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This study aims to evaluate the impact of firm, industry level determinants and ownership concentration on the dynamic capital structure decision in Indonesia and analyses the governing theories.

This study uses the dynamic panel model of generalized method of moments-System (one-step and two-step) by using a panel data from 2000 to 2014 to examine the relationship between the determinants and leverage. The results are robust to the various definitions of leverage, heterogeneity, autocorrelation, multicollinearity and endogeneity concern.

Growing firms and firms operating in a highly concentrated industry use high level of debt, taking advantage of the tax shield (trade-off theory). However, if the firms are operating in a highly dynamic environment, they take on less debt as to avoid bankruptcy risk. Firms in Indonesia opt for debt financing perhaps to act as a controlling mechanism to mitigate agency conflicts that may exist between the large controlling shareholders and the minority. Aged and highly profitable firms with high tangible and intangible assets and liquidity level operating in a high dynamic environment follow the pecking order theory.

This study does not perform each industry regression individually. All the industries are pooled together, as the main focus of this study is to examine the factors affecting leverage of firms in general without giving particular attention to individual industry.

The insights on the impact of ownership concentration and industry characteristics are novel especially on Indonesia, thus fill the gap in the literature.

This paper aims to investigate the impact of corporate governance and other related factors on the risk-taking of Islamic banks. Risk-taking is defined according to credit risk, liquidity risk and operational risk.

The study uses the two step system generalized method of moment (2SYS-GMM) estimation technique by using a panel data set of 129 Islamic banks (IBs) from 29 countries in the Middle East, South Asia and the Southeast Asia regions covering from 2008 to 2017. Governance variables incorporated include board size, board independence, chief executive officer (CEO) power, Shariah board and audit committee, as well as other control variables.

This study provides evidence that board size and Shariah board are positively and significantly related to credit and liquidity risk. Board independence and CEO power are negative and significantly associated with credit and liquidity risk, but the audit committee has a mixed relationship with bank risk. Male CEOs take more risk compared to the female and more board meeting has an inverse relationship with Islamic banks risk. Bank size, however, does not influence the level of risk in Islamic banks, but leverage has an inverse relationship with bank risk.

The present study sheds light on the risk-taking behaviour of the board of IBs, particularly the board independence and CEO power reducing the level of risk in IBs thereby contributing to the agency theory. Therefore, regulators and policymakers can use the findings of this study to strengthen the internal corporate governance mechanism to protect IBs at a time of financial distress. Moreover, it increases the trust of the shareholders and stakeholders in the effectiveness of governance reforms that have been pursued to reap long-term benefits.

To the best of the knowledge, this research is preliminary in examining the board behaviour on risk-taking of IBs from four different regions. The results are robust and suggest that the board of directors mitigate the level of risk in IBs.

There is much debate in the literature about how the performance of Islamic banks (IBs) should be measured. Basically, IBs’ business models are different from that of conventional banks; thus, the performance of IBs should be measured by using a Sharīʿah-based approach. This paper considers zakat (Islamic tax) as an alternative indicator to measure the performance of IBs. This paper aims to examine whether zakat ratios can be used as Islamic performance (ISPER) indicators for IBs besides the conventional performance (COPER) indicators.

The investigation covered a sample of 214 yearly observations of 37 IBs located in Indonesia, Malaysia, Bahrain, Saudi Arabia and the United Arab Emirates for the period 2007–2015. This study used a single-factor congeneric model and confirmatory factor analysis, performed using the AMOS 23.0 software.

The findings assert that the discriminant validity of multi-bank performance, as measured by ISPER [zakat on assets (ZOA) and zakat on equity (ZOE)] and COPER indicators (return on assets, return on equity and operational efficiency in terms of assets), is very high. Hence, ISPER and COPER measurements are valid, either together to measure the multi-performance of IBs from both the Islamic and conventional perspectives, or independently as each measurement is valid to measure the Islamic and conventional performance if it is used separately.

This paper does not investigate whether the findings are constant across time. This represents one of the limitations of this study.

