establishment of Islamic banks meant to avoid interest and promote Islamic norms of economic behaviour and ultimately realizing the noble objectives of shariah. This paper examines the challenges of the proper realization of maqasid al-shariah in Islamic banking and finance. These challenges cover various issues: the proper understanding of maqasid al-shariah in Islamic economics; the methods of implementing maqasid al-shariah in Islamic banking and finance; the potential conflicts between macro maqasid and micro maqasid; and the possible abuse of maqasid al-shariah to justify certain financial contracts which in fact contradict the shariah texts. The paper analyses these challenges and provides examples from the current practices of Islamic banks and financial institutions.JEL classification: Z12, G10, K00Key words: Islamic economics, Islamic banking, Maqasid al-Shariah
ISLAMIC CAPITAL MARKET PRODUCTS: DEVELOPMENT AND CHALLENGES
No full textISLAMIC CAPITAL MARKET PRODUCTS: DEVELOPMENT AND CHALLENGE
WORKS ON PUBLIC FINANCE BY THE SIXTEENTH CENTURY MUSLIM SCHOLARS
Get PDFThe subject of public finance and taxation marked the beginning of systematic and rather exclusive writing on economic issues in Islamic scholarship in its earliest period. Within a few centuries, a large number of works came out on the subject. This trend continued in the later centuries but with a difference in quantity, quality and style. Their number decreased, coverage contracted and they increasingly tended to deal with specific issues. Writings in the later centuries were characterized by imitation and repetition. In the sixteenth century the major works on the subject included the works of al-Balatunusi "TahrÊr al-MaqÉl FÊ mÉ Yahull wa yahrËm min Bayt al-MÉl" and Ibn Nujaym's "RisÉlah fi'l-kharÉj" and "Fi Mas'alÉt al-JibÉyah wa'l-RatibÉt wa'l-Mu'sharÉt al-DiwÉniyyah." From the Persian speaking East, Fadl-Allah Khunji discussed the Islamic provision of public finance in much detail in his work Sul´k al-Mul´k, a very comprehensive treatment of the subject in that period. In Safawid Iran the issue of kharÉj was a very controversial topic and centered on whether the acceptance of a stipend from kharÉj income was permissible for religious scholars. .JEL classification: N25Key words: Islamic economics, Islamic banking, Maqasid al-Shariah
MUSLIM CIVILIZATION: THE CAUSES OF DECLINE AND THE NEED FOR REFORM
Get PDFMUSLIM CIVILIZATION: THE CAUSES OF DECLINE AND THE NEED FOR REFORM by M. Umer Chapr
HOW DID THE MALAYSIAN REAL EXCHANGE RATE MISALIGN DURING THE 1997 ASIAN CRISIS?
Get PDFCurrency overvaluation seems tobe the prominentexplanation for the 1997–98 Asian financialcrisis. Although this is the case, the reinstatement to managed float exchange rate regimeinmid-2005, as wellas the instability of commodity prices and the recent 2008–2010 global economic crisis, leads to the questionofhowfar the fluctuationinthe Malaysian ringgit isconsistentwiththe changes initseconomicfundamentals. Based on the theory of real equilibriumexchangerate, this paper estimates the NATREX approach tomodelingthe Malaysianequilibriumexchangerate from 1991 to2009. The empiricalresultsshow thatthe ringgittook a U-turn from being overvalued during the pre-crisis(1991–1997) tobeing undervalued inthe post-crisis (1997–2002) periods, before fluctuating around its long-run equilibriumfor the rest of the period. This corroborated the hypothesis that an overvaluation leads toa currencycrisis, which is followed bysubstantial currency devaluation.The misalignment rates then reduce andremainclose tothe equilibriumpath.  JEL Classification:C32, F31, F41  Keywords: Asiancrisis, Global financial crisis, Real exchange rate misalignment, NATREX model, Malaysi
MONETARY POLICY AND FIRMS' INVESTMENT IN MALAYSIA: A PANEL EVIDENCE
Get PDFhis study examines the effects of monetary policy on firms’ balance sheets, witha particular focus onthe effects upon firms’ fixed-investment spending. Ituses a dynamic panel system GMM estimation proposedby Blundell and Bond (1998). The focal point concernsthe two mainchannels ofmonetary policy transmissionmechanism,namely theinterest rates and broad creditchannelsinaffectingfirms’ investmentspending.By estimating thefirms’ investment modelusing a dynamic neoclassical frameworkinan autoregressive distributed lagged(ARDL) model,the empirical results tendtosupport the relevance ofinterestrates and broad credit channels intransmittingto the firmbalance sheet condition, thatis, firms’ investmentspending. Theresultsalso reveal that theeffect of monetarypolicychannelstothe firms’ investmentare heterogeneous,in that the small firms which faced financial constraint responded more to monetarytightening ascomparedtothelarge firm(less constrained firms). Thus,themonetaryauthorityhastoconsiderthe microeconomicaspects of firmbehaviour informulating their monetarypolicy. JEL Classification: E22, E52, C33  Key words: Monetarypolicy, Financialconstraint, Firminvestment, Dynamic paneldat
