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Article
Publication date: 4 March 2021

M. Luthfi Hamidi and Andrew C. Worthington

The study aims to extend the conventional triple bottom line (TBL) framework (prosperity, people and planet) to the quadruple bottom line (QBL) by newly adding a “prophet”…

Abstract

Purpose

The study aims to extend the conventional triple bottom line (TBL) framework (prosperity, people and planet) to the quadruple bottom line (QBL) by newly adding a “prophet” dimension for Islamic banks seeking compliance with Islamic law in their pursuit of sustainability.

Design/methodology/approach

Employ Chapra's corollaries of maqasid al-shari'ah (the goals of Islamic law) to develop constructs for a survey of 504 Islamic bank stakeholders from five Indonesian provinces to gather primary data to quantitatively verify the dimensions and items in the proposed QBL framework. Categorical principal component analysis (CATPCA) then identifies the sustainability of ten Islamic banks from ten countries as a trial application of the resulting QBL index.

Findings

Using the dimensions and items identified using CATPCA, the authors develop a QBL index to assess the sustainability of the ten Islamic banks. The findings suggest that half of the banks are sufficiently sustainable, with three being proactive (doing more than is required) and two being accommodative (doing all that is required). The remaining five banks are unsustainable, with two banks being defensive (doing the least that is required) and three being reactive (doing less than is required). Most of the banks perform relatively poorly according to the “planet” (38%) and “people” (41%) dimensions and perform better on the “prosperity” (53%) and “prophet” (63%) dimensions. Nonetheless, there is ample room for improvement across all dimensions of sustainability.

Research limitations/implications

The generalizability of the findings is limited by the small-scale single-country survey used in the CATPCA part of the analysis. Only ten Islamic banks were included in the QBL scoring and ranking exercises

Practical implications

Islamic banks can improve their sustainability by increasing green financing and reaching out to rural areas and disadvantaged populations. In countries with Islamic banking systems, regulators can support this through training, guidance and incentives.

Originality/value

Pioneering exploration of TBL from maqasid al-shari'ah perspective. First, we develop a QBL index to assess the sustainability of Islamic banks in line with actual stakeholder expectations.

Details

International Journal of Bank Marketing, vol. 39 no. 5
Type: Research Article
ISSN: 0265-2323

Keywords

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Article
Publication date: 1 March 1996

Andrew C. Worthington

A public finance framework is used to examine the relationship between community composition, namely occupancy status, and the provision of governmental services. A…

Abstract

A public finance framework is used to examine the relationship between community composition, namely occupancy status, and the provision of governmental services. A comprehensive literature survey suggests that a systematic relationship exists between the fraction of renters in a given jurisdiction and the level of fiscal expenditures. More particularly, it would appear that renters ceteris paribus are willing to support a higher level of publicly provided goods than homeowners. The competing hypotheses of renter illusion and renter rationality are discussed, as are the differing implications for public policy. Suggestions are also made on how future research on this important topic might proceed.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 10 no. 1
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 1 August 2006

Tracey West and Andrew C Worthington

This paper employs a Generalised Autoregressive Conditional Heteroske‐dasticity in Mean (GARCH‐M) model to consider the effect of macroeconomic factors on Australian…

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851

Abstract

This paper employs a Generalised Autoregressive Conditional Heteroske‐dasticity in Mean (GARCH‐M) model to consider the effect of macroeconomic factors on Australian property returns over the period 1985 to 2002. Three direct (office, retail and industrial property) and two indirect (listed property trust and property stock) returns are included in the analysis, along with market returns, short, medium and long‐term interest rates, expected and unexpected inflation, construction activity and industrial employment and production. In general, macroeconomic factors are found to be significant risk factors in Australian commercial property returns. However, the results also indicate that forecast accuracy in these models is higher for direct office, listed property trust and property stock returns and that the persistence of volatility shocks varies across the different markets, with volatility half lives of between five and seven months for direct retail and industrial property, two and three months for direct office property and less than two months with both forms of indirect property investment.

