International Journal of Islamic Banking and Finance Research
Centre for Research on Islamic Banking & Finance and Business (CRIBFB)
ISLAMIC FINANCIAL SERVICES AND INCLUSIVE GROWTH: EVIDENCE FROM SOME SELECTED ECONOMIES
Abandoned housing projects remain a long-standing issue in Malaysia, affecting buyers, developers, and financial institutions. Although various studies have examined their legal, financial, and administrative dimensions, the research landscape remains fragmented, and the role of Islamic finance in addressing these problems remains insufficiently explored. This study addresses this gap through a systematic review of peer-reviewed research to map the main areas of discussion, patterns of methodologies, and emerging issues related to abandoned housing projects. The purpose of this study is to identify emerging issues and proposed solutions highlighted in Islamic finance research on abandoned housing projects from 2023 to 2025; determine the frequency and percentage distribution of the major research areas discussed between 2015 and 2022; and examine the most commonly used research methodologies in previous studies. This review analyses 30 peer-reviewed journal articles retrieved from Google Scholar. The data, although qualitative, were quantified into frequencies and percentages to classify the thematic areas and methodological choices of existing studies. The results show that 40% of the articles discuss causes of abandonment, 16.7% examine impacts on stakeholders, and 20% focus on potential solutions. Qualitative approaches dominate the literature, with 56.7% using document analysis predominantly. 30% of the articles use quantitative methods with descriptive statistical Analysis or the analytical hierarchy process, and only 13.3% use mixed methods. Between 2023 and 2025, none of the reviewed studies link Islamic finance to abandoned housing projects. The significant findings further show that research remains concentrated on economic, legal, and managerial factors, with Islamic finance perspectives largely absent despite their conceptual relevance to risk mitigation and consumer protection. JEL Classification Codes: G2, G21, O18, R31.
Research Paper/Theoretical Paper/Review Paper/Short Communication Paper
Construction, Housing Development, Housing Abandonment, Islamic Home Financing, Islamic Banking
Copyright (c) 2025 Sharifah Fatimah Alhaddad , Nur Harena Redzuan http://creativecommons.org/licenses/by/4.0
IMPACT OF FINANCING RISK ON PROFITABILITY OF ISLAMIC BANKS
Banks, as financial intermediaries, face a variety of risks that significantly affect their performance and stability. Islamic banks, like conventional banks, are particularly vulnerable to financing risk, which directly affects their profitability and, if not properly managed, can lead to severe financial distress or even bankruptcy. The purpose of this study is to investigate the relationship between financing risk and the profitability of Islamic banks operating in the MENA region. This research utilizes a panel dataset comprising 14 Islamic banks over ten years from 2013 to 2022. Profitability is measured through the return on assets (ROA), while financing risk is assessed using the nonperforming financing ratio, the financing-to-asset ratio, and the capital adequacy ratio. The study employs panel regression analysis to evaluate secondary data extracted from banks' financial reports. The results indicate that both the financing-to-asset ratio and the capital adequacy ratio have a positive impact on the return on assets, suggesting that a well-managed financing structure and robust capital adequacy contribute to enhancing bank profitability. Conversely, the findings reveal that the nonperforming financing ratio negatively impacts the return on assets, highlighting the detrimental effects of poor financing quality on overall bank performance. The significant findings of this study suggest that Islamic banks should place a greater emphasis on mitigating financing risk through maintaining a strong capital base, diversifying their portfolios, and implementing effective credit risk management practices. This approach would not only enhance profitability but also safeguard the banks against potential losses and financial crises. JEL Classification Codes: G21, F65, C23.
Financing Risk, Islamic Banks, Profitability
Copyright (c) 2025 Zineb Afif , Camélia Sehaqui , Mohamed Haissoune ; Mohamed Azeroual http://creativecommons.org/licenses/by/4.0
THE POTENTIAL OF WOMEN PARTICIPATION IN ISLAMIC BANKING AND FINANCE: A LEGAL ANALYSIS OF THE BARRIERS AND OPPORTUNITIES
Gender disparities persist in the Islamic banking and finance (IBF) sector, with women facing structural barriers to financial inclusion and career advancement. Within contemporary socioeconomic transformations characterized by rising female educational attainment and increased labor market participation to meet familial economic needs, these systemic barriers warrant urgent examination. Despite growing recognition of this issue, the relationship between regulatory frameworks and women's participation remains underexplored in scholarly literature. This study examines the impact of women's regulatory and participatory roles on the development of the IBF sector and measures the effectiveness of institutional policies in overcoming gender-based barriers. The research employs legal framework analysis, conducting a comprehensive review of literature, laws, regulations, and policies related to women’s empowerment in the IBF sector. The findings indicate that current regulatory and supervisory guidelines in the IBF sector remain insufficient to address gender-based barriers fully. Despite recent efforts, a need remains to further promote female financial inclusion and gender diversity in career development within the IBF sector through regulatory and supervisory guidelines. The study emphasizes the importance of implementing stronger, gender-inclusive policies to encourage women's participation and leadership in the IBF sector, while upholding adherence to Sharia principles. By strategically applying foundational principles of justice (adl) within the Maqasid al-Sharia framework, the IBF sector can develop approaches that reconcile traditional financial jurisprudence with contemporary socioeconomic imperatives. Such reforms would simultaneously advance gender equity objectives and strengthen the sector's alignment with sustainable development goals, while preserving the essential ethical parameters of Islamic finance. JEL Classification Codes: G32, F65, L66, L25, M41.
Gender Equality, Financial Inclusion, Women’s Economic Empowerment, Islamic Banking And Finance, Islamic Financial Institutions.
