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Article
Publication date: 14 May 2018

Mohammad Ashraful Ferdous Chowdhury, Chowdhury Shahed Akbar and Mohammad Shoyeb

The purpose of this paper is to examine the linkage between Islamic financing principles and economic growth (EG) by taking into consideration two Islamic Financing…

Abstract

Purpose

The purpose of this paper is to examine the linkage between Islamic financing principles and economic growth (EG) by taking into consideration two Islamic Financing Principles: Risk Sharing and non-risk sharing separately.

Design/methodology/approach

The data for this study are obtained from the annual reports of all Islamic banks from Bangladesh using Bank scope database and annual report for the period 1984-2014. The research uses an Autoregressive Distributive Lags (ARDL) approach. For robustness, this study also employs a continuous wavelet transform approach.

Findings

The empirical findings reveal that the risk sharing instruments are positively related to the EG of the country. On the other hand, non-risk sharing instruments are negatively related to the EG of the country.

Research limitations/implications

The dominant use of non-risk sharing-based financing has undermined the greater possibility of Islamic banking to contribute more to the EG of the country. Banks and other financial institutions need to pay greater attention to systemic risk created by risk transfer and apply risk sharing methods of financing more vigorously to achieve greater equity, efficient allocation of resources, stability and growth of the financial system and welfare of the society as a whole.

Originality/value

This study has advanced the knowledge by examining the issue of Islamic financing principles and EG. This is probably one of the first attempts to find the linkage between Islamic financing principles and EG by taking into consideration two portfolios: risk sharing and non-risk sharing separately and provide significant insights for policy makers, market players and academicians.

Details

Managerial Finance, vol. 44 no. 6
Type: Research Article
ISSN: 0307-4358

Keywords

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Article
Publication date: 17 December 2018

Md Hakim Ali, Md Akther Uddin, Mohammad Ashraful Ferdous Chowdhury and Mansur Masih

On the backdrop of growing importance of Shariah compliant equity markets, the purpose of this paper is to study cross-country portfolio diversification benefits for…

Abstract

Purpose

On the backdrop of growing importance of Shariah compliant equity markets, the purpose of this paper is to study cross-country portfolio diversification benefits for investors with major trading partners of Saudi Arabia, namely, USA, China, Japan, Germany and India, who have already invested or tend to invest in Saudi Arabian stock market.

Design/methodology/approach

The authors have investigated time invariant, dynamic correlations at different investments horizons of the investors among Islamic asset classes by applying relevant econometric techniques like multivariate generalized autoregressive conditional heteroscedastic –DCC and continuous wavelet transforms. For robustness, this study also applied maximal overlap discrete wavelet transform.

Findings

The findings tend to indicate that the Saudi Arabian investors have portfolio diversification benefits with all major trading partners in the short-term investment horizon. Interestingly, Saudi Arabian market has the least portfolio diversification benefits with the Chinese market. However, in the long run, all markets are correlated, yielding minimum portfolio diversification benefits and most importantly Saudi Arabian investors have portfolio diversification benefits with the Indian Islamic equity market in almost all investment horizons. The findings are highly consistent across different econometric technique estimations.

Research limitations/implications

The authors are only considering five major trading partners of Saudi Arabia. Also, the authors are using S&P and FTSE shari’ah index. Moreover, the time period of the study is constrained by the availability of shari’ah indices. Econometric limitations are also well documented in the literature.

Practical implications

The results could be beneficial for the investors, portfolio managers, hedge fund managers and institutional investors and also could be useful for the policy makers in their policy-making decisions.

Originality/value

Only very few studies have looked into the benefits of international portfolio diversification from the perspective of local investors as well as the portfolio diversification benefits with the major trading partners of Saudi Arabia. One of the novelties of the method is to make the stock investors, practitioners and policy makers aware of the portfolio diversification benefits available at different time scales such as 4, 8, 16, 32, 64 and 256 trading days as investment holding periods to unveil the true dynamics of co-movement between those different assets.

