Development Of Islamic Finance Research Articles

Influential and intellectual structure of Islamic finance: a bibliometric review

PurposeIslamic finance is an alternative approach of financial intermediation based on risk-sharing and asset-backed operations, which evolved substantially in recent years in academic research raising the need for quantitative studies to address the intellectual development and scientific performance of this field. This study aims to provide quantitative statistics and comprehensive review of the key influential and intellectual structure of Islamic finance literature.Design/methodology/approachThe authors apply the trending and cutting-edge quali-quantitative approach of bibliometric citation analysis. This study reviews 1,940 English studies and review papers published in scientific journals indexed by the Scopus database from 1983 to 2019. RStudio, VOSviewer and Excel’s software are used to analyze the collected data and apply the bibliometric tests.FindingsThe results identify the leading academic authors, journals, institutions and countries with relation to Islamic finance. The authors also propose six main research themes in this field, which are as follows: Islamic finance – fundamentals, growth and legitimacy; customer’s attitude and perception toward Islamic finance; accounting and social reporting of Islamic finance; performance and risk management of Islamic finance; Islamic financial markets; and efficiency of Islamic financial institutions. Lastly, the authors identify research gaps in the existing Islamic finance literature and present 24 future research directions.Research limitations/implicationsThe data in this study is confined only to the Scopus database of English papers and reviews. It also considers papers directly related to the field of Islamic finance.Originality/valueTo the best of the authors’ knowledge, this paper is one of the first to address the literature of Islamic finance from a bibliometric aspect. The results of this study along with future research questions will help researchers and practitioners to further explore and stand on firm quantitative bases regarding the scientific development of Islamic finance.

QuoVadis Regulation of Islamic Economics in Post-Reform Indonesia

This paper describes the regulation of Islamic economics and the urgency of its development, the post-reform Islamic economic, regulatory system, and analyzes the orientation of Indonesian Islamic economic regulation from a political economy perspective. This article's method is a descriptive analysis by analyzing political phenomena that occur in the formulation of Islamic economic regulations in post-reform Indonesia. This qualitative research uses literature studies. The development of Islamic financial regulation in Indonesia is relatively late when referring to Islamic finance development in other countries. This is related to the national political conditions, which are generally less responsive to institutions labeled Islamic. The dramatic changes in Indonesian politics since the fall of the Soeharto regime have made room for real democracy. Islamic banking regulation responds to the Islamic banking industry's development, which requires assurance of legal certainty and legal justice in a clear regulation. The increase in the role of the government in dealing with Islamic economic problems has a big role. According to Islam, economic policies must be supported by social responsibility, limited economic freedom by sharia, multi-ownership recognition, namely private ownership, state ownership, and a high work ethic. The interpretation and development of Islamic economic regulations can be richer and more important if it is based on concrete experiences of development in implementing Islamic economic regulations in Indonesia. In seeking economic laws in line with the rububiyah principle, practical experiences are material for validating Islamic economic laws.

ISLAMIC FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH IN NIGERIA: A BOUNDS TESTING APPROACH

Using a bounds testing approach to the cointegration and error correction method developed within the autoregressive distributed lag (ARDL) framework, this paper analyses the short- and long-run dynamic relationships between Islamic financial development and economic growth in Nigeria. Quarterly time-series data (2012:1 to 2019:3) are employed for the variables, together with non-interest bank financing to the private sector and real gross domestic product as indicators of Islamic financial development and economic growth respectively. The results indicate a significant short- and long-run relationship between Islamic financial development and economic growth. The relationship, however, is neither Schumpeter’s supply-leading nor Robinson’s demand-following type; rather, it appears to be bi-directional. In addition, empirical evidence is found that underscores the important role of Islamic bank financing in the economic performance of Nigeria. The paper recommends that improvement of the Islamic financial system in Nigeria may foster economic development and enhance welfare and poverty alleviation in the long run.

Legal Origin, Institutional Quality, and Islamic Finance Development: Does Shari’a Matter?