Copyright (c) 2025 Sanaa Kadi http://creativecommons.org/licenses/by/4.0
A COMPARATIVE ANALYSIS OF OPERATIONAL PRINCIPLES IN ISLAMIC AND CONVENTIONAL BANKING
This article aims to explore & compare the operational principles of Islamic Banking (IB) & Conventional Banking (CB) to enhance awareness & deepen understanding of IB, with the further goal of establishing a foundation for the development of joint IB & CB products in Latvia. The study investigates a comparative analysis of IB & CB operational principles is conducted through a systematic literature review, highlighting key similarities & differences. Data was sourced from various electronic databases, with no restrictions on selecting papers based on the authors' religious backgrounds or countries of origin. The results show four key areas of similarity between IB & CB: both are financial institutions, operate globally, adhere to principles of corporate social responsibility, & are regulated by central banks. However, nine significant differences were observed concerning: the use of interest in capital allocation, profit & loss sharing mechanisms, regulatory frameworks, the influence of religious principles, conditions for current & savings accounts, investment opportunities & types, financing & insurance practices, security requirements, and late payment charges of funding. These findings help to underst the operational principles distinguishing IB from CB. This knowledge is valuable to researchers and potential clients of IB & CB to enhance their awareness & motivation to explore IB & CB products & services, and it enables them to make informed & flexible choices between the two banking systems based on their current needs, interests, & goals. The study also explores pathways for collaboration between the banking systems, proposing a customer-centric banking philosophy. JEL Classification Codes: E50, E58, G20, G21, G24, G29.
Islamic Banking, Conventional Banking, Hybrid Financial Products, Comparative Banking Analysis, Compliance Architectures, Financial Integration, Latvia
Copyright (c) 2025 Khalid Mehmood , Natalja Lace , Karine Oganisjana http://creativecommons.org/licenses/by/4.0
The major attraction of Islamic finance is its equitable and fair allocation and distribution of economic resources emanating from business and social engagements. However, a growing body of literature, keeping pace with its increasing attraction, suggests that Islamic finance is unfair due to its profit-sharing tenet, which typically seeks to re-allocate profits of productive borrowers to passive lenders, despite the corresponding risk and loss sharing. This has been described not only as a disincentive to the former but also as crowds out investment and debilitates growth. Consequently, this study investigates Islamic financial services and inclusive growth in seven (7) developing Islamic countries that comprise Nigeria, Pakistan, Saudi Arabia, Malaysia, Indonesia, Qatar, and Bangladesh for the period 2015 – 2023. Using bank-specific and economic aggregate time-series annual data, the analysis technique employed is Panel Least Squares, with Panel Quantile Regression used for robustness. The results show that the property contract (i.e., Istisna) and leasing (i.e., Ijarah) are the two Islamic financial services with consistent significant impacts on inclusive growth in those developing Islamic countries. Also, the effects of both primary and secondary capital adequacy measures on inclusive growth in those economies are asymmetric and disproportionate. Notably, interest-free financial services (i.e., Qardh), which are rendered on empathetic and compassionate grounds, have had a negligible effect on inclusive growth. The findings of this study suggest that policymakers should legislate to protect the rights to private property, promoting Istisna and Ijarah, while also addressing inherent regulatory concerns. JEL Classification Codes: C33, F65, G30, O47.
Copyright (c) 2025 Taofeek Olusola Ayinde http://creativecommons.org/licenses/by/4.0
THE DYNAMICS OF IMPLEMENTING SHARIA ACCOUNTING STANDARD IN SHARIA FINANCIAL INSTITUTION
This study investigates the dynamics of Sharia Accounting Standards (SAS) implementation in Indonesian sharia-compliant financial institutions. The adoption of SAS is essential for ensuring consistency and transparency in financial reporting within the Islamic finance sector. However, the process faces several challenges, including differences in practitioners' understanding and expertise of Sharia accounting principles. To explore these dynamics, a systematic literature review was conducted, focusing on publications related to SAS and its application in Islamic finance. The results reveal that multiple factors influence the adoption of SAS. Technical issues, such as varying levels of comprehension and expertise among practitioners, hinder effective implementation. Furthermore, governance issues, stemming from different models of Shariah compliance across countries and varying stages of growth in the Islamic finance sector, add complexity. Additional challenges include the alignment with the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards, conflicts between multiple accounting frameworks, and the lack of a unified accounting structure. The study also highlights the disparities in SAS application across Islamic financial institutions. Some institutions exhibit high levels of compliance and effective integration, while others struggle with the implementation. Factors such as inadequate human resources, differences in interpreting SAS, and the need for adjustments to accounting systems further complicate the process. The findings suggest that while the implementation of SAS faces significant challenges, regulatory support, enhanced education and training, and increased collaboration among sharia financial institutions can improve the effectiveness of Sharia-compliant financial reporting in Indonesia. JEL Classification Codes: M4, M41, P43.
Shariah Accounting Standards, Systematic Literature Review, Shariah Accounting Framework, Challenges of Shariah Accounting Standard.