Details

Managerial Finance, vol. 45 no. 1
Type: Research Article
ISSN: 0307-4358

Keywords

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Article
Publication date: 4 October 2021

Syed Moudud-Ul-Huq, Kawsar Ahmed, Mohammad Ashraful Ferdous Chowdhury, Hafiz M. Sohail, Tanmay Biswas and Faisal Abbas

This study aims to investigate the relationship between capital regulation and risk-taking behavior (financial stability) concerning the impacts of the recent global…

Abstract

Purpose

This study aims to investigate the relationship between capital regulation and risk-taking behavior (financial stability) concerning the impacts of the recent global (COVID-19) crisis and diverse ownership structure.

Design/methodology/approach

The analysis uses an unbalanced panel data set from 32 commercial banks of Bangladesh for 2000–2020. The authors use the two-step system generalized method of moments and three-stage least squares to produce the study outcomes.

Findings

The robust results reveal that the relationship between capital regulation and risk (financial stability) is negative (positive) and bi-directional. More significantly, COVID-19 makes banks fragile and demands more capital to absorb risk. However, the effect of COVID-19 is heterogeneous when the authors consider ownership structure. Among the diverse ownership styles, Islamic and active shareholding show their controlling wheel on capital regulation and risk-taking aptitude (financial stability) during the global (COVID-19) crisis. In normal economic conditions, private banks and minority active shareholding can be a good determinant for capital regulation and risk (financial stability). On the other hand, state-owned and large banks have been found as less capitalized and highly risky.

Originality/value

This study is the pioneer in exploring capital regulation and risk toward the recent global (COVID-19) crisis.

Details

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

Keywords

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Article
Publication date: 7 August 2018

Mohammed Imran, Mosharrof Hosen and Mohammad Ashraful Ferdous Chowdhury

Economic hardship and crime is always a debatable issue in the political economy literature. Some authors define poverty leads to crime some are completely opposite. The…

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Abstract

Purpose

Economic hardship and crime is always a debatable issue in the political economy literature. Some authors define poverty leads to crime some are completely opposite. The purpose of this paper is to find out the impact of poverty on crime in the USA.

Design/methodology/approach

Using time series data of USA over the period from 1965 to 2016, this study applies autoregressive distributed lag approach to identify the effect of poverty on crime.

Findings

The outcomes confirm a positive co-integrating relationship between poverty and property crime. It can be argued that poverty ultimately leads property crime in long run in the USA. However, unemployment and GDP exhibit neither long-run nor short-run relationship with property crime and they are not cointegrated for the calculated period.

Research limitations/implications

The subject of this paper helps to explain and analyze the nexus between poverty and crime in the USA.

Practical implications

Government and policymakers should focus more on poverty rather than unemployment alone to control property crime.

Originality/value

This study attempts to identify the consequences of economic hardship and poverty on the crime in the advanced economy like USA.

Details

International Journal of Social Economics, vol. 45 no. 10
Type: Research Article
ISSN: 0306-8293

Keywords

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Article
Publication date: 23 November 2020

Hamad Omar Bakar, Zunaidah Sulong and Mohammad Ashraful Ferdous Chowdhury

This paper aims to investigate the effect of financial development (FD) on economic growth and growth-enhancing transmission channels for the sub-Saharan African (SSA…

Abstract

Purpose

This paper aims to investigate the effect of financial development (FD) on economic growth and growth-enhancing transmission channels for the sub-Saharan African (SSA) region in three different periods: the pre-Millennium Development Goals (MDGs) era (1990–1999), during the MDGs (2000–2017) era and the main period (1990–2017).

Design/methodology/approach

The study used the system generalized method of moments (SGMM) approach on 45 SSA countries from 1990 to 2017, using the data collected from the World Bank and the International Monetary Fund (IMF).

Findings

The long-run effect of the study showed mixed results in pre-MDGs and during MDGs periods but was positive in the main period. For growth-enhancing transmission channels, the results were mixed, although in many cases, institutional (INST) quality, human capital (HC) and foreign direct investment (FDI) were the main transmission channels.

Research limitations/implications

Some of the countries were dropped from the analysis due to data inadequacy.

Practical implications

The empirical results of this study provide evidence that the financial sector has robust positive effect throughout 1990–2017. Furthermore, the financial sector depends on several factors to improve economic growth. The SSA region has to focus on improving HC, INST quality in terms of good governance and create environment that is attractive to FDI since they were the main growth-enhancing channels.

