Search results

1 – 10 of 963
Open Access
Article
Publication date: 14 February 2020

Sutan Emir Hidayat, Ahmad Rafiki and Suvorov Svyatoslav

This study aims to evaluate the awareness level of Islamic finance principles among employees of financial institutions in Moscow, Russia.

3291

Abstract

Purpose

This study aims to evaluate the awareness level of Islamic finance principles among employees of financial institutions in Moscow, Russia.

Design/methodology/approach

A quantitative method is used with a Likert scale questionnaire. A survey was conducted to 310 financial institutions’ employees to determine the level of their awareness of major Islamic finance principles. The sample population is selected using the judgment sampling technique. A descriptive analysis with frequency, percentage and weighted mean are used to analyze the data.

Findings

The study finds that the level of awareness of financial institutions’ employees towards Islamic finance is low. This is probably due to the minority of the Muslim population and geographically far from to the countries where Islamic finance is being implemented. All respondents have a good education background, thus implementing some training sessions for its employees or hiring some outside specialists could transfer the knowledge and widespread the adoption of Islamic finance instruments.

Originality/value

The academic institutions such as universities in Russia could play a pivotal role to offer Islamic finance-related subjects, while the government as a regulatory body, should support the Islamic finance initiatives.

Details

PSU Research Review, vol. 4 no. 1
Type: Research Article
ISSN: 2399-1747

Keywords

Open Access
Article
Publication date: 15 August 2019

Muhammad Mohsin Hakeem

The purpose of this paper is to indicate an innovative solution to address the financing issues faced by “Micro-, Small and Medium Enterprises” (MSME) in emerging economies.

4809

Abstract

Purpose

The purpose of this paper is to indicate an innovative solution to address the financing issues faced by “Micro-, Small and Medium Enterprises” (MSME) in emerging economies.

Design/methodology/approach

Islamic Financial Institutions (IFIs) especially Islamic banks are competing for high net worth individuals, whereas the MSME sector is largely untapped. A collaborative model for IFIs is suggested, to explore the MSME sector. Islamic Non-Banking Financial Institutions (NBFIs) are operating in these markets through their extensive gross route networks. The multistep collaborative model proposes “Special Purpose Entity (SPE)” partially owned by a single Islamic Bank or consortium and NBFI/s. SPEs can be incorporated with a defined scope, focus areas, risk profile, budget and shareholding patterns.

Findings

Risk and profit sharing instruments also known as Musharakah and Mudarabah have less than 6 percent share within total financing offered by Islamic banks globally. Risk sharing products offered by Islamic banks are not targeting this sector due to the underdevelopment of instruments, lack of knowledge and resources. Proposed SPEs can operate regionally with a concentration on specific business sectors.

Originality/value

The SPE model would enable Islamic banks to enter the huge MSME market while mitigating risk. On the contrary, it would enable the large segments of emerging economies (bottom 40 percent population of developing nations) to get involved and actively play their role to attain long-term development goals.

Open Access
Article
Publication date: 12 September 2019

Luqyan Tamanni and Mohd Hairul Azrin Haji Besar

The purpose of this paper is to shed some lights on the process of mission drifting or abandoning poverty objective by Islamic microfinance institutions (IMFs). The paper…

4560

Abstract

Purpose

The purpose of this paper is to shed some lights on the process of mission drifting or abandoning poverty objective by Islamic microfinance institutions (IMFs). The paper investigates whether the extensive use of banking logic changes IMFs, from focusing on both development and financial objectives to only considering sustainability as their primary mission.

Design/methodology/approach

This paper adopts mixed methods by analyzing 7,200 microfinance data from Microfinance Exchange Market and reviewing annual reports and websites of 25 IMFs to examine their vision and mission statements and other related information.

Findings

The finding shows Islamic microfinance has not changed, despite increasing adoption of financial or banking performance measures. However, size and age of the institutions may affect the outcome in the future. The authors find that smaller microfinance institutions maintain genuine objective to serve the poor, as the grow larger they would be more inclined toward sustainability objectives.

Research limitations/implications

The research is limited on the sample size as data on Islamic microfinance globally is limited. However, the paper looked at the global data rather than local data to compensate for this limitation. Future study would be further taking the study through qualitative methods to support the study.

