Financing Mode Research Articles

Modes of Islamic financing and aggregate economic output: evidence from Islamic banking industry of Pakistan

With the evolution of Islamic banking, the economic impact of Islamic finance has been studied by many authors. Islamic banks significantly differ from conventional banks in terms of underlying contracts. The asset side of Islamic banks is composed of different modes of financing, which can be categorized at participatory and non-participatory modes of financing. This study aims to examine the relationship of modes of Islamic financing in connection to the real economic output of Pakistan. Using quarterly data from 2005 to 2019, we use autoregressive distributive lag (ARDL) model to analyze the impact of modes of Islamic financing and industrial output. Our findings reveal that non-participatory modes of Islamic financing play a significant role in deriving a healthy aggregate economic output. Therefore, Industrial production found to have a significant positive long run relationship with non-participatory Islamic financing. However, financing modes based on partnership does not have significant impact on total industrial production. The results also show that poor asset quality hinders the production process in the long run and decreases the economic outcome.

DIMINISHING MUSHARAKAHIN ISLAMIC BANKS: AN ANALYSIS BASED ON HOME FINANCING

Islamic Banking is one of the fastest growing banking systems in the modern world. It has also achieved significant growth in the Pakistani banking sector in the recent decades. Diminishing Musharakah (DM) is an Islamic mode of finance which not only provides home financing facilities to the customers but also provides other long term financing transaction such as machinery and equipment financing in Islamic banks. In September 2020, DM has the largest share in the Islamic banking financing in Pakistan at 34.5 percent. Considering the widespread acceptance of DM, this paper discusses the shariah structure of DM and its use as a home finance product, specifically its variants, in Islamic Banking Institutions. This paper also clarifies the issues which create confusions in the minds of the common public about Islamic banking products, emphasizing the importance of this product for Islamic Banking Institutions

Shar¯ı‘ah Governance Framework and Perception of Islamic Banking in Pakistan

Purpose: Globally commercialized Islamic Banks were launched in 1970s at Middle East, Africa while in year 2002 at Pakistan. As of 2019, there were 5 full-fledge Islamic Banks operating in Pakistan and nearly all conventional banks have Islamic windows. Islamic Banks captured more than 15.5% share of the total Pakistan’s banking market and have far greater potential and capacity to take major share in the market. Methodology: Researchers have examined State Bank of Pakistan’s Shar¯ı‘ah Governance Framework and compared it with the Shar¯ı‘ah governance framework of Malaysia, in light of IFSB guidelines. Based on key findings, focused group interviews of Shar¯ı‘ah scholars were carried out to get their perception about the Shar¯ı‘ah compliance and effectiveness of Shar¯ı‘ah Governance Framework in Pakistan. Findings: The study focused on 5 key components of a good governance system, independence of Shar¯ı‘ah board, competence, confidentiality, consistency and disclosure requirement. The study revealed that Pakistan’s Shar¯ı‘ah governance system is compliant with IFSB guidelines and comparable with Malaysian model. Significance: This study is a unique study in the context of Pakistan. The finding of this research study will provide a comprehensive over view of the Shar¯ı‘ah Governance Framework (SGF) and perception of the Shar¯ı‘ah Scholars on SGF. The study findings may be useful for Islamic banks and other institutions using Islamic mode of financing. Limitations: The study was conducted on a limited sample size mainly from Karachi however the study may be replicated on a bigger sample size and including other cities while the number of conducted interviews can be increased if we go for pan Pakistan as they were only 15 dues to limitation of city as Karachi. Practical Implication: The Shar¯ı‘ah scholars have positive opinion and shown satisfaction on Shar¯ı‘ah governance system and effectiveness of Shar¯ı‘ah controls.The study results can be used to improve public perception about Shar¯ı‘ah compliance of Islamic banking system in Pakistan.

LES POLITIQUES DE FINANCEMENT DE LINNOVATION AU MAROC - ETAT DES LIEUX ET PERSPECTIVES -

The Morocco has made considerable efforts in order to develop investments in R&D, from public, private sources or through international cooperation. However, the analysis of the funding policy for Research and Innovation in Morocco teaches us that, in addition to the weak presence of the private sector in this area, public policy is exposed to immense constraints, such as the low budget. allocated, the incompatibility of public procedures… All the more so, the discontinuity and opacity of almost all the funds and programs have prevented any attempt to develop research and innovation in Morocco. These constraints, both economic, institutional and political, lead to recognize the imminent role that large Moroccan companies could play, in terms of financing research and innovation, However, the use of other alternative modes of financing, such capital investment, Business Angels and Crowdfunding constitute a promising choice, faced with the financing problem faced by startups and innovative project leaders in Morocco.