Copyright (c) 2024 Qimyatussa‘adah ., Raihand Ramadhani Abdul Sayeed http://creativecommons.org/licenses/by/4.0
THE IMPACTS OF BORROWERS ATTITUDE AND ACCESSIBILITY TO NON-INTEREST LOAN ON THEIR WELFARE DURING COVID-19 PANDEMIC: A CASE OF TRICYCLE RIDERS IN KWARA STATE, NIGERIA
This study examines the impacts of borrowers' attitudes and accessibility to non-interest loans on the welfare of tricycle riders in Kwara State, Nigeria, during the COVID-19 pandemic. The objective is to gain insights into how these factors influence the well-being of tricycle riders and provide recommendations for enhancing their welfare in challenging times. The study utilizes a quantitative research approach and collects data through a field survey. The demographic data of the respondents indicate that the sample predominantly consists of male respondents and individuals following the Islamic faith. The majority of respondents have completed the Senior Secondary Certificate Examination, followed by non-formal education and NCE/HND qualifications. Most respondents are married and fall within the age group of 36-45 years. Regression analysis is employed to analyze the data. The findings reveal that both accessibility to non-interest loans and borrowers' attitudes towards borrowing significantly impact the welfare outcomes of tricycle riders. Access to non-interest loans is positively associated with welfare, while negative attitudes towards borrowing are linked to lower welfare outcomes. Recommendations include enhancing access to non-interest loans, providing financial literacy programs, addressing negative attitudes towards borrowing, strengthening social safety nets, and fostering collaborative partnerships among stakeholders. This study contributes to the understanding of the welfare dynamics of tricycle riders in Kwara State, Nigeria, during the COVID-19 pandemic. It provides valuable insights for policymakers, financial institutions, and other relevant stakeholders to develop targeted interventions that support the welfare and economic resilience of tricycle riders and similar informal sector workers. JEL Classification Codes: L26, E32, E02.
Non-Interest Loans, Attitude, Welfare, Tricycle Riders, COVID-19 Pandemic, Kwara State, Nigeria.
Copyright (c) 2023 Muhammad-Bashir Owolabi Yusuf, Tajudeen Olayiwola Busari
ETHICAL DIMENSIONS OF ISLAMIC FINANCE AND THEIR RELEVANCE IN CONTEMPORARY BUSINESS PRACTICES
In the vast tapestry of global financial systems, Islamic finance emerges as a paragon of ethical praxis, steeped in the venerable tenets of Shariah law. The essence of this research is the exploration of these profound ethical underpinnings and their resonance in the contemporary mercantile milieu. The study takes a deep dive into the historical evolution of Islamic finance to highlight its core values of fairness, societal stewardship, and sustainable growth. These values make it a compelling alternative to the criticisms often levelled at conventional monetary systems. This research methodology adopts a systematic literature review approach, sourcing information from peer-reviewed articles, books, conference papers, and reports from recognised financial bodies. The culmination of this endeavour reveals an intricate interplay between the time-honoured ethics of Islamic finance and its manifestation in the modern economic realm. The introduction suggests that Islamic finance offers moral rectitude by championing risk-sharing and avoiding interest-driven transactions in today's globalised commerce. JEL Classification Codes: G21, G20, Z12, P51, D63.
Islamic Finance, Shariah Law, Ethical Considerations, Risk-Sharing, Social Responsibility.
Copyright (c) 2023 Babruk Aijaz Baloch, Andrew Chimenya
PERFORMANCE ASSESSMENT OF ISLAMIC BANKS IN THE LIGHT OF MAQASID AL-SHARIAH: A GLOBAL EVIDENCE
As an “Islamic” entity, Islamic banks are expected to fulfill the purposes of Islamic law. This study aims to assess the performance of Islamic banks beyond traditional yardsticks, to emphasize their ethical, social, and environmental role in accordance with the higher goals of Islamic law namely Maqasid al-Shariah. Based on Imam al-Ghazali’s concept of Maqasid al-Shariah, we develop a Maqasid al-Shariah index including the 5 objectives of Shariah (Preservation of Life, Religion, Intellect, Posterity, and Wealth). Sekaran’s operationalization method is used to transform the theoretical concept of Maqasid al-Shariah into measurable indicators. The originality of this study stems from two factors: First, we build on previous research to develop a new Maqasid al-Shariah index with 12 dimensions, 25 elements, and 25 indicators. Second, we provide fresh insight into the Maqasid al-Shariah performance of 10 large and well-established Islamic banks from 2017 to 2021. The results of the 5-year study show that Meezan Bank in Pakistan performed the highest score, while Dubai Islamic Bank received the lowest. Furthermore, when comparing the performance of the sampled Islamic banks across the five objectives, we find that they earned the lowest score in the objective of intellect due to their failure to disclose the required information in their annual reports. JEL Classification Codes: A13, G21, I31, L20, P47.
Maqasid al-Shariah, Imam al-Ghazali, Maqasid al-Shariah Index, Islamic Banks, Performance Assessment.
SHAPING THE FUTURE OF ISLAMIC BANKING AND FINANCE: A LEGAL PERSPECTIVE
After the inception of Islamic banking and finance (IBF) in the global financial industry, IBF became a new alternative form of ethical finance based on Islamic economic thought. According to classical thought, the essence of Islamic economics is not to prohibit making a profit but to prioritize people’s well-being and, hence, enjoy the profit. This study examines the regulation and functioning of Islamic financial institutions (IsFIs), including their compliance with Sharia law. It explores the ethical considerations surrounding IsFIs by examining how their financial services align with the Sustainable Development Goals (SDGs). The study aims to shed light on the challenges and opportunities within the IBF sector, ultimately contributing to a deeper understanding of its role in promoting ethical finance and sustainable development. This study employs an empirical legal research approach to investigate the legal framework of IBF. The results reveal that by effectively highlighting ethical foundations and objectives, Islamic finance will attract a larger market of Muslims and arouse the interest of a wider audience of stakeholders who are not just interested in avoiding financial transactions that support prohibited practices. The findings of this study suggest that a major obstacle to the massive growth of the Islamic banking and finance sector is the existence of contradictions that depend especially on the excessively liberal accreditation of Islamic banks as “Sharia compliant.” JEL Classification Codes: E44 G10 G20.