NON-PARAMETRIC APPROACH TO MODEL THE BRANCH-WISE EFFICIENCY OF ISLAMI BANK BANGLADESH LIMITED (IBBL): AN EMPIRICAL STUDY
Get PDFThis study examines the branch-wise technical, pure technical, scale and allocative efficiencies of Islami Bank Bangladesh Limited (IBBL) using panel data for the year 2003 to2007. The technique of DataEnvelopment Analysis (DEA) has beenutilizedtocompute the efficiencies of branches. The average allocative efficiency is 61-76%, whereas the average technical efficiencyisabout51-65% during the studyperiod. Thismeans that the dominant source of inefficiency is duetoboth technical inefficiency and allocative inefficiency but technical inefficiency has gotmore contribution to inefficiency than allocative inefficiency. These results are consistentwith the fact that the Islamic banks do notoperateinan overallregulatory supportive environment.Theyare noteven technicallysound enough in their operations. Average scale efficiencyisabout 53%, and average pure technicalefficiencyisabout68%t,suggesting thatthe major source of the total technical inefficiency for IBBL branches are not pure technical inefficiency(inputrelated) butscale inefficiency(outputrelated). Study results indicate that there has been moderateincrease inproductivitygrowth over the years. Productivityincreases inIBBLbranches are mainly driven bytechnologicalchange (opening up and penetrating inother markets) not technical efficiency change(efforts of inefficient bankstocatchupwiththe efficient ones). The results show that larger branch size isassociated with higher efficiency. These resultsindirectlysupportthe economies of scale arguments in IBBL branches.  JEL Classification:D61, G21, Z12  Keywords:Bank Efficiency, Productivity, Islamic Banking, DEA Approach, Banglades
A Case Study on the Implementation of Qardhul Hasan Concept as a Financing Product in Islamic Banks in Malaysia
Get PDFQardhul Hasan is a zero-return financing that Al-Quran urges Muslims to make available to those who need it. In addition, Qardhul Hasan is an example of a unique instrument offered by Islamic Financial Institutions (“IFIsâ€) due to non involvement of interest. The objective of this paper is to study the implementation of Qardhul Hasan concept, as a financing product in an Islamic bank in Malaysia. This study adopted a single case study research. This is the best approach and appropriate to answer the research questions and to achieve the research objectives. In addition, this is a pilot case study which can be extended for multiple case studies later. This study reveals that CALF Berhad offers Qardhul Hasan financing only to its employees. In addition, the facility is limited for certain purposes like marriage, birth of a child, study and other relevant purposes. The study also offers guidelines on the implementation process of the Qardhul Hasan financing in IFIs. Hence it is also believed that this study can be used by the regulatory body like Bank Negara Malaysia or Malaysian Accounting Standard Board, as a basis for setting up the accounting and reporting guidelines, specifically on Qardhul Hasan
A COMPARISON OF ISLAMIC AND CAPITALIST CONCEPTION OF ECONOMIC JUSTICE
Get PDFEpistemological and metaphysical foundation of Islam is distinct from that of capitalism. Secular and liberal discourse defines the basis of capitalism rather. Due to this the conception of economic justice in the two discourses is expected to differ substantially. A significant amount of literature on Islamic economics, finance and banking doesn’t seem to explicitly highlight this difference. Due to this perhaps the Islamic financial industry is measuring its performance as per the standards of its mainstream financial industry. This study would emphasize and elaborate these differences so that the concerned can appropriately evaluate the outcome of their decisions and practices in the domain of Islamic economics and finance. The paper will compare the theory of justice and economic justice in the two respective discourses. A conceptual analysis which follows provides basis for policy recommendations. The ideals of justice of both ideologies are two poles apart, and no overlap exists between the two at least at conceptual levels due to their contradicting epistemological and metaphysical positions. The study is exclusively normative and discussion from pragmatic perspective is beyond its scope. Such a comparison doesn’t exist in literature as per the limited knowledge of author. This study would have implications for policy makers and practitioners while adapting structures, institutions, policies, frameworks, etc. from the western world as they would have to be altered to an extent to make them compatible to advance Islamic conception of justice in Muslim societies, if that by any means is possible