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Article
Publication date: 1 April 1998

A. Zeinelabdin and Ilhan Ugurel

Despite the apparent orientation of the world economy and markets towards globalisation, it is obvious that this process is dominated by trends of regionalisation and big…

Abstract

Despite the apparent orientation of the world economy and markets towards globalisation, it is obvious that this process is dominated by trends of regionalisation and big economic blocs. Needless to say that this inclination towards groupings is dictated by the fierce competition at the world scale, economically and politically. Almost all of these economic blocs group countries with a lot of similarities in their socio‐economic and political structures as well as cultural set‐ups, geographical proximity and apparent vested mutual interests. An immediate question which comes to the mind when one thinks of the Islamic Common Market (ICM), where there is supposed to be free flow of products, capital, entrepreneurship, labour and technology among the members, as well as a common tariff wall against third parties, is whether the Islamic countries qualify for these criteria or not. The Islamic countries are known to be a diverse group in terms of their economic structures and levels of development, political systems, ethnic backgrounds, as well as a diversified social cultural milieu, although most of them draw on a common source, Islam. This heterogeneity has often been taken as the major argument against the feasibility of an ICM. However, we believe that although this heterogeneity creates a lot of problems, it is also a source of strength if it is positively thought of in terms of diversity and is carefully manipulated.

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Humanomics, vol. 14 no. 4
Type: Research Article
ISSN: 0828-8666

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Article
Publication date: 8 June 2021

Lokman Gunduz, Hamad Mohammed Rahman Humaid Alshamsi and Mehmet Yasin Ulukus

This paper aims to examine the per capita income convergence of 57 member countries of the Organization of Islamic Cooperation (OIC) over the period 1990–2017 and to…

Abstract

Purpose

This paper aims to examine the per capita income convergence of 57 member countries of the Organization of Islamic Cooperation (OIC) over the period 1990–2017 and to investigate the determinants of convergence club formations.

Design/methodology/approach

The authors applied the methodology of Phillips and Sul (2007, 2009) to identify the convergence clubs and estimated several-ordered logit models to determine the key drivers.

Findings

The results support existence of two convergence clubs and one diverging unit, indicating that 30 and 26 member countries form two separate groups converging to their own steady-state paths. They also suggest a significant productivity divergence between these clubs. The authors showed that the number of convergence clubs started to decline after the global financial crisis in 2008. Moreover, they found that fixed capital formation, education and political stability are key drivers of convergence club membership.

Practical implications

There is a strong need for large-scale policy interventions to close the gap between leading and lagging clubs of the OIC. A substantial investment in human and physical capital seems necessary for lower-income OIC countries.

Originality/value

This is the first empirical study on the existence of convergence clubs among member countries of the OIC.

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

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Article
Publication date: 6 May 2014

Ali Ashraf, M. Kabir Hassan and William J. Hippler III

The aim of the paper is to analyze whether performance measures and their factors for microfinance institutions (MFIs) in Muslim countries are significantly different from…

Abstract

Purpose

The aim of the paper is to analyze whether performance measures and their factors for microfinance institutions (MFIs) in Muslim countries are significantly different from those in their non-Muslim counterparts, central to the Islamic scholars' argument that religious and cultural norms in Muslim countries may drive the preference of Islamic microfinance over conventional microfinance.

Design/methodology/approach

Using a cross-sectional dataset of 2,138 firm-years for 754 different MFIs across 83 countries, 33 Organization of Islamic Conference (OIC) member Muslim countries and 50 non-member countries, we analyzed the MFI performance based on three sets of measures: outreach, loan recovery and profitability and overall financial performance measures, with respect to two sets of explanatory variables, namely, country-specific and firm-level variables.

Findings

Results show that country gross domestic product size is positively related with profitability, and the percentage of women borrowers is also significant in driving loan recovery and firm profitability in the OIC sample, but they are otherwise not significant for the rest of the world sample.

Practical implications

This study contributes to the understanding of the core argument in the motivation of Islamic MFIs, which is whether cultural and religious factors are important for MFI success in Muslim countries.

Originality/value

This study introduces a variable that measures the difference between a country's independence year and their OIC membership year as a proxy for the “country religious inclination” of a Muslim country. Results suggest that countries with delayed membership in OIC show lower inclination to popular Islamic beliefs and higher market penetration of conventional microfinance outreach. Positive relationships among a country's religious inclination and loan loss ratios and loan provisions are also consistent with the moral hazard hypothesis that few religious communities may be more prone to default.

Details

Humanomics, vol. 30 no. 2
Type: Research Article
ISSN: 0828-8666

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Article
Publication date: 1 March 1997

A. Zeinelabdin Ahmed and Ilhan Ugurel

Although, in preparing this paper, the authors have had the chance to consult several reports and studies of the SESRTCIC that they had contributed to over the years, they…

Abstract

Although, in preparing this paper, the authors have had the chance to consult several reports and studies of the SESRTCIC that they had contributed to over the years, they would like to point out that the views expressed in this study are completely of their own and they cannot and should not in any way be attributed to the SESRTCIC or the OIC.