Islamic Banking and Finance Law, Islamic Economic Thought, Maqasid Al-Sharia, Legal Framework of IBF, Sharia-Compliance.
TAKAFUL-GROWTH NEXUS BEFORE AND AFTER THE IMPLEMENTATION OF IFSA 2013: EMPIRICAL EVIDENCE FROM MALAYSIA
The expanding Takaful industry, together with the remarkable economic development has drawn attention to explore the impact of Takaful on economic growth, especially in Malaysia as it has been retaining its position as the leader in Islamic finance as well as maintaining its position to be in top for the Global Islamic Economy Indicator (GIEI) Score for the 9th consecutive years. Although many challenges have been faced by Takaful successfully, there are still some issues that need to be improved especially in terms of the legal, supervisory, and institutional framework, and the directions for future research by focusing on statistical analysis and economic significance, and its primary objective to serve the society. Hence, this paper examines the association between the Malaysian Takaful sector and real economic growth pre and post-IFSA 2013 for the period of 2007 – 2019. This study employs both quantitative and qualitative analysis, in which Pearson Correlation Coefficient is adopted for the quantitative analysis, while an interview session with 5 experts is employed for the qualitative analysis. The quantitative findings show that Takaful is positively linked to real economic growth significantly pre-IFSA 2013 but insignificantly post-IFSA 2013, supporting the supply-leading hypothesis. Meanwhile, the qualitative findings suggest that IFSA 2013 does assist the Takaful sector to improve the real economic growth in Malaysia via its rules and regulation, and the Takaful industry has contributed its own humble quota to economic growth by creating jobs the society and adding value to both participants and businesses. JEL Classification Codes: G2, O4.
Takaful, Industrial Production Index, Pearson Correlation Coefficient.
Copyright (c) 2023 Ainatul Aqilah Kamarudin, Jarita Duasa, Salina Kassim, Riasat Amin Imon
DIGITAL TRANSFORMATION OF SAUDI ARABIA’S BANKING: A COMPARATIVE STUDY
Banks' digital transformation has become a growing and competitive research area in the last decade. This study aims to compare the digital transformation of the Saudi banking sector with that of developed and emerging Islamic countries by examining progress, digital solutions to banking services provided, and regulatory frameworks. To this end, a systematic review was conducted, analyzing 44 primary documents and seven websites collected through a 5-step process: scoping, planning, searching, selection, and eligibility. Next, a comparative analysis of these documents was conducted, analyzing the similarities and differences of the digital transformation processes addressed by Saudi Arabia, the U.S., the United Kingdom, and Malaysia. The findings revealed that Saudi Arabia and Malaysia have banking sectors of similar size, smaller than those of the U.S. and the U.K., although all of these sectors are of significant importance in the economies of their respective countries, as measured by their share in GDP. All countries have adopted similar digital technologies and offer very similar banking services. Concerning its regulatory frameworks, the U.K.'s sandbox approach is the most effective and inspiring. At the same time, the U.S. needs to catch up due to its regulatory complexities and differences in approach between federal and state jurisdictions. For their part, Saudi Arabia and Malaysia have developed their regulatory frameworks with approaches inspired by the U.K. model, although both differ in the degree of Sharia compliance. JEL Classification Codes: G21, G28, L86, O33, O57.
Bank, Bank Regulation, Electronic Banking, Financial Service, Financial Technology.
ISLAMIC CAPITAL MARKET-GROWTH NEXUS PRE AND POST IFSA 2013: EMPIRICAL EVIDENCE FROM MALAYSIA
This study examines the relationship between Islamic capital market and Malaysian real economic growth pre and post IFSA 2013 from 2007 to 2019. This study adopts both quantitative and qualitative analysis, where Autoregressive Distributed Lag (ARDL) method of cointegration is adopted for the quantitative analysis, while interview session is adopted for the qualitative analysis. The findings found that the link between Shari’ah-compliant Securities (SCS) and the real economic growth is negatively significant, while the link between Shari’ah-compliant Market Capitalization (SCMC) and the real economic growth is positively significant in both short and long runs. It is also shown that IFSA 2013 does assist the Islamic capital market sector to improve the real economic growth in Malaysia via its rules and regulations, as the coefficients and significance of the real economic growth as proxied by the industrial production index (IPI) are improving with the implementation of IFSA 2013. Besides, the qualitative results of the study have shown that Islamic capital market does promote economic growth by ensuring stability in the market and significantly contributing to the environmental, social and governance (ESG) via the implementation of SRI Sukuk, Bond Grant Scheme, ESG Financing/Sukuk, and value-based judgement projects. The work gives some insights into the field of Islamic capital market-growth nexus from the perspective of a developing country, which is Malaysia. It also delves further into the Islamic capital market-growth nexus by considering the effect of IFSA 2013. JEL Classification Codes: E44, E58, E60, O00.
Shari’ah-Compliant Securities, Shari’ah-Compliant Market Capitalization, Industrial Production Index, ARDL.
