Islamic Cooperation Countries Research Articles

Do markets react to dividend announcements and sharia compliance? Evidence from organisation of Islamic cooperation countries

Purpose This study aims to investigate the market reaction to dividend announcements and sharia compliance based on the Islamic stock indexes of Indonesia, Malaysia and Pakistan by scrutinising investors’ interpretations, behaviour (traditional, rational, religious or ethical) and preferences. Design/methodology/approach Event study methodology (ESM) was used to analyse 31 days around the event date. The research period spanned 2011–2018, during which 282 observed dividend announcements were tested using a t-test, and there were 4,960 cases of sharia compliance in the data panel. Findings Indonesian investors react to earnings surprises as bad news while bypassing dividend announcements, thus classifying their behaviour as rational. Meanwhile, investors in Malaysia and Pakistan respond to dividend announcements as bad news while bypassing earnings surprises, thus classifying their behaviour as traditional. Surprisingly, sharia compliance does not affect abnormal returns. These results imply that investors prefer a profit motive rather than sharia compliance. Practical implications To perpetrate positive reactions, companies need to increase earnings (Indonesia), nominal dividends (Malaysia) and delay dividend announcements (Pakistan). Also, tax regulators need to evaluate dividend tax and capital gains tax. Social implications Investors cannot solely rely on Islamic stock lists, while regulators and firms must be transparent and accountable regarding sharia compliance ratio. Originality/value There is a dearth of research on market reaction in Islamic stock indexes. This study adheres to critical assumptions of ESM: controlling the confounding effects and ensuring market efficiency. These assumptions lead to the proposal of mandatory and advisory sharia compliance, evaluation of ratios using a staple scale and examination of differences in dividend tax rates. An extended tax preference theory is also proposed to contribute to the body of knowledge.

Human rights and value of cash: Evidence from Islamic and non-Islamic countries

This study examines whether and how human rights (HR) have bearings on the value of cash. Given the positive effect of HR improvement on corporate governance (CG) and that of CG on cash value, HR should positively affect cash value through CG. Using 23 Organization of Islamic Cooperation countries and 88 other countries during the period 1995–2019 as the sample, this study finds that the value of cash and excess cash is lower in Islamic countries than in other countries. Additionally, HR have a positive effect on cash value, but this effect is weaker for Islamic countries than for other countries. Furthermore, economic development (ED) (rule of law (RL)) reinforces the positive effect of HR on cash value, and this effect is stronger (weaker) for Islamic countries than for other countries. Study results provide important implications. Given the observed striking differences in results between Islamic and other countries, future related research should consider them to improve validity and reliability of empirical results. Multinationals or firms that consider establishing subsidiaries in foreign countries should also consider country-specific factors, like types of countries, HR, ED, and RL, because they may affect the agency and external financing costs. Furthermore, national governments can evaluate the effectiveness of HR promotion by referring to the study results regarding HR's positive effect on cash value such that they can fine tune their HR and economic policy as well as enforcement of RL to better achieve their intended goal of improving HR and CG.

Training of Imams, Murshidat and Muslim Religious Leaders: Experiences and Open Questions—An Overview of Italy

Muslims in Italy are an increasingly large and relevant part of the social fabric, although their social condition is still characterized by a “precarious” status. This is explained by a relationship with State institutions that is not yet fully defined in formal terms and by resistance to legitimizing their presence in the public space. In addition, international events have led to the spread of a securitarian political rhetoric and to the intensification of “control” devices on the organized forms and public manifestations of Muslim religiosity. One issue that has concerned political interlocutors has been the training of “imams”. This paper presents the Italian case of training “on” and “of” Islam, analyzing it as a contested field, albeit in a not open and hostile form, between the different social and institutional actors, that is Italian universities, Islamic organizations and transnational Islam and Islam “of the States”. It then analyzes the approach that has been developed and experimented by an Italian State university for the training of imams and murshidat, in collaboration with Italian Islamic organizations and some universities in the Organization of Islamic Cooperation countries, and it also discusses how it fits in as a possible innovative model among the various “assemblages” that have emerged in Europe in recent years.

DETERMINANTS OF FOREIGN DIRECT INVESTMENT IN ORGANIZATION OF THE ISLAMIC COOPERATION COUNTRIES: DOES FINANCIAL DEVELOPMENT MATTER?