Originality/value

This paper aims to shed some lights on the process of mission drifting or abandoning poverty objective by IMFIs. The paper investigates how has the extensive use of financing logic has changed IMFIs from focusing on both development and financial objectives to only considering sustainability as their primary mission. Arun and Hulme (2009) argued that the interaction of multiple logic within microfinance institutions, i.e. financial vs social, could pose some serious management dilemmas within microfinance institutions. Further, commercialization puts pressure on the field staffs to achieve financial targets and often neglect their poverty outreach mission to the poor. The well-known crisis in Andhra Pradesh, India where clients of microfinance institutions committed suicide after being shamed by field officers who tried to collect payments of loans (Mader, 2013; Taylor, 2011), provides a powerful case of the impact of financialization to microfinance clients.

Details

Asian Journal of Accounting Research, vol. 4 no. 2
Type: Research Article
ISSN: 2443-4175

Keywords

Content available
Book part
Publication date: 20 May 2019

Abstract

Details

Research in Corporate and Shari’ah Governance in the Muslim World: Theory and Practice
Type: Book
ISBN: 978-1-78973-007-4

Open Access
Article
Publication date: 27 July 2020

Varsha Mooneeram-Chadee

The purpose of this paper is to analyse the main components of the regulatory framework for Islamic banking in Mauritius. This small island state of the Indian Ocean aspires to…

3489

Abstract

Purpose

The purpose of this paper is to analyse the main components of the regulatory framework for Islamic banking in Mauritius. This small island state of the Indian Ocean aspires to host Islamic banking products while diversifying the range of financial services offered within its hybrid jurisdiction despite having a minority Muslim population. The study also aims at drawing some comparisons with the well-established regulatory framework that applies to conventional banking.

Design/methodology/approach

In this qualitative analysis of the regulatory framework of Islamic banking in Mauritius, the doctrinal approach is adopted. This method relies principally on a scrutiny of the provisions of the law and delves into the primary and secondary sources of law guiding Islamic banking practices in the Mauritian jurisdiction.

Findings

The research study concludes that, with the view of encouraging investors into Islamic banking, policymakers took some regulatory initiatives but these remained timid. These initiatives relied too often on borrowing from the regulatory framework in place for conventional banking practices instead of regulating the area within its own precepts. Prospects for expanding Islamic banking exist but will require more audacious regulatory steps so as to secure the environment within which Islamic banking is to flourish. In the meantime, the industry is in a status quo position with no further legal action currently being envisaged to re-launch this area.

Originality/value

This research study is among the first generated specifically on the regulatory framework of Islamic banking in a small financial centre that operates mostly offshore financial activities. Previous research work either focused on the empirical analysis or on reviewing the challenges and the prospects but no study has provided an in-depth analysis of the regulatory provisions circumscribing Islamic banking. This lacuna is being filled up by this research paper which highlights the regulatory needs of Islamic banking and comments on the inclusion of and the need for specific rules related to Islamic finance instead of relying on the overlap with conventional banking laws.

Open Access
Article
Publication date: 28 December 2020

Ahmed Tahiri Jouti

This paper aims to understand the issue of interest rate benchmarking in Islamic financial institutions (IFIs) from a macro-economic perspective and assessing the relevance of…

2625

Abstract

Purpose

This paper aims to understand the issue of interest rate benchmarking in Islamic financial institutions (IFIs) from a macro-economic perspective and assessing the relevance of creating a Sharīʿah-compliant profit rate benchmark to solve this issue. This paper also aims at suggesting an Islamic alternative that will handle both the negative economic impact on IFIs as well as on their financial performance.

Design/methodology/approach

The paper is based on literature review of conventional finance and Islamic finance theories to construct a theoretical model to assess the impact of interest rate benchmarking on the ability of IFIs to achieve the objectives of the Islamic economy.

Findings

The macro-economic perspective concludes that conceiving a profit rate benchmark for the Islamic finance industry is not relevant to raising the Sharīʿah credibility of the industry. Indeed, several adjustments need to be introduced in terms of the business model.