STUDYING VOLATILITY IN SAUDI STOCK MARKET USING ARCH AND GARCH MODELS: A CASE STUDY OF AL RAJHI BANK
This study aims to empirically modeling the volatility of the daily closing share prices of Al-Rajhi Bank listed on Saudi stock exchange (Tadawul). The study approach related to quantitative method is based on the data collected through daily closing prices of Al Rajhi Bank shares for the period from 1/02/2018 to 9/23/2022. To analyze the data and test the study hypothesis, ARCH and GARCH models were applied in this paper. According to results of heteroskedasticity tests, values of R-squared, Akaike, Schwarz, and Hannan-Quinn of ARCH models, the GARCH (1, 1) model is suitable for describing the conditional variance and the estimation. The findings indicate that the positive shocks synchronizing with favorable conditions cause less severe fluctuations than the negative shocks synchronizing with unfavorable conditions. The research has some limitations that must be noted in terms of the study sample which represents only Islamic banks and therefore, the results cannot be generalized to other banks, similarly, the heterogeneity of banks in terms of the size of assets and finance capabilities. This research emphasizes the importance of developing banking performance and enhancing investment strategies to enhance the stability of bank share prices, especially during crises. Based on the results, investors may have the incentive to buy shares of Islamic banks according to stock price indices characterized by stability in the face of economic shocks. This study is considered as one of the main studies contributing to the analysis of the volatility of the daily closing share prices of Islamic Banks listed on the Saudi stock exchange (Tadawul). JEL Classification Codes: E44, E58, G24, G18, H12.
Al Rajhi Bank, Saudi Stock Market, Volatility, ARCH & GARCH Models.
Copyright (c) 2023 Yasser Saleh Ali Almonifi, Mohammed Murshed Ali Alkhasi, Abdullah Saleh Ali Sofian
Our paper critically reviews the different factors that motivate a corporation to issue a Sukuk versus a Conventional Bond. Currently, Sukuk papers are growing, yet the studies are limited compared to Conventional Bond research. Our paper analyzes firm performance and characteristics to demonstrate how this affects choosing between the two securities. We examine these in a time series with the 2008 financial crisis intervention to see how this may have affected the issuance choice through logistic regression. Our study examines 628 Conventional Bonds and 227 Sukuk issuers globally across 12 countries from 2005 – 2017. We find in our research that the performance of companies issuing Sukuks resembles Conventional Bond issuers in financial performance. We confirm that larger companies will enter the Sukuk market as an alternative to the Conventional Bond market when there is a higher demand for capital. We also find that firms with higher financial performance may enter the Sukuk market as a premium where it may not be accessible in the Conventional Bond Market. JEL Classification Codes: G15, G31, G41, F23.
Capital Structure, Firm Performance, Capital Markets, International Finance.
Copyright (c) 2023 Ayşe Yüce, Usama Toor
ADVANCEMENT OF ISLAMIC BANKING AND FINANCE IN THE SOCIO-ECONOMIC CONTEXT OF BANGLADESH BASED ON IBBL
This study's background is in the context of comparative activities and achievements highlighted by Islami Bank Bangladesh Limited in their Annual Report 2020. The purpose of this study is to present the socio-economic impact and role of Islamic banks in the economic development of Bangladesh. This research has tried to prove how Islami Bank contributes through various tests and methods. Comprehensive profile analysis was conducted by collecting data using a Google survey form from a sample of 100 Islamic bank customers. Firstly, based on the respondents' responses, most of the customers of Islamic banks are between 25-40 years based on age. First, the customers are highly educated and have a stable relationship with the bank. Second, awareness of clients and the current use of deposit instruments is commendable. Third, customers in education and income classes have an important role in using various banking services or products. Fourth, customers are always satisfied with using various products and services. Fifth, within the service delivery system, the employees of Islami Bank deserve immediate attention to improve customer satisfaction. However, as a result, we have yet to get high awareness and usage of any individual products/services through Islami Bank financing and facilities. Finally, the significant finding is the 'Principle of Religion,' which is the key to selecting a bank's criteria for its customers, where the demographics of clients play a more critical role in determining selection criteria than others. JEL Classification Codes: G01, G21, G24, E58.
Islamic Banks, Shariah, Advancement, Principle, Islami Bank Bangladesh Limited (IBBL).
This paper applies an Islamic economic perspective to a major conundrum besetting the Islamic world, namely, how to provide financial support to expanding ageing Muslim populations. The paper employs a qualitative method involving descriptive and analytical methods whereby primary and secondary data are analyzed to inductively form a formula for an Islamic pension scheme. The results of this study suggest that despite the benefits and worldwide application of pension schemes, proponents of Islamic finance remain ill-prepared and slow to devise prototypes of workable Islamic pension models designed to address the needs of ageing Muslim populations. The vast majority of existing pension schemes fail to comply with the principles and values of Islamic law and ethics. As a generality, Muslim populations would prefer to remain without pension provision rather than endorse a religiously unlawful policy. The paper proposes that infaq as a key institution of Islamic moral economy, provides an ideal foundation for the development of an Islamic pension model that satisfies both legal and ethical Islamic stipulations. Keywords: Islamic pension, Islamic welfare, Muslim elderly, Muslim employees’ pensions, infaq and Islamic moral economy. JEL Classification Codes: G32, F65, L66, L25, M41.
Islamic Pension, Islamic Welfare, Muslim Elderly, Muslim Employees’ Pensions, Infaq and Islamic Moral Economy
Copyright (c) 2022 Ataollah Rahmani, Alija Avdukic, Faizal A. Manjoo
EFFICIENCY OF ISLAMIC BANKS: EVIDENCE FROM ISLAMIC WINDOWS OF CONVENTIONAL BANKS IN ETHIOPIA
The study examines the cost and technical efficiency of selected Islamic banking windows of conventional banks in Ethiopia during the period of 2016-2020. The parametric method, stochastic frontier approach (SFA) was employed to measure both cost and technical efficiency of the banks. The efficiency scores of the sampled banks can be measured based on their performance in utilizing inputs to successfully generate output during the study period. It gauges the service quality of the banks taking loans and deposits as well as operating income and expenses into consideration. The study uses time series data from four conventional banks which provide Islamic banking widow in Ethiopia. The statistical findings show that the conventional banks have fairly better technical efficiency individually and collectively; however, the cost efficiency scores indicate that the banks are not efficient enough in terms of minimizing costs for a given scale and mix of outputs. Similarly, the results of the stochastic technical frontier estimates uncovers that there is positive significant relationship between the input variables namely total deposits and total operating expenses and output variables namely total financing and total operating income. The outputs remain an essential contributor to the cost efficiency in Islamic windows conventional banks in Ethiopia. JEL Classification Codes: G01, G21, G24.
