Narrow Results

The first motivation of the creation of derivatives is hedging risk but unfortunately this motivation has changed over the decades since more conventional contracts are used for speculation. The purpose of this study is to use derivatives solely for hedging while respecting principles of profit and risk sharing. According to previous work about the pricing of Waad Bil Mourabaha and using the conventional expression of the contingent premium option, we will propose a model of Participating CPO.

Islamic finance has started to grow in international finance across the globe, with some concentration in few countries. Nearly 20% annual growth of Islamic finance in recent years seems to point to its resilience and broad appeal, partly owing to principles that govern Islamic financial activities, including equity, participation, and ownership. In theory, Islamic finance is resilient to shocks because of its emphasis on risk sharing, limits on excessive risk taking, and strong link to real activities. Empirical evidence on the stability of Islamic banks (IBs), however, is so far mixed. While these banks face similar risks as conventional banks (CBs) do, they are also exposed to idiosyncratic risks, necessitating a tailoring of current risk management practices. The macroeconomic policy implications of the rapid expansion of Islamic finance are far reaching and need careful considerations.

Islamic fintech literature growth rapidly, and several literature trends have occurred. This paper conducts a systematic literature review of the papers about the challenges of Islamic fintech. For this goal, three main categories are created. The first focuses on the Shariah and legal issues of Islamic fintech because these are the main difference between Islamic finance and its conventional counterpart and therefore are unique to Islamic finance. The second category is on the challenges of Islamic crowdfunding, microfinance, SMEs, and other related institutions. The last category focuses on user and software-based challenges, as most Islamic financial institutions significantly lack experience in this area. Further studies must focus on each challenge and find solutions by opening stagnations.

In this paper, I explore Imam Ghazali’s concept of money and then extend those concepts to explain his ideas regarding ‘Riba’ (interest). In this paper I examine those aspects of Imam Ghazali’s ideas which were overlooked by previous studies. This paper argues that Imam Ghazali views a particular purpose of money, which involves the medium of exchange and a just unit of account while he criticizes the store of value function of money. I also examine the multiple symbols that Imam Ghazali uses to make the point, for example, money as a just ruler, or a mirror that reflects light but has no light of its own. This enables us to further elucidate the crux of Imam Ghazali’s argument which is that money loses its essential nature when store of wealth function become predominant. I also examine the text of the most important passages related to money in Imam Ghazali’s work to support the main arguments in the paper.

Since the launch of the Sustainable Development Goals (SDGs) by the United Nations (UN) in 2015, the global financial markets have strongly inclined towards being more ethical, responsible and value-based investing. Similar with the conventional counterparts, the stakeholders in Islamic finance have initiated its efforts and thrives in manifesting and incorporating the global sustainability agenda into its business operations and product innovations. Given that the principles of Islamic finance fundamentally support socially inclusive, environmentally preserved and economically prosper, the potential for Islamic finance to play a role in realizing and translating the SDGs into practical approach is extensively explored in this paper. This paper reviews the role of Islamic finance industry, specifically the Islamic banking and Islamic capital market in Malaysia, in contributing the realization and manifestation of the SDGs in its day-to-day business activities by analyzing few existing products in the local market namely, Islamic microfinance, Islamic green financing, green sukuk and ESG Islamic fund. The discussion presented in this paper predominantly derived from a comprehensive analysis conducted through literature review approach. The paper concludes that Islamic finance industry in Malaysia is still on the right track in terms of contributing to sustainable development goals, environmental preservation and social welfare, as advocated by the United Nations. All of the key stakeholders in Malaysia also have been working hard to make sure the overall Islamic financial ecosystem is aligning with the global sustainable finance movements. This paper provides an indirect motivation and personal incentive for the policy makers to continue assimilating and harmonizing the SDG elements into the Islamic finance industry.

Past studies investigated a number of fundamental variables influencing FDI in various countries. This study offers extensive evidence on the impact of investor sentiment on net FDI flows in Malaysia. Using a vector error correction framework, this study analyzed the net FDI flows in Malaysia for 56 quarterly observations between 1998 and 2011, and reported a strong positive connection between investor sentiment index and FDI flows in the presence of other macroeconomic variables in the long- and short-run. Other important factors deciding FDI in Malaysia are real GDP, interest rate and currency value. FDI exhibited a bi-directional Granger causality with investor sentiment and gross domestic product. FDI is also Granger caused by interest rate. Decomposing the sentiment index to two sub-indexes, we find that the attitude dimension of the index hold greater influence on FDI than the market trading dimensions although both are significant. The study concludes that expectation around financial market, expected economic condition of the country and the region (i. e. ASEAN), and interest rates are important determinants of FDI in Malaysia. It is one of the findings of this study that FDI cannot be attracted simply based on economic stability of the country; rather a conducive regional atmosphere is indeed necessary. Consequently, our findings suggest that rather than implementing policies to improve macroeconomic conditions, governments should attempt to improve the perception and outlook of Malaysia to foreign investors in order to increase FDI flows into the country. Investing in bilateral (and/or multilateral) relationships can be one of the steps to create a positive impression for the region to attract more foreign companies.

Islamic banks and financial institutions have demonstrated an unprecedented success since their emergence in commercial form in 1970s. The expansion of the asset base of the industry and its diffusion into main financial centers in the world is a clear indication of its success. While Islamic finance is constituted through Islamic normativeness as expressed through Sharia compliance process coupled with the standards developed by the Accounting and Auditing Organization for Islamic Financial Institutions and the Islamic Financial Services Board within dual banking system, their accounting system follows conventional system of accounting which is based on the fictitious claim that accounting is value free. However, this chapter is developed through the assumptions that neither economics and finance, nor accounting and management is value free as value system and ontologies determine their nature and operations. In expanding this assumption, this chapter aims to identify the Islamic accounting implication for Islamic finance with the hope that Islamic banks and financial institutions, in particular, and Muslim societies, in general, can move onto authentic accounting system and philosophy shaped by Islamic ontology and epistemology. This chapter hence aims to develop and identify the way Islamic accounting can apply to Islamic finance transactions and contracts as well as institutions such as zakat. It also presents some critical reflections on the practice of Islamic accounting and accounting standards.

Islamic finance or Qur’anic finance is an ethical finance based on Sharia, prohibition of riba, prohibition of gharar and maysir, and sharing of losses and profits (3P) because it promotes investment in licit sectors. And, it prohibits investment in illicit sectors. These principles are the main pillars of Islamic banking governance. In this context and given the interest of Quranic finance in this chapter, we sought to highlight the theoretical foundations relating to the notion of efficiency in general and more particularly of its specificity on Islamic finance since the latter has occupied more and more a rather important place in scientific research. We then presented the different forms of banking efficiency. Finally, we presented Islamic banking governance, risk management within Islamic banks, and governance of these banks.

This chapter reviews the basic dimensions of Maqasad al-Shari’ah. An attempt is made to cover the important concepts related to this subject, such as a comparison between the divine laws and manmade laws. This chapter reviews the theoretical development in chronological order, and divides it into three periods, i.e., the early period, the medieval period, and the current period. The major concepts and terminologies which are applied in the field of Islamic finance and economics have also been discussed.