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1 – 9 of 9Salman Ahmed Shaikh, Mohd Adib Ismail, Abdul Ghafar Ismail, Shahida Shahimi and Muhammad Hakimi Mohd. Shafiai
This paper aims to integrate Islamic and mainstream economics framework towards a more realistic understanding of Muslim consumption behaviour.
Abstract
Purpose
This paper aims to integrate Islamic and mainstream economics framework towards a more realistic understanding of Muslim consumption behaviour.
Design/methodology/approach
The model incorporates some of the Islamic institutions like period-wise deduction of Zakat from endowments. It also includes bequests which could be significant given the Islamic injunctions on inheritance distribution and the significance placed on the institution of family. Furthermore, the model integrates the assumption that consumption opportunity set will axiomatically filter out the prohibited consumption goods from the consumption set in both contemporaneous and inter-temporal consumption.
Findings
Zakat ensures contemporaneous redistribution from endowment surplus households (those having Zakatable endowments above Nisab) to endowment-deficient households (those having Zakatable endowments below Nisab). The lifetime resources are scaled down for endowment surplus households because of the payment of Zakat in both periods and leaving bequests in old-age period, while the lifetime resources are scaled up for endowment deficient households because of the receipt of Zakat in both periods and receiving the bequests in youth.
Originality/value
The authors show how some of the Islamic principles and institutions can be integrated in the mainstream economics framework, especially in research studies where the objective is to understand and describe reality rather than persuasion and idealization.
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Salman Ahmed Shaikh, Mohd Adib Ismail, Abdul Ghafar Ismail, Shahida Shahimi and Muhammad Hakimi Mohd. Shafiai
This study aims to comparatively analyze the performance of Islamic and conventional income and equity funds using various performance evaluation methods.
Abstract
Purpose
This study aims to comparatively analyze the performance of Islamic and conventional income and equity funds using various performance evaluation methods.
Design/methodology/approach
The authors comparatively analyze the performance of mutual funds using measures, such as tracking error, Sharpe ratio (1966), Treynor ratio (1965), M-square measure by Modigliani and Modigliani (1997) and information ratio. The authors also use market timing and selection measures, such as Treynor and Mazuy model (1966), Henriksson and Merton (1981) model and Fama’s decomposition approach (1973).
Findings
The authors find that Islamic equity funds are as much competitive as conventional equity funds. All Islamic equity funds have positive Sharpe ratio, Treynor ratio and net selectivity measure. Islamic equity funds are slightly less risky in general. Islamic equity and income funds generally have positive Jensen's Alpha and a positive market timing ability. However, the authors find that Islamic income funds generally underperform the market due to less Shari’ah-compliant investment class assets in the market.
Practical implications
It will help the industry players to assess their strategic positioning with regard to the commercial competitiveness of Islamic investments.
Originality/value
The authors take considerably large sample of 60 funds in Pakistan as compared to previous studies and also cover recent period (2006-16). For income funds, the authors construct an original benchmark index based on price and dividend data and use that in performance assessment.
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Salman Ahmed Shaikh, Mohd Adib Ismail, Abdul Ghafar Ismail, Shahida Shahimi and Muhammad Hakimi Mohd Shafiai
This study aims to examine the consumption behaviour in Organization of Islamic Cooperation countries.
Abstract
Purpose
This study aims to examine the consumption behaviour in Organization of Islamic Cooperation countries.
Design/methodology/approach
Using time series and panel data, this study estimates rational expectations permanent income hypothesis model and the intertemporal elasticity of substitution, and examines the response in consumption to expected and unexpected changes in income.
Findings
The evidence supports the phenomenon of loss aversion. The response of consumption to unexpected income changes is statistically significant in only one-third of the countries in the sample. Conversely, the response of consumption to expected income changes is statistically as well as economically significant in one-fourth of the countries in the sample. The intertemporal elasticity of substitution is also statistically insignificant in majority of OIC countries in the sample.
Practical implications
The evidence in support of loss aversion in preferences could help in explaining the low penetration of equity-based risk sharing instruments in Islamic finance.
Social implications
The excess sensitivity of consumption to income suggests that redistribution efforts to enhance incomes of poor households could help in enhancing their consumption levels.
Originality/value
The study takes a comprehensive sample across time and space for OIC countries as compared to previous studies and also adjusts the budget constraint for Zakat.
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Salman Ahmed Shaikh, Mohd Adib Ismail, Abdul Ghafar Ismail, Shahida Shahimi and Muhammad Hakimi Mohd. Shafiai
This paper aims to study the cross section of expected returns on Shari’ah-compliant stocks in Pakistan by using single- and multi-factor asset pricing models.
Abstract
Purpose
This paper aims to study the cross section of expected returns on Shari’ah-compliant stocks in Pakistan by using single- and multi-factor asset pricing models.
Design/methodology/approach
To estimate cross section of expected returns of Shari’ah-compliant stocks, the study uses capital asset pricing model (CAPM), Fama-French three-factor model and Fama-French five-factor model. Data for the period 2001-2015 on 217 companies are used. For the market portfolio, PSX-100 and Dow Jones Islamic Index for Pakistan are used.