Cost Efficiency, Technical Efficiency Islamic Windows, Stochastic Frontier Analysis
Copyright (c) 2022 Abdu Seid Ali, Suadiq Mehammed Hailu
THE IMPACT OF ISLAMIC FINANCING ON THE OPERATIONS OF SMES IN OMAN
The study investigates the relationship between the growth of Islamic banks & financial institutions and the operational performance of small and medium enterprises located in Oman. The study employs qualitative method for data gathering. An effective questionnaire was created to gather the opinions of participants through semi-structured interviews. The sample consist of 40 employees of SMEs, 20 managers, and 2 financial experts. Thematic and descriptive analysis was used for analyzing data. Research findings revealed that owners/managers of SMEs and employees have effective knowledge regarding Islamic financing principles. Although the Islamic financing strategy is new in Oman, most participants including financial experts showed positive interest regarding its adaption. Further, findings indicated that there is a positive correlation between operations of Omani SMEs and Islamic financing. It is found that Islamic financing has benefitted SME operations as well as could play a significant role in the growth of SMEs and their operations in the future. This study helps policymakers and banks in understanding the scope of the growth in future. Thus, these banks can attract more SMEs and improve their growth rate. Finally, a comprehensive perception regarding workers, SME owners, and financial experts clarify willingness of using Islamic financing to get potential benefits in operations. JEL Classification Codes: F65, D02.
Small & Medium Enterprises, Islamic Banks, Islamic Finance, Thematic Analyses, Financing
PRINCIPLES AND METHODS FOR THE MANAGEMENT AND REGULATION OF FINANCES IN ISLAM: AN APPROACH TO MAULANA ASHRAF ALI THANAVI
In light of Maulana Ashraf Ali Thanavi’s discussions and deliberations, the purpose of this study is to analyze the principles and methods for financial management in Islam, with a focus on three essential areas of finance: obtaining wealth, securing wealth, and spending wealth. For this aim, several of M. Thānavī’s written works were searched, and his discussions on Islamic economic teachings were collected and expanded upon, and references to all primary and secondary sources were provided. The entire content is presented here in a systematic and academic manner, culminating in a five-point conclusion. The findings show that the state of contentment in economic and financial concerns is the result of complete trust in God, the Creator and the Provider of all creatures, as well as belief in the Day of Judgment. This state of contentment and confidence is attained through practical measures such as avoiding extravagance, squandering, and ostentation while adopting a balanced and moderate lifestyle. Similarly, the data reveal that adhering to business ethics outlined in the Sharī‘ah ensures a safe, peaceful, and prosperous individual and communal existence, and bring about abundant barakah (benediction). The current paper will thus serve as a compendium of Islamic economic and financial teachings, as well as related moral and ethical precepts. JEL Classification Codes: A130, G41, G51.
Extravagance, Contentment, Moderation, Squander, Thanvi/Thanawi, Islamic Finance.
PERFORMANCE COMPARISON OF ISLAMIC PORTFOLIOS WITH AFRICAN INDEX
The objective of this study is to see if the "sharia compatible" stock portfolios common to the various stock exchanges have better returns than the classic African indices. We propose two new methodologies based on the median statistic to build sharia-compliant portfolios to which we add the Dow Jones Islamic Market World (DJIMI) methodology. These three Islamic portfolios are compared with 13 African stock market indices (JTOPI, DCIBT, BRVM10, BRVMCI, MDEX, NSE20, MASI, NGSE30, FTN098, ALSIUG, DSEI, TUNINDEX, LASILZ). First, we looked at the returns and volatilities of weekly and monthly data for Islamic portfolios and classic indices and compared the spreads of their returns and risks. We find the results to be quite divergent, although we can see a trend that Islamic portfolios are more profitable and riskier than conventional indices; for both weekly and monthly data. We show with risk-adjusted performance analysis that Islamic portfolios outperform traditional index. JEL Classification Codes: G10, G11, G12, G14, G53.
Islamic Finance, Median Filtering, Qualitative Filtering, Quantitative Filtering, Portfolios.
Copyright (c) 2021 Moustapha Balde, Mamadou A. Konte, Babacar Sene
DESIGN OF SALES PERFORMANCE DASHBOARD BASED ON SALES FUNNEL & SALES FORCE AUTOMATION THEORIES: A CASE OF AN INDONESIAN ISLAMIC BANK
One of the bank management concerns related to sales performance is ensuring sales people perform the sales process correctly. Unfortunately, most sales people have problems in the sales process, which causes their low performance. Islamic banks in Indonesia also experienced this situation, so a strategy needs to overcome this problem. For instance, using surveillance tools such as Sales Force Automation (SFA) with sales funnel theory. An SFA tool is a sales system connected to computers and internet networks. It monitors sales processes and results, manages contacts, forecasts sales, and analyzes sales performance daily and monthly. Additionally, it helps sales forces to measure the ability to achieve targets, plan sales strategies and customer approaches, and increase work motivation. Also, raise awareness of developing skills, and provide up-to-date information to supervisors about sales force performance to determine the proper training. Therefore, the use of SFA tools is expected to increase the productivity of sales people in optimizing the fulfillment of deposit targets in Islamic banking. This paper reports the SFA design in the form of a dashboard model with a visual sales to funnel that shows the function of the salesperson in conducting the sales process ends with the results. JEL Classification Codes: D40, E50, M31.