Exploration of Rural Supply Chain Finance Mode in Shandong Province and Credit Risk Warning in the “Internet+” Environment

Exploration of Rural Supply Chain Finance Mode in Shandong Province and Credit Risk Warning in the “Internet+” Environment

Crowdfunding as an alternative financing solution for SMEs in Algeria

The purpose of this study is to present crowdfunding as a new financing alternative for SMEs, which, despite their small size, represent a major challenge for economic growth in Algeria. Therefore, by offering several advantages compared to traditional bank financing, crowdfunding further encourages project leaders to implement their innovative ideas. The crowdfunding present in the world has contributed to the financing of a significant number of emerging companies in the field of entrepreneurship. Despite the rapid evolution of this new mode of financing, the crowdfunding is experiencing slow growth in the Maghreb countries in general and Algeria in particular. This delay is due to the lack of awareness and initiatives on the part of the authorities. Despite the effort made by the Algerian authorities through the complementary finance law of 2020 to regularize this mode of financing, Algeria will have to make even greater efforts to raise awareness of the use of this mode of financing.

Long-Term Care Insurance Reform in Singapore

ABSTRACT In recent years, governments in rapidly aging countries have looked toward the implementation of public insurance schemes to help cover the costs of care for their aging citizenry. This article presents a comprehensive overview of long-term care insurance policy in Singapore. We discuss the successes and challenges of nearly two decades (2002–2019) of policy experimentation with a voluntary long-term care insurance scheme, which was replaced by mandatory social insurance in the 2019 reform. Various aspects of the new scheme, including mode of financing, eligibility criteria, benefit design, and potential impacts are assessed. The article concludes that, in the inherent tension between the breadth and depth of public long-term care social insurance coverage, Singapore has opted for breadth at the expense of depth.

Financing capital-constrained third party logistic firms: fourth party logistic driven financing mode vs. private lending driven financing mode

The accounts payable payment period for transportation costs is usually less than the accounts receivable cycle for transportation fees for a third-party logistic (3PL) firm in China; hence, a capital-constrained 3PL firm has a strong demand to seek credit loans from some competitive lenders (e.g., fourth-party logistic [4PL] firm or private lending [PL] organization). To investigate the attractiveness and effectiveness of different financing modes, two practical financing modes (4PL-driven and PL-driven) and an improved 4PL-driven financing mode are formulated in this work. We present a game-theoretical approach to investigate the equilibria based on the profile functions among 4PL firm (or PL), 3PL firm, supplier and retailer under different financing modes. We find that (1) the practical 4PL-driven financing mode will be the Pareto-dominant financing mode for 3PL firms, suppliers and retailers when the initial budget of the 3PL firm falls below a certain level. (2) The 4PL firm's profit is always higher when using the improved 4PL-driven financing mode. (3) The 4PL firm should use the practical 4PL-driven financing mode for start-up 3PL firms to support their growth; but when they grow to a certain scale, the 4PL firm should use the improved 4PL-driven financing mode to enhance its profit.

Trade credit or vertical merger strategy for financial constrained retailer in a supply chain with asymmetric competing retailers

Motivated by the practices that many small and middle-sized enterprises (SME) retailers have financial constraints due to their limited budget and financing access, this paper studies the manufacturer’s financial strategy (i.e., trade credit versus vertical merger with a capital-constrained retailer) in a supply chain with two financial asymmetric retailers. We first compare the equilibrium profits under different financing modes and find that if manufacturer’s capital cost under trade credit or administrative cost under vertical merger is below a certain threshold, the manufacturer should finance instead of deselect the capital-constrained retailer even though the competition is intensified. Furthermore, manufacturer can choose a financing strategy based on the tradeoff between financing value and cost from trade credit or vertical merger. Under trade credit, the increased horizontal competition intensity is against the capital-constrained retailer while with vertical merger the competition intensity is harmful to the capital-abundant retailer. In addition, through investigating the impact of different financial modes on the equilibrium profits of the supply chain players, we find that whether trade credit can outperform vertical merger for both the manufacturer and the capital-constrained retailer depends on horizontal competition intensity, profit-sharing proportion and administrative cost of vertical merger. Moreover, the capital-abundant retailer will get the lowest profit when other participators act like an alliance. Our study provides a roadmap for the manufacturer to make a financing policy for capital-constrained retailer who competes with a funded retailer.

