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– The paper aims to revive the Islamic economic system discourse given the increasing interest in the moral economy agenda.
Abstract
Purpose
The paper aims to revive the Islamic economic system discourse given the increasing interest in the moral economy agenda.
Design/methodology/approach
Proponents of Islamic economics theorise that the Islamic system presents the ideal form of a socio-economic order. However, the reported huge gap between theoretical construct and real activities seems to support the critics’ claim that it is a mere utopian state that directly challenges the viability of the Islamic economy idea.
Findings
The fact of the matter is that homo economicus is overpowering homo Islamicus despite the presupposed position of homo Islamicus as the mainstay of Islamic economics.
Research limitations/implications
To manifest the Islamic economic system notion further, it is argued that a shariah-based values infusion policy (VIP) needs to be formulated to actualise the predominance of homo Islamicus.
Practical implications
Owing to the overarching and holistic nature of the proposed public policy, the operations of individuals, firms and state agencies should have the tendency to reflect the expected behaviour of homo Islamicus better than the present state of affairs.
Social implications
The success of the VIP would include the enhancement of social integration and cohesion.
Originality/value
The link between moral economy, homo Islamicus and public policy is clearly established. Thus, this research guides policy makers in promoting the Islamic economic system as a universally-aspired moral economy project.
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Sugiyarti Fatma Laela, Hilda Rossieta, Setyo Hari Wijanto and Rifki Ismal
This paper aims to examine the effect of management accounting–strategy coalignment on the maqasid Shariah-based performance of Islamic banks in Indonesia. The study also examines…
Abstract
Purpose
This paper aims to examine the effect of management accounting–strategy coalignment on the maqasid Shariah-based performance of Islamic banks in Indonesia. The study also examines the role of the corporate life cycle of Islamic banks in influencing the relationship between management accounting–strategy coalignment and performance.
Design/methodology/approach
Management accounting practices, management control systems, strategy and maqasid Shariah-based performance are measured using questionnaires which were distributed to 97 directors and heads of Islamic banks. The model of this study is analyzed using structural equation model.
Findings
This study finds that the coalignment between low cost-oriented strategy, strategic management accounting practices and mechanistic management control system has positive impact on improving maqasid Shariah-based performance. However, this study is unable to verify that corporate life cycle strengthens the positive relationship between management accounting–strategy coalignment and performance.
Research limitations/implications
Limited indicators of management accounting practices in this study illustrate less comprehensive management accounting practices. Further studies may add other relevant management accounting as described by the International Federation of Accounting Committee to provide a more comprehensive management accounting practices.
Practical implications
This study provides recommendations to the management of Islamic banks to design management accounting practices and management control systems that fit to their strategic orientation.
Originality/value
This paper fulfils limited empirical studies on management accounting practices and strategy in Islamic banking industry.
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Despite being a Muslim-dominated country, Bangladesh has widely embraced traditional microfinance since its inception in the mid-1970s. However, Islamic microfinance, which has a…
Abstract
Purpose
Despite being a Muslim-dominated country, Bangladesh has widely embraced traditional microfinance since its inception in the mid-1970s. However, Islamic microfinance, which has a lot to offer to the poor, is still in its infancy and has yet to gain momentum in the country. Therefore, the purpose of this study is to analyze the importance of Islamic microfinance and propose alternative Shariah-compliant microfinance models in Bangladesh.
Design/methodology/approach
This study is based on the desk research method, which relies on existing literature to collect secondary data on key concerns of traditional microfinance programs. In addition, institutional-level secondary data were also collected from the Microcredit Regulatory Authority (MRA) of Bangladesh. Guided by the Maqasid-al-Shariah, this study then proposes several Islamic microfinance models to overcome selected challenges faced by the microfinance industry in Bangladesh.
Findings
This study suggested three composite Shariah-compliant microfinance models, which are likely to help the underprivileged and thus ensure the achievement of the sustainable development goals in Bangladesh. The first model explained how the operational strategy of incumbent microfinance institutions (MFIs) could be restructured, while the second proposed the organizational strategies for establishing a new MFI. The third model used the notion of Sadaqah (charity) to address the multiple borrowing issues of the industry. Meanwhile, the successful transformation of the conventional microfinance industry to an Islamic one is dependent on the effective collaboration between the regulatory authorities, practitioners and MFIs.
Originality/value
Albeit the paucity of literature on the topic, the findings of this study will guide policymakers/practitioners in designing relevant microfinance models to help transform conventional microfinance into Islamic microfinance in Bangladesh.