A study on the factors influencing foreign direct investment (FDI) was started by the Islamic Cooperation countries, the majority of which are developing nations, due to the significance of capital flows for these nations. The present study employs an institutional quality framework, green economic policies, and the function of financial development to evaluate the components that effect foreign direct investment (FDI). The results of this research demonstrate that institutional changes and green economic policies stimulate foreign investment. Several institutional metrics, including government performance, the rule of law, political stability, and regulatory quality, have highly positive outcomes, while electoral accountability and preventing corruption have negative and minor consequences. Furthermore, elements of the green economy including human capital, natural resources, and environmental laws have a big impact on foreign investment. These results also suggest that the growth of the financial sector can boost the impact of institutional quality and the green economy on the attraction of foreign investment. The conclusions of this study demonstrate that investors examine institutional integrity, the green economy, and financial development when making investment decisions.

Current Status of Neurorehabilitation Services in the OIC Countries: Results of an International Online Survey

Objectives: Neurorehabilitation services are not widely available to most persons with disability (PWD) in the Organization of Islamic Cooperation countries. This study aimed to document status of neurorehabilitation services in OIC countries. Study Design and Setting: Cross-sectional online survey. Methods: Self-administered online survey conducted using Google Forms. Key resource persons for each OIC country working in field of neurorehabilitation were identified from various databases. The questionnaire was emailed to 20 identified resource persons. The response rate was 60% (12/20). Results: Neurorehabilitation services were available in 9 out of 12 surveyed countries. Only 2 countries reported providing access to neurorehabilitation services to 76-100% of their population. Five countries reported less than 25% of population had access to these services. Most commonly available neurorehabilitation services included services for stroke, spinal cord injury, pediatric neurorehabilitation, brain injury, and neuromuscular rehabilitation. Three countries had none of these specialized services. Five countries had neurorehabilitation training programs for physicians and other rehabilitation professionals. Patients had to pay out of pocket for these services in most of surveyed countries, followed by public funding and private insurance. Tele-neurorehabilitation and local disease-specific neurorehabilitation guidelines were not available in most of surveyed countries. Conclusion: Neurorehabilitation services in OIC region are not widely available, with significant variability in availability and quality. There is a need to develop and improve these services. Sharing knowledge and expertise through various forms, such as exchange visits and online sessions, can help improve neurorehabilitation services in these countries

Comparative Analysis of Sustainable Food Governance and the Alignment of Food Security Policies to Sustainable Development: A Case Study of OIC Countries

Employing Grey Relation Analysis (GRA) and Leximetrics, this study conducts a comparative analysis of sustainable food governance performance in the Organization of Islamic Cooperation countries (OIC). It assesses the alignment of their food security policies with sustainable development principles. Addressing a gap in the existing literature, the study aims to assess two separate components of food security governance, i.e., policy formulation and policy implementation. This is achieved by focusing on critical intrinsic factors like sustainable agriculture, sufficiency, resilience, and inclusivity, and sustainable finance which are often overlooked in policy formulation and evaluation. The findings reveal inadequate incorporation of sustainable finance, sustainable agriculture, circular food systems, and effective governance principles. Several countries lack concise policies (e.g., Iran, Turkmenistan, Suriname), relying on fragmented approaches, while others adopt regional food security strategies with observed differences in food governance versus policy alignment performance. The study enhances our understanding of food security governance and policy formulation and implementation, offering insights for advancing sustainability in the food security policies of the OIC.

Sharia compliance, national governance, and value of cash in Organization of Islamic Cooperation countries

This study examines whether and how Sharia compliance and national governance affect the value of corporate cash holding (cash) in Organization of Islamic Cooperation (OIC) countries. Study results indicate that cash can enhance firm value and such cash value is higher for Sharia-compliant firms than for Sharia non-compliant firms. In addition, cash is particularly valuable when national governance is strong. Furthermore, the positive effect of Sharia compliance on cash value is more pronounced when national governance is strong. Results suggest that internal governance (i.e., Sharia compliance) and external governance (i.e., national governance) should be in sync to maximize cash value.

Exploring the dynamics of bank liquidity holding in Islamic and conventional banks

PurposeThis study aims to address how Islamic banks (IBs) and conventional banks (CBs) manage their liquidity and their speed of adjusting liquidity holdings both in the short- and long term.Design/methodology/approachThis study uses the partial adjustment model (PAM) on a sample of 445 banks from 17 Organisation of Islamic Cooperation countries over the period 2010–2018.FindingsResults reveal that despite IBs’ placement of higher short-term liquidity buffer, they experience lower net stable fund ratio (NSFR) in the long term, relative to CBs. This study’s results also reveal that IBs enjoy higher and lower speed of adjustment (SOA) for NSFR in the long- and short term, respectively. Furthermore, the results suggest that bank-specific and macroeconomic factors weaken the liquidity SOA.Practical implicationsThis study sheds light on the importance of the adjusting speed of bank liquidity in a bid to provide regulators with insights for enhancing liquidity holdings and emphasising the regulation of banks’ reaction pace to attain the target buffers.Originality/valueThis study estimates the liquidity adjustment speed of IBs and CBs by providing a comprehensive discussion and empirical evidence across countries. To the best of the authors’ knowledge, this study is the first to use PAM for the assessment of liquidity holdings in IBs and the first to examine SOA of short-term liquidity holdings in the banking sector.

