Journal of Islamic Finance (JIF)
Not a member yet
182 research outputs found
Sort by
Financial Market Risk and Gold Investment in an Emerging Market: The Case of Turkey
Get PDFThis study aims to identify the opportunity cost of holding gold, in relation to the stock market for case of Turkey. The focus is to detect if gold acts as a safe haven or a hedge asset in times of distress. The Threshold GARCH (TARCH) model was utilized. The analysis used daily data for the period 2005-2014. The data for selling prices of gold was represented by selling prices derived from Precious Metals and Diamonds Markets (PMDM). The returns on Borsa Istanbul (BIS) was employed to represent aggregate prices of stock market investment. It was found that gold has safe haven asset features which shows that gold outperforms the average portfolio during times when stock market faces distress
HASBLE Card: Innovation on Company Funding Using Shari'ah Venture Capital Toward Halal Industry in Indonesia
Get PDFThe growth of the Muslim population in the world is the main driver of growth for global halal products. In Indonesia, Law No.33 of 2014 on the Guarantee of halal products provides significant opportunities for the development of innovative products given the potential of huge Indonesian Muslim population. In the process, requirements to use halal certification in trade as mandated by the national law brings about a dilemma to the halal industry players as well as micro, small, and medium enterprises (SMEs). The problem of capital and funding are the key issues. Stakeholders are faced with the problems of production and sustainability, procurement of equipment and materials production, marketing, and internal reinforcement. This qualitative paper offers a review of the literature. The purpose of this paper is to understand how the model of innovative funding through Shair’ah venture capital firms spur the growth and development of the halal industry. Halal Sustainable (HASBLE) card is an innovative model of mudharabah and musyarakah transaction, which are realized in a sustainable funding by Shair’ah venture capital firms to halal industry players. The allocation of the profit-sharing is based on the contract by setting some parts aside in the card as productive deposit. These deposits will be managed as a productive stimulus funds for the maintenance of halal certification, training and business assistance, and the balance of HASBLE card itself. HASBLE card is innovative model that has sustainable funding agreement involving several stakeholders in order to improve productivity, growth, and the existence of halal products in the global trade arena.
 
A Study on the Implementation of Dual Contracts of Tabarru and Tijarah on Shari'ah Insurance Industries in Indonesia
Get PDFThis article examines the legal issues associated with the application of the dual contract system, tabarru’ and tijÄrah, in sharia insurance industries in Indonesia. This qualitative study used secondary data. It is linked up with clauses and conditions of the contract used by Islamic insurance industries in Indonesia. This method is used for the purpose to examine the legal reasoning regarding the application of the contracts of tabarru’ and tijÄrah in Islamic insurance products. The research approach to the problems is normative-juridical. It is a method employed to figure out the legal problems based on secondary data. This study found that the application of Islamic insurance contracts was not created a separation between the returns obtained from the sectors tabarru’ with tijÄrah. This shows that the dualism of tabarru’ and tijÄrah contracts in sharia insurance in Indonesia is not in line with the basic principles of sharia engagement
Risk Management in Changing Benchmark Rates Regime: Prudential Implications for Islamic Banks and Supervisors
Get PDFPost-global financial crisis scenario has presented extraordinary challenges to the global economy, in general, and the banking industry, in particular. This has brought the financial industry to a set of new challenges including risk management in changing benchmark rates risk for Islamic banks. Thus, in recent years, the management of benchmark rates (or interest rates) received considerable prominence in the banking sector due to a number of reasons including supervision of banks’ benchmark rates under Basel II Pillar II. Taking into account the specific features of Islamic banks, the purpose of the paper is to theoretically and empirically review the possible prudential implications of lowly and increasing benchmark rates risk, and provide a sturdy risk management and regulatory perspective for Islamic banks and supervisors. For low rates perspective, policy rates of 12 central banks were collected and analyzed. However, for increasing rates scenario, we used duration gap and stress testing approaches, with a sample of 50 Islamic banks from 13 countries, for the period 2009-2015. Our empirical results indicate that persistently low benchmark rate regime carries strategic implications for Islamic banks including pressure on profitability, excessive risk taking and distortion in credit allocations. On the other hand, an increasing benchmark rate regime indicates the significant loss of the capital base, emergence of displaced commercial risk causing early withdrawals by the customers due to higher expectations in dual banking systems. This study concludes that implications under both scenarios call for a better risk management with appropriate tools and effective supervisory oversight for Islamic banks
The Application of Ar-rahan-based micro-credit facility as an Alternative Instrument for poverty alleviation in Nigeria