Islamic Bank, Performance, Sales Force Automation, Sales Funnel.
Copyright (c) 2021 Mardhiah Gani, Rosmalina Hanafi, Kifayah Amar
E-ZAKAT: AN APPROACH FOR ZAKAT MANAGEMENT TO ERADICATE POVERTY
This paper has shown an online-based zakat management system named E-ZAKAT. Zakat is one of the main foundational goals of the world’s second-largest religion, Islam. So, it has indisputable importance for a country as well as the world economy and poverty eradication. During the COVID-19 pandemic, people have become habituated with the online system due to unavoidable situations, such as education and commodity market has now turned into online systems. However, an online base zakat management system for both donors and seekers has not prevailed widely. Here in this proposed system, the donor can calculate, donate their zakat, and the seeker can apply to receive it. Instead of providing cash, business or agricultural help is planned to ensure the economic stability of a low-income family. For this purpose, the expectant can claim support for green farming, agricultural equipment, or money to start a small business after ensuring the required verification and qualification steps. The proposed dynamic web application E-ZAKAT will provide an easier and hassle-free system for zakat donors and seekers with an attractive design. As a result, proper utilization of our system could provide a positive impact to change our society as well as our world. JEL Classification Codes: I3, N3, P36, P46, H3.
E-ZAKAT, Zakat Donor, Zakat Seeker, Online System.
Copyright (c) 2021 Md. Abdur Rouf, Jahid Hasan Rony, Nazmul Karim, Md Fahim Bhuyan, Momotaz Begum
ISLAMIC BANKING SYSTEM IN THE SULTANATE OF OMAN FROM THE PERSPECTIVE OF BANKING OFFICERS EMPLOYEES AND CUSTOMERS
This research aims to determine the viability for the operation of Islamic banks within the Omani banking system. By looking into various opportunities for Islamic banking in Oman and given the unique rules on transactions (ﬁqh muamalat) of Islamic banking based on the Shariah precepts or the so-called Islamic law. As the establishment of small and medium enterprises (SMEs) is rapidly growing in Oman, many SMEs can draw support from Islamic banks. The study used a mixed method approach to answer the research questions. Do the participants patronize Islamic banking over conventional banking?. The study compared both conventional and Islamic Banking. The population of the study represented bank officers, bank employees and customers. The sample of the study (n=100) participated in the survey. Another selected sample participated in interviews. Findings revealed different views over Islamic banking. Islamic banking is careful to provide products and services. Also, they are found to be capable of offering products and processes that answers the need of certain aspects with a risk management framework that is distinct from what normal banking provides. The study findings support the need for Islamic banking systems as it would be easier to spread Islamic banking and financing. JEL Classification Codes: E5, E58, G2, G21, E4, E42.
Islamic Banking, Conventional Banking, Financial Contracts, Banking System, Oman.
Copyright (c) 2021 Sultan Khamis Said Al Bulushi
CONSTRUCTION OF AN ISLAMIC INDEX USING THE MEDIAN CRITERION OF QUANTITATIVE FILTERS: APPLICATION TO THE AFRICAN STOCK EXCHANGE
Many techniques, combining qualitative and quantitative filters, have been proposed in the literature to construct an Islamic index on financial stock exchange. These are often based on fixed thresholds to define quantitative filters. However, as companies do not have the same characteristics from one sector to another, it is necessary to have heterogeneous thresholds for filtering purposes. Our contribution, here, is to propose a methodology which integrates this fact by using the median (statistic) criterion which is much more robust than the average criterion (vis-à-vis the presence of extreme values) but also the median statistic is consistent with the Wassatiya principle (50% of the way) than the 33% fraction used by many studies. JEL Classification Codes: G10, G11, G12, G14, G53.
Islamic Finance, Median Filtering, Qualitative Filtering, Quantitative Filtering, Stock Market Index.
Copyright (c) 2021 Moustapha Balde, Mamadou A. Konte
IMPACT OF THE COVID-19 PANDEMIC ON ISLAMIC BANK INDICES OF THE GCC COUNTRIES
The present study explores the impact of the COVID-19 pandemic on Islamic bank indices in GCC countries banking sector. The research aims to know the ability of Islamic Bank indices to face the COVID-19 crisis and examine whether Islamic bank indices can respond to the volatility in the stock exchanges. The study uses data of stock exchanges and Dow Jones Islamic Market Index in GCC countries banking sector to relate the data before and during the COVID-19 crisis. It is found that Islamic banks have ability to respond the financial and economic crisis. Also, Islamic banks are able to provide their valuable services continuously and perform their financial activities during and after the crisis competently. The results also indicate that Islamic Bank Indices in GCC countries have performed better during 2019 with significant closing prices compared to 2020. As during 2020 fifteen banks recorded normal decreasing in its indices and six Islamic banks achieved growth in its indices. In Q1, Q2 of 2021 the Islamic banks achieved positive growth in its indices price. This specifies that Islamic Banks have managed the financial and economic crisis in an efficient manner. JEL Classification Codes: E44, E58, G24, G18, H12.
Islamic Banks, The COVID-19 pandemic, Islamic Indices, Banking Sector, GCC Markets, Dow Jones Islamic Market Index.
