International Journal of Economics, Management and Accounting
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Return on the Letter of Guarantee: Issues and New Proposals in Structuring the Product
Full text linkThe paper aims at discussing the issues surrounding earning of return on Letters of Guarantee (LG) issued under kafÄlah by Islamic banks and to propose alternative ways of structuring it by sharī‘ah compliant Islamic banks. The paper proposes structuring LG as a service contract under wakÄlah or as a reputation-based partnership. Letter of guarantee can be issued as a service contract and the Islamic Bank can charge service fees commensurate with the direct and indirect costs of issuing the cover. The paper further proposed that an Islamic Bank and a client (prospective guaranteed) can set up a reputation-based partnership for an underlining project where the Islamic Bank contributes through the issuance of the LG with profit sharing agreed upon and losses borne proportionate to capital contribution. The paper contributes to Islamic bank practice in the financial intermediation role by providing an instrument for such banks to meet unique needs of their clients with financial solutions fulfilling the dual needs of financial intermediation and sharī‘ah compliance
A CGE Model for Assessing the Economy-Wide Effects of Removing the Cooking Oil Subsidy in Malaysia
Full text linkThe Malaysian government eliminated the subsidy on cooking oil from January 2017 in its efforts to improve market efficiency and curb the smuggling of the product into neighboring countries. Implementing this policy will impact the economy through changes in relative prices and improvements in resource allocation. This article simulates the economy-wide effects of this policy reform using a computable general equilibrium model based on the country’s latest input-output tables (2015) under short and long-run scenarios. The simulation results show that the subsidy removal substantially increases the price of cooking oil which in turn affects the prices of other food and agricultural products and causes a mild contraction in the overall economy. The results also show that in addition to the impact on the cooking oil sector, the oil palm sector is also somewhat affected by this policy as upstream linkages are taken into account in both the model and database. The Hicksian welfare criterion shows that household welfare decreases marginally as a result of the subsidy removal
The Mediating Role of Work Engagement Between Pay Satisfaction and Turnover Intention
Full text linkThe relationship between pay satisfaction, work engagement and turnover intention has long been understudied. Drawing upon equity and social exchange theories, we hypothesized causal links between pay satisfaction, work engagement and turnover intention. Data were collected from professionals working in the Malaysian oil and gas sector (n = 409). Partial Least Squares Structural Equation Modelling (PLS-SEM) was used to test the hypothesized model. The results indicate that pay satisfaction positively affects employee work engagement; and work engagement negatively affects employee intentions to leave. An analysis of the indirect effects suggests that work engagement mediates the relationship between pay satisfaction and turnover intention. Findings from this study confirm the importance of pay satisfaction as the key to achieving higher levels of work engagement and reducing voluntary turnover. These findings provide important implications for research and human resource management practitioners
Practices of Islamic Banking in the Light of Islamic Ethics: A Critical Review
Full text linkThe purpose of this paper is to critically evaluate the practices of Islamic banks in the light of Islamic ethical values and philosophy of accountability to Allah and society. The paper’s structure comprises history and growth of Islamic banking, evaluation of non-compliance of Islamic banking with PLS modes of financing, emergence of earning management issues in Islamic banking, non-compliance with Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards, issue of diverse versions of Islamic rulings (fatwÄ), evaluation of practices against fundamental Islamic philosophy of “accountability to Allah and society†and discussions and concluding remarks for future development of Islamic banking. The findings show that Islamic banks defend their practices by taking Islamic rulings from Sharī‘ah advisors in order to make them sharī‘ah compliant not sharī‘ah based. Profit maximization, availability of a vast range of Islamic rulings, market competition, lack of adequate risk management tools and trust on Islamic banking and meeting the general public expectations caused Islamic banks to comply with debt base modes of financing. Islamic Financial Institutions (IFIs) comply with International Financial Reporting Standard (IFRS), US Generally Accepted Accounting Principles (GAAP), domestic accounting standard or mix of these but do not adopt the AAOIFI standard in their financial reporting. This paper is a value addition in the literature of Islamic finance which suggests what it ought to be. It also discusses the role of the Organization of Islamic Countries (OIC) and the governments of Islamic countries
Risk Vulnerability and Takaful Acceptance: Evidence from a Frontier Market
Full text linkRecently, acceptance of takaful as an Islamic financial product has been declining in African Muslim-dominated countries such as Kenya, Tunisia, and Nigeria. In understanding the causes of this trend and to proffer a possible solution, this study examines the effects of individuals’ attitude toward takaful, perceived behavioral control, individual’s risk vulnerability on takaful acceptance intention in the Nigerian Frontier Market. It also examined the moderating effect of individual’s risk vulnerability on the relationship between attitudes toward takaful, perceived behavioral control, and takaful acceptance intention. Through a quantitative methodology employed for the purpose, the results revealed that attitude toward takaful, perceived behavioral control and individual’s risk vulnerability are significantly related to acceptance intention. Moreover, individual’s risk vulnerability moderates the relationship between attitude toward takaful, perceived behavioral control, and takaful acceptance intention. In line with these findings, theoretical and practical implications, as well as the direction of future research, were highlighted
The Age of Stagnation: Why Perpetual Growth is Unattainable and the Global Economy is in Peril
Full text linkFactors Influencing Subscription of IPO in Bangladesh
Full text linkDue to huge loss in the secondary market during the 2010-2011 stock market crash, small investors in Bangladesh involved themselves in IPO investment. This study, based on secondary data, depicts the IPO market in Bangladesh and also identifies the factors influencing IPO subscription times. The study documented 85% growth in the listed companies on the Dhaka Stock Exchange (DSE) through IPO during the last decade with an average number of 14.80 IPOs per year. Fixed price method was followed in most of the IPOs; whereas the book building method was followed in only 2.70% of IPOs. Earnings forecast, a very common phenomenon of IPO prospectus in developed countries, was hardly ever found in the IPO prospectus in Bangladesh. Multiple regression model indicates that market lot has significant positive, whereas EPS and offer price have insignificant negative influence on IPO subscription times. The current study has explored the existing scenario of IPOs in Bangladesh that will help regulators to undertake proper course of action in developing the stock market in Bangladesh. The study will help issuers assessing the potential subscription condition of an IPO candidate company and also contribute to the existing stock of knowledge