It is strongly recommended that IBs calculate and disclose zakat ratios, particularly ZOA and ZOE, in their annual reports. Researchers and academicians should use these ratios for measuring the ISPER of IBs, either along with COPER or separately.

Empirical evidence is provided in this paper on the development and validity of zakat ratios as ISPER indicators in the Islamic banking industry. Zakat ratios are suitable indicators that can measure IBs’ performance and achieve the goals of IBs as well as those of Islamic economics. Technically, zakat has a dynamic ability to reflect the profitability of IBs. The more the IBs generate profit, the more they pay zakat. Furthermore, the greater the total assets of IBs, the higher the amount of zakat that they should pay. Thus, zakat ratios can be used as profitability measurements as in the case of tax ratios.

This study aims to investigate the dynamic aspects in the capital structure decisions of firms in Indonesia, offering an extension to the existing literature on Indonesia via a dynamic model, including the existence of target capital structure, the influencing factors, the speed of adjustments and the supporting theories to explain the findings.

This study uses a dynamic partial adjustment model estimated based on a generalized method of moments.

Indonesian firms do practice target capital structure and are influenced by firm-specific factors like profitability, business risk, firm size, liquidity and share price performance due to time-varying factors. A rapid adjustment toward target leverage is detected, thus supporting the existence of the dynamic trade-off theory (TOT). The pecking order theory (POT) also has significant influence, particularly after the new reformation of financing policy, where retained earnings are also preferred as a source of financing apart from merely external financing through bank loans. There are also traces of market timing influences where firms also seem to time their equity issuance.

Despite relatively utilizing recent data and bigger sample firms compared to the previous limited studies on Indonesia, the results of this study, however, need to be cautiously interpreted. First, the sample chosen focused on listed firms, hence may not be generalized to all Indonesian firms, listed and unlisted. Second, the study does not separate firms by sectors and their leverage positions, that is under-levered and over-levered, so as to note that financial decisions may also be affected by the sector in which the firms operate and their leverage positions. These are to be considered in future research.

There is strong evidence that the corporate financing behavior of Indonesian firms is governed by the POT and TOT. Both are dealing with the function of debt. The financial sector reformation does have a positive impact on the banking sector, but not the local corporate bond market. Therefore, regulators and policymakers should bear in mind that banking as well as private bond market in Indonesia must be tailored in such a way that both could act as intermediaries of debt financing, as bond market represents an important component of a diversified financial sector.

This study fills the gap by providing an extension to the existing literature and a deeper insight of the capital structure of Indonesian firms using a more robust dynamic model.

The existing literature asserted that the Islamic banking industry progress significantly, but it has increasingly found asset deficient which assaulted the performance of Islamic banks (IBs). The aim of this study to examine the mediating role of intellectual capital (IC) on the relationship between corporate governance (CG) mechanisms and IBs performance is examined (ATO, NPM).

A panel sample of 129 IBs is drawn from the 29 organisation of Islamic cooperation (OIC) countries from 2008 to 2017. Two-step system generalized method of moments (2SYS-GMM) was used to account for the unobserved endogeneity and heteroscedasticity problem.

The empirical findings demonstrate that there is a significant impact of the CG mechanism on IC. Moreover, the empirical findings indicate that CG has a direct influence on banking performance but it affects indirectly through IC. IC also appears to have a mediation role in the relationship between the CG mechanism and the performance of IBs.

As the empirical research on IC from CG point of view in Islamic banking is generally new in the banking literature, the output of this research will contribute to the building up of empirical framework and practices regarding IC in the Islamic banking industry by using the resource-based theory as a leading theory and agency theory as a sub theory. It is anticipated that this study provided a superior comprehensive discussion of the IC in IBs across OIC countries which discovers the CG mechanism to influence the IC to improve banking performance.

This study offers useful insights to the regulators and practitioners to draw the rules and regulations in improving the CG mechanism and the effectiveness of internal controls by acknowledging the importance of IC in Islamic banking institutions. Particularly, the findings of this study may be of benefit to bankers to efficiently use the IC as a premise to design new and creative strategies to achieve a competitive advantage in the banking industry.

