Financial Principles Research Articles

IMPACT OF BEHAVIOURAL FINANCE ON RISK PERCEPTION, PSYCHOLOGICAL BEHAVIOUR, AND FINANCIAL DECISIONS OF MOROCCAN INVESTORS

The paper deals with behavioural finance as a stream of finance challenging the principles of classical finance by adding psychology to the reasons that could explain observed anomalies within financial markets and which, at the same time, are caused by real human behaviour. The aim of this paper is to explore investors' behavioural, biases and their disturbances of rationality, focusing mostly on the factors of loss aversion, cultural influences, and overconfidence, and how these elements influence investment decisions.It is based on empirical data and behavioural experiments, which help to show how such biases deviate from efficient market theories; this work also tests some methods that can mitigate these negative effects, therefore providing insights on how to integrate the teaching of behavioural finance more effectively into the decision-making process of investors and experts within finance. Precisely, this work is aimed at attempting to provide a model of psychological behaviour for Moroccan investors, based on an investigation carried out in the field among 93 regular investors in the Casablanca Stock Exchange.The main findings of the study underline how behavioural biases deviate from predictions by efficient market theories. This paper has only focused on the specific context of Moroccan investors, yet giving insight into how psychological factors impact investment decisions through new insights into life where these financial behaviours take place.There is, hence, uniqueness to the research through the theoretical and practical approaches integrated therein, with the use of empirical data and behavioural experiments that sustain the discussion on behavioural finance. Presenting the case of Moroccan investors adds a significant contribution to proposing a context-specific model, which may bring important implications for financial decision-making within the region.

The Role of Sharia Economics in Realizing Sustainable Development in Indonesia

This study provides a comprehensive bibliometric analysis of the role of Sharia economics in promoting sustainable development in Indonesia. By examining 810 publications between 2006 and 2024, the study explores key research trends, themes, and collaborations in the literature. The analysis reveals a significant increase in research activity after 2020, with a focus on aligning Islamic finance principles with sustainable development goals (SDGs), particularly in areas such as poverty alleviation, economic growth, and green finance. Keyword co-occurrence visualizations highlight the importance of concepts such as "green sukuk," "economic growth," and "poverty alleviation," while co-authorship networks show concentrated collaboration within small research groups. The findings suggest that Sharia economics has substantial potential to contribute to SDGs, particularly through instruments like green sukuk and waqf, but greater interdisciplinary collaboration and exploration of emerging topics like technology and post-pandemic recovery are needed. These insights have significant implications for both academic research and policy-making in Indonesia and beyond.

The Effect of Islamic Financial Socialization and Education on Public Interest in Using Islamic Banking Services

This study aims to analyze the influence of Islamic finance socialization and education on public interest in using Islamic banking services. Involving 66 respondents in two major cities in Indonesia, this study uses a survey method with questionnaires to collect data that measures respondents' perception and understanding of Islamic finance principles, such as profit-sharing and the prohibition of usury. Data analysis using SPSS shows that socialization and education of Islamic finance have a significant positive influence on the increase in public interest in using Islamic banking services, where more than 65% of respondents reported an increase in interest after participating in the socialization and education program. These findings indicate that effective education strategies are very important in communicating Islamic finance concepts in order to build public understanding and trust. The implication of this study is the need for Islamic banks and financial institutions to continue to strengthen Islamic financial socialization and education programs to expand public access to sharia-based financial services. This step not only supports the growth of the Islamic banking sector, but also strengthens sustainable financial inclusion in Indonesia.

Evaluating robo-advisors through behavioral finance: a critical review of technology potential, rationality, and investor expectations

The mini review assesses the value propositions of robo-advisors through the lens of behavioral finance. Despite their promise of data-driven, rational investment strategies, robo-advisors may not fully replicate the personalized service of human financial advisors or eliminate human biases in decision-making. A content analysis of 80 peer-reviewed articles and publications was conducted, focusing on the intersection of financial technology and behavioral finance. Literature was retrieved using The Chicago School University Library's OneSearch and the EBSCO host database, with key terms including “robo-advisor,” “investment behavior,” “risk tolerance,” “financial literacy,” and “affective trust.” The review identifies four key limitations of robo-advisors: (1) their inability to replicate the service-relationship of human advisors; (2) the presence of human bias in supposedly rational algorithms; (3) the inability to minimize market risk; and (4) their limited impact on improving users' financial literacy. Instead, robo-advisors temporarily compensate for a lack of financial knowledge through passive investment strategies. The findings suggest that integrating behavioral finance principles could enhance the predictive power of robo-advisors, though this would introduce additional complexities. The review calls for further research and regulatory measures to ensure that these technologies prioritize investor protection and financial literacy as they continue to evolve.