Does Trade Openness Foster Unemployment? Evidence from D-8 OIC Countries

This study aims to analyse the effect of trade openness, wages, inflation, economic growth, and population toward unemployment in the D-8 Organization of Islamic Cooperation countries over the period, 1991 to 2020. The quantitative approach uses techniques analysis of panel data regression. The study result shows a significant simultaneous effect of trade openness, wages, inflation, economic growth, and population on unemployment of D-8 OIC member countries. While partially, trade openness has a significant positive effect on unemployment, wages, economic growth, and inflation have a significant negative relationship with unemployment. The population has a significant positive effect on unemployment. Overall, the result implies that each OIC member country should promote an effective and strategic plan to enhance the demand for labour and employment. Furthermore, professional courses and vocational training should be initiated to fulfil the growing demand for skilled labour.

The Relationship Between Globalization and Economic Growth: Panel Cointegration Analysis for Organization of Islamic Cooperation Countries

Bu çalışmada İslam İşbirliği Teşkilatına üye ülkelerde küreselleşmenin alt bileşenleri olan ekonomik küreselleşme, sosyal küreselleşme ve politik küreselleşmenin ayrı ayrı olarak ekonomik büyümenin bir ölçütü olan kişi başına GSYİH ile ilişkileri incelenmiştir. Öncelikle yatay kesit bağımlılığı altında birimler için yapılan CADF ve panelin geneli için yapılan CIPS birim kök testlerine göre bütün serilerin durağan olmadığı görülmüştür. Yapısal kırılmalı panel eşbütünleşme analizine göre küreselleşmenin alt bileşenleri ile ekonomik büyüme arasında eşbütünleşme ilişkisi tespit edilmiştir. Ekonomik büyüme ile küreselleşmenin alt bileşenleri arasındaki nedensellik ilişkisi araştırılmış ve ekonomik küreselleşmeden ekonomik büyümeye doğru tek yönlü nedensellik ilişkisi, sosyal küreselleşme ile ekonomik büyüme arasında iki yönlü nedensellik ilişkisi bulunmuştur. Politik küreselleşme ile ekonomik büyüme arasında herhangi bir nedensellik ilişkisi bulunamamıştır.

How diverse are Shariah supervisory boards of Islamic banks? A global empirical survey

PurposeThis study aims to examine diversity in the composition of Shariah supervisory boards (SSBs) of Islamic banks (IBs). It investigates diversity from two perspectives: existing composition of SSBs and the regulatory frameworks and standards of selected Organisation of Islamic Cooperation countries. Diversity characteristics include education, nationality, gender and age.Design/methodology/approachA list of all full-fledged Islamic commercial banks (FFICBs) globally has been carefully prepared and confirmed. Conventional banks with Islamic windows, non-commercial banks, takaful companies and other Islamic financial institutions are excluded. The available profiles of 428 SSB members have been scrutinised and analysed. These board members occupy 522 SSB positions in 238 FFICBs operating in 52 countries around the globe. From the regulatory perspective, 12 national and international Shariah governance frameworks and standards have been examined.FindingsFindings of this paper indicate various levels of diversity in SSBs of the reviewed IBs. The level of diversity in educational background and in the nationality of SSBs can be described as generally acceptable. However, a lack of diversity in gender and age among SSB members is evidently observed in IBs. While the lack of age diversity in SSBs may be relatively justified as a common trend in the composition of corporate boards, SSBs of IBs are seriously lagging behind in gender diversity. On the regulatory level, this study concluded that provisions on diversity as a requirement in SSBs are almost non-existent in the existing regulatory frameworks and standards.Research limitations/implicationsThe major limitation of this study is the lack of available information on the SSB members.Practical implicationsThis paper provides insights for IBs and policymakers concerned with the corporate governance of IBs and all Islamic financial institutions. First, it offers an excellent bird’s-eye view of the status of diversity in SSBs of IBs. Second, it motivates policymakers and standard-setting bodies to ensure, through the relevant regulatory frameworks, adequate levels of diversity in the composition of SSBs. Diversity in SSBs of IBs and Islamic financial institutions should be given special emphasis, not only in boards and top management positions but also in the workplace. This is of profound significance to the reputation of Islamic finance industry which has been recently under mounting pressure to translate the rhetoric about the Islamic finance industry being ethical, fair, just, equitable and inclusive into genuine implementations.Originality/valueTo the best of the authors’ knowledge, this study is the first of its kind to examine the diversity of SSB members from the regulatory as well as from the implementation perspective.