The study is unique in its nature because it presents a successful model for IBs to concentrate more on the role of IC in enhancing banking performance, which might be used by the banks to rearrange the roles within CG, to place their priorities regarding the internal governance system and financial plans for competency enhancement.

This paper aims to examine the effect of dual board governance structure, i.e. Shari’ah supervisory board (SSB) and board of directors (BoD), on the performance of Islamic banks (IBs) in Southeast Asia region versus banks in the Gulf Cooperation Council (GCC) region.

This study uses a sample of 45 IBs over seven countries covering the period of 2007-2015 based on the GMM estimator – First Difference (2-step).

The findings reveal that SSB and BoD for IBs in both regions are segmented in terms of ROA (negative interaction) and integrated in terms of Zakat ratio (Zakat on equity [ZOE]) (positive interaction) only for Southeast Asia region. Furthermore, SSBs positively affect multi-bank performance in Southeast Asia while its effect is absent for GCC. This suggests that Shari’ah governance practices for IBs in Southeast Asia are stronger compared to GCC IBs. Finally, BoD has a significant association with low ZOE for IBs in both the regions.

The implications of this research is that the unique agency theory depicted in this study can be inferred when analyzing how dual board structure affects IBs' performance.

For regulators in both regions, SSBs must be given real power to monitor BoD. They should also balance the number of SSB scholars with experience in Shari’ah, as well as in law, accounting and finance. It is also important that such a balance of scholars with PhD in these areas be required for Southeast Asia IBs. For the GCC’s regulators, CG practices need to be improved by giving due importance to SSB characteristics and BoD structure.

Though the effects of dual board structure on IBs' performance has been previously examined in the literature, only SSB size has been used as a single proxy of SSB governance. Furthermore, no empirical evidence is recorded to date on this issue in Southeast Asia and the GCC regions. One of the innovations of this paper is the use of multi-bank performance measures in the IBs performance and corporate governance.

This study aims to investigate the Malaysian retail investors and fund managers’ investment decision behaviours. The study offers an important opportunity for understanding the investors’ experiences, how they understand the Malaysian economy and their priorities for company selection. Other main aspects of this study are how investors mitigate the influence of emotions and psychological biases and challenges faced during investment decisions.

The researchers have mainly adopted an interpretivist approach for the present study. Qualitative data elicited through semi-structured interviews conducted with four retail investors and four fund managers were subjected to qualitative thematic analysis.

The results reveal that the investment decision processes of fund managers are more comprehensive than those of retail investors. Although both fund managers and retail investors acknowledge the influence of psychological biases on their investment decisions, the former use different and comprehensive approaches to mitigate such influences during investment decisions compared with the latter. Other important findings are how investors understand the Malaysian economy, their priorities for company selection and challenges faced during investment decisions.

The researchers have interviewed eight carefully selected interviewees across retail investors and fund managers divide. Adopting other grouping criteria, focus group discussion with more respondents or adopting a mixed-methods approach may increase our understanding of the investment decision behaviours of Malaysian retail investors and fund managers.

This study could be used as a guide by both retail investors and fund managers when making investment decisions.

This research has included both retail investors and fund managers; it has also increased literature on investment decision and behavioural finance, particularly in the context of Malaysian investors and managers.

This paper aims to attempt to first examine the competitiveness of micro, small and medium-sized enterprises (MSMEs) in the logistics industry; second, to identify the MSMEs’ perception towards takāful (Islamic insurance); third, to recognise the challenges in the adoption of takāful; and fourth, to suggest strategies to enhance the micro-takāful penetration rate.

The SWOT (strengths, weaknesses, opportunities and threats) analysis was used to measure the MSMEs’ competitiveness. Interview sessions were conducted with 13 owners of MSMEs in the logistics industry from the period November 2018 until January 2019 in Selangor, Malaysia.