The Urgency of Green Banking Regulations in Indonesia in the Implementation of Sustainable Development

This research highlights significant gaps in Indonesia's green banking regulations, particularly the lack of stringent sanctions and clear enforcement frameworks for sustainable finance principles. While the Financial Services Authority Regulation No. 51/POJK.03/2017 addresses environmental sustainability, it fails to impose effective penalties on banks that contribute to environmental degradation. As a result, green banking in Indonesia remains largely a voluntary initiative due to insufficient regulatory measures. This research employs a normative legal research design, utilizing both conceptual and statutory approaches. It advocates for the implementation of stricter penalties and enhanced oversight to ensure compliance with sustainability standards among financial institutions, thereby facilitating the transition to a green economy. Furthermore, the Sustainable Development Goals (SDGs) underscore the importance of indicators related to economic, social, and environmental sustainability, which green banking can help achieve. The proposed revised regulatory framework should include stringent sanctions for violations by both banks and customers, ensuring that financial institutions actively contribute to environmental protection.

Environmental, Social, and Governance (ESG): Roles and Strategies to Improve the Performance of the Indonesian Insurance Industry

The objective of this research is to understand the role of environmental, social, and governance (ESG) in improving the financial performance of insurance companies in Indonesia. A qualitative, library study method was employed, Research results show (1) the role of ESG as definers of competitive advantage, in improving performance, and guaranteeing the sustainability of the company in the future; and (2) the strategy of insurance companies in Indonesia with respect to ESG is to run business with sustainable financial principles and create environmental-based service products. The implications of this study are that the application of ESG principles to insurance companies in Indonesia is expected to drive government programs to implement sustainable development governance (SDGs) in sustainable finance. The novelty of this research is its emphasis on environmentally-based sustainable financial principles. Keywords: social and environmental governance, roles, strategies, performance, insurance

Understanding and Preferences of Islamic Finance Among Gen Z

This study explores the understanding and preferences of Islamic finance among Generation Z by referring to Surah Al-Kahf verse 46. Generation Z, as a growing cohort in the digital era and globalization, has an increasingly important role in global economic development. Qualitative research methods are used to gain in-depth insight into the financial perspectives and beliefs of this generation, while verse 46 of Surah Al-Kahf was chosen as the theological basis for interpreting Islamic financial values. Results showed that, despite exposure to global culture, Generation Z showed significant interest in the concepts and principles of Islamic finance, as described in Surah Al-Kahf verse 46. Their understanding of these values influences their preferences for financial products and services. The implications of these findings for the financial industry and policymakers are presented, highlighting the importance of understanding and accommodating young people's preferences in more inclusive sustainable economic development, in line with the teachings of Surah Al-Kahf verse 46. This research aims to contribute to a better understanding of how Islamic financial values, as stated in the Qur'an, can guide the transformation of the global economy towards greater sustainability and inclusiveness.

Pengaruh Penganggaran Berbasis Kinerja Terhadap Kenaikan Tunjangan Kinerja Bawaslu Dalam Perspektif Hukum Keuangan Negara

This research explores the impact of performance-based budgeting on the increase in the performance allowance of Indonesia's Election Supervisory Agency (Bawaslu) from the perspective of state financial law. This research examines how performance-based budgeting, which emphasises efficiency, effectiveness, and accountability, affects financial management and justifies the increase in allowances. By analysing the legal framework, empirical data, and performance metrics, this study aims to provide a comprehensive understanding of the alignment between budget allocations and performance outcomes in Bawaslu. The method used is normative research with primary, secondary and tertiary legal materials. The data generated from legal materials are described to find objective results. The results of this study The use of a performance-based budgeting system (ABK) by Bawaslu has influenced the policy of increasing performance allowances. Bawaslu's performance measurement refers to the principles of state finance, including efficiency, economic effectiveness, accountability, responsibility, professionalism, proportionality, and openness. The increase in Bawaslu's performance allowance is in accordance with the performance improvement that has been evaluated by Menpan RB, which is the institution responsible for bureaucratic reform.