PERAN LEMBAGA KEUANGAN SYARIAH DALAM MENGAHADAPI PANDEMI COVID 19

The Covid-19 pandemic has made funding and lending problems even bigger. There is no lending, the withdrawal is also bigger. Thus, BMT's need for funding will be greater, because the need for funds to be withdrawn is also greater. Of course, the liquidity problem of financial institutions including BMT becomes a more serious challenge in the case of Covid-19. In fact, there are several BMTs that can provide financing. Hopefully, this will come. The revolving fund management agency in collaboration with small, medium and micro-medium enterprises (LPDB-KUMKM) has a financing role and comes from banks. The government's role is needed to provide BMT funds, so this BMT will not stop lending. As the growth of Islamic cooperative countries slows down, the global Islamic finance industry is under threat. According to data from SEISRIC, the total number of cases in the Organization of Islamic Cooperation (OIC) countries has reached 180,000.This study used qualitative research methods. This is due to the flexibility in getting information from the latest news stories from trusted sources, regarding how the impact/impact caused by Covid-19 (corona virus), the author also took several news samples from the internet and then combined them into a result. The results are sourced from several news and sources obtained by the author. The author uses an observation technique in the form of observing data related to this Covid-19 (Corona) virus. The results obtained indicate that with the Covid-19 virus pandemic, BMT Amanah Indonesia's financial statements have had an impact on financing achievement, revenue achievement, and operating profit achievement.Keywords: Islamic Financial Institutions

National Governance and Corporate Liquidity in Organization of Islamic Cooperation Countries: Evidence based on a Sharia-compliant Liquidity Measure

This paper investigates the determination of corporate liquidity in Organization of Islamic Cooperation (OIC) countries with emphasis on whether and how national governance (NG) has bearings on corporate liquidity in such countries. Using the Sharia-compliant liquidity measure to examine non-financial firms' liquidity in 22 OIC countries during the period 2000–2016, results reveal that liquidity determination in OIC countries resembles that in other countries. Additionally, NG positively affects corporate liquidity. Furthermore, the positive and negative effects of growth opportunities and leverage, respectively, on corporate liquidity strengthen with NG. Overall, results suggest that NG improves corporate governance in OIC countries.

Financing foreign trade in Turkey under 2020 Corona virus Covid-19 pandemics

Purpose- The study aims to estimate the export income of Turkey under the effects Corona Virus Covid 19 Pandemics of 2020. Methodology- The study employs descriptive statistics analyses for macroeconomic indicators of leading export markets of Turkish economy. Findings- The analysis shows that Turkish Economy export income would decline 30 percent relative to 2019 due to sudden shock and lockdowns and losses, deaths and illnesses during the first quarter of 2020. Conclusion- The World Economy has been expected to shrink 3 percent at 2020. This is larger than 1.68 percent decline in growth rate at 2009. In 2009 financial crises, Turkish export volume decreased %30 in 2009. At 2020, the export of Turkey would decrease 30 percent due to decline of import demand of major export markets of EU, OECD and member countries of Islamic Cooperation Countries. However, the World Bank and IMF’s expectations suggest rapid growth in the World economy at 2021.

Determinates of Islamic banks liquidity

Purpose The purpose of this paper is to investigate the determinants of Islam banks (IBs) liquidity. Design/methodology/approach In this paper, the author uses a generalized least square fixed effect model on an unbalanced panel data set of all IBs operating in the Organization of Islamic Cooperation countries over the period 1989-2008. Findings The estimation results show that all the determinants have statistically significant relationships with IBs’ liquidity but with different signs. On the one hand, foreign ownership, credit risk, profitability, inflation rate, monetary policy and deposit insurance negatively affected IBs liquidity. On the other hand, capital ratio, size gross domestic product growth and concentration have a positive nexus with IBs’ liquidity. Originality/value According to the best of the author’s knowledge, this is the first empirical study to investigate the determinants of IBs liquidity using cross-country data with a large sample of IBs (110 banks) and over a long period (19 years). Also, the paper included variables that had not been discussed on the previous studies, which used cross-country data, such as efficiency, deposit insurance, monetary policy, concentration and market capitalization.