The SWOT analysis identified several strengths (e.g. advanced infrastructure, rising number of new entrants and contribution to the local economy), weaknesses (e.g. lack of digital culture and training and a dearth of expertise), opportunities (e.g. supportive government initiatives and evolution of the mobile internet) and threats (e.g. changing customer expectations and limited financing facilities). The MSMEs’ perception towards micro-takāful and challenges in the adoption of takāful were also identified.

This paper provides an understanding of the MSMEs’ perception towards micro- takāful products, sheds light on the challenges faced by MSME owners in protecting their businesses from risk exposures and offers strategies to enhance the micro- takāful penetration rate. This study, however, is limited to Malaysia’s experience.

The identification of MSMEs’ SWOT will be useful for these businesses as it provides solid information that can be used to improve business performance while also seeking takāful protection. This paper, other than serving as a guideline for stakeholders in the logistics industry to have a better understanding of their business environment, may also provide useful insights to practitioners and policymakers.

This paper integrates the SWOT analysis into a study on business risk exposure and takāful protection from the MSMEs’ perspective. Hence, the findings could broaden available knowledge on MSMEs, especially for businesses in the logistics industry. The knowledge may also facilitate matters for takāful operators interested in tapping into the market.

This study aims to examine the resolutions issued by the Sharīʿah Advisory Council of Bank Negara Malaysia (SAC-BNM), which have recognized maṣlaḥah (public interest) as the basis of ruling to see the extent of its usefulness to the public and the extent of its adherence to the maṣlaḥah parameters. The study will also look into the opposing opinion to identify the basis of rejection and overall implication on Islamic finance based on opposing opinions of SAC-BNM and other bodies of collective ijtihād (juristic interpretation).

The study uses a qualitative approach by analyzing the SAC-BNM resolutions, which have been resolved based on maṣlaḥah. The study also applies the comparative approach by comparing the fatwa (Sharīʿah pronouncement) issuing bodies of Malaysia and the Gulf Cooperation Council countries. Furthermore, the secondary data is obtained from sources such as uṣūl al-fiqh (theory of Islamic jurisprudence) books, papers and relevant internet sources.

The study found that SAC-BNM’s resolutions are in line with some of the major maṣlaḥah parameters mentioned in the uṣūl al-fiqh sources i.e. must not contradict with the Qurʾān and the Sunnah. While looking at the other two criteria of being in line with ijmāʿ (consensus) and having a general impact, such resolutions might not fulfill the criteria of valid maṣlaḥah considering, respectively, the stand of collective ijtihād or the impact on the group of customers and institutions.

Most available shari’ah (Islamic law) research considers the perspective of fiqh (Islamic jurisprudence) while analyzing the issue of maṣlaḥah. This study aims to conduct analysis based on uṣūl al-fiqh. Moreover, maṣlaḥah itself is a broad concept, which can be abused. Hence, this study discusses the parameters of maṣlaḥah to understand the validity of an important juristic tool in Sharīʿah.

This paper aims to provide a systematic review of literature on the demand for takāful (Islamic insurance) from articles published from January 2009 to June 2019. The review aims to synthesise and segment previously published research to identify the gaps and provide future research direction.

A systematic review of the literature was conducted. Past research was analysed, and content comparisons based on research focus, context and methodology were evaluated.

It was found that not much has been written and published on takāful demand in quality journals. The first two articles were published in 2009, but it was only in 2017 that coverage of the topic rapidly expanded. Although no article was found to have been published in 2018 on takāful demand, there was one published article on the topic in 2019. This paper also found that not much attention has been given to takāful demand from the corporate sector.

The defined rule for document searching and selection excluded out-of-scope documents that might be relevant. Furthermore, as this paper concentrates exclusively on articles published in English journals, the possibility that other relevant works do appear elsewhere in a different language is not denied.

Factors determining takāful demand are provided, and general directions are discussed, which managers can use to develop market share further.

Such an extensive review of literature on takāful demand has not been done before. Other than revealing ambiguities, gaps and contradictions in the literature, this paper sketches an avenue for further research. It also provides information and guidance for other researchers wishing to embark on research on takāful demand.