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The purpose of this paper is to compare the return performance and persistence of ethical and conventional mutual funds during two extreme events, the Asian and the global financial crises under Shariah constraints.

The overall sample comprises of 129 Islamic mutual funds (IMFs) and 350 conventional mutual funds (CMFs) in Malaysia, and the average monthly data cover two periods of market cycles, before and during a financial crisis. The net of all expenses data is obtained from the Morningstar Database. This study employs various market risk-adjusted performance measures (ratios) to estimate the funds’ overall performance during the crises, and then it uses CAPM model to estimate the parameters via panel data approach. Moreover, paper employs the two persistence performance measures on IMFs and CMFs through contingency tables. It tests for the performance persistence effects for IMFs, CMFs using repeat winner and the cross-product ratio (CPR) tests proposed by Malkiel (1995) and Brown and Goetzmann (1995), respectively.

The main findings of the paper are: on average, both funds IMF and the CMF outperform the market return during the entire sample period; none of the funds is better than the “others” during the financial crises and the pre-crisis periods; the ethical fund – IMF outperforms the CMF over the study period. This outcome also indicates that ethical funds are more persistent especially during and the pre-crisis AFC and the GFC periods.

The finding of this study is limited to only Malaysian data because the objective was to guideline investors and market players in Malaysia to prefer investing in Islamic ethical funds to diversify their investment portfolio.

Cautions to use existing ratio measures and CAPM model rather persistence measures may be used with existing methodologies in light of extreme events which influenced investor decision making for better returns at lower risks.

A class of ethical funds consists of religious sustainable, socially responsible and impact-investing (SRI) funds but Shariah implications of halal investment must be observed to avoid prohibited practices within the class of SRI funds.

The work done in this paper are original in the sense that the authors employed various ratios to measure fund performance in conjunction with CAPM model and then tested for two persistence performance measures; the repeat winner and CPR tests.

This paper aims to analyse whether the practices of Islamic banks in Bahrain are in line with value-based Islamic banking (VBIB) and reporting disclosure in the annual reports towards achieving their fundamental objectives of human-centred economic development and social justice.

Based on Islamic finance, Islamic economic principles and perception of Maqasid al-Shari’ah, this paper examines and assesses the current practices of Islamic financial institutions (IFIs) in Bahrain through content analysis of financial and annual reports of Islamic banks in Bahrain and interviews of Islamic banking experts.

The findings reveal that value-based banking (VBB) has not been translated fully into practice by the Islamic banks in Bahrain.

The data analysis was restricted to Islamic banks in Bahrain.

This paper identifies the need for reporting standard development to improve the VBB practice in Bahrain in the future. Looking at the objectives of the IFIs, this paper introduces the concept of VBB in Bahrain, which includes ethical banking, responsible banking and social responsibility. The study adds value not only to the current Islamic finance literature but also helps many stakeholders, including prospective academics, who may conduct comparative studies in different jurisdictions throughout the world.

The specific contribution of this paper is the identification of the VBB practices and related disclosure in the Islamic banking industry in Bahrain. The study is useful to harmonise and standardise the practices of VBIB by the contemporary Islamic banks in Bahrain.

This chapter compares the returns performance of the Islamic mutual funds (IMFs) with that of conventional mutual fund (CMF). It covers both pre- and post-ASEAN financial crisis and global financial crisis data for an overall sample of 128 IMFs and 350 CMFs. It also covers two market cycles from January 1995 to December 1998 and from January 2005 to December 2008.

The net raw returns of all expenses and market risk-adjusted return performance measurements are employed to examine the portfolios’ performance, and to capture the difference movement of the funds based on the particular market trend.

We observed that on average both portfolios outperform the market return. In general, average returns performance of IMFs is not better than the CMFs during bullish and bearish market trend periods. However, the empirical results based on time-series regression model reveal that the IMFs portfolio slightly outperform the conventional counterparts.

The study would benefit the investors and market players to consider IMFs in their portfolio selection, if in future such an expected event may occur.

The study provides insights to regulators and market players who plan to access investment plan in an emerging market, particularly in Malaysia.

This paper aims to present the results of a comprehensive literature review with regard to the application of Tawarruq in the Islamic banking system covering the period between 2011 and before. The review aims to synthesize the previous research, capsulize the structural overview inasmuch as future research might be oriented and identify the gaps and direction for future research.

A range of published and unpublished documents was collated and filtered based on the defined rules to identify the determinants of the writing. The documents were then be classified into few segments in which content analysis was conducted to capsulize the essence of the subject matter described in the literature.

The analysis demonstrates that most of the studies discussed the fundamental theories which concerning the area of jurisprudence, while a few of them did discuss the application aspect in the banking environment. However, none of the operational process is discussed in-depth, whereas the risk of Shari’ah non-compliance might arise in the detail transaction.

The databases used in the search might not contain all the documents that could be relevant for the review. Furthermore, the defined-rule for document searching and selection excluded the out-of-scope documents that might be relevant.

This paper identifies the gaps that become apparent in the literature in assisting researchers to ascertain the interesting areas as well as the direction for future research.