Details

Journal of Financial Management of Property and Construction, vol. 11 no. 2
Type: Research Article
ISSN: 1366-4387

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Article
Publication date: 30 December 2020

Luthfi Hamidi and Andrew C. Worthington

This paper aims to outline the argument for social outcomes as an objective for Islamic banks and investigate whether social failure exists in Islamic banking in Indonesia…

Abstract

Purpose

This paper aims to outline the argument for social outcomes as an objective for Islamic banks and investigate whether social failure exists in Islamic banking in Indonesia by assessing it against this performance dimension.

Design/methodology/approach

Content analysis of the annual reports of a sample of 12 Islamic commercial banks, seven Islamic banking units, and seven Islamic rural banks operating in Indonesia. The social outcomes to be measured employ the social objectives and disclosure measures from the prevailing literature, combined with the Kinder, Lydenberg, Domini Research and Analytics index of corporate social performance, the United Nations’ 17 Sustainable Development Goals and five Environment Social Governance Scorecards developed by Oikocredit, a global cooperative and social investor group.

Findings

Social failure evident in all Islamic rural banks and half of all Islamic commercial banks, but in only one of the seven Islamic bank units where most banks appear to pursue social outcomes at the accommodative level (accepting and doing all that is required). A social outcome-weighted asset formulation reveals Islamic banking has improved in meeting its social objectives over time, but sometimes at the cost of other objectives relating to the environment and customers.

Research limitations/implications

Single-country context for analysis and limited period of analysis given rapid growth of industry and less stringent reporting requirements in the past.

Practical implications

Islamic banking in Indonesia needs to continue to improve its social outcomes, particularly in relation to the environment and customer benefits.

Social implications

Emphasis on banking supervisory bodies to regulate and provide incentives for the industry to address the social issues upon which consumer support, industry efforts and regulation draws.

Originality/value

Few existing studies investigate the social dimension of Islamic banking, not least in Indonesia. Novel quantitative and qualitative application of content analysis.

Details

Society and Business Review, vol. 16 no. 1
Type: Research Article
ISSN: 1746-5680

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Article
Publication date: 6 November 2017

Dong Xiang and Andrew C. Worthington

This paper aims to examine the impact of government financial assistance provided to Australian small and medium-sized enterprises (SMEs).

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7422

Abstract

Purpose

This paper aims to examine the impact of government financial assistance provided to Australian small and medium-sized enterprises (SMEs).

Design/methodology/approach

This study uses firm-level panel data on more than 2,000 SMEs over a five-year period from the Business Longitudinal Database compiled by the Australian Bureau of Statistics. The authors measure the impact of government financial assistance in terms of subsequent SME performance (income from sales of goods and services and profitability) and changes in the availability of alternative nongovernment finance.

Findings

The authors find government financial assistance helps SMEs improve performance over and above the effects of conventional financing. They also find than the implicit guarantee effect signalled by a firm receiving government financial assistance suggests firms are more likely to obtain nongovernment finance in the future. Control factors that significantly affect SME performance and finance availability include business size, the level of innovation, business objectives and industry.

Research limitations/implications

Nearly all of the responses in the original survey data are qualitative, so we are unable to assess how the strength of these relationships varies by the levels of assistance, income and profitability. The measure of government financial assistance of the authors is also general in that it includes grants, subsidies and rebates from any Australian Government organisation, so we are unable to comment on the impact of individual federal, state or local government programmes.

Practical implications

Government financial assistance helps SMEs improve both immediate and future performance as measured by income and profitability. This could be because government financial assistance quickly overcomes the financial constraints endemic in SMEs. Government financial assistance also helps SMEs obtain nongovernment finance in the future. The authors conjecture that this is because it overcomes some of the information opaqueness of SMEs.

Originality/value

Few studies focus on the impact of direct government financial assistance compared with indirect assistance as typical in credit guarantee schemes. The authors use a very large and detailed data set on Australian SMEs to undertake the analysis.

Details

Accounting Research Journal, vol. 30 no. 4
Type: Research Article
ISSN: 1030-9616

Keywords

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Article
Publication date: 11 October 2021

M. Luthfi Hamidi and Andrew C. Worthington

This paper aims to extend the existing triple bottom line framework (Prosperity, People and Planet [so-called 3Ps]) with a new dimension, namely, Prophet, to reflect…

Abstract

Purpose

This paper aims to extend the existing triple bottom line framework (Prosperity, People and Planet [so-called 3Ps]) with a new dimension, namely, Prophet, to reflect Islamic values (the now 4Ps) for banks seeking compliance with Islamic religious principles.