Get PDFOne of the major challenges facing developing nations like Nigeria is the continuous increase in the level of poverty, which widens the gap between the rich and the poor amidst increasing population and economic growth. In Nigeria, there are scores of microfinance outlets but their operational products are yet to stem the tides of people falling into the poverty bracket. UNICEF reported that about 70.8% of Nigerians live on less than a dollar per day amidst the country’s growing GDP. This rise in the level of poverty culminating from the uneven distribution of the national wealth continue to exacerbate economic instability and social insecurity in Nigeria. Government and other relevant bodies have continued to explore different kinds of solutions to minimize the multifarious challenges posed by the exponential rise in income disparity that has eating deep into the fabrics of the national economy. The micro financing structure has been proven to be helpful to stimulate greater financial inclusion of the low-income groups especially in developing economies. Focal among the many factors responsible for this challenge is the issue of interest charged by the banks to small and medium enterprises despite the rising rate of inflation. Meanwhile, the issue of transacting in riba is prohibited in Islam and some other religions because of its oppressive nature. This paper therefore proposes Ar-Rahn based credit facility aimed at ensuring that the unemployed, the poor and low income earners have access to non-interest based micro financing in Nigeria to aid their financial inclusion and achieve the broader objectives of microfinancing in Nigeria
The Impact of Financial Services Globalisation on Islamic and Conventional Bank Performance in GCC and MENA Countries
Get PDFEmpirical researches have shown that Islamic banks were more efficient than the conventional banks before, during and after global financial crises and were more resilient to negative profitability and speculation commonly identified with conventional banks despite that the former have grown as a result of globalisation of financial markets, product innovation, and delimitation of financial regulations, among others. However, the analyses of globalisation or internationalisation of financial services have concentrated only on the cross-border flow of portfolio investment in country stock markets, ignoring foreign direct investment and movement of financial services professionals. Using panel regressions to analyse the impact of financial services globalisation, the paper finds that net capital account used to measure the phenomenon has no significant impact on Islamic banks’ performance measured in terms of return on equity, return on asset and profit before tax. This may be due to the oft-cited limited patronage for Islamic banking in general. The policy implication suggests the need for an increased drive to popularise Islamic banking products in non-Islamic countries and for Islamic banks to more actively engage in cross-border trade of Islamic banking services as well as foreign direct investment in subsidiary banks outside their traditional locations.
Key words: Financial services, globalisation, Islamic banks, GCC and MENA
JEL Classification: G21, G24, G1
Liquidity Risk Management - A Study of Islamic Financial Institutions in Nigeria
Get PDFThis paper investigates short run and long run impact of specific determinant factors on liquidity risk of Islamic Financial Institutions in Nigeria. The study employs econometric methods such as unit root tests, Auto Regressive Distributed Lag (ARDL) model and error correction model to deeply investigate the issue. The empirical findings reveal the existence of the cointegration as well as short run and long run causality relationship between the determinant factors and liquidity risk. It was also found that about 83% of the past period liquidity risk deviation are from long-run equilibrium with the determinant factors which restore back in the current period. The research findings support short-long run economic theory and recommend development of regulatory framework as well as establishment of special purpose institutions that would manage short-long run liquidity risk of IFIs.
Keywords: Framework, IFIs, short run, long run, ARDL model, Error correction model, liquidity risk, determinant factors
Macroeconomic Variables and Islamic Bank Stock Returns: Panel Data Evidence From GCC Countries
Get PDFThe study provides an empirical evidence of the relationship between macroeconomic variables and bank stock returns in the context of GCC countries using a panel data approach. The data for this study is retrieved from the DataStream World Bank Data archive. The data of 66 banks for the period 2005-2014 was examined using GLS estimation for the analysis. The findings revealed that there is a statistically positive relationship between macroeconomic variables and Islamic bank returns. The positive relationship implies that most banks in the GCC countries engage in numerous off-balance sheet transactions and implement efficient and effective methods of risk management, which reduces their exposure to changes in macroeconomic variables
Issues and Challenges in Management of Waqf in Ningxia Province of China
Get PDFWaqf institutions in China are facing several issues and challenges such as waste of charitable resources, difficulties in retaining Waqf assets, and low levels of professionalism of those involved in Waqf. The internal management mechanisms of these institutions continue to be designed and controlled to support personal ambitions and control as opposed to the more religious considerations advocated by Islam that align with the purpose of Waqf. Despite this formidable challenge that permeates Waqf in China, there has been a lack of research on these issues. This paper aims to fill this lacuna in the literature by investigating and assessing the management mechanism and national governance of both general and Islamic aspects of Waqf in China. The paper adopts a qualitative method using semi-structured interviews with several senior Waqf managers. The findings highlight several issues and challenges facing Waqf in China, including the lack of a defined aim, low level of capability and professionalism, narrow-mindedness, and poor levels of coordination. Other issues include brain drain, unstable performance, low qualification, and managerial neglect of Waqf managers. Lastly, the findings elaborate the balance point between China’s national governance and Islamic governance