Originality/value

Most of the studies in SSA countries assessed the direct effect of FD on economic growth without considering its transmission channels in different time frames. Moreover, they often used specific variables but not the financial index. This study extended the scope by considering various financial sector transmission channels, in different time periods and the financial index.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

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Article
Publication date: 19 February 2021

Nirmol Chandra Das, Mohammad Ashraful Ferdous Chowdhury and Md. Nazrul Islam

The purpose of this study primarily is to investigate the heterogeneous effect of leverage on performance of the listed nonfinancial joint stock companies in Bangladesh.

Abstract

Purpose

The purpose of this study primarily is to investigate the heterogeneous effect of leverage on performance of the listed nonfinancial joint stock companies in Bangladesh.

Design/methodology/approach

A large panel sample of 165 listed nonfinancial firms under different industries of Bangladesh studied for the period 2007–2016 employing the dynamic panel approaches, namely, differenced generalized method of moments (GMM) and system GMM. The asymmetric relationship between leverage and performance is also examined by quantile regression approach.

Findings

GMM showed that the leverage indicators have the negative impact on the performance of the firms in terms of return on equity and return on asset while the quantile regressions revealed the heterogeneous relationship between leverage and profitability. It showed that greater negative impact of leverage on performance in high-profitable firms than low-profitable firms.

Research limitations/implications

The study is confined to only the listed nonfinancial joint-stock companies of Bangladesh.

Practical implications

The asymmetric relationship between leverage and financial performance identified in this study would be the helpful tool for financial managers for optimal capital structure decisions.

Originality/value

This is one of the first in-depth attempts to find the nonlinear heterogeneous effect of leverage on firms' performance.

Details

South Asian Journal of Business Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2398-628X

Keywords

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Article
Publication date: 13 October 2021

Muhammad Saeed Meo, Kiran Jameel, Mohammad Ashraful Ferdous Chowdhury and Sajid Ali

The purpose of the research is to analyze the impact of world uncertainty and pandemic uncertainty on Islamic financial markets. For representing Islamic financial markets…

Abstract

Purpose

The purpose of the research is to analyze the impact of world uncertainty and pandemic uncertainty on Islamic financial markets. For representing Islamic financial markets four different Islamic indices (DJ Islamic index, DJ Islamic Asia–Pacific index, DJ Islamic-Europe index and DJ Islamic-US) are taken.

Design/methodology/approach

The study employs quantile-on-quantile regression approach to see the overall dependence structure of variables based on quarterly data ranging from 1996Q1 to 2020Q4. This technique considers how quantiles of world uncertainty and pandemic uncertainty asymmetrically affect the quantiles of Islamic stocks by giving an appropriate framework to apprehend the overall dependence structure.

Findings

The findings of the study confirm a strong negative impact of world uncertainty and world pandemic uncertainty on regional Islamic stock indices but the strength of the relationship varies according to economic conditions and across the regions. However, the world pandemic effect remains the same and does not change. Conversely, pandemic uncertainty has a larger effect on Islamic indices as compared to world uncertainty.

Practical implications

Our findings have significant implications for investors and policymakers to take proper steps before any uncertainty arise. A coalition of the central bank, government officials and investment bank regulators would be needed to tackle this challenge of uncertainty.

Originality/value

To the best of the authors' knowledge, none of the current works has considered the asymmetric impact of world and pandemic uncertainties on Islamic stock markets at both the bottom and upper quantiles of the distribution of data.

Details

Journal of Economic and Administrative Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1026-4116

Keywords

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Article
Publication date: 16 September 2020

Md. Mizanur Rahman, Mohammad Ashraful Ferdous Chowdhury, Md. Mahmudul Haque and Mamunur Rashid

Owing to religious and economic preferences in Muslim-dominated countries, middle-income customers are at the heart of banks’ strategic targeting. This study aims to…

Abstract

Purpose

Owing to religious and economic preferences in Muslim-dominated countries, middle-income customers are at the heart of banks’ strategic targeting. This study aims to investigate selected middle-income Islamic bank customers from Sylhet, one of Bangladesh’s top religious and cultural cities, to examine their perceptions of the Islamic banking services.

Design/methodology/approach

This study forwards three determinants of overall satisfaction. These are perceived relative advantage (PRA), perceived risk management (PRM) and perceived customer engagement (PCE). The study has used structured questionnaire and collected complete data on 300 middle-income Islamic bank users. The data was analysed using exploratory factor analysis (EFA), confirmatory factor analysis (CFA) and structural equation modelling (SEM).