Design/methodology/approach

This study conducts a survey of 504 Islamic bank stakeholders across six provinces in Indonesia and use regression analysis to test the applicability of the 4Ps. This paper further examines their application in two large Islamic banks in Indonesia and Malaysia.

Findings

The models are all highly significant and well reflect a broad stakeholder perspective on bank performance. Of the four elements, this study finds stakeholders rank Prosperity first, followed by Prophet and then Planet. The case studies strengthen the application of the new Prophet dimension as a way for Islamic banks to improve their financial, social and economic performance, particularly during periods of financial distress.

Research limitations/implications

This study only uses survey data from a single country, and this may limit the generalizability of the findings.

Practical implications

Practitioners will find the quadruple bottom line useful in assessing organizational performance, as will regulators seeking to improve the social and economic outcomes of the Islamic banking sector.

Originality/value

This paper internalises maqasid al-syari’ah (the most basic goal of Islamic law) as a simple but essential approach to organizational performance using empirical evidence from a real-world banking setting.

Details

Journal of Islamic Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0833

Keywords

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Article
Publication date: 29 March 2021

Xiaoyue Chen, Bin Li and Andrew C. Worthington

The purpose of this paper is to examine the relationships between the higher moments of returns (realized skewness and kurtosis) and subsequent returns at the industry…

Abstract

Purpose

The purpose of this paper is to examine the relationships between the higher moments of returns (realized skewness and kurtosis) and subsequent returns at the industry level, with a focus on both empirical predictability and practical application via trading strategies.

Design/methodology/approach

Daily returns for 48 US industries over the period 1970–2019 from Kenneth French’s data library are used to calculate the higher moments and to construct short- and medium-term single-sort trading strategies. The analysis adjusts returns for common risk factors (market, size, value, investment, profitability and illiquidity) to confirm whether conventional asset pricing models can capture these relationships.

Findings

Past skewness positively relates to subsequent industry returns and this relationship is unexplained by common risk factors. There is also a time-varying effect in which the predictive role of skewness is much stronger over business cycle expansions than recessions, a result consistent with varying investor optimism. However, there is no significant relationship between kurtosis and subsequent industry returns. The analysis confirms robustness using both value- and equal-weighted returns.

Research limitations/implications

The calculation of realized moments conventionally uses high-frequency intra-day data, regrettably unavailable for industries. In addition, the chosen portfolio-sorting method may omit some information, as it compares only average group returns. Nonetheless, the close relationship between skewness and future returns at the industry level suggests variations in returns unexplained by common risk factors. This enriches knowledge of market anomalies and questions yet again weak-form market efficiency and the validity of conventional asset pricing models. One suggestion is that it is possible to significantly improve the existing multi-factor asset pricing models by including industry skewness as a risk factor.

Practical implications

Given the relationship between skewness and future returns at the industry level, investors may predict subsequent industry returns to select better-performing funds. They may even construct trading strategies based on return distributions that would generate abnormal returns. Further, as the evaluation of individual stocks also contains industry information, and stocks in industries with better performance earn higher returns, risks related to industry return distributions can also shed light on individual stock picking.

Originality/value

While there is abundant evidence of the relationships between higher moments and future returns at the firm level, there is little at the industry level. Further, by testing whether there is time variation in the relationship between industry higher moments and future returns, the paper yields novel evidence concerning the asymmetric effect of stock return predictability over business cycles. Finally, the analysis supplements firm-level results focusing only on the decomposed components of higher moments.

Details

Review of Accounting and Finance, vol. 20 no. 1
Type: Research Article
ISSN: 1475-7702

Keywords

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Article
Publication date: 16 November 2015

Alsadek Gait and Andrew C. Worthington

– This paper aims to analyse the attitudes of Libyan retail customers to Islamic methods of finance.

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5364

Abstract

Purpose

This paper aims to analyse the attitudes of Libyan retail customers to Islamic methods of finance.

Design/methodology/approach

The study conducted a survey of 385 Libyan retail consumers. Descriptive, factor and discriminant analyses of responses were performed to identify principal factors affecting attitudes towards and the potential use of Islamic financial products and services.