Copyright (c) 2021 Shakeel Ul Rehman, Yasser Saleh Ali Almonifi, Rafia Gulzar
THE EFFECT OF NON-PERFORMING FINANCING AND THIRD PARTY FUNDS ON THE PROFITABILITY THROUGH PS/RS AND PLS FINANCING
This research is motivated by the phenomenon of increasing PS/RS and PLS financing and profitability at Islamic Commercial Banks (BUS) in Indonesia during the 2015-2019 period, and experiencing a decline from 2019 to 2020. PS/RS and PLS financing can use mudharabah and musharakah contract schemes. Mudharabah financing is based on profit sharing, while Musharaka is based on profit-loss sharing. This study aims to obtain empirical evidence regarding the effect of non-performing financing and third-party funds on profitability through PS/RS and PLS financing. The population used in this study were all Islamic Commercial Banks in Indonesia in the 2015-2020 period. The data analysis technique used is Partial Least Square with SmartPLS software version 3. The results of the study found a direct effect of non-performing financing on profitability. The results of the study did not find a direct effect of non-performing financing on PS/RS and PLS financing. In addition, third party funds do not have a direct effect on profit-sharing and profitability-based financing. The results also did not find an indirect effect of non-performing financing and third-party funds on profitability. JEL Classification Codes: A19, B10, B25, C10, C53.
Non-Performing Financing, Profitability, PS/RS and PLS Financing, Third-Party Funds.
ISLAMIC FINANCE IN ETHIOPIA: CURRENT STATUS, PROSPECTS AND CHALLENGES
Ethiopia is a country found in the horn of Africa and notable in the Muslim world as the destination of the two migration of the companions of Prophet Muhammad (PBUH). Ethiopia has a Muslim population expected to be around 50 million. Unfortunately, with this significant Muslim population, it accommodates Islamic finance in its conventional financial system lately. This study aims to investigate the current status, prospects, and challenges of Islamic finance in Ethiopia. For these reasons, different secondary data were collected and analyzed. The result of the study indicated that Islamic finance in Ethiopia is representing by three financial institutions such as Islamic banks, Islamic Insurance and Islamic microfinance. Islamic banking is providing through the Interest-free banking window and fully-fledged forms of interest-free banking. The interest-free banking window system is adopted by conventional banks, whereas Full-fledged Islamic Banks providing services using their own separate Sharia-compliant financial system. The result also indicated that high public demand, adequate capital for the establishment, availability of substantial customers, easy deposit mobilization and profitability are the foremost opportunities for Islamic finance in Ethiopia. Whereas, negative perception about Islamic finance, legal framework challenges such as restriction of investment and double taxation, and lack of skilled human resources are the main potential hindrances for the sector. JEL Classification Codes: F65, G21, G22.
Ethiopia, Islamic Finance, Interest-Free Banking Window, Full-Fledged.
Copyright (c) 2021 Suadiq Mehammed Hailu, Nissar Ahmad Yatoo
MURABAHA-RELATED CREDIT RISK AND FINANCIAL PERFORMANCE OF ISLAMIC BANKS IN AFRICA
The uniqueness of Murabaha (cost-plus) financing has suggested another theoretical relationship between credit risk and the financial performance of banks. While studies from Asian countries supported this assertion, empirical analyses from Africa reported conventional findings on the credit risk effect on performance. These conflicting reports were partly due to the exclusion of factors specific to Murabaha financing in past studies in Africa. This study was conducted to assess the effect of credit risk on the financial performance of Islamic banks in Africa. Data were collected from annual reports of the selected Islamic banks for nine years from 2012 to 2020. A fixed-effect regression model was estimated after conducting the preliminary tests of Breusch Pagan Lagrange Multiplier (BP/LM) and Hausman. The study found that non-performing Murabaha (0.0220) and provision for impairment of Murabaha financing (0.3506) have positive effects on return on assets. The results were found to be significant at a 5% level of significance. Based on this finding, it was concluded that credit risk exposure that arises from Murabaha (transactions) financing tends to improve the financial performance of the banks. Therefore, the study recommends that Islamic banks increase their financing of Murabaha transactions to boost their profitability and compensate for high credit risk exposure. JEL Classification Codes: G21, G32.
Africa, Credit Risk, Financial Performance, Murabaha.
Copyright (c) 2021 Muftau A. Ijaiya, Abdulrazaq T. Jimoh, John A. Attah, Biliqees A. Abdulmumin, Aliyu I. Nafiu
PERFORMANCE OF INVESTMENT MANAGEMENT: A STUDY ON SOCIAL ISLAMI BANK LIMITED (SIBL)
This study attempts to understand the level of efficiency of investment management of social Islami bank limited (SIBL). In this regards, different aspects (i.e., amount, ratio, profit and growth) of deposit, investment, investment modes and procedures are scrutinized thoroughly. To conduct the study, secondary data sources have been primarily used. Some information was also collected from officials over the phone. The study was based on five consecutive years i.e., 2015 to 2019.The major findings are that the ratio of investment deposit also remains as high as 90%. The bank invests more in Murabaha, Bai-Muazzal, HPSM and Quard. The ratio of classified investment to total investment increased 8.20% till 2017 and decrease to 6.63% up to 2019 whereas the ratio of unclassified investment decrease to 89.09% till 2017 and increase to 91.71% up to 2019. There has an increase of sub-standard and doubtful investments till 2017 and a decrease up to 2019. But in case of bad or loss investment, an upward trend has been observed till 2018 and had a negligible decrease in 2019. The last part of the analysis shows that the overall profit growth of investment fluctuated over years but remains positive i.e., 11.39%. In conclusion, the bank is moderately efficient in investment management. JEL Classification Codes: G11, G24, O16.
Islamic Banking; Investment; management, Profitability and Efficiency.
Copyright (c) 2021 Sanzida Tasnim, Ariful Islam