Research on the Prevention and Control of Supply Chain Financial Risks from the Perspective of Enterprise Financing

At present, China’s economy is developing rapidly and all companies actively participate in market competition. Hence, many small-sized companies with lower competitiveness face more risks and may be shut down if no efficient marketing strategies are adopted. Among their obstacles, financing problems seriously affects the company’s development. However, in view of the fierce market competition, emerging supply chain financing models has been constructed, which is highly valued by many companies. In addition, the supply chain financing mode has a positive impact on the development of enterprises. In this thesis, the corporate financing and its application in risk management will be analyzed in detail, so as to provide companies with better financial services and to ensure their stable and sustainable development.

Islamic House Financing through Diminishing Musharakah: A Cheaper Solution

Shelter is one of the basic necessity along with food and clothing which any human endeavors for. The assiduous efforts to acquire basic necessities is made part of human nature (Shahzad & Farooq, 2014). Quran and Hadith emphasizes on the importance of housing; “And Allah has made for you from your homes a place of rest and made for you from the hides of the animals tents which you find light on your day of travel and your day of encampment; and from their wool, fur and hair is furnishing and enjoyment for a time” (Al Quran An-Nahl: 80) The Holy Prophet Muhammad (PBUH.) said; “The happiness of son of Adam is determined by three things: a pious wife, a good house and a good vehicle, and the misery of son of Adam is determined by three things: an impious wife, a bad House, and bad vehicle.” (Musnad Ahmad: 1368). Irrespective of housing being one of the basic necessity, the high expenses to acquire it usually costs people all of their reserves and life savings. But not all people have sufficient resources to get a house and therefore, they often approach the financial institutions in order to fulfil their financial needs. The financial institutions offer house financing facility for buying, construction, renovation or balance transfer (Muhammad Asghar Shahzad, 2012; Shahzad, 2015; Shahzad & Farooq, 2014; Shahzad, Saeed, & Ehsan, 2019) . Conventional banks provide financing for building a house based on interest (Riba), which is strictly prohibited in Islam. According to the Quran, dealing with interest is equivalent to waging war against Allah (SWT) and His Prophet (PBUH) (Council of Islamic Ideology, 2003; Khan, 2000; Shahzad & Hameed, 2018). In order to provide alternative solution of house financing, contemporary Sharī‘ah scholars have introduced Sharī‘ah compliant methods of house financing. There are different modes of Islamic house financing being used in Muslim and non-Muslim countries, i.e., Murabahah Lil-Amiri bi-al-Shira, Istisna’, Ijara, and Diminishing Musharakah (Al-Shalhoob, 2008). However, the Diminishing Musharakah is more acceptable to Sharī‘ah scholars as compared to other modes for house financing. (Shirazi, Syed Ali, & Zafar, 2014)

District Reliance by Service Function: A Study of Public Financing of American Special Districts

Over the past several decades, special districts have proliferated and become the most rapidly growing type of local governments in the U.S. This study provides an exploratory investigation of special district finance reliance from two aspects, including expenditure reliance of general–purpose governments on special districts’ service delivery and financing mode of special districts. Using financial data collected from the Bureau of Census, this study provides detailed descriptive analyses on temporal trends and geographical patterns of expenditure reliance and revenue financing mode for four service functions. From the perspective of expenditure reliance, this study shows that special districts have replaced the role of general–purpose governments. In terms of revenue modes, special districts tend to rely on user fees, equating payers and beneficiaries of services. Moreover, this study shows that on which revenue sources the districts rely the most vary by service function and geography.

