Search results

This paper primarily aims to review and analyze a new model for Islamic finance based on Laurence J. Kotlikoff's idea of limited purpose banking (LPB). In addition, this paper aims to highlight, explain and discuss various aspects of LPB and how it suits the original aspirations of pioneer writers in Islamic finance.

Based on an extensive literature review, this paper aims to highlight, explain and discuss the reform of the Islamic finance industry based on Kotlikoff's model of LPB.

Based on a modified LPB model, Islamic financial institutions could be established to provide specific services with clear aims and objectives. These LPB Islamic financial institutions would operate in a similar way to LPB.

As there is no perfect plan, the proposal of this paper is far from being perfect and is open to discussions and improvements. The paper will, hopefully, spark off quite a discussion on the topic; may result in a better understanding of the model; and provide some alternative solutions to the current structurally ill financial system.

The paper provides some practical ideas for a better implementation of Shari'ah principles in financial intermediation of the Islamic financial system.

Kotlikoff's LPB proposal for reforming the financial system is new and has been directed to the conventional financial system. This paper represents the first attempt to apply his proposal to the Islamic finance industry.

Debt‐equity swaps represent a new market‐based mechanism, by which debtor countries and creditor banks can defuse the acute problems associated with the international debt crisis. This paper describes, analyzes and evaluates debt‐equity swaps from the standpoint of the debtor country. It also discusses some of the possible advantages and disadvantages for LDCs that might contemplate the use of such swaps. The paper demonstrates how a successful debt‐equity swap program could play an important role in alleviating the IDCs' debt problem as well as contributing to their future economic growth.

Asset‐backed securitization (ABS) is an interesting financial innovation whereby debt instruments backed by cash flows generated from income‐producing assets are issued for investment purposes in the capital markets. This study examines the characteristics of ABS transactions in Singapore and evaluates whether proper governance mechanisms have been developed to protect ABS investors. We examined the unique features of the Visor case, such as rental guarantee, large block ownerships of junior bonds, credit enhancement, embedded options, managerial relationships between the SPV and servicers, and critically evaluated the effects of these characteristics on the governance of ABS. Rules on separation of banks' participation in ABS and the accountant's requirement of “clean sale” that affect the ABS structure were also discussed. We also develop a simple information asymmetric model to evaluate the pecking order choice of two different financing methods: collateralized loans and ABS.

Transaction costs, responsive housing supply, rent controls, tenant protection, and access to credit affect residential mobility – these different parts of housing policy are included in what has been defined as housing regimes, which embrace regulations, laws, norms, and ideology as well as economic factors. In this chapter, we investigate how these regimes change by using institutional theories of path dependence. We use Sweden as an example and study three Swedish housing market reforms during the past decades that may have affected residential mobility, each related to one of the main institutional pillars of housing provision: tenure legislation, taxation, and finance. More precisely, we study the development of the rental regulation since the late 1960s, the tax reform in 1991, and the new reforms on mortgages since 2010. What caused these reforms? What were the main mechanisms behind them, and why did they occur at the time they did? We argue, besides affecting residential mobility, these reforms have the common feature of including interesting elements of path dependence and forming critical junctures that have led the development on to a new path. Institutions of tenure legislation, housing finance, and taxation are often claimed to have effects on residential mobility. Although they are seldom designed with the explicit aim of supporting (or counteracting) residential mobility, they may sometimes do so as more or less unintended consequences.

In early 2002, an analyst, Tom Baumann, must propose terms for leasing one of his company's advanced factory-automation systems to a major customer. From the lessor's standpoint, the challenge is simply to design an annuity stream that yields a present value equal to, or greater than, the value of the asset being leased. Certain factors, however, serve to complicate the analysis. The tax exposure and debt rating of the customer are uncertain, leaving the analyst to estimate the impact of alternative lease terms under different tax and interest-rate assumptions. Also, the customer is considering leasing competing systems from companies in Germany and Japan; these competing proposals limit Primus's flexibility in tailoring its proposal. In short, the student's task is to design lease terms that exploit the lessee's tax and interest-rate exposure within constraints set by competitive terms.

