Search results

An Islamic social finance ecosystem has its specific instruments in terms of funding and investment that are in line with Shariah (Islamic law) principles. These include waqf (Islamic endowment), zakat (compulsory alms), ṣadaqah (donation), qarḍ ḥasan (benevolent loan) and others. In this context, the Islamic financial institutions can be considered as Islamic social finance institutions since it has the elements of Islamic social finance concepts. The uniqueness of these two types of institutions is that they operate with the absence of riba, maysir, gharar and thus the requirement of Shariah governance comes into existence. The practice of Shariah governance in Islamic financial institutions needs to be extensively examined by using a comprehensive measurement. Therefore, this chapter attempts to discuss on the needs of Shariah Governance Practices Index (SGPi) as a comprehensive measurement to measure the Shariah governance practices. In conclusion, it is proposed to have a comprehensive index to measure the Shariah governance practices which consider few components of Shariah governance such as the board of directors, the management, Shariah Committee and Shariah compliance functions.

This chapter discusses the opportunity of Islamic project financing implementation for public infrastructure development in Indonesia.

This chapter, firstly, reviewed existing literature on Islamic finance to explore the applicability of Islamic financing in infrastructure development. Interviews were conducted as the first stage of Delphi method approach. This was then followed by reviewing Indonesia’s government policies and regulations in infrastructure industry and Islamic financing.

This chapter enlightens the implementation of Islamic financing on infrastructure project financing in Indonesia. The findings indicate that the government policies and regulations on both infrastructure investment and Islamic financing support the implementation of Islamic project financing, whereas, an improvement is still needed in order to overarch infrastructure business and Islamic financing investment.

Financing framework development for Indonesia infrastructure projects.

The result reported comprises the preliminary study of Islamic project paper written based on published research papers and interviews. Furthermore, the data collected for the study are limited to the case of Indonesian infrastructure projects.

Islamic financing in Indonesia infrastructure projects development has not been optimally implemented. Therefore, this chapter serves as a catalyst to explore alternative financial scheme such as Islamic financing for infrastructure development.

This chapter highlights possibilities and obstacles in applying Islamic scheme to infrastructure project financing. This provides a framework to analyse the steps to implement Islamic financing successfully in infrastructure development.

Islamic social finance assists in achieving social good and economic justice in societies by closing the gap between rich and poor in a Shariah compliant framework. COVID-19 pandemic has created the opportunity to experience the untapped potential of Islamic social finance in many of the countries. This chapter sheds light on the use of Islamic social finance in Iran in the midst of the pandemic with the objective of sharing some Shariah compliant financial solutions for reducing undesirable consequences of the COVID-19. Iran is a country that has a unique Islamic financial system. Currently, it is the country where constitutionally and statutorily practices only shariah-compliant financing activities. This chapter reveals that tradability of justice shares, introduction of Shariah-compliant crowdfunding platforms, provision of Islamic microfinance vehicles in the form of Al-Qard Al-Hassan loans, payment facilities to factories damaged by COVID-19, low-profit rate Murabaha facilities for housing sector are some Shariah-compliant social finance products which were provided in Iran in the midst of the pandemic to provide financial solutions to fulfil the need of the society in a convenient and effective manner.

In this paper, the authors explore the specific nature of material-based legitimation and examine how it differs from other forms of legitimation. Prior studies of institutional legitimacy have predominantly focused on the discursive and iconic aspects of legitimation, with much less focus placed on the role of materiality. To advance our argument, the authors introduce the notion of enactive legitimation. The authors suggest that legitimation is derived from and supported by the ongoing engagement and interaction with materials and material-based practices. To elaborate our argument, the authors study a case of the use of material signification to legitimize a new financial product within Islamic banking. The authors show that the legitimacy of the product is grounded in materials and the materiality of a number of ritualized practices. Materials and practices, however, also impose their own specific constraints on the process, and do so in ways that are more evident than when legitimation is based on signs and symbols (both language and images). The paper contributes to practice-based institutionalism by leveraging one of the central tenets of practice theory to extend the understanding of legitimation. It also illustrates what practice-based sensitivity may look like in action.

The objective of this chapter is twofold. It first explores the complementarities of Islamic investment with Socially Responsible Investment. Secondly, it examines the financial price, for investors, of being both shariah-compliant and socially responsible.