Research limitations/implications

The recommendations of this paper require the involvement of financial authorities and governments for their implementation. Indeed, the adjustments require a macro-economic review.

Practical implications

The paper considers a profit rate benchmark irrelevant and inefficient. Instead, it suggests the necessary adjustments in terms of business model and economic approach for IFIs to achieve their objectives.

Social implications

The paper considers zakat implementation and the adjustment of IFIs as the real path to implement a fair wealth distribution in the society.

Originality/value

The creation of a profit rate benchmark has always been the only solution for the pricing issue in IFIs. This paper challenges this idea and tries to give a deeper understanding of the situation.

Details

ISRA International Journal of Islamic Finance, vol. 13 no. 1
Type: Research Article
ISSN: 0128-1976

Keywords

Open Access
Article
Publication date: 1 November 2018

Muhammad Hanif

This study aims to develop a Sharīʿah-compliance rating mechanism for the Islamic financial services industry (IFSI), with a special focus on banking. The banking sector is taken…

5444

Abstract

Purpose

This study aims to develop a Sharīʿah-compliance rating mechanism for the Islamic financial services industry (IFSI), with a special focus on banking. The banking sector is taken as the area of focus due to its leadership role in the volume of global Sharīʿah-compliant assets.

Design/methodology/approach

The objectives of the Islamic financial system (IFS) are selected as the basis for ratings. A range of performance indicators (leading to achievement of the objectives) is grouped into four broader categories and used in the study to allocate scores with a sum total of 100. Special considerations – including the amount of resources required in performing an activity, suitability of prevailing business conditions, the degree of compulsion/discretion in performing a task and linkage with the essence of the IFS – were taken into account in the allocation of scores.

Findings

This study groups multiple performance measures into four categories, including portfolio construction (deposits mechanism, participatory and asset-based modes of financing), access to finance (service to the less-privileged and sector screening), reputation (disclosures and stakeholders’ survey) and Sharīʿah governance (Sharīʿah supervision and controls, charitable operations, human resources, product development and organization). The Portfolio, Audit, Reputation and System (PARS) rating system is then developed.

Practical implications

A Sharīʿah-compliance rating system is helpful in measuring the progress towards goal achievement of the IFS and in gaining stakeholders’ trust. It is also important for Sharīʿah boards and regulators in policy formulation, for management in addressing weaknesses and taking corrective measures and potentially for standard-setting bodies.

Originality/value

This study presents a comprehensive quantitative Sharīʿah-compliance rating mechanism, taking into consideration the objectives of the IFS – equitable distribution of wealth and financial stability, in addition to Sharīʿah-compliance in operations. Development of Sharīʿah-compliance quality ratings for Islamic banking is essential to gain customers’ trust; the suggested methodology is thus a contribution to the literature on Islamic finance.

Details

ISRA International Journal of Islamic Finance, vol. 10 no. 2
Type: Research Article
ISSN: 0128-1976

Keywords

Open Access
Article
Publication date: 19 January 2024

Ummi Ibrahim Atah, Mustafa Omar Mohammed, Abideen Adewale Adeyemi and Engku Rabiah Adawiah

The purpose of this paper is to propose a model that will demonstrate how the integration of Salam (exclusive agricultural commodity trade) with Takaful (micro-Takaful – a…

Abstract

Purpose

The purpose of this paper is to propose a model that will demonstrate how the integration of Salam (exclusive agricultural commodity trade) with Takaful (micro-Takaful – a subdivision of Islamic insurance) and value chain can address major challenges facing the agricultural sector in Kano State, Nigeria.

Design/methodology/approach

The study conducted a thorough and critical analysis of relevant literature and existing models of financing agriculture in Nigeria to come up with the proposed model.

Findings

The findings indicate that measures undertaken to address the major challenges fail. In view of this, this study proposed Bay-Salam with Takaful and value chain model to solve a number of challenges such as poor access to financing, poor marketing and pricing, delay, collateral requirement and risk issues in order to avail farmers with easy access to finance and provide effective security to financial institutions.

Research limitations/implications

The paper is limited to using secondary data. Therefore, empirical investigation can be carried out to strengthen the validation of the model.