Determinants of prepaid systems of healthcare financing: a worldwide country-level perspective

In this paper we examine determinants of prepaid modes of health care financing in a worldwide cross-country perspective. We use three different indicators to capture the role of prepaid modes in health care financing: (i) the share of total prepaid financing as percent of total current health expenditures, (ii) the share of voluntary prepaid financing as percent of total prepaid financing, and (iii) the share of compulsory health insurance as percent of total compulsory prepaid financing. In the econometric analysis, we refer to a panel data set comprising 154 countries and covering the time period 2000–2015. We apply a static as well as a dynamic panel data model. We find that the current structure of prepaid financing is significantly determined by its different forms in the past. The significant influence of GDP per capita, governmental revenues, the agricultural value added, development assistance for health, degree of urbanization and regulatory quality varies depending on the financing structure we look at. The share of the elderly and the education level are only of minor importance for explaining the variation in a country’s share of prepaid health care financing. The importance of the mentioned variables as determinants for prepaid health care financing also varies depending on the countries’ socio-economic development. From our analysis we conclude that more detailed information on indicators which reflect the distribution of individual characteristics (such as income, family size and structure and health risks) within a country’s population would be needed to gain deeper insight into the decisive determinants for prepaid health care financing.

EMI Tracking System

EMI Tracking System is a mobile application which will be useful for the people who are buying and selling products in installment. The Equated Monthly Installments (EMI) based term financing has been found to be convenient by both the lending and borrowing communities, especially in the case of small ticket equipment financing. However, there remains considerable scope for clarity and understanding of the EMI mode of term financing. This system aims at digitalization of EMI payment. This is system provides a platform to connect both lenders and borrowers. They can register themselves in this platform and the lenders can note down all the payment details of their borrowers, They can also list the available products in their own login page. The lender can add as many borrowers they want and store their details. Borrowers can also register in this platform and they can verify their payments with their respective lender and they can set remainder for their future payments and they can also order products through in platform.

Enterprise Financing Mode and Technological Innovation Behavior Selection: An Empirical Analysis Based on the Data of the World Bank’s Survey of Chinese Private Enterprises

In China, private enterprises are becoming more and more important subjects of technological innovation, however(at the same time) financing difficulties of private enterprises are also ubiquitous. The research on the impact of financing methods on technological innovation behavior of private enterprises is conducive for the government to launch more targeted financing support policies.I men private enterprises are becoming the mainbody of technological innovation, but the difficulties in financing is especially heavy in China. Based on the data of the World Bank survey on China’s enterprises in 2012, this paper studies the impact of different financing methods on technological innovation behavior of private enterprises. The results show that (1) internal financing can promote the technological innovation behavior of enterprises better than external financing can do and (2) among the various forms of external financing, bank loans have the most significant impact on the technological innovation behavior of private enterprises, followed by commercial credit.

Antecedents and Consequence of Murabaha Funding in Islamic Banks of Indonesia

As Islam supports fair trade, the Murabaha is the most popular and most common mode of Islamic financing. It is a contract of sale between the bank and its client for the sale of goods at a price plus an agreed profit margin for the bank. The contract involves the purchase of goods by the bank which then sells them to the client at an agreed mark-up. While their characteristics and values are unique, they are also subject to conventional measurement of efficacies. This study investigates how the primary health predictors of conventional banks under the Basel III regime could provide a positive means to assess the Murabaha funding and subsequently secure long-term profitability. This study constructed a path analysis (from 120 databases) to assess whether Islamic banks’ leverage and capital adequacy may alter the Murabaha funding and increase stock equity directly and indirectly. The research findings are mixed where leverage does not alter the Murabaha funding but only affects the profitability; besides, capital adequacy increases the outgoing funding significantly but does not increase stock equity. Murabaha funding is essential to Islamic bank equity. This study implies Murabaha funding are expensed, despite increasing debts in Islamic banks

Research on Financing of Small and Micro Enterprises in Postepidemic Period: Based on Evolutionary Game and Numerical Simulation

Small and microenterprises are most affected during the COVID-19 epidemic period. Despite the government introducing many preferential policies, financing for small and microenterprises is still difficult. Based on evolutionary game theory and Matlab r2017b software, this paper discusses the causes of financing problems from two aspects. By taking loan amount, loan interest rate, guarantee value, and intermediary business income as variables, the research shows that banks not only pay attention to the comprehensive return of small and microenterprises but also pay more attention to the coverage of loan principal and interest by the value of collateral. Relying on collateral for credit is still the main way, and the lack of collateral causes financing difficulties of small and microenterprises. Accordingly, this paper puts forward the countermeasures and suggestions to improve the guarantee compensation mechanism and innovate the financing mode.

Out-of-Pocket, Catastrophic Health Expenditure and Distress Financing on Non-Communicable Diseases in India: A Systematic Review with Meta-Analysis.