This qualitative research aims to analyze the effects of the global crisis known as COVID-19 in family businesses in North Macedonia and defines the strategies that Albanian entrepreneurs have used to overcome the pandemic.

The purpose of this study is to conduct a gender comparison between the behaviors of ten men entrepreneurs with ten women entrepreneurs in the city of Skopje. The data we collected by the interview method. The interviews were conducted by phone from June 1 to June 15.

The results of this research show that women entrepreneurs have overcome the crisis through defensive strategy compared to men entrepreneurs who have used more offensive approach. Due to the pandemic, the majority of women entrepreneurs have lost incomes, labor and clients. Men entrepreneurs have maintained their employees with the minimum salaries, but they have suffered the same loss in the aspect of revenues and clients. Findings show that in the category of women-owned enterprises lower financial results have shown those who operate in the textile industry and beauty salons. In companies with men entrepreneurship, the biggest loss is estimated in the luxury jewelry industry and restaurants, while pharmacies, supermarkets and detergent manufacturing companies proved to be profitable. Even companies that have shown high financial performance have encountered considerable problems in supplying raw materials due to the pandemic. This research will help SMEs in our country with useful suggestions to make the right decisions for the mentioned issue.

There are some limitations in this study that should be considered a guide for future research. First, this research includes only Albanian entrepreneurs located in the city of Skopje. The investigation will be complete if we add a more significant number of Albanian entrepreneurs from more cities in North Macedonia. Second, considering that this paper's topic is new, we did not have enough literature to compare or enrich the study. Third, due to the current situation caused by the virus, we have faced difficulties in convincing entrepreneurs over the phone to respond in our questionnaires.

This paper addresses a new topic comparing Albanian entrepreneurs' behaviors based on their gender in overcoming the pandemic in Skopje, North Macedonia.

The purpose of this paper is to examine the revenue efficiency of Islamic banks in the Southeast Asian countries. Specifically, the empirical analysis comprises Islamic banks operating in Malaysia, Indonesia and Brunei. This paper also seeks to investigate the potential internal (bank-specific) and external (macroeconomic and industry-specific) factors which influence the revenue efficiency of Islamic banks operating in Southeast Asian countries.

This paper used a whole gamut of domestic and foreign Islamic banks operating in Southeast Asian countries, namely, Malaysia, Indonesia and Brunei during the period of 2006-2011. The level of revenue efficiency is computed by using the data envelopment analysis (DEA) method. Following the procedure set in Banker and Natarajan (2008) and Gujarati (2002), this paper use a panel regression analysis framework based on the ordinary least square and generalized least square methods to examine the potential determinants of revenue efficiency of the Islamic banks in the sample. In addition, this paper also use a battery of parametric (t-test) and non-parametric (Mann–Whitney [Wilcoxon] and Kruskall–Wallis) tests to examine the difference in the revenue efficiency of the domestic and foreign Islamic banks.

The results indicate that the level of revenue efficiency on the domestic Islamic banks is higher compared to that of their foreign Islamic bank counterparts. The empirical findings seem to suggest that revenue efficiency has greater influence on the profit efficiency levels. It was found that the bank size, asset quality, capitalization, liquidity and management quality significantly influence the revenue efficiency of domestic Islamic banks operating in Malaysia, Indonesia and Brunei during the period under study.

Due to its limitations, the present study may be extended in variety of ways. First, if information on input prices is available, further analysis could be performed to investigate the cost, technical and allocative efficiency. Second, interested researchers may apply the Malmquist Productivity Index method to examine the sources of total factor productivity changes of Islamic banks operating in the ASEAN countries. Third, to obtain more robust results, empirical findings from the present study could be compared to the results derived from improved statistical methods, i.e. Bootstrap DEA.