Perbandingan Sustainability Report antara Bank Syariah Indonesia (BSI) dan Bank Mandiri Berdasarkan Global Reporting Initiative (GRI) Tahun 2022-2023

This research aims to determine the comparison of sustainability reports between Bank Syariah Indonesia (BSI) and Bank Mandiri based on global reporting initiative (GRI) 2022-2023 or to what extent are these two banks committed to implementing GRI standards in presenting transparent and accountable sustainability information? This research uses comparative qualitative descriptive research. By collecting data using secondary data obtained from sustainability reports published by BSI and Bank Mandiri 2022-2023 which can be accessed on their respective websites. This research shows that both banks have a strong commitment to economic, environmental and social performance, although with different approaches and scales. Bank Mandiri has a higher operating scale and numbers, while BSI shows consistent growth and focuses on social and environmental aspects in line with sharia financial principles. This research provides insights into best practices and areas of improvement in sustainability reporting in the banking industry.

Peran Pembangunan Proyek Smelter Manyar dalam Meningkatkan Pendapatan Masyarakat Ditinjau dari Manajemen Syariah

This research aims to determine the role of the development of the Manyar Smelter project and its influence in increasing community income in terms of sharia management. The method used is qualitative obtained from primary and secondary data. The results of this research show that the economic condition of the community before the construction of the Manyar Smelter project was sufficient to meet prosperity. The role of the construction of the Manyar Smelter project in increasing people's income has a huge impact on the community's economy. Apart from recruiting local workers, it also has an impact on the MSME aspect of the surrounding community. So that the level of welfare is more than adequate. Of course, this increase must also be accompanied by financial management in accordance with Islamic financial principles

An analysis of Islamic financing access in Nigeria: perspectives of MSME owners

Purpose Funding difficulties are particularly compounded for Muslim entrepreneurs in Nigeria, owing to the dominance of interest-based financial institutions prohibited in Islam. Thus, this study aims to explore the role of awareness of Islamic finance principles in ameliorating financial deprivation and financial anxiety to increase access to Islamic financing among Muslim entrepreneurs. Design/methodology/approach A quantitative survey method of data collection was used to collect data from a total of 208 micro, small and medium enterprises (MSME) owners based on hand-delivered questionnaires. The data was analyzed using a partial least square structural equation model. Findings The result supports the direct negative impact of relative financial deprivation and the positive impact of awareness of Islamic finance principles on access to Islamic finance. However, awareness of Islamic finance principles could not moderate any of the direct relationship. Practical implications This study implies that financial deprivation is detrimental to access to Islamic finance, but financial anxiety has no significant impact. In addition, policymakers and MSME owners could directly foster access to Islamic finance through awareness of Islamic finance principles, though it could not redirect the negative impact of relative financial deprivation on access to Islamic finance. Originality/value The valuable finding here is that the substantial positive impact of awareness of Islamic finance principles on access to Islamic finance is not enough to redirect the negative effect of relative financial deprivation on access to Islamic finance.