Abstract Previous studies on financial development have shown that differences in the legal origin explain differences in financial development. Using historical comparisons and cross-country regressions for 40 countries observed for the period from 2005 to 2018, our research assesses how different legal origins have affected the development of Islamic finance worldwide. More particularly, our research assesses empirically why and how the adoption of Shari’a, wholly or partially (combined with common or civil law), could explain the level of development of Islamic finance in different jurisdictions. Our primary results show that countries adopting a Shari’a legal system have a very well-developed Islamic financial system. Moreover, countries adopting a mixed legal system based on common law and Shari’a law have sufficient flexibility within their legal systems to make changes to their laws in response to the changing socioeconomic conditions, and this has helped the development of the Islamic financial industry. However, countries adopting a mixed legal system based on both civil law and Shari’a law appear less flexible in making changes to their old laws and this thwarted the development of the Islamic financial industry in these countries. Furthermore, we have found that the concentration of a Muslim population (the percentage of Muslim population) along with the level of income have both had a positive effect on the development of Islamic banking assets and on the development of Islamic banking as a whole.

Islamic Finance as a Vehicle to Promote Improved Intellectual Property Rights in the Gulf Cooperation Council

AbstractThe purpose of this article is to assess how Islamic finance can act as a vehicle to enhance the current intellectual property rights regime in the Gulf Cooperation Council (GCC). Islamic finance has developed within the constraints of sharia law and has been a growth sector for the GCC. This article will identify the main principles of Islamic finance that contribute to the success of Islamic finance, which can enhance intellectual property protection in the GCC. The main sharia-compliant areas to be considered are musharaka, mudaraba, murabaha, takaful, istisna, ijara, salam and sukuk. The article will outline the founding principles of Islamic finance, the governance of sharia boards, development of Islamic finance in the individual GCC states, different frameworks of sharia-compliant investment products and the impact of intellectual property rights on the varying Islamic finance investment tools. Furthermore, the article will discuss an integrated approach to intellectual property rights which learns lessons from the Islamic finance sector in relation to infrastructure, regulation and sharia compliance. The lessons learnt from Islamic finance will inform the overall framework of recommendations for an Islamic intellectual property model. The use of Islamic finance as a vehicle to promote better intellectual property rights in terms of defining a new intellectual property approach is novel. It is aimed at spearheading further research in this area, and it will form a part of the overall integrated approach proposals to intellectual property protection in the GCC and beyond.

Sosialisasi Literasi Keuangan Syariah Pada Anak Usia Dini

Indonesia is a country with a majority Muslim population. In terms of quantity, it has big potential as a center for the development of Islamic finance. The lack of Islamic financial literacy has made the public do not understand the importance of Islamic financial institutions in terms of both the benefit of the world and the hereafter. The method of implementing this activity is carried out in four stages, namely (1) Planning, (2) Preparation, (3) Implementation, and (4) Evaluation Implementation. At the implementation stage, socialization of sharia financial literacy is carried out to students, teachers and guardians of students and mentoring. The results obtained from community service are the first percentage of understanding and knowledge of financial literacy which increased from 56,5% to 85% both students, teachers and guardians of students viewed from the results of the pretest and posttest that have been given. Secondly, during the mentoring the participants gave a positive response with a percentage of 86% and 100% interested in participating in the second phase of socialization in order to know the positive developments after obtaining mentoring as seen from the results of the questionnaire responses that had been given.

Modelling demand and supply of Islamic banking deposits

AbstractThe purpose of the study is to assess the market of Islamic banking deposits. As banking intermediation ensures efficient allocation of excess capital, but stable availability of deposit resource helps banks to manage long‐term capital structure portfolio. Unlike conventional banks, Islamic banks also have to meet the Shari'ah requirements. This study works under the domain of Islamic economics and intends to explore the demand and supply model of deposits of Islamic banks using data from financial statements, World Development Indicators and Thomson Reuters. The results using panel feasible generalized least squares model with two‐way fixed effect showed that deposits are supply‐elastic and demand‐elastic with respect to returns to deposits. While other factors like inflation, money market rate and knowledge significantly affect supply of deposit and banking profitability and Islamic financial development significantly affect demand for deposits. This study concludes that the global Islamic banking deposit market is stable and converging hence, banks must ensure their relationship with price while devising a strategy to attract deposits.