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Halima Begum, A.S.A. Ferdous Alam, Md Aslam Mia, Faruk Bhuiyan and Ahmad Bashawir Abdul Ghani
Though microfinance has been working for many years as a tool to eradicate poverty from its root, most of the least developed and developing countries are yet to significantly…
Abstract
Purpose
Though microfinance has been working for many years as a tool to eradicate poverty from its root, most of the least developed and developing countries are yet to significantly alleviate it from the society. The purpose of this paper is to focus on Shariah-based microfinance products in the context of sustainable poverty alleviation approach and provide them financial benefits to enhance their livelihoods.
Design/methodology/approach
Here, this qualitative study critically analyzes the basics of the sustainable Islamic microfinance to exterminate the level of poverty.
Findings
Islamic microfinance is a more ethical practice than the traditional motives of profit maximization, and it encourages extending the time of repayment if the debtors are in hardship. In some case, it suggests to give charity if the creditor has capability.
Research limitations/implications
Most importantly, research scholars and experts have already criticized the concept of conventional microfinance on the basis of various points, especially for its high rate of interest.
Social implications
Islamic microfinance is provided with a view to fulfill two tools simultaneously, i.e., social and financial inclusion. In this case, credits and Zakah can be given to the extreme poor people for satisfying basic needs. In terms of social responsibility, Islam encourages the people to be soft in case of collecting the lending money.
Originality/value
The study discoursed that sustainable Islamic Microfinance (IM) may be a promising future option to draw the attention of the religiously sensitive people toward the Shariah-based microfinance which can, in turn, mitigate the poverty level.
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This paper aims at retracing changing attitudes toward Islamic financial products in international markets over the past three decades, thereby providing an account of their…
Abstract
Purpose
This paper aims at retracing changing attitudes toward Islamic financial products in international markets over the past three decades, thereby providing an account of their “unexpected” expansion outside of the Muslim world.
Design/methodology/approach
This conceptual paper builds on an archival research
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969 news articles published in the UK from 1985 to 2014. Although emphasis is put on the decade of fast changing attitudes toward Islamic finance (IF) in global markets (2001-2011), the years prior to (1985-2000) and following (2012-2014) the target period are also investigated.
Findings
Starting as an obscure set of practices often associated with religious fundamentalism before the mid-1990s, IF had become a “mainstream” alternative by the turn of the century. A second interpretive break then emerged with the advent of the subprime crisis in 2007-2008, which increasingly conferred to IF an ethical component. Interestingly, both narratives still exist concurrently in the media, even in post-crisis discussions.
Social implications
The discussion in this paper allows us to explain the findings of the most recent surveys on this topic, which put forward the complex, and sometimes even contradictory, understandings of what IF stands for in global markets.
Originality/value
This is the first archival research on the topic of IF in international markets. Besides bringing to the discussion an interesting historical perspective, it also draws attention to the growing importance of Islam-based financial products in traditionally secular markets.
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Muhammad Iqmal Hisham Kamaruddin, Zurina Shafii, Mustafa Mohammed Hanefah, Supiah Salleh and Nurazalia Zakaria
This study aims to explore the current Shariah audit practices in zakat and waqf institutions in Malaysia.
Abstract
Purpose
This study aims to explore the current Shariah audit practices in zakat and waqf institutions in Malaysia.
Design/methodology/approach
A focus group discussion (FGD) with 38 zakat and waqf officers from 17 different zakat and waqf institutions in Malaysia was conducted. For reporting purposes, this study used a single-case study approach. The FGD was conducted and completed at the end of June 2021 via an online approach through Microsoft Teams.
Findings
The finding highlights the existing Shariah governance practices especially in terms of Shariah supervision roles, Shariah audit implementation in terms of Shariah audit scopes and common findings, Shariah audit competency, Shariah audit effectiveness especially the need for external Shariah audit function and Shariah audit issues and challenges faced in the implementation of Shariah audit practices.
Practical implications
The study findings and recommendations are useful for zakat and waqf institutions as well as the State Islamic Religious Councils to enhance Shariah audit practices in Malaysia.
Originality/value
This study is among the pioneer studies that explore Shariah audit practices in zakat and waqf institutions in Malaysia.