The empirical findings of this paper clearly call for regulators and decision-makers to review the revenue efficiency of banks operating in Malaysia, Indonesia and Brunei Islamic banking sectors. The results could also provide better information and guidance to the managers of Islamic banks, as they need to have a clear understanding on the impact of revenue efficiency on the performance of their banks. The empirical findings of this paper may also have implications for investors whose main focus is to gain higher profit from their investments.

The paper is the first to provide empirical evidence on the determinants of revenue, cost and profit efficiency of Islamic banks operating in Southeast Asian countries.

There is still an ongoing debate on the value relevance of capital structure and its determinants. Recently the issue has been explored in family firms after being explored in mature firms. This paper investigates the role of institutional investors and the firm's innovation activity in influencing the firm's decision and ability to acquire debt capital.

A large sample of 700 privately-held family firms in Italy from 2010 to 2019. Two analysis techniques are used: panel analysis and path analysis. The value of debt and the debt ratio are used as leverage measures. The value of patent (as a proxy for innovation) and institutional investor are the explanatory variables.

The results show that institutional investors have no relationship with financial leverage measures except when controlling for an interaction variable (Institutional investors × Lombardy region). The patent value is positively correlated with debt; however, the ratio patent-to-asset is negatively related to financial leverage indicating higher risk exposure. The nonlinearity test demonstrates a turning point when the relationship between patent value and debt inverts.

Firms should monitor their innovation activity since excessive innovation increases risk exposure and affects financing opportunities and value. The involvement of institutional investors does not always enhance value.

Existing literature focuses separately on family firm innovations and financial leverage as outcome variables, emphasizing the role of institutional investors in both fields by adopting agency theory and socioemotional wealth framework. In this study, the authors go further by merging both relationships, investigating the dynamics of the institutional-family firm innovation relationship in influencing the firm's capital structure. The authors contribute to the ongoing debate by providing original findings on capital structure, governance and innovation, supported by rigorous methods to enhance family firms' decision-making.

This study attempts to document the impact of financial leverage on corporate innovation in the Chinese nonfinancial public firms listed on Shenzhen and Shanghai stock exchanges.

The firm-level data are collected from CSMAR database for ten years, ranging from 2007 to 2016. The authors have employed the panel fixed effects model and further system GMM approach for analysis. The sample is segregated on the basis of state (SOE) and nonstate ownership (NSOE) to check for the diverse effects. In total, three different proxies of financial leverage are used to unearth the varying impact of short-time and long-term leverage separately. Further, corporate innovation is divided into input innovation (R&D/Sales and R&D/Assets) and output innovation (patents and inventions).

The results suggest that financial leverage is detrimental to the input innovation while conducive for the output innovation when measured by the number of patents. Contrarily, leverage has a negative influence over the output innovation when measured by the number of inventions. This implies that leverage is more damaging for the highest form of innovativeness (inventions) in China. Input innovation is more sensitive to the changes in long-term leverage versus short-term leverage. Further, the authors find that innovation in SOEs is more sensitive to the changes in the leverage as compared to the NSOEs. The results are free from the threat of endogeneity and identification problems, as reported by the system GMM model.

The authors did not segregate the sample on the basis of industry/sector.

The firms pursuing a strategy of radical innovation should try to keep their debt levels lower in order to achieve a higher innovation performance. Although, a rise in the leverage may mean an increased access to finance for a firm but such an access comes at a cost in the form of damage to the corporate innovation. However, increased debt financing may not be so bad for the firms that want to achieve a moderate and not the highest level of innovation. Such firms can produce recurring and synergic effects with debt financing and moderate innovation, once they achieve a level of innovation performance that satisfies their financiers.

To the best of authors’ knowledge, this is probably the first study to check the impact of firm-level financial leverage on both input and output innovation in the Chinese public-listed nonfinancial firms' panel data perspective till now.