Findings

The results indicate that while most respondents have at least some knowledge about some Islamic products, especially Musharakah (full-equity business partnerships) and Quard Hassan (interest-free benevolent loans), they are generally unaware of many other products. Nonetheless, most respondents (85.9 per cent) are potential users of Islamic methods of finance at the retail level, though potential use varying markedly according to age, level of education, employment, income and nationality. Factor analysis reduces the large number of variables that determine retail consumers’ attitudes towards Islamic methods of finance to just community service, profitability, religion and unique services. Discriminant analysis shows that religion and community service are the most important positive attitudes determining the potential use of Islamic methods of finance by retail consumers in Libya.

Research limitations/implications

The study is undertaken in a single national context, so there is no possibility of comparing the results with alternative financial systems in different stages of the adoption of Islamic finance. Research was completed in 2010, with the ongoing unrest in Libya precluding publication until recently.

Practical implications

Religious motivations rank highest in determining positive attitudes to Islamic methods of finance, and marketers should ensure that Islamic financial products and services strictly comply with Sharia. However, it may be possible to strengthen these positive attitudes by promoting that the community service role of Islamic finance is also important. Consumers also react favourably to marketing that either admits something negative about the product (e.g. Islamic finance is Sharia-compliant, but less profitable for depositors) or something positive about a competing product (e.g. conventional finance is more profitable, but cares less about the community). Marketers should emphasise the strengths of Islamic finance across the several sources of positive attitudes the authors have identified.

Originality/value

There is no published work on Libyan retail consumers and limited study of attitudes towards Islamic methods of finance more generally.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 8 no. 4
Type: Research Article
ISSN: 1753-8394

Keywords

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Article
Publication date: 2 October 2009

Andrew C. Worthington

The purpose of this paper is to establish the profile of mortgage‐holding households in terms of their demographic, socioeconomic, and financial characteristics and assess…

Abstract

Purpose

The purpose of this paper is to establish the profile of mortgage‐holding households in terms of their demographic, socioeconomic, and financial characteristics and assess the current state of knowledge concerning mortgage products in Australia.

Design/methodology/approach

Logit models predict owner‐occupied, investor mortgages, and mortgage understanding. Factors include financial literacy, gender, age, ethnicity, occupation, education, family structure, household income, savings, and debt. Understanding is knowledge of mortgage rates, fees and charges, and familiarity with mortgage terms.

Findings

Middle‐aged and couples with children have an increased likelihood of an owner‐occupied mortgage, while being from a non‐English speaking background, a small business owner, or a skilled tradesman increases the likelihood of an investor mortgage. Understanding is generally poorer for females, rural/regional households and the young, and better for professionals, the university‐educated, and small business owners and skilled tradesmen.

Research limitations/implications

The cross‐section of households is from a period when mortgage rates were stable and housing prices strong.

Practical implications

No more than 40 per cent of mortgage‐holding households have an understanding of any key mortgage terms, only 35 per cent understand the main disadvantage of fixed over variable rates during falls in interest rates, and just 15 per cent understand the fees and charges on their own mortgage. There is a need for financial literacy programmes to continue and expand.

Originality/value

This is the first Australian study to model the demand and understanding of mortgage products using household level data.

Details

International Journal of Housing Markets and Analysis, vol. 2 no. 4
Type: Research Article
ISSN: 1753-8270

Keywords

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Book part
Publication date: 29 December 2016

Mahfod Aldoseri and Andrew C. Worthington

The purpose of this chapter is to review the risks Islamic financial institutions face in an emerging market context, including risk sharing in Islamic financing and…

Abstract

The purpose of this chapter is to review the risks Islamic financial institutions face in an emerging market context, including risk sharing in Islamic financing and Shari’ah (Islamic law) compliance risk. We explore current risk management practices and establish the link between risk management and the financial performance of banks and the efficiency and effectiveness of financial sectors in emerging markets. Because of their distinctive risk profile, Islamic finance institutions face challenges in risk management. We show that Islamic banking is riskier in emerging markets because of the presence of immature money markets, limitations in the availability of lender of last resort facilities, and deficiencies in market infrastructure. There is also no evidence that Islamic banks have developed effective solutions for managing the risks conventional banks face as well as their own unique risks. We suggest that the countries that do this best are those that prioritize the structure of risk management knowledge and capabilities in a single financial regulator.

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