Journal of Islamic Finance (JIF)
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Hybrid Sukuk in Light of the Recent Implementation of AAOIFI Shariah Standard no. 59 Related to the Sale of Debt
Full text linkSukuk is among the primary fund-raising method for the sovereigns and corporates in a Shariah-compliant manner. Besides the Islamic investors, sukuk has been well received by conventional investors as an instrument that can provide similar risk and reward equal to the bond. However, as there are various sukuk structures in the market, hybrid sukuk is among the popular structure preferred by the issuers. One of the reasons is it requires a lower physical or tangible asset requirement i.e., 30% out of the total sukuk issuance amount ("tangibility ratio"). However, this changes with the implementation ofShariah Standard no. 59 on the Sale of Debt by Accounting and Auditing Organisation for Islamic Financial Institutions(“Standard 59”) (“AAOIFI”). It mandates a higher tangibility ratio requirement and an additional requirement ofmaintaining the tangible asset value. Thus, via document analysis methodology, this paper aims to explore further theimplication of these requirements toward the underlying asset condition and tradability of hybrid sukuk, as well as otherpotential impacts
Climate-Related Disclosure in Malaysian Wakalah Sukuk
Full text linkIt is evident that climate change, especially those related to Covid-19 has opened many new avenues of research and policy making initiatives. Climate-related disclosure is among them. While a number of policies have been drafted and finalized in both local and international markets, the practices to conform to the policies are only at the infant phase. Considering the initiatives taken by global policy makers and local regulators in relation to climate change, it is imperative to provide some insights on the responses of various financial players. For a beginning, this study has considered a number of sukuk issuers and their climate-related disclosures. Since these issuers’ principal activities involve various business activities, diversity of climate change and climate-related disclosures are anticipated. Using a document analysis on 13 selected Wakalah sukuk documents, it was found that there are four types of climate-related risk disclosure with six types of disclosure practices. Further analysis is based on the provisions of Climate Change and Principle based Taxonomy (CCPT) (2021) and recommendations of Task Force Climate related Financial Disclosure (TCFD), the climate-related disclosure was found to be minimal and inadequate. However, the findings of this study are only limited to small sample size. Nonetheless, the findings may provide some insights for the financial players in their efforts to provide a quality climate-related disclosure and practices in tandem with the initiatives of the local regulators and international policy makers
COVID-19 on Performance of Islamic Banks in Fintech and Digitalization Era
Full text linkThis study attempts to provide insight on risk and opportunities for Islamic banks arising from COVID-19 pandemic by using document analysis approach. The COVID-19 pandemic has increased banking risk. The paper emphasizes the impact of the crisis on credit risk as historically thought as the most significant risk driver. Increased credit risk in Islamic financial institutions (IFIs) is due to broad-based deterioration of economic conditions affecting multiple sectors, resulting in a general increase of non-performing financing (NPF) balances and charge-offs. Further, it was found that banks have suffered more not only relative to other sectors, but also in comparison with previous crises. In addition, some authors observe that banks that had entered the crisis with the highest level of credit risk, measured in terms of credit default swap (CDS) spreads rise, were most hit. On the other hand, the pandemic has proved beyond doubt the value of digital services that minimize or eliminate direct human contact. The power of digitalization can facilitate outreach to even the most vulnerable population. Islamic financial institutions may seize this opportunity to expedite the digitalization of their operations either using their own resource or by joint venturing with technology companies
Risk-Taking in Public versus Private Banks: Evidence from Islamic Banking
Full text linkThis study examines risk-taking by publicly traded and privately owned banks in an Islamic banking sector employing a diversified international sample of 133 IBs across 35 countries. Unlike the vast majority of previous research, this study uses ordinary least squares (OLS) and Heckman's two-step models to analyse a comprehensive risk-taking by two proxies. It investigates the risk and stability features using the credit risk and Z-score as the insolvency proxy. The study finds that publicly traded banks engage in more risky activities than their privately owned peers. The study further analyses the link between ownership structure and risk in Islamic banks, finding that state ownership shows that it is not a determinant in taking risk differences. On the other hand, institutional investors are more likely to engage in risky activities when they hold higher stakes. Despite this, the results provide some advice to the financial actors in their attempts to deliver information to the risk-taking practices in concert with regulators and international policymakers
The Level of Acceptance and Awareness of Takaful in Nigeria
Full text linkThis study investigates the factors determining consumers’ acceptance of takaful (Islamic insurance) in Nigeria. The main objective is to explore the Shariah view, price, service quality, attitude, awareness, subjective norm and perceived behavior control of Nigerian citizens towards the acceptance of takaful services in the country. One of the obstacles currently facing the takaful industry in Nigeria is the lack of awareness about takaful products. To examine the acceptance and awareness of takaful in Nigeria, 209 questionnaires were distributed to respondents in five states, including Lagos, Abuja, Kano, Kaduna, and Enugu; and the data collected were analyzed using SPSS, version 25. The results show that Shariah view, locality, consumer acceptance, service quality, attitude, awareness, subjective norm, and perceived behavior control are the factors influencing the awareness and acceptance level of takaful in Nigeria. The implication of this study is that the majority of respondents do not possess sufficient information to differentiate between conventional and Islamic insurance. As such, for proper implementation and development of takaful in Nigeria, it is important for the policymakers and other stakeholders to provide enough information about the takaful services, products, and operating system to the general public. The future of takaful industry in the country will be determined by a proper understanding of the operating system and the rights of participants as well as other stakeholders, including customers and insurance regulatory bodies