ALTERNATIF PERHITUNGAN RETURN SHAHIBUL MAL PADA SKEMA MUDHARABAH BANK SYARIAH

Abstract:
 The rapid development of the number of islamic banks should be balanced with the availability of infrastructure to carry out daily operational practices. The operational tools include hardware as like as representative office, computerized system, reliable human resources and software as like as method, culture and financial and islamic banking knowledge. In terms of development of Islamic finance is the paper "Alternative Calculation of Return Shahibul Mal on Mudharabah Scheme on Bank Syariah" was written. During this calculation of return shahibul mal has not been standardized in a formula, thus causing two serious effects. First, in the theoretical level, the formula has not yet created a difficulty. Secondly, in practical level, the formula is not impressive enough to recalculate the complexity of return calculations obtained by shahibul mall, causing laziness of the community using the services of islamic bank. This paper using mathematical and arithmetic equations with the help of modeling made by the author to refine and improve the method of calculation that has been available. The purpose of this paper is to create a standard formula that facilitates the calculation of return earned by a shahibul mal in a mudaraba scheme in a islamic bank.

Features And Challenges of Islamic Finance Development in Russia

Features And Challenges of Islamic Finance Development in Russia

ISLAMIC FINANCIAL DEVELOPMENT, ECONOMIC GROWTH AND CO2 EMISSION IN INDONESIA

This study aims to investigate the dynamic relationship between Islamic financial development, economic growth, and CO2 emissions with Environmental Kuznets Curve (EKC) approach in Indonesia over the 2000-2018 period. This study employs the Auto Regressive Distributed Lag (ARDL) bound testing approach and the Error Correction Mechanism (ECM) to examine the existence of long-run and short-run relationship between variables. From the results of the model, we do not find any support for the existence of the EKC for Indonesia. Moreover, the results present that there is no dynamic relationship in the short run among growth, Islamic finance development and CO2 emission. Long-run findings suggest that CO2 emission from transport; other sectors, excluding residential buildings and commercial and public services; and residential buildings and commercial and public services sector are significantly associated to the Islamic finance development in Indonesia. The findings of this study shows that Islamic finance development can help the country to adjust its CO2 emissions and play its role in protecting the environment by encouraging environmental-friendly and energy-efficient projects. A strong and efficient financial sector would be helpful in facilitating the investment process by advancing loans for business in condition with curbing CO2 emissions.

İran Bankacılık Sistemi Üzerine Bir Araştırma: Sorunlar ve Çözüm Önerileri

Iran is one of the two countries that have full-fledged Islamic banking in their banking systems. Although there are many criticisms about the operation of the Islamic system in Iran, this country has the greatest proportion of Islamic banking assets in the global Islamic financial system. Islamic banking in Iran, as one of the milestones of the reorganization of Iranian society after the Iranian Revolution, continues its operation by the contracts which take their roots from the economic and social factors. The banking system in Iran contains commercial state banks, specialized state banks, qard al-hassan banks, and private banks. In addition to contributing to economic development by supporting economic activities, the banking system also supports the strategies of income distribution equality. Some portion of the banking sources in Iran is used to support individuals who are below adequate income level. In this study, the performance of the Islamic banking system in Iran will be analyzed. The study consists of three parts. In the first part, the historical development of Islamic finance and Islamic banking and in the second part, the current situation of the Iranian banking sector will be discussed. In the last part, challenges related to the local economic problems as well as the sanctions initiated by the US, other countries, and organizations will be explained. Besides, some policy recommendations to improve the performance of Islamic banking in Iran will be put forth.

Overview of Financial Institutions in the United Arab Emirates

This report will explore the various aspects and nuances of Financial Institutions within the UAE and some of the advantages and disadvantages that are a result of this unique system. The UAE is a relatively new nation despite its financial success and rapid development. This rapid development coupled with the establishment of the common currency between the 7 Emirates has led to the establishment of the Central Bank of the United Arab Emirates in 1980. The uniting of multiple Emirates and the development of a common currency helped stimulate the rapid growth of the UAE’s Financial Markets. This growth was inevitable with the success of a vision of the Nation’s Leaders. However, rapid growth combined with the global appeal has attracted a diverse population that has catapulted the nation onto a global stage. This environment is attractive to many and this brings foreign commerce and business. With the influx of foreign business and currency comes the need to acquire a financial model capable of handling these transactions and trade. This has led to the need to adopt the western finance models, financial institutions, and trade markets. This growth and global inclusion can leave room for unwanted financial practice, opinion, and influence if not regulated properly. To protect the Nation’s interests, the UAE found a way to incorporate Shariah Law into transactions and practice laws. This unique scenario has led UAE to quickly become the leading force in the development of modern Islamic finance. However, with this rapid growth, the need for neutral regulation and regulatory bodies became more evident as efforts have been made to establish Financial regulation to ensure the Islamic standards are upheld. This review will explain further the different types of Institutions in place in this Islamic Financial Market. The regulations, financial developments, and challenges will be explained in more detail to examine the effectiveness of this style of Finance and how it supports the Nation’s unique needs.