Findings

While all the three selection factors significantly influence overall satisfaction, PCE has greater positive impact on overall customer satisfaction, followed by PRA and PRM. “Convenient location”, “competitive charges” and “return on deposit despite low earnings” are the top three instruments measuring “PCE”. Religion did not qualify as a standalone selection factor. The results are robust across tests conducted by using EFA, CFA and SEM.

Practical implications

Gross purchasing power of middle-income class in Bangladesh grew from 7% to over 30% during the past decade, and the purchasing power of this class stood at US$100bn. Having a greater portion of this population as Muslims, banks can design products and marketing campaigns by using the three selection criteria that offer a combination of faith and non-faith-based variables.

Originality/value

Similar studies on the middle-income customer group have been rare, especially from the Islamic banking perspective. These findings offer a concise list of three factors for the bank managers to build their strategies. With respect to the Vision 2021, these findings carry greater socio-economic significance given the transition of Bangladesh to a middle-income country.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 14 no. 2
Type: Research Article
ISSN: 1753-8394

Keywords

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Article
Publication date: 21 August 2017

Ajim Uddin, Mohammad Ashraful Ferdous Chowdhury and Md. Nazrul Islam

The purpose of this paper is to examine the resiliency between conventional banks (CBs) and Islamic banks (IBs) in Bangladesh at the financial crisis, pre-crisis and…

Abstract

Purpose

The purpose of this paper is to examine the resiliency between conventional banks (CBs) and Islamic banks (IBs) in Bangladesh at the financial crisis, pre-crisis and post-crisis period.

Design/methodology/approach

Data from 25 banks, 18 CBs and 7 IBs, operating in Bangladesh during the period 2005-2014 have been collected and divided into three stages: the pre-crisis period (2005-2006), the crisis period (2007-2008) and the post-crisis period (2009-2014). Dynamic generalized method of moments and quantile regression analysis have been used for this study.

Findings

This paper uses Z-score as an indicator of bank stability and found a significant difference in stability between IBs and CBs during the financial crisis. In addition, this paper also tries to identify the type of banks that performed better during pre-crisis, crisis and post-crisis periods but found no significant differences between IBs and CBs in this regards. For robustness, quantile regression found that the statistical significance level of credit risk, capital adequacy ratio and efficiency ratio of CBs and IBs differ at different percentile.

Originality/value

Most of the previous studies were conceptual or narrative and conducted on a global basis, not country-specific. To filling the country-level research gap, this study provides a meaningful insight about how these two types of banks performed in different periods.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 10 no. 3
Type: Research Article
ISSN: 1753-8394

Keywords

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Article
Publication date: 22 December 2020

Shinaj Valangattil Shamsudheen and Mohammad Ashraful Ferdous Chowdhury

The purpose of the study is to develop and validate scale to measure the “product knowledge of salesforce in Islamic financial institutions”.

Abstract

Purpose

The purpose of the study is to develop and validate scale to measure the “product knowledge of salesforce in Islamic financial institutions”.

Design/methodology/approach

A total of 371 responses were collected from the salesforce of Islamic financial institutions in the United Arab Emirates. Study adopted both exploratory and confirmatory approach with fundamental principles of Islamic finance. Content validity test and factor analysis are employed to refine measurement items and define as well as validate the scale, respectively.

Findings

Total three dimensions were extracted, i.e. “System”, “Features” and “Contracts” through “exploratory factor analysis” (EFA), and evidence of validation of measurement scale/construct was reported through “confirmatory factor analysis” (CFA).

Research limitations/implications

The span of the study is limited to a single country. Future studies are suggested to employ the newly developed scale/construct in the research frameworks and obtain the overall model fit.

Practical implications

The scope of developed and validated measurement scale is broad and can be applied in any kind of Islamic financial institutions in which the study requires capturing product knowledge of salesforce with special reference to peculiar characteristics of Islamic financial institutions.

Originality/value

While there is ample literature addressing the issues of competence and need for capacity building among Islamic banking practitioners in general, little has been explored with special reference to the salesforce, their degree of knowledge about the product they offer to the customers and a scale to measure their knowledge that envelopes the specific features of Islamic finance. These gaps serve as justification for undertaking this study.

Details

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

Keywords

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