Financing Afforestation in the Organization of Islamic Cooperation Countries: What Role for Islamic Economics and Finance?

This paper looks at environmental conservation within the growing understanding of the urgent need to confront the two menaces of desertification and deforestation through afforestation schemes in the Organization of Islamic Cooperation (OIC) member countries. Deforestation is one of the main contributors to global greenhouse gas emissions, ecosystem degradation, and from there the rising cases of poverty in the developing world. Their impacts on the economy and environment of OIC member countries has been devastating. Desertification and deforestation are caused by human activities like logging, harmful farming practices, as well as haphazard cutting of trees in order to make way for city buildings and farms. The paper shows that poor handling of past responses to desertification problems can be solved with the right approaches. It first looks at existing approaches to the problem and causes of their failure. Then, it proposes an alternative model based on fiqh teachings and recent developments in Islamic economics and finance. The paper syntheses conventional and Islamic approaches towards solving the problems of desertification, deforestation, and rising temperatures in the OIC countries. It delineates specific functions and contributions of each one of (a) the Islamic state, (b) the institution of waqf, (c) Islamic finance, and (d) the Islamic firm.

Liquidity risk, credit risk and stability in Islamic and conventional banks

The aim of this paper is to provide a thorough assessment of Islamic banks’ (IBs) liquidity risk compared to conventional banks (CBs). We firstly investigate the relationship between liquidity and credit risk. Employing a simultaneous structural equation approach, on a comprehensive dataset of 52 IBs and CBs, from selected Organization of Islamic Cooperation Countries for the period of 2007–2015, we find that credit risk and liquidity risk have negative relationship. We then investigate the relationship between liquidity risk and stability, finding a negative relationship just for IBs. We finally show that Islamic banks are better than conventional in managing risks.

How profitability differs between conventional and Islamic banks: A dynamic panel data approach

This paper analyzes and compares the dynamics for the profitability of conventional banks and Islamic banks in the Organization of Islamic Cooperation countries and the United Kingdom between 2007 and 2013 using a sample of 74 Islamic and 354 conventional commercial banks. “Net interest margin” and “return on asset” are employed as variables representing the profitability and several new explanatory variables are introduced such as, the usage of self-service banking channels, penetration of financial services, crude oil/agriculture price indexes and asset ratio of non-Murabahah assets of Islamic Banking. Dynamic panel data estimates indicate that almost all explanatory variables of profitability for conventional and Islamic banks are different implying that profitability of Islamic banks relies on the different dynamics than that of conventional ones. Both profitability measures are not persistent over time and neither of them has significant relationship with the country specific macroeconomic variables. Estimation results imply the importance of new product and alternative channel development in enhancing the profitability of Islamic banks. Moreover, our analysis shows that the usage of products which promotes more risk sharing as compared to the products based on Murabahah structure can contribute to the performance of Islamic banks.

Determinants of banks liquidity: evidence from OIC countries

PurposeSpecifically, the purpose of this paper is to identify the key factors affecting banks’ liquidity in developing/less-developing countries.Design/methodology/approachIn this paper, the author uses the ordinary least-square fixed effect model on an unbalanced panel data set of all conventional banks (686 banks) operating in the organization of Islamic cooperation countries over the period 1989-2008.FindingsThe estimation results show that all the determinants have statistically significant relationship with liquidity (except for concentration) but with different signs. On the one hand, capital ratio, foreign ownership, credit risk, inflation rate, monetary policy and deposit insurance negatively affected banks’ liquidity, while on the other hand, efficiency, size, off-balance sheet activities, market capitalization and concentration have a positive link with banks’ liquidity.Originality/valueAccording to the best of author’s knowledge, this is the first empirical study to investigate the determinants of banks liquidity in developing/less-developing countries using a large sample of banks (686 banks) and for long period (19 years).

The assets and liabilities gap management of conventional and Islamic banks in the organization of Islamic cooperation (OIC) countries

This article focuses on the short- and long-term assets and liabilities gap and the determinants of net interest/profit margins of both conventional banks and Islamic banks in the Organization of Islamic Cooperation countries over the period from 1997 to 2010. The results show that both conventional and Islamic banks have negative short-term gaps and positive long-term gaps. These indicate that banks use short-term deposits and funding to finance long-term loans, advances and investments, taking into consideration refinancing and reinvestment risks. The findings also show that operating cost is a significant determinant of bank margins and important factor to improve quality of management in banks. Overall, the conventional banks have better quality of assets and liabilities with an optimum composition of profitable assets and low-costs liabilities. The low bank margins in conventional and Islamic banks indicate low volatility in financial markets and the growth of banking business.