Factors affecting financial engineering and product development in Islamic Financial Institutions

Abstract

Purpose

This study aims to analyze Islamic financial institutions’ (IFIs) current financial engineering and product development procedures.

Design/methodology/approach

The paper is quantitative in nature and the survey questionnaire were collected from managers and IF experts working for Islamic Banks, Takaful and other IFIs in Turkey, Malaysia and UAE. Two-stage structural equation modeling was used to test the hypothesis.

Findings

The findings highlighted that the Shari’ah Supervisory Board, Strategy and Planning of IFIs, Legal and Regulatory framework, pricing of a new product and financial performance positively impact the new product development (NPD) process. At the same time, Islamic values have no significant positive impact.

Research limitations/implications

When generalizing the research results, data collection from the right departments was the main limitation of the current study. Future research may opt to collect data only from Product Development Departments.

Practical implications

The findings of this study will allow IFIs to reflect on their present methods, procedures and Shari’ah compliance framework for the NPD process.

Originality/value

Factors affecting the product development and financial engineering process are discussed in the literature. The findings of this study can be regarded as building blocks for future academic research on product development and financial engineering in Islamic finance.

Citation

Shaamirova, S. and SARAÇ, M. (2024), "Factors affecting financial engineering and product development in Islamic Financial Institutions", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 17 No. 5, pp. 1044-1063. https://doi.org/10.1108/IMEFM-09-2023-0341