Does Mobile Payment Promote Financial Inclusion Among Palestinians Women: A Quantitative Approach Through Structural Equation Modeling
Full text linkAn attempt at validating the notion of whether women's access to financial services through mobile payment enhances their empowerment necessitated this study. Mainly, it focuses on the extent to which mobile payment can contribute to financial inclusion in the context of Palestinian women, which seems to be sparse and lacking in the literature. A quantitative approach was employed using 147 questionnaires designed based on the theory of planned behavior and reflective model for measuring financial inclusion. The research found that with successive increases in mobile payment usage, financial inclusion further increased. Precisely, the growth of mobile payment usage by 1 percent can improve women's financial inclusion by 0.449 percent. By increasing women's financial inclusion, women's economic empowerment could be effectively and positively improved, which boosts productivity, increases economic diversification and income equality, and other positive development outcomes
Waqf Effectiveness in Nigeria: Problems and Solutions
Full text linkThe efficiency of the institution of Waqf in alleviating poverty is undisputable and Nigeria as a country with a significant Muslim population stands to benefit immensely from well-functioning Waqf institutions. Despite the presence of Waqf in Nigeria, the country still experiences increasing levels of poverty. This study aims to find the problems hindering the effectiveness of the Waqf operation in alleviating poverty in Nigeria. It uses the thematic framework medium of interviewing as a methodology of retrieving the necessary data. From the analysis, it was evident that a combination of a lack of awareness, lack of transparency as well as corrupt practices is what has led to the inefficiency of Waqf operations in Nigeria. The study concludes by discussing solutions that can be employed to remedy the challenges, including producing experts in Waqf management, providing tax exemptions for Waqf donors, enacting Federal laws relating to Awqaf and awareness creation
Blue Sukuk as a Solution to Indonesia Maritime Economic Crisis due to the Global Covid Pandemic
Full text linkThe aim of this paper is to analyze and provide a solution related to the maritime economic crisis in Indonesia which occurred due to the COVID-19 pandemic, affecting almost all countries in the world. The research technique used in this research is descriptive qualitative using secondary data. As the largest archipelagic country in the world, the ocean plays an important role in Indonesia. The marine and fisheries sector contributes to food security, livelihoods, and foreign exchange earnings. Currently, more than 6 million people are involved in Indonesia's maritime and fisheries sector, including small businessmen and fishermen. Since the COVID-19 pandemic, it has disrupted Indonesia's economic sector, one of which is in the fisheries sector. According to the Coordinating Ministry for Maritime Affairs and Investment, the COVID-19 pandemic has caused a decline in the price of fishery products in several national fishing ports by up to 50 percent. This price decline occurred due to distribution disruptions caused by the emergency to contain the spread of COVID-19. This policy resulted in the accumulation of fish stocks in almost all cold storage. Thus, a stimulus is needed so that this crisis will not harm fishermen and other related industry players further. Blue sukuk can be a solution to this problem. With the issuance of the blue sukuk, it can become a reserve fund in the maritime sector and can be a long-term solution for the government in increasing Indonesia's maritime potential
Legal and Regulatory Requirements to Implement Sukuk in Algeria: Learning from Malaysian Experience
Full text linkIn the last two years, Algeria has shown its willingness to introduce Sukuk into the capital market after introduction of new regulations related to Islamic banking and Takaful. Currently, there are no Sukuk regulations. Thus, Algeria may adopt best practices of Sukuk regulation like Malaysia. The paper's purpose is to examine whether Algeria can learn from Malaysia’s experience in order to establish sound Sukuk regulations. The paper uses the exploratory approach to review the main existing legal documents related to Sukuk in the two countries and uses the interpretive analysis to examine legal and regulatory data. Although there are several legal divergences underpinning the legal and regulatory framework of the two countries, the Malaysian experience can be a suitable regulatory model to implement in the Algerian context with the adaptation of some rules. Relevant Algerian laws such as civil, commercial, and capital market regulations should be amended to permit adequate Sukuk issuance. Besides, Algerian regulators have to prepare sound Shariah governance and tax incentives. The study focuses on the mainland Malaysia regulatory framework that relates to Sukuk issuance and does not discuss the Labuan regulatory scheme. It is the earliest study that sets out the possibility to implement the Sukuk regulation framework in the Algerian context referring to a pioneering country like Malaysia. It contributes significantly to the legal and regulatory conceptual framework of many civil jurisdictions whose aim is to introduce Sukuk
Customers’ Perception on Islamic Crowdfunding as A Possible Financial Solution For The Pandemic Covid 19 Crisis in Malaysia
Full text linkThe COVID 19 pandemic has brought an unprecedented crisis globally and people are still struggling for solutions to deal with the crisis. The effect is very broad-based be it on a social, economic, and healthy way of living. The purpose of this study is to investigate customers’ perception of Islamic Crowd Funding (ICF) as a possible financial solution for the pandemic crisis. Several factors such as the concept of ICF, justice and fairness and acceptance of ICF were used. A total of 322 responses were collected through questionnaires to investigate the validity of the proposed model. SPSS was used to analyse the data collected using reliability, correlation and multiple regression. The result indicated that the concept of ICF, justice and fairness significantly influenced the acceptance of Islamic crowdfunding. Hence, practitioners should emphasize these values to attract customers during this COVID 19 crisis. The result of this study further contributed to the new body of knowledge on ICF as a solution to the pandemic COVID 19 crisis