Objective:The aim of this systematic review is to determine pooled estimates of out-of-pocket (OOPE) and catastrophic health expenditure (CHE), correlates of CHE, and most common modes of distress financing on the treatment of selected non-communicable disease (cancer) among adults in India. Methods:PubMed, Scopus and Embase were searched for eligible studies using strict inclusion and exclusion criteria. Data was extracted and pooled estimates using random effects model of meta-analysis were determined for different types of costs. Forest plots were created and heterogeneity among studies was checked. Results:The pooled estimate of direct OOPE on inpatient and outpatient cancer care were 83396.07 INR (4405.96 USD) (95% CI = 44591.05-122202.0) and 2653.12 (140.17 USD) INR (95% CI = -251.28-5557.53), respectively, total direct OOPE was 47138.95 INR (2490.43 USD) (95% CI = 37589.43-56690.74), indirect OOPE was 11908.50 INR (629.15 USD) (95% CI=-5909.33-29726.31) and proportion of individuals facing CHE was 62.7%. However, high heterogeneity was observed among the studies. Savings, income, borrowing money and sale of assets were the most common modes of distress financing for cancer treatment. Conclusion:Income- and treatment-related cancer policies are needed to address the evidently high and unaffordable cancer treatment cost. Economic studies are needed for estimating all types of costs using standardised definitions and tools for precise estimates. Robust cancer database/registries and programs focusing on affordable cancer care can reduce the economic burden and prevent impoverishment.

Islamic banking and corporate investment efficiency: empirical evidence from Malaysia

PurposeThe purpose of this paper is to examine whether and how Islamic banks' financing affects corporate investment efficiency.Design/methodology/approachTo achieve the research purpose, an empirical model was constructed to describe the relationship between Islamic banks' financing and corporate investment efficiency. The empirical model was tested through generalized method of moments (GMM) estimation technique using a panel data of 163 Malaysian listed firms for the period 2007–2017.FindingsThis study provides evidence that Islamic banks' financing plays an important role in enhancing investment efficiency and that this positive effect comes mainly from non-PLS contracts. Moreover, the results show that the effect of Islamic banks' financing in preventing suboptimal investments is stronger in the financial crisis period. The results also reveal that the contribution of Islamic banks' financing in reducing suboptimal investments is more prominent when firms face over-investment problems.Research limitations/implicationsThis research contributes to the debate on the financial implications of Islamic banks' financing modes by exploring their effect on corporate investment efficiency.Practical implicationsFrom a managerial perspective, the research findings are beneficial to Islamic bank managers to the extent that they highlight the role of Islamic financial contracts in improving corporate investment efficiency. In addition, the lower effect of PLS contracts on investment efficiency implies that policymakers in Malaysia should multiply their efforts to further expand the PLS financing.Originality/valueThis paper offers some insights on the role of Islamic banks' financing in mitigating agency conflicts and reducing asymmetric information problems. It is the first attempt focusing on the role of Islamic financing in fostering corporate investment decisions.

Understanding the impact of land finance on industrial structure change in China: Insights from a spatial econometric analysis

Land finance has played an essential role in China’s fiscal system, and the use of such in the future will impact the development of the industry. Introducing the terms land transfer-centered (LTC) mode and land investment-centered (LIC) mode, for land finance, this study aims to understand the relationship between land finance and industrial structure change by incorporating spatial factors. Using panel data at the Chinese prefecture-level from 2004 to 2017, the dynamic spatial Durbin model (SDM) was applied. The empirical results indicate that the industrial structures of the cities have spatial dependence. Furthermore, the employment of the LTC and LIC modes resulted in different industrial structures, both in focal and adjacent cities. Specifically, the LTC mode, which helps the government to gain land conveyance revenue, cannot boost the optimization of industrial structure. In a LIC mode where the agreement-based land transfer area is expanded, the advancement of industrial structure is hindered, while a LIC mode that increases the agreement-based land transfer price can facilitate the upgrade of industrial structure to some extent. Additionally, the spatial spillover effects of land finance suggest there are interregional competition and imitation, with negative effects on industrial structure change in adjacent areas. Considering the overall negative effects of land finance on industrial structure advancement, specific policy guidelines are provided based on the different industrial structure change pathways that result from the two modes of land finance. Improvement of the local government’s evaluation systems and formulation of targeted and instructive land finance strategies are crucial to upgrade industrial structure.