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The main aim of this paper is to measure customers’ perception of car Ijarah financing transactions services provided by the Islamic banks and financial institutions in Pakistan.

The paper uses two research methodologies: Kruskal–Wallis and Mann–Whitney test (non-parametric) and logit regression model (parametric). Both methods are then applied to a real data set of 300 respondents from various cities of Pakistan in the car Ijarah financing industry. The demographic effects are also investigated to see the perception about the degree of Shari’ah compliance and the quality of service of transaction offered by banks.

Main finds of the paper reveal that the customers who used the car Ijarah facility from Islamic banks have positive attitude toward this sort of transaction. In addition, gender, income, marital status affect the perception about the quality of Shari’ah compliance, and the quality of service of transaction issues are very important to selected clients in the industry.

These findings are limited to the car Ijarah financing industry and may not be applicable in other banking products in Pakistan and elsewhere.

Based on the results of this study, potential Islamic bank customers may find it helpful choose products or make product decisions conveniently. The findings of the paper also support Islamic banks in improving the Ijarah facility to increase their customer base in the geo-political locality with similar characteristics as Pakistan.

Shari’ah compliance in the Islamic finance industry is a sensitive issue in Pakistan, and hence, car Ijarah’s Shari’ah compliance can affect banks’ reputation and sensitivity.

The work reported in this paper is original, unpublished and the paper is not submitted elsewhere for publication.

This paper is an attempt to present legal issues of Islamic corporate governance (ICG) in the presence of global financial crises. It presents ICG model and discusses its viability in today’s corporate structure. The model is based on institution of Hisbah which demands book keeping, disclosure, transparency based on Shariah principles of Islamic Finance Ethics.

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.

The purpose of this paper is to examine the new paradigm of Islamic corporate governance (ICG) in an emerging area of Islamic finance.

The paper adopts an analytical approach to investigate the new executive and managerial roles that ICG is expected to play in the process of corporate financial decision making.

The authors argue that ICG is no longer expected to play the traditional supervisory and regulatory role within Islamic financial institutions. Indeed, the acuteness of competition, the observed failures of the Islamic finance industry, the unprecedented challenges, and the required ethical considerations levy as a new approach that improve the growth of the Islamic finance industry sustain its survival in the global financial world, and enhance the welfare of 25 percent of the world population who survived beyond all level of poverties.

The authors claim that ICG must be endowed with a multi-faceted, new paradigm for the purpose of improving the stakeholders’ interests and reaching the best business practices of the Islamic finance industry to cater investors’ need and the social well-being of the homeless and disadvantaged communities.

This paper aims to report practice-relevant anomalous investment yield behavior of two types of bonds – Type A, the mainstream bond, and Type B, which is Sukuk – both having similar cash-flow-relevant characteristics.

Bond valuation theory suggests that yields to investors of similarly rated bonds ought to be same. The authors collected time-series data on A and B bonds, all being coupon-paying bonds with similar rating and similar tenor as two matched samples traded in a bond exchange. To ensure the results are extended to different bond sectors, the data set was separated into treasury bonds as risk-free and corporate bonds as risky ones. The data set was further sub-divided into short-, medium- and long-tenor bonds. As the data straddle the Global Financial Crisis period, the authors use appropriate econometric method to control the possible effect from the crisis.

The average and median yields on Type A bond are significantly different from those of Type B. The test results show significant and systematic differences: treasury bonds of Type A returns yield lower than treasury bonds of Type B; the yields of corporate mainstream bonds (A) are higher than the yields of Sukuk (B). The authors observe these findings constitute a puzzle, being anomalous to theory.

This paper is original in that it is documenting significant differences in pricing of equivalent bonds. This has both theory and practice implications for fixed-income security market practices. The evidence is very strong to suggest that the identical types of bonds may have missing variable that contributes to the difference. Therefore, further research to identify the missing variable is necessary.

This paper investigates the performance of locally focused equity mutual funds (LFEFs) in Saudi Arabia as compared with the performance of benchmark funds. More specifically, the focal question pertains to whether Shariah-compliant mutual funds (SMFs) and conventional mutual funds (CMFs) outperform their respective benchmarks. Undertaken in the context of Saudi Arabia's economic planning under Vision 2030, the study offers a foundation for determining whether and the extent to which Shariah-compliant investment strategies are competitive—a matter of considerable importance across 57 Muslim countries.

The Carhart four-factor model is applied to a sample of 39 Saudi Arabian mutual funds (MFs) using the monthly net asset value (NAV) per share. The sample period, April 2007 to October 2016, is considered in its entirety and as three sub-periods, i.e. low-, medium- and high-volatility.