Editorial: Embracing New Horizons

In September 2024, ‘ISRA International Journal of Islamic Finance’ (IJIF) has been rebranded, and its publication is being continued under a new title, ‘International Journal of Islamic Finance and Sustainable Development’ (IJIFSD), following an institutional collaboration between the Islamic Development Bank Institute (IsDBI) and INCEIF University. The collaboration in the publication of IJIFSD marks the interest of both institutions in driving innovative research to create more meaningful real-world impact and support sustainable economic development in societies. The collaboration brings the combined resources and expertise of the two institutions in providing a premier platform for showcasing cutting-edge research by synthesising the principles of Islamic finance and sustainable development practices. While IJIFSD will continue to be published by ISRA Research Management Centre, INCEIF University, it will now have the added leverage of IsDBI to support its sponsorship and ensure its open and free accessibility to readers. The new title incorporates the terms ‘sustainable development’ as a strategic move to align the journal with the evolving landscape of Islamic finance that promotes global sustainability goals and, thus, results in a journal that is broader in scope and coverage. Therefore, besides focusing on the areas of Islamic economics, banking and finance and its related fields—Islamic capital markets, Islamic social finance, takāful (Islamic insurance), Islamic financial law, and Sharīʿah applications in Islamic finance—attention will also be given to the discourse on sustainability and sustainable economic development. With the expanded scope, it is expected that the journal will garner increased appeal to a wider range of authors and readers. It will also be able to reach a wider range of markets that have not yet been served, as well as have greater impact through enhanced citations. The key features of the rebranded journal therefore include: Focus: emerging trends such as green finance, impact investing, financial inclusion. Platform: fostering a community of forward-thinking scholars, researchers, policymakers, and practitioners to share insights on issues of concern. Goal: providing practical solutions for sustainable economic development and showcasing Islamic finance’s role in creating shared prosperity.

Blended Islamic Social Finance-Microtakāful Model

Purpose — This research intends to explore and develop a blended Islamic social finance-microtakāful business model by integrating Islamic social finance (ISF) instruments into the microtakāful framework to enhance its effectiveness and reach. The main objective of integrating these elements is to recommend a sustainable and inclusive financial solution that is in line with the principles of Islamic finance and will address the needs of unserved and underserved segments of the population. Design/Methodology/Approach — This study employed desk research to develop a blended ISF-microtakāful model. It involved reviewing literature to assess existing models and best practices, benchmarking their effectiveness, and analysing successful implementation approaches. Insights were used to create a framework integrating Islamic finance tools with microtakāful, followed by recommendations for a sustainable and inclusive financial solution. Findings — The study portrays a conceptualised blended ISF-microtakāful business model which incorporates ISF instruments into the microtakāful model with an illustration of the business case in the context of the pandemic. Originality/Value — Though microtakāful has been accepted as a mode for providing takāful services to low-income individuals, limited research is available on how it can be blended with traditional ISF instruments such as zakat (obligatory alms), ṣadaqah (voluntary charity), and waqf (Islamic endowment). This makes the model proposed in the research novel. The originality of this research lies in its pioneering exploration of the synergies between ISF and microtakāful, opening up new avenues for research and practical implementation in the field of microtakāful.

Shariah Contracts in Private Equity and Its Prospect for Small and Medium Enterprises (SME)

This study explores the significance of contracts in private equity applications, particularly in addressing Shariah compliance concerns inherent in traditional private equity structures. Private equity plays a crucial role in funding and nurturing SMEs, aligning with equity-based activities that are conducive to Islamic finance principles. Using a qualitative Grounded Theory approach, the study involves interviews with various stakeholders in the financial industry. Grounded theory is an iterative and inductive method that systematically analyses data to uncover patterns and themes, generating hypotheses or theories derived directly from the data. The study identifies murabahah, ijarah, mudarabah, and musharakah as suitable contracts for private equity applications. These findings illuminate opportunities for financial industry participants, particularly SMEs, to innovate and access funding through private equity avenues.

Integration of productive waqf in Sharia insurance: Enhancing investment and life protection

Purpose – This study investigates the integration of productive waqf into Sharia insurance in Indonesia and its contribution to investment benefits and life protection. It aims to explore how waqf can enhance the economic and social impacts of Sharia insurance products.Methodology – A qualitative approach was employed, involving a comprehensive review of the literature on waqf, Sharia insurance, and Islamic finance. Additionally, interviews were conducted with experts in Sharia insurance and waqf management to gather insights into the current practices and challenges.Findings – This study reveals that productive waqf initiatives within Sharia insurance have the potential to significantly improve investment returns and expand the scope of life protection benefits offered to participants. It identifies key areas in which waqf funds can be deployed effectively, such as long-term investment projects and social welfare programs.Implications – The findings have practical implications for policymakers, Sharia insurance providers, and waqf administrators in enhancing collaboration to maximize the socio-economic benefits of waqf. By integrating waqf into insurance products, stakeholders can foster sustainable development and financial inclusivity.Originality – This study contributes to the literature by offering insights into the innovative use of waqf within the dynamic context of Sharia insurance. It underscores the originality of leveraging waqf assets to address contemporary socioeconomic challenges and promote ethical finance principles.