To analyze the role and problems of islamic finance development in the economy of the Republic of Tajikistan

The article deals with the phenomenon of Islamic Finance presented in the economy of the Republic of Tajikistan. Based on a broad empirical base, the author analyzes the specifics and structure of investments involving Islamic capital in Tajikistan. A classification of investors using the tools of Islamic Finance is given. Content analysis and cognitive mapping methods reveal the features of relevant investment strategies. The total amount of Islamic capital is estimated and the role and limitations of the development of Islamic Finance in the country's economy are determined.

Islamic Financial Development and Economic Growth of Emerging Economy of Pakistan; a Panel Data Approach

The purpose of this study is to investigate the dynamic interactions between five pure Islamic banks of Pakistan and economic growth by using Panel ARDL method over the period of 2006-2016. The study elaborates strong confirmation and advocates the significant positive long-run relationship with economic growth. However, in short-run, each bank has individual significant positive relationship with economic growth in its individual capacity. The findings of this study are encouraging and signify a considerable contribution to recognize how pure Islamic banks activities translated into economic performance of the country. Although prudential regulations of State Bank of Pakistan are quite sound and their legislative structure and policy framing is also equally good but they are required to enhance the number of pure Islamic banks in the country for offering multiple options to clientele in order to promote Islamic economic activities in the country to make Pakistan more prosperous.

ANALISIS FAKTOR PREFERENSI IMPLEMENTASI AKAD MUSYARAKAH MUTANAQISHAH DIBANDINGKAN AKAD IJARAH MUNTAHIYA BITTAMLIK PADA BANK JATIM SYARIAH SURABAYA

The development of Islamic finance currently reaching a high stage by creating a varied and innovative financial product. One such product development is the musyarakah mutanaqishah and ijarah muntahiya bittamlik contracts, where the two contracts are attractive and have similiar mechanisms. Ijarah muntahiya bittamlik contract in Islamic finance more appear first than the contract musyarah mutanaqishah. But musyarakah mutanaqishah contract more widely used in the current sharia banking, ijarah muntahiya bittamlik contract more can be found in leasing and purchasing companies. The paper analyzes the application of musyarakah mutanaqishah contract on syariah banking and the reason sharia Jatim Bank prefer to apply the contract musyarakah mutanaqishah from ijarah muntahiya bittalmik contract. Then this paper also presents the advantages musyarakah mutanaqishah contract and lack of ijarah muntahiya bittamlik contract, which in the end musyarakah mutanaqishah contract more widely applied to Islamic banks, in Surabaya particular. Data analysis of this paper using case study analysis method. Where it has the conclusion that Bank Jatim Syariah Surabaya in taking a decision to choose a contract that will be applied to see from the contribution of the contract in the sharia banking. Other than in the tendency to choose some contract, Bank Jatim Syariah Surabaya also pay attention contract which is considered fo fulfill market requirement and have easy mechanism, so that doesn’t complicate employees of Bank Jatim Syariah Surabaya.Keywords: Election Policy, Musyarakah Mutanaqisah, Ijarah Muntahiya Bittamlik, Bank Jatim Syariah Surabaya

Islamic Finance in Russia: Between Past and Future

Russia interested in alternative partnership finances as early as the 90s of the XX century. The first attempts to apply the principles of Islamic finance were made by individual banks. The second wave of initiatives began after the global financial crisis of 2008–2009, with increasing interest in 2014 in the face of a complicating foreign policy situation and the imposition of economic sanctions. In such conditions, it became necessary to search for alternative sources of attracting investment, which, inter alia, became Islamic finance. From 1992 to the present, Russia has gained some experience in Islamic finance. This article provides a comprehensive review of the more than 25-year history of the development of the Islamic financial market in Russia in the context of the analysis of its problems and prospects. After introducing the main definitions, concepts, features and principles of Islamic finance, as well as citing numerical and geographical data on the industry, the author describes all the initiatives for the development of Islamic finance in Russia, divided into 4 levels: international, federal, regional and individual. The history of the development of the Islamic financial market in Russia is presented in chronological order with a division into industry components and Russia’s experience in developing each of them — Islamic banking, Islamic insurance and the Islamic capital market. At the end, a brief analysis of the current state of the Russian Islamic financial micro-market is made and the main opportunities that Islamic finance can give Russia are also indicated.

