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Article
Publication date: 3 April 2019

Fadillah Mansor, Naseem Al Rahahleh and M. Ishaq Bhatti

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…

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Research limitations/implications

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.

Practical implications

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.

Social implications

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.

Originality/value

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.

Details

International Journal of Managerial Finance, vol. 15 no. 4
Type: Research Article
ISSN: 1743-9132

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Article
Publication date: 11 January 2021

Naseem Al Rahahleh, Serkan Akguc and Turki Abalala

The purpose of this paper is to examine the operating performance of Dow Jones Islamic Index (DJII) firms vs non-DJII firms. It also explores the impact of the 2007–2008…

Abstract

Purpose

The purpose of this paper is to examine the operating performance of Dow Jones Islamic Index (DJII) firms vs non-DJII firms. It also explores the impact of the 2007–2008 financial crisis on the operating performance of firms included under DJII relative to a comparable set of firms (i.e. industry-size matched) that are not included in the DJII.

Design/methodology/approach

The final sample consisted of 1,128 unique firms (or 5,669 observations) in the DJII sample and 9,501 unique firms (or 55,889 observations) in the non-DJII sample. The paper uses a unique dataset from S&P’s Compustat North America database during the period of 2005–2014. This study uses univariate tests complemented with multivariate regression analysis to gain further insight into the influence of Shariah compliance on the operating performance of firms during the crisis.

Findings

The paper shows that DJII firms were more profitable than non-DJII firms during the sample period. In addition, DJJI firms’ profitability was not affected as much during the financial crisis as non-DJII firms. This finding is robust to various model specifications and to alternative definitions of operating profitability.

Research limitations/implications

Corporate governance and managerial characteristics and the possible effects of these on operational performance are not considered herein.

Practical implications

Investors and fund managers could benefit from investing in Islamicly permissible equity funds when constructing investment portfolios in regard to asset allocation and policy responses to financial crises.

Originality/value

The present paper uses a unique sample and timeframe to show that the characteristics that makes a firm Shariah-compliant also leads to much higher operating profitability and reduces the impact of the financial crisis on firm profitability.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 14 no. 3
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 4 May 2021

Iman Adeinat, Naseem Al Rahahleh and Tameem Al Bassam

This study aims to present a case study using a Lean Six Sigma (LSS) process to manage the Assurance of Learning (AoL) process in higher education. The case study…

Abstract

Purpose

This study aims to present a case study using a Lean Six Sigma (LSS) process to manage the Assurance of Learning (AoL) process in higher education. The case study highlights the value that LSS can bring to the higher education context in respect to making the AoL process more efficient and more effective. The article also illustrates lessons learned in relation to adopting LSS in higher education institutes (HEIs).

Design/methodology/approach

The case study presented is part of a larger undertaking implemented by the Faculty of Economics and Administration (FEA) at King Abdulaziz University in Saudi Arabia to improve its curricula for all its programs as the graduate and undergraduate level in line with the 2013 Association to Advance Collegiate Schools of Business standards. The FEA project team implemented the AoL process using an LSS methodology – define–measure–analyze–improve–control (DMAIC).

Findings

The experience of the FEA as described in the case study suggests that the DMAIC framework can be very useful in managing the AoL process. Three aspects of LSS used in the AoL context are identified as critical in ensuring that the process achieves its stated institutional goals. Firstly, it is necessary to clearly identify which team members have which areas of responsibility in relation to, for example, sponsoring, implementing, managing and monitoring the project. Secondly, the common language provided by LSS is essential to fostering collaboration among members of a cross-disciplinary team. Lastly, quantifiable priorities should be identified.

Research limitations/implications

The experience of the FEA as described in the case study suggests that the DMAIC framework can be very effective in advancing and managing the AoL process. For example, writing the project charter, mapping the process using the suppliers, inputs, process, outputs, customers model and using various LSS tools and techniques to measure and control the assessment were critical to improving the AoL process.

Practical implications

This paper provides a guide to the range of practices cited in the literature on implementing LSS in relation to AoL as a comprehensive means of assessing, evaluating and improving curriculum design and delivery. The importance of this process to accreditation is explored and recommendations are offered focused on realizing both short- and long-term benefits through the initial assessments and subsequent iterations.

Originality/value

The defining contribution of this paper to the literature is its consideration of LSS implementation in the HEI context through the development and management of the AoL process.

Details

International Journal of Quality & Reliability Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0265-671X

Keywords

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Article
Publication date: 28 May 2019

Iman Adeinat, Naseem Al Rahahleh and M. Ishaq Bhatti

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…

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Research limitations/implications

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.

Practical implications

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.

Originality/value

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.

Details

Qualitative Research in Financial Markets, vol. 11 no. 2
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 8 February 2016

Naseem Al Rahahleh, Iman Adeinat and Ishaq Bhatti

The purpose of this paper is to understand the controversial issue of whether stock returns and idiosyncratic risks are related positively or negatively in case of…

Abstract

Purpose

The purpose of this paper is to understand the controversial issue of whether stock returns and idiosyncratic risks are related positively or negatively in case of Singaporean ethically poor screened stocks.

Design/methodology/approach

To achieve the major objectives of this paper, it uses a multiple regression to explore the relationship between expected stock returns and idiosyncratic risk. The paper replicates the Lee and Faff’s (2009) three-factor capital asset-pricing model (CAPM) model in creating the six size/book-to-market portfolios from which it constructs the small minus big (SMB) and high minus low (HML) portfolios that capture the size and book-to-market equity factors, respectively.

Findings

The basic finding of the paper is that there is a strong relation between idiosyncratic risk and the expected stock returns. In more details, we observe that the portfolio of stocks with the highest idiosyncratic volatility generates higher average returns (4.36 per cent) than the portfolio of stocks with the lowest idiosyncratic volatility (0.79 per cent) over the sample period. The paper observes that the stock’s idiosyncratic volatility is inversely correlated with the size of the underlying firm. Moreover, there is a pattern of relationships nearer the periods of financial crises: Asian and global financial crises.

Research limitations/implications

This paper uses only a three-factor model on a single country. So it cannot be generalized to a multi-country level in the Association of Southeast Asian Nations (ASEAN) region, as the structure of each member country is different.

Practical implications

This paper provides guidelines for policymakers and foreign investors in Singapore about the relationship. This research can also be extended to other ASEAN countries to understand this puzzle.

Social implications

Ethically sensitive and faithful investors with small investment can benefit from the findings of this paper.

Originality/value

The work reported in this paper is original, unpublished and is also not under consideration for publication elsewhere.

Details

Humanomics, vol. 32 no. 1
Type: Research Article
ISSN: 0828-8666

Keywords

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