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Keywords
Norazlina Abd. Wahab, Rosylin Mohd Yusof, Zaemah Zainuddin, Jamaltul Nizam Shamsuddin and Siti Farah Norbaini Mohamad
This paper aims to provide an overview of research topics and publications produced by Islamic Finance scholars in Malaysia, focusing on six research domains (Shariah-based…
Abstract
Purpose
This paper aims to provide an overview of research topics and publications produced by Islamic Finance scholars in Malaysia, focusing on six research domains (Shariah-based, Islamic Finance, Islamic Economics, Islamic Accounting, Islamic Management and Halal Management) in five public universities in Malaysia.
Design/methodology/approach
This study seeks to analyse the research gaps and recommend future research based on publications produced by Islamic Finance scholars from five public universities in Malaysia. Data on talents were collected from the MIFER report 2016 and each universities’ website, while research and publications of the talents were collected from Google Scholar and the Scopus database. The extracted data were analysed using bibliometric analysis in VOSviewer version 1.6.15.
Findings
The results show that the five selected universities talents have different research strengths according to six research domains highlighted in MIFER 2021 and Beyond Report. All five universities are found to contribute the least research in Halal Management domain. In view of the increasing prominence of this area of research in the national and international levels, these universities and other universities in Malaysia can generate more research in Halal Economy, Halal Management, and other related areas within this domain. The finding indicated that each university tends to have a strength according to the different domains, and 2019 is the most productive year for Islamic Finance publications. Analysis from productive scholars and co-citations shows that the authors collaborate within the same university to create a different topic for each research cluster.
Research limitations/implications
The bibliometric analysis only captures the general keyword terms, which may be limited to the only generalised sub-research areas.
Practical implications
This bibliometric study, which is based on the expertise of researchers, complements meta-analysis, and qualitative structured literature reviews aid researchers or talents in developing future research directions such as Green economy, Cryptocurrency, Fintech, Halal Management and others. In addition, this is a case study in nature and can serve to enhance understanding the landscape of Islamic finance education and as a reference for practices in institutions of higher learning from around the world.
Originality/value
To the best of the authors’ knowledge, this study is a new research initiative comparing five top programme providers in the field of Islamic finance using a bibliometric approach to enhance talent development and capacity building. With the government’s efforts to further promote Malaysia as the Islamic Financial Hub, this study highlights the research gap in Islamic finance based on scholars’ publications from selected five Malaysian universities and potential topics for future research. This study focuses on the research domain for each university, the trend of publishing, the number of journals published by academics, productive scholars and citations by Malaysian universities, and examines if the publications align with current industry needs.
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Keywords
Taslima Julia and Salina Kassim
Environmental degradation has been identified as one of the major impediments for development in Bangladesh. The World Health Organization has ranked Bangladesh fourth among the…
Abstract
Purpose
Environmental degradation has been identified as one of the major impediments for development in Bangladesh. The World Health Organization has ranked Bangladesh fourth among the most polluted countries in the world. Faced with this challenge, the Government of Bangladesh introduced the Green Financing Policy and encouraged banks to participate in offering green financing as part of the efforts to promote environment-friendly economic activities for sustainable economic development. This study aims to examine the financial performance of selected commercial banks that offered green financing in Bangladesh in the period from 2012 to 2014.
Design/methodology/approach
In achieving this objective, the paper has divided the various sections of green banking policy under Maqasid Shariah framework of Imam Al-Ghazali, which is preserving faith, life, intellect, posterity and wealth. After that, green performance is compared between five conventional banks and five Islamic banks, according to the secondary data gathered from the annual reports and sustainability reports, as well as verified based on interviews. Finally, based on quantitative and qualitative thematic analysis approach, it is identified which banks meet most of the Shariah objectives along with performing sustainably.
Findings
The study finds that none of the banks fully meet the green/sustainable policy requirements; however, the Islamic banks are ahead in preserving faith, intellect and wealth circulation.
Research limitations/implications
This research is mostly based on secondary data; banks’ non-disclosure of green data was an impediment to run in-depth and fair comparisons. However, to check the reliability and validity of secondary data, two heads of sustainable banking department from conventional bank and two from Islamic bank have been interviewed.
Practical implications
Based on the findings, several recommendations are made on ways to expedite green financing, which can ultimately enhance contribution of Islamic banks toward the sustainable economic growth of the country while fulfilling Maqasid Shariah.
Social implications
Because the green banking policy aim is very much in line with Maqasid Shariah which is the aim of Islamic banks, Islamic banks can presumably contribute more to the sustainable economic growth of the country by aligning their entire operations with green policies.