Islamic finance, opportunities and problems of its development

The purpose of this article is to identify the current development, principles, norms and tools of Islamic finance. The second is Islamic financing opportunities. The third is the Challenges of Islamic finance. This article reveals the many reasons that lead to the development and growth of Islamic finance and the challenges facing this system. Despite the fact that a number of measures have been taken to introduce this system, it still faces many challenges. However, the differences between theory and practice, as well as the diversity of opinions of practitioners and financial professionals, pose great challenges.

Development opportunities of islamic finance in Kazakhstan: world experience and perspectives

An increase in demand for alternative financial services contributes to the growing importance of Islamic finance for a part of the international financial market, which represents for Kazakhstan a viable and sustainable sphere of capital investment in times of crisis to diversify risks. The article reveals the features of functioning of Islamic banks, highlights the main tools of Islamic finance, highlights the development of Islamic finance in foreign countries, including Arab countries, European countries and the United States. The author analyzes the key stages of the development of Islamic finance in Kazakhstan and highlights the problems that impede its full implementation. The recommendations aimed at the development of Islamic instruments in the framework of the Kazakhstani economy are presented. In conclusion, it is concluded that the state is the main institution on whose actions the further functioning of Islamic finance in Kazakhstan depends.

Co-movements and diversification opportunities among Dow Jones Islamic indexes

PurposeThis paper aims to analyse the opportunity of an exclusive investment in the DJ Islamic indexes. The objective is to characterize the links between MENA region index with seven DJ Islamic indexes.Design/methodology/approachA co-movement analysis was conducted to assess whether there is a safe investment during crisis. The VECM verifies the existence of a long run association. The MGARCH-DCC characterizes the dynamic links. The wavelet coherence detects a correlation in a time-frequency domain, which is relevant to set up a diversification strategy based on investment horizons.FindingsDespite the existence of a long run association between the Islamic indexes, diversification opportunities are present. The MGARCH-DCC results recommend including the USA, Canada and Emerging Markets indexes with the Mena index to get diversification benefits. The Wavelet coherence confirms these results for 0 to 16 days holding period and more than six-months’ investment horizons. Hence, MENA portfolio managers should not invest in Europe, UK and Emerging Markets indexes.Research limitations/implicationsThis study focused only on the bivariate correlation analysis without taking into consideration multivariate relationships. Future research should use multiple wavelet coherence and explore S&P Shariah indexes.Practical implicationsThis work is important for investors searching for assets governed by sharia rules, who reject resorting to conventional markets, and policy makers dealing with coordination costs. They would be able to formulate strategies based on the different indexes’ relationships.Originality/valueThis paper enriches the limited stream of literature focusing only on Islamic indexes. Due to the important development of Islamic Finance in each MENA country, the authors shed the light on this Region’s index.

Finance-growth nexus: Islamic finance development in Indonesia

Purpose There are many studies related to finance-growth nexus, but existing empirical evidences still have not provided conclusive result of the nature and direction of this relationship. Moreover, there are only few studies about finance-growth nexus seen from Islamic finance perspective, especially in Indonesia. Therefore, this study aims to examine the nature of causal relationship between Islamic finance development and economic growth in Indonesia seen from the development of Islamic banking, sukuk market and Islamic stock market. Design/methodology/approach By using quarterly data from 2002Q3 to 2017Q4, this study uses vector autoregressive (VAR) model, then uses granger causality and impulse response function to analyze the causal relationship between Islamic finance development and economic growth and also among three main sub-sectors of Islamic finance. Findings This study found that Islamic banking development and Islamic stock market development support neutrality hypotheses view, while sukuk market development supports supply-leading hypotheses view. Moreover, this study also found that there are unidirectional causalities from sukuk market development to Islamic banking development and from sukuk market development to Islamic stock market development. Research limitations/implications This study focuses only on the development of Islamic finance viewed from a macro perspective and only looks at how the three main sub-sectors in Islamic finance develop. In addition, the results of research related to finance-growth nexus are also sensitive to the object of research, the method and the proxies of variables used. Originality/value To the best of the authors’ knowledge, there is no study that examines the causal relationship between Islamic finance development and economic growth in Indonesia based on its three main sub-sectors simultaneously. So, this study gives empirical evidence to contribute on finance-growth nexus discussion based on three main sub-sectors of Islamic finance development in Indonesia.