The results show that the locally focused equity mutual funds (LFEFs) significantly outperformed their benchmark, i.e. the Tadawul All Share Index (TASI), during the full sample period and the low-volatility period. According to the empirical comparison, the CMFs also outperformed their TASI benchmark for the full sample period and the low-volatility period. However, the SMFs neither outperformed nor underperformed their S&P Saudi Arabia Domestic Shariah Index benchmark. That is, for each of the SMFs included in the sample, the Jensen's alpha was insignificant for both the full sample and all three volatility sub-periods.

In this paper, the four-factor model is used in the context of a single country. The results, therefore, may not be generalizable to the multi-country level in the Gulf Council Cooperation (GCC) region given differences between the member countries in terms of financial structure and economic focus.

The results reported constitute a useful guide for policymakers and faith-based-sensitive investors concerned about the Shariah compliancy of their portfolios given that there is very little difference between how CMFs and SMFs performed in the focal period. This research can be extended to include other Islamic countries in the GCC region as a basis for identifying optimal investment vehicles, i.e. those most likely to produce high returns at low risk.

The work reported in this paper is original and constitutes a valuable asset for ethnoreligious-sensitive investors. The research has not been published in any capacity and is not under consideration for publication elsewhere.

The objective of this paper is to investigate the validity of stock valuation theories and their forecasting ability by conducting an empirical study. It employs four most commonly used theories which are then tested using 19-year banking-firm market data. The usefulness of these models demonstrates with promising results.

This paper conducts a multi-country study using the multi-model testing approach to evaluate validity of theories and forecast accuracy of banking firms. It employs four methodology models used in finance literature; (1) P/E multiples model, (2) accounting-information-based clean surplus model, (3) theoretical model based on Gordon and Shapiro (1956) method and (4) the Damodaran-Kottler Free Cash Flow or FCF theory based on discounting model.

The tests show that the four theories under tests have a significant fit with actual price formation. The explained variation ranges from 72 to 92%, so the explanatory power of the theories accounting for variations in bank prices over 19-year period is substantial. The models fit suggest that the P/E model has superior predictive power followed by the RIM, DDM and FCFE. These findings shed new lights on the relative performance of valuation models.

The study is limited in terms of the sample period size for 1999–2019. The availability of essential financial data prior to 2000 is very limited, so one can understand interpretation of statistical results under certain assumptions.

The paper suggests that one-factor model is better than the two-factor model.

The work done in this paper is unpublished and original contribution to banking and finance literature and also not under consideration for publication in any other journal.

The purpose of this paper is to explore the current strategic planning practices in the MENA region by highlighting the practices in the Saudi telecommunications industry (Saudi TI) and the external and internal factors that influence strategic planning in the Saudi TI.

The data comprised those from a questionnaire-based survey of a random sample of managers of Saudi TI firms, supplemented with data from secondary sources.

The results revealed that most participating managers recognized the potential benefits of using strategic planning in their firms. Several significant factors that impacted on the decision-making process with regard to strategic planning in Saudi TI firms were identified.

The main contribution of this paper is to fill an existing knowledge gap on strategic planning in a key industry such as the telecommunications industry in a country that is of importance as a business hub in the Middle East.

The purpose of this study is to assess customers’ perceptions of Islamic banks (IBs) of customers who have used or intend to use Ijarah service to purchase a car. The study further examines the mediating role of clarity and accuracy (CAA) of service offered between customer perceptions and customer satisfaction. This paper focuses on connecting in quantitative terms customers’ perceptions of IB services to customer satisfaction by providing the first evidence of this relationship in the context of car Ijarah financing.

In this paper, a model is proposed to assess customers’ perceptions of the Ijarah service used by IBs to finance car purchases. The model connects customers’ perceptions to customer satisfaction with this Shariah-compliant service. The data are drawn from 300 randomly selected customers living in five major cities in Pakistan, and factor analysis and structural equation modeling are used to understand the patterns of correlation/covariance among a set of variables and to evaluate customers’ perceptions of Ijarah financing for car purchases.

The results of the study show a significant positive relationship between customers’ perceptions and customer satisfaction. In particular, the CAA of the services provided is a significant predictor of customer satisfaction. This paper finds that CAA is a partial mediator between customers’ perceptions and customer satisfaction.

As this study is based on only one country and one simple car Ijarah financing product, the results cannot be generalized to the entire industry. Therefore, deeper research is needed in which data from other countries are used and a range of models and approaches are applied to secure knowledge about the multinational and multifactor variations of Ijarah financing.

In terms of their implications for IBs, the study results provide a basis for the banks to more effectively cater to their customers by improving the services offered in line with customers’ expectations and thereby increasing profitability. This investigation is much needed in academia and industry because the market share for Ijarah financing is growing and competition between IB products and conventional banking products is increasing.

This study presents the first endeavor to use exploratory factor analysis, confirmatory factor analysis and structural equation modeling to assess customer satisfaction in Ijarah financing using Pakistani banking clients’ data. This approach is also applicable to various IB financial products and Shariah contracts.