Originality/value
To the best of the authors’ knowledge, this study is perhaps the earliest initiative to compare Islamic and conventional banks’ green performances in Bangladesh.
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This study aims to examine the impacts of Shariah-compliant products, value-added benefits, mortgage repayment policy and well-versed bankers on the consumer acceptance of Islamic…
Abstract
Purpose
This study aims to examine the impacts of Shariah-compliant products, value-added benefits, mortgage repayment policy and well-versed bankers on the consumer acceptance of Islamic home financing. These variables, thereafter, are called the “critical success factors” (the CSFs) for Islamic home financing.
Design/methodology/approach
Guided by the Islamic theory of consumer behaviour (ITCB), this study intends to propose the specific CSFs that ensure consumer acceptance of Islamic home financing a success. The term success refers to consumers’ willingness to take up the facility. A questionnaire survey was conducted to elicit responses pertinent to the level of agreement/disagreement of the CSFs. A total of 460 respondents usable responses were obtained and analysed accordingly.
Findings
The results obtained indicate that Shariah-compliant products, value-added benefits, mortgage repayment policy and well-versed bankers are instrumental to influence the consumer acceptance of Islamic home financing.
Research limitations/implications
Like other works, this study has confined its context to capture only a limited geographical area, and the study’s contributions are restrained to the variables analysed to a specific context of Islamic home financing in Malaysia.
Practical implications
The results obtained can become as a yardstick to measure the consumer acceptance of Islamic home financing.
Originality/value
New proposed CSFs can help to address the new demand of Islamic home financing accordingly, where a new area of improvement is brought into play. This study also extends the applicability of the ITCB to include Islamic home financing products.
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This study aims to map the digital risks for the Islamic finance industry. Since 2010, the financial space has largely shifted from being banking-centric to the entrepreneurship…
Abstract
Purpose
This study aims to map the digital risks for the Islamic finance industry. Since 2010, the financial space has largely shifted from being banking-centric to the entrepreneurship spectrum, benefiting from groundbreaking innovations in computer technology. The problem of Islamic Finance is that it is still within its banking-centric moment that is risk averse leading to financial exclusion. As with all innovations, there are associated risks that require careful consideration to ensure the reaping of the benefits of these technologies while controlling the risks at its lowest. In this context, the aim of this study is to highlight the risks associated with financial technologies (FinTech) to prepare the Islamic finance sector to serve the economic ideals of Maqāṣid al-Shariah in financial inclusion and profit and loss sharing. The main research question is as follows: What do Islamic Finance industry need to do to manage the digital risks for financial inclusion?
Design/methodology/approach
This study uses narrative review method in analysing the discourse of financial technology literature using qualitative data collected from the literature on the topic. It aimed to problematise associated digital risks from the Shariah compliance and Maqā¸ṣid al-Shariah critical viewpoints. Considering the nature of this conceptual study, it adopts a qualitative methodology by using discourse and thematic analysis of the literature that can lay the foundation for future empirical testing on the topic.
Findings
The study found that managing risks faced by the Islamic financial sector while adapting to the digital era can be divided into two main clusters: risk mitigation for Shariah-compliant FinTech and risk avoidance for Shariah non-compliant innovations. The high level of gharar associated with current practices in both cryptocurrencies and smart contracts needs additional regulation and simulation before they can be reconsidered for market-wide application. Cloud computing, crowdfunding and big data have promising applications that can address the limitations of the Islamic finance industry, particularly in terms of reducing transactional costs.
Research limitations/implications
This conceptual article offers some insights into the subject; nevertheless, it does not attempt to establish causation or generalise the results. Additional statistical testing is required prior to generalising the results.
Practical implications
Due to the difficulties experienced since its inception, the Islamic financial industry is in urgent need of the cutting-edge solutions required to gain a competitive edge in the market and get over the limits that came with its late entry into the financial sector. Mapping digital risks is imperative for the development of comprehensive prudential risk management strategies for the Islamic finance industry that can fix its problems and enable it to deliver the more favourable Shariah-based solutions, rather than remaining in the lower bands of Shariah compliance.
Originality/value
Findings of the study lay the foundation for empirical testing the volatility of FinTech innovations for the Islamic finance industry to reduce uncertainties and generate reliable forecasts. Scholarship on managing digital risks for Islamic financial institutions is still developing due to the covid global lockdown and the looming recession, and this study will help enhance theorisation necessary that can aspire economic recovery after current challenges.
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