Practical implications

The study outcome seeks to improve the productivity of the farmers through enhancing their access to finance. This will increase their level of production and provide more employment opportunities. In addition, it will boost financial inclusion, income generation, poverty alleviation, standard of living, food security and overall economic growth and development.

Originality/value

The novelty of this study lies in the integration of classical Bay-Salam with Takaful and value chain and create a unique model structure which the researchers do not come across in any research that presented it in Nigeria.

Details

Islamic Economic Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1319-1616

Keywords

Open Access
Article
Publication date: 12 August 2019

Ahmed Tahiri Jouti

Bringing more impact seems to be a real issue for social initiatives and organizations requiring the adoption of new approaches. The paper aims to define an integrated approach…

9665

Abstract

Purpose

Bringing more impact seems to be a real issue for social initiatives and organizations requiring the adoption of new approaches. The paper aims to define an integrated approach for building, maintaining and upgrading Islamic social finance and sustainable ecosystems.

Design/methodology/approach

The paper presents a conceptual framework based on case studies and literature review describing the methodology and the necessary steps to build sustainable ecosystems.

Findings

The paper shows the impact of building social finance ecosystems on tackling social issues. It emphasizes the idea that solving social issues is everybody’s business – from governments to businesses – and that those initiatives require sufficient Sharīʿah-compliant funding to achieve sustainability goals.

Research limitations/implications

The paper does not focus on the Islamic world experiences in building ecosystems serving social causes.

Practical implications

The paper gives an overview on how collaboration between the different social oriented organisations can enhance the social impact of the different initiatives. The aim is to ensure adequate financing to all the ecosystem components during the whole lifecycle.

Social implications

The suggested approach of building sustainable ecosystems can serve as a way to assess the existing social initiatives and practices to find relevant combinations targeting more impact.

Originality/value

In the social sphere, the idea of building ecosystems has been explored in different ways but never in a way that gathers all the components including finance providers, coordinators and the different types of initiatives. The paper adapts the ecosystem concept to the Islamic finance specificities.

Details

ISRA International Journal of Islamic Finance, vol. 11 no. 2
Type: Research Article
ISSN: 0128-1976

Keywords

Open Access
Article
Publication date: 19 June 2018

Abd Hakim Abd Razak

The purpose of this paper is to supply basic insights into the principle of shūrā (consultation) in Islamic banking, the idea of a centralised approach to the corporate governance…

5168

Abstract

Purpose

The purpose of this paper is to supply basic insights into the principle of shūrā (consultation) in Islamic banking, the idea of a centralised approach to the corporate governance of Islamic financial institutions (IFIs), the roles of a centralised Sharīʿah board as the highest authority on Sharīʿah issues and its distinguishing features from a de-centralised system and the advantages and disadvantages of the two governance systems.

Design/methodology/approach

In analyzing these, the paper adopts the critical legal studies approach and refers to the provisions of the Qurʾan and Sunnah, ijmāʿ (consensus) of Sharīʿah scholars and recent Islamic banking reports.

Findings

Despite the fact that the double-digit growth of the current US$2tn Islamic banking industry is a promising sign for its further expansion – expecting to cross the US$6.5tn mark by 2020 – there remains concern over the lack of standardization or rather the diversified approaches to the corporate governance of IFIs across key Islamic banking regions.

Practical implications

There has been much debate surrounding the issue of whether the Islamic banking industry requires a centralised Sharīʿah board at the state level to complement the Sharīʿah boards at the IFIs’ individual level in providing better supervision of the Sharīʿah-compliance of IFIs. The fact that the industry is already equipped with two prominent standard-setting agencies in the form of the AAOIFI, the IFSB does little to suggest that best governance practices – which centre around the themes of consistency, harmony and uniformity – are on the horizon, at least not whilst their issued standards and guidelines remain voluntary for IFIs.

Originality/value

All in all, it is aspired that this paper may assist the reader in evaluating the pros and cons of the whole concept of Sharīʿah board centralisation.

Details

ISRA International Journal of Islamic Finance, vol. 10 no. 1
Type: Research Article
ISSN: 0128-1976

Keywords

1 – 10 of 963