Findings
The study could not find empirical support for CAPM using Lintner (1965), Black et al. (1972) and Fama and Macbeth (1973) approach. Nonetheless, the relation between beta and returns is positive in up-market and negative in down-market. The results of Fama-French three-factor and five-factor models suggest that size premium is positive and significant for explaining the cross section of stock returns of small size stocks, whereas value premium is positive and significant for explaining the cross section of returns of high value stocks.
Practical implications
The results suggest that fund managers can use Shari’ah-compliant stocks for portfolio diversification and for offering specialized investments given the positive market excess returns and the existence of size and value premium on Shari’ah-compliant stocks.
Originality/value
This is the first study on Fama-French (2015) five-factor model for Islamic capital markets in Pakistan.
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Salman Ahmed Shaikh, Abdul Ghafar Ismail, Mohd Adib Ismail, Shahida Shahimi and Muhammad Hakimi Mohd. Shafiai
This chapter looks at the relationship between governance and economic development in selected Organization of Islamic Cooperation (OIC) member countries. This chapter outlines…
Abstract
This chapter looks at the relationship between governance and economic development in selected Organization of Islamic Cooperation (OIC) member countries. This chapter outlines the concept of good governance in Islamic faith and episteme and provides some empirical evidence on the governance development nexus in the literature. It also describes the state of governance in OIC countries through descriptive statistics on some indicators. It looks at the relationship between governance and economic development. In contrast, it explores the relationship between governance and economic growth. The results highlight the need for reforms in the quality of institutions, establishing rule of law, emphasising on governance in the policy agenda and bringing strong accountability mechanisms.
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Salman Ahmed Shaikh, Abdul Ghafar Ismail and Mohd Adib Ismail
Muslim investors must comply with the ethical injunctions prescribed for them while making financial investments. As per Islamic principles, the use of Riba (interest), Maysir…
Abstract
Muslim investors must comply with the ethical injunctions prescribed for them while making financial investments. As per Islamic principles, the use of Riba (interest), Maysir (gambling) and Gharar (uncertain or contingent payoff contracts) is prohibited. This chapter provides some recent post great financial crisis evidence on the comparative performance of Islamic and conventional market indices. Islamic indices outperformed conventional market indices in terms of annualized returns except for emerging markets. In the overall period of 2007-16, it is found that Islamic indices have a lower coefficient of variation and hence higher reward to variability ratio. This suggests that Islamic indices are superior to conventional market indices adjusting for variability in returns. In most comparable Islamic and conventional indices, a strong co-movement and long-term co-integrating relationship is found. The results also highlighted causality running from conventional indices to the Islamic indices in most of the market groups, except for the S&P Global.
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Siti Nur Asmad Che Hassan and Asmak Ab Rahman
Purpose – This study analyses the potential of cash waqf for the socio-economic development of Kelantan state. A cash waqf scheme was established by the Kelantan Islamic Religious…
Abstract
Purpose – This study analyses the potential of cash waqf for the socio-economic development of Kelantan state. A cash waqf scheme was established by the Kelantan Islamic Religious Council (Majlis Agama Islam Kelantan or MAIK) in an effort to contribute to the socio-economic development of the Muslim community in that state.
Methodology/approach – A qualitative method of data acquisition through interviews. Among the informants interviewed were persons well versed with waqf and Islamic affairs, and several relevant public persons in Kelantan.
Findings – The results indicate that the people of Kelantan are optimistic about the success of cash waqf, although the implementation of this instrument is still in its infancy there. The socio-economic development factors of the economy, education, well-being, agriculture, health and religious affairs can be improved with the implementation of cash waqf.
Originality/value – This chapter is the first attempt to discuss the potential of cash waqf in Kelantan.
Anna Farmaki, Levent Altinay, Prokopis Christou and Ainur Kenebayeva
This study aims to provide a theoretical account of the nexus of religion and entrepreneurship in hospitality and tourism (H&T) by considering the influences of religion on…
Abstract
Purpose
This study aims to provide a theoretical account of the nexus of religion and entrepreneurship in hospitality and tourism (H&T) by considering the influences of religion on entrepreneurial motivation, acquisition of resources for entrepreneurship and entrepreneurial behaviour.
Design/methodology/approach
The authors synthesise research and theory on religion and entrepreneurship and apply it within H&T, taking into account the specificities of the industry. Specifically, they pooled together relevant theory and empirical research findings which they summarised to identify points of convergence and divergence, before refining the data to allow for further theoretical insights to be gained.
Findings
The authors suggest that religion may positively or negatively influence entrepreneurship; in particular, they identify various modes of religion influences, which offer insights into how religion may encourage, sustain and amplify entrepreneurship or alternatively inhibit entrepreneurship.
Originality/value
Religion offers an important yet underused lens for understanding the activities and mechanisms influencing entrepreneurship in the rapidly evolving H&T industry. This study identifies different aspects of the two multidimensional and interdisciplinary concepts of religion and entrepreneurship and offers new insights into the relationship between the two within the context of H&T.
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