Hubungan Jangka Pendek dan Jangka Panjang antara Pembiayaan Perbankan Syariah dan GDP di Indonesia dengan menggunakan metode Vector Error Correction Model

This research analyzes the relationship between Islamic bank financing and economic growth as measured by Gross Domestic Product (GDP) using the Vector Error Correction Model (VECM) to explain the short-term and long-term relationship dynamics between these two variables. The results of this research found that there is a long-term negative relationship between Islamic bank financing and GDP. These findings indicate that, although Sharia financing is expected to support economic growth through Sharia-based financial principles, the reality shows that the direct effect on overall economic growth is more complex and not always unidirectional. Apart from that, this research also finds that in the short term, both sharia financing and GDP adjust back to long-term balance after experiencing deviations, which means a strong economic correction mechanism exists. The stable VAR stability test results validate the model's reliability in describing the accurate relationship between sharia financing and economic growth in Indonesia. These findings provide important insights for policymakers and Islamic banking practitioners in developing more effective strategies to encourage inclusive economic growth.

POLITICAL-ECONOMIC PARADIGM OF EU ENLARGEMENT: THE CASE OF UKRAINE

The Copenhagen criteria define the requirements for Ukraine’s membership of the European Union: democracy guaranteed by stable institutions, a functioning market economy and the ability to implement the union’s economic, political and monetary objectives. Despite progress made in important areas, Ukraine must take further steps on reforms related to abuse of power, lack of transparency and labour migration. Joining the European Union will pose a challenge for Ukraine to reform bad practices and implement European legislation into national law. The Association Agreement and Deep and Comprehensive Free Trade, which contain economic, judicial and financial principles, should be used as a model for a gradual approach to EU policies and legislation. Ukraine’s future success depends on the reforms implemented, the ability to eradicate corruption, keep people in the country, attract foreign investment and rebuild the country, while maintaining ongoing military support to defend the integrity of Ukrainian territory.

ФИНАНСИРОВАНИЕ «СИНЕЙ» ЭКОНОМИКИ: МИРОВАЯ И РОССИЙСКАЯ ПРАКТИКА

The article briefly describes the prerequisites for the emergence of the blue economy concept. Characteristics are given of the international innovative business standards that have emerged on its basis (Practical guidance for implementing the Sustainable Ocean Principles of the UN Global Compact, Sustainable Blue Economy Finance Principles of the UN Environment Programme Finance Initiative) and new types of financial instruments (blue bonds and debt-for-nature swap). Particular attention is paid to the development of the market for financing a sustainable development in the Russian Federation and the prospects for the emergence of blue bonds on it.

Principles of health care financing based on the FOMS

Principles of health care financing based on the FOMS

Peran Fintech Peer to Peer Lending Syariah dalam Meningkatkan Akses Pembiayaan UMKM di Indonesia

This paper examines the role of Fintech Peer-to-Peer (P2P) Lending Sharia in enhancing financing access for Micro, Small, and Medium Enterprises (MSMEs) in Indonesia. The objective is to explore how P2P Lending Sharia facilitates MSMEs in securing necessary capital and offers investment opportunities in compliance with Sharia principles. The methodology involves a review of existing literature and regulatory frameworks, including the principles outlined by the OJK and DSN MUI. Findings reveal that P2P Lending Sharia provides an efficient, cost-effective, and accessible financial solution, enabling MSMEs to expand their market reach and improve business capacity. It also offers investors a Sharia-compliant alternative to traditional financing. The significance of these findings lies in the potential of P2P Lending Sharia to support MSME growth, strengthen the real sector, and contribute to national economic development, while adhering to Islamic financial principles. This innovation is essential in bridging the financing gap and fostering economic inclusivity