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Humanomics, vol. 13 no. 3
Type: Research Article
ISSN: 0828-8666

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Article
Publication date: 1 March 2003

M. Kabir Hassan

Summarizes the net capital flows from industrial to developing/transitional countries 1970‐1996 and recent changes in their equity and bond markets; and identifies the…

Abstract

Summarizes the net capital flows from industrial to developing/transitional countries 1970‐1996 and recent changes in their equity and bond markets; and identifies the factors affecting these portfolio flows and risk/return behaviour in OIC stock markets. Uses monthly stock return data from ten OIC countries to demonstrate that despite their volatility they might offer opportunities for portfolio diversification; and uses cointegration methods to investigate the dynamic relationships between them. Discusses the causes of the Asian currency crisis and its impact on these stock marekts; and considers what trade and development policies OIC countries should adopt to improve their economies.

Details

Managerial Finance, vol. 29 no. 2/3
Type: Research Article
ISSN: 0307-4358

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Book part
Publication date: 20 May 2019

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…

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.

Details

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

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Article
Publication date: 1 February 2005

Zakir Hossain, M. Ishaq Bhatti and Mohammad Ziaul Hoque

The focus of this paper is to develop an econometric model that measures the changes in GDP for the OIC states.

Abstract

Purpose

The focus of this paper is to develop an econometric model that measures the changes in GDP for the OIC states.

Design/methodology/approach

This paper focuses on the development of an econometric model which measures the changes of gross domestic product (GDP) for the members of Organization of Islamic Conference (OIC) countries. In particular, we analyze the growth of GDP in the OIC countries and their implications for expanded marketing opportunities for goods and services. We also discuss some challenges the marketers may face in future if the formation of OIC countries block become an economic identity and set up some sort of confederation.

Findings

The problem of multi‐collinearity needs to be solved if the model is not going to change.

Originality/value

The recommended solution is to acquire more data on the countries that were absent from the original sample. This may be hard to obtain due to some countries not having a process for collecting accurate statistics.

Details

Managerial Auditing Journal, vol. 20 no. 2
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 March 1990

A.R. Zeinelabdin

Before I embark on the economic cooperation experience among the Islamic countries, members of the Organisation of Islamic Conference, I would like to dwell briefly on the…

Abstract

Before I embark on the economic cooperation experience among the Islamic countries, members of the Organisation of Islamic Conference, I would like to dwell briefly on the history of OIC and its organisational set‐up.

Details

Humanomics, vol. 6 no. 3
Type: Research Article
ISSN: 0828-8666

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Article
Publication date: 12 June 2018

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.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 11 no. 4
Type: Research Article
ISSN: 1753-8394

Keywords

Content available
Article
Publication date: 16 April 2019

Ahmad Al-Harbi

The purpose of this study is to investigate the effect of internal and external variables on the profitability of conventional banks operating on developing and…

Abstract

Purpose

The purpose of this study is to investigate the effect of internal and external variables on the profitability of conventional banks operating on developing and underdeveloped countries, the Organization of Islamic Cooperation (OIC) states.

Design/methodology/approach

In this paper, the author uses ordinary least squares fixed-effects model on an unbalanced panel data set of all conventional banks operating in OIC countries (52 countries included from 57) over the period 1989-2008, 686 banks.

Findings

The results suggest that equity, foreign ownership, off-balance sheet (OBS) activities, real gross domestic product growth, real interest rate and concentration foster banks’ profitability. In addition, the results showed that the banking sector development and loans will increase banks’ profitability in the long run in the countries of the studies. In contrast, the study reported that deposits lower profitability. The study also revealed that GDP per capita, market capitalization and banks size have no impact on profitability.

Practical implications

The findings of this study have considerable policy implications. First, policymakers need to regulate nontraditional activities to avoid any financial crisis because banks in OIC countries are heavily engaged in nontraditional activities to boost its profit. Second, policymakers are advised to improve the deposit insurance system to insure the stability of the financial system as well as improving banks’ profitability. Third, policymakers need to improve the efficiency of the stock market, maintain small banking system and encourage foreign investments in the banking system.

Originality/value

The paper adds to the literature on the commercial bank’s profitability determinants. In particular, such study has not been conducted on OIC countries, and the study included all mainstream banks and incorporated the effect of deposit insurance system so far. Also, pure sample of conventional banks used as many conventional banks in OIC countries have Islamic windows or offer Islamic products. In addition, this study investigated the effect of OBS activities on net interest margin (NIM) because the studies that explored this interrelationship are limited especially for developing and under developed countries. The results showed that OBS activities contributed significantly and positively to return on assets and NIM. Moreover, this paper used a pure sample of conventional banks to avoid any biasness; see data section. Moreover, this study gives an idea about the economic situation and financial conditions of OIC countries during the period of the study.

Details

Journal of Economics, Finance and Administrative Science, vol. 24 no. 47
Type: Research Article
ISSN: 2077-1886

Keywords

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