Using a value-weighted approach, we experiment the construction of a set of sharia-compliant stock portfolios with different Environmental, Social, and Governance (ESG) performance. We use the KLD ratings of 238 companies listed in U.S. stock market from 2007 to 2011. We measure and compare their performance using the model developed by Fama and French (1993) and extended by Carhart (1997).

The results indicate no adverse effect on returns due to the application of a double screening, Islamic and SRI, and show a substantially higher performance for positive governance screen during 2008–2011 periods. This outperformance cannot be explained by differences in investment style. Though, we observe significant outperformance for some ‘irresponsible’ portfolios involved in community and human rights controversies.

The study only focuses on U.S. market. Future works should extend the experimentation to other markets.

This study provides a venue for Islamic funds managers to consider SRI screening as fully in line with shariah-compliance requirements, while preserving the performance of their portfolios.

Potentially, the reconciliation of Islamic investment with positive SRI practices may foster the implementation of CSR policies by firms’ manager willing to attract Islamic investors.

With reference to the many studies emphasising the compatibility between CSR criteria and Islamic principles, this experimental study is the first to investigate the integration of a positive screening process designed to select companies based on their ESG performance in addition to a traditional shariah-compliant screening.

This chapter explores the impact of the pandemic on Islamic commercial finance and Islamic social finance in a comprehensive manner. The chapter reveals that COVID-19 has provided more opportunities to Islamic social finance than Islamic commercial finance. The beauty of Islamic finance in this regard is reflected as the perception that Islamic finance does not achieve its objective as being a social finance is proved to be false as Islamic finance not only promotes profit maximization, but it has also the potential to achieve social objectives. Islamic commercial finance developments could be slower, but it is anticipated that Islamic social modes of financing will be used widely even by multilateral agencies to assist the communities who need help in this pandemic. The most important lesson one could learn from this pandemic in relation to Islamic finance is that Islamic finance is truly different from conventional finance and as such, it needs a unique legal, regulatory and governance framework to display the true potential of it.

COVID-19 pandemic was a health crisis that plunged the world into economic turmoil due to its resultant national lockdowns across economies which brought business and market activities to a standstill. In order to adapt to ensuing restrictions owing to the pandemic, forge ahead in a new way of living, work and interactions with one another (new normal), digitizing business and market operations is considered a necessary option. Sukuk is an essential Islamic capital market product whose operations involve multiple parties/intermediaries alongside some technical financial, administrative and legal/shariah processes. On this note, this chapter aims to study and examine the need for digitizing and automating sukuk operations and related activities to pave way for innovation, development and better continuity of sukuk market. In conducting the study, a review of literature approach is employed where relevant works on sukuk and fintech were examined. Using content analysis, the chapter explored digitization of sukuk in the Islamic capital market via fintech and blockchain and associated benefits, including peculiar challenges therein. An interview was also conducted to better understand the Wethaq case study. The chapter reveals that digitizing sukuk issuance adds value to sukuk and remedies certain inadequacies associated with sukuk transactions; can increase transparency of underlying sukuk assets and cash flows and can reduce costs due to lesser number of intermediaries. Digitization is the future of sukuk issuance and will promote sukuk well through the COVID-19 crisis and beyond.

This chapter aims to extend the knowledge and understanding on the role of halal ports in halal logistics. Halal logistics is a relatively new area in supply chain management. It refers to the process of managing the logistics operations such as fleet management, storage/warehousing, and materials handling according to the principles of Shariah law in ensuring the integrity of the halal products at the point of consumption.

This chapter studies how, in halal logistics, ports play an important role as the main processes of delivering halal products to the end consumers should be performed through their gateway. At port, the logistical handling of goods is performed through four systems, namely, transfer, delivery/receipt, ship, and storage.

The halal control and assurance activities conducted at transport, terminal, and warehouse should be clearly inspected in preserving the halal status of the products, thus enhancing the halal supply chain performance. Such activities include having a dedicated halal warehouse and transport, use of tertiary packaging in shipment as well as segregation of halal products from non-halal products to avoid contamination.

This chapter also highlights the issues and challenges of adopting halal logistics faced by the industry. The issues and challenges discussed in the literature includes disunity of halal certification, high cost and low demand of the halal processes, inadequate Shariah compliant personnel and lack of a general and worldwide acceptable halal compliant process.

The chapter concludes with recommendation to perform qualitative research and case studies at specific ports in order to assess the role and implementation of halal ports in their supply chain processes.