Financial Sustainability Research Articles

Empowering the elderly: a cash waqf Takaful model for enhanced provision and protection in Malaysia

Purpose The primary objective of this research is to introduce a pioneering takaful model that provides both provision and protection to the aging population by combining the concept of cash waqf with takaful. This model is designed to align with Shariah principles, ensuring sustainability and enduring impact. Design/methodology/approach This research adopts a qualitative methodology, where a focus group discussion was conducted with six stakeholders. The participants consisted of takaful operators, legal experts and other industry players. The participants were presented with the proposed cash waqf takaful model and their feedback was recorded. Legal issues related to linking waqf with takaful were also identified and discussed. Findings The study highlights the need for innovative financial solutions to support Malaysia's aging population. It proposes a cash waqf takaful model, leveraging crowd funding for sustainability. Legal hurdles and recommendations for overcoming them are discussed, along with suggestions for future research on quantitative validation and regulatory frameworks. Ultimately, the study emphasizes the holistic approach of the proposed model in addressing the well-being of Malaysia's senior citizens. Practical implications The proposed takaful model presents opportunities for takaful operators to integrate Islamic social finance into their operations, enabling easier access to takaful for the elderly community. By eliminating financial barriers, it can transform the takaful landscape, ensuring inclusivity and financial security for aging populations. Moreover, policymakers see it as a blueprint for sustainable financial solutions and social welfare enhancement globally. Originality/value The study introduces a novel cash waqf takaful model to support Malaysia's aging population, leveraging crowdfunding for sustainability. It addresses legal challenges unique to Malaysia and proposes collaboration with State Islamic Religious Authorities. Furthermore, it emphasizes the need for further research to validate the model's effectiveness and explores its potential global policy implications.

Mapping the landscape of green banking strategies: a bibliometric approach

IntroductionGreen banking (GB) strategies are a set of financial practices and activities implemented by banks to encourage sustainability, environmental responsibility, and low-carbon impact. This bibliometric study examines the present state of research in this field by utilizing the Scopus database for data retrieval and VosViewer for network analysis.MethodA total of 149 researches were retrieved from the Scopus and analyzed using the VosViewer software following the PRISMA guidelines. The study examines year-by-year publication patterns, top-cited articles, contributing countries, journals, co-citation analysis of authors, and co-occurrence analysis of keywords.ResultStrategies such as online banking, solar ATMs, construction of green buildings, and making provisions for green loans are identified as the key GB strategies that can be adopted by the banks. Furthermore, the fundamental challenges banking organizations encounter while implementing GB strategies are underlined.DiscussionThe study suggests that “green brand image,” “green audit,” “environmental economics,” and “carbon footprint” can be considered as an area of interest in future. The study provides researchers, policymakers, regulators, and financial institutions with valuable insights by presenting the current state of green banking research and identifying emerging areas for further exploration. These findings will help others to discover the areas of interest in GB and advancing sustainable finance practices that can foster environmental responsibility in the financial sector.

Convergence of public policies: Aligning policies and actors for sustainable financing of Moroccan SMEs—MACTOR analysis

SMEs are characterized by a number of flaws that threaten their survival and counteract them from reaching high levels of growth and development. Access to finance is the primary problem facing these companies in the Moroccan context. Aware of the effective and potential impacts of SMEs on the country as a whole, the Moroccan Government through a variety of actors has mobilized its efforts in a number of ways to support this population of companies. This study assesses the extent to which actors within the Moroccan SMEs’ financing ecosystem align to support these companies and develop their ability to access external financing. Using the MACTOR model, based on an in-depth contextual analysis and expert interviews, our findings suggest that Morocco’s SMEs’ financing ecosystem is skewed, with high levels of convergence between its components.

US domestic sentiment reactions to climate and economic policy uncertainties: a quantile ARDL approach

ABSTRACT Over the years, climate and economic policy uncertainties have become critical considerations that shape public attitudes. They have the potential to impact people’s perceptions of financial stability, ecosystem integrity, and environmental sustainability. This paper aims to provide evidence on the sensitivity of US business and consumer sentiments to uncertainties arising from climate and economic policies in both short-term and long-term perspectives, and across different sentiment states. Our empirical investigation draws on a quantile ARDL approach, after orthogonalizing original sentiment series with respect to a diverse range of influential factors. The results reveal that climate and economic policy-related uncertainties have a negative impact on business (consumer) sentiment in the short and long run (only in the short run). These effects are particularly more pronounced when pessimistic sentiment begins to take hold. Moreover, we find evidence of locational asymmetry, especially in the long run.

The Impact of Financial Development and Green Financing on Economic Growth: An ARDL Estimation

This research investigates the influence of financial development and green financing on Pakistan's economic growth. Financial development is assessed through two sub-dimensions: financial value added by manufacturing and financial value added by services. Additionally, population and education serve as control variables to assess their impact on economic growth. Data from 1990 to 2020 was utilized for analysis using EViews v10 in Time series. Statistical tests including descriptive statistics, F-bound cointegration tests, and ARDL models were employed to test hypotheses. Diagnostic tests were also conducted to ensure data clarity and generalizability. The findings reveal that financial development positively and significantly affects economic growth in both the short and long run. Moreover, green financing demonstrates a positive and significant impact on long-term economic growth but remains insignificant in the short term. Findings suggest that fostering financial development, and integrating green financing initiatives into economic policies can further bolster sustainable development efforts, aligning with global environmental goals. Policymakers can use these insights to design targeted strategies aimed at leveraging financial sector growth and sustainable financing practices to enhance Pakistan's economic resilience and prosperity. Nevertheless, this study is limited by its focus solely on Pakistan, with only 31 yearly observations. Future research could enhance the study's applicability by utilizing panel data from various countries.

Bank financial sustainability evaluation: Data envelopment analysis with random forest and Shapley additive explanations

Ensuring financial sustainability is imperative for a financial institution's overall stability. To mitigate the risk of bank failure amid financial crises, effective management of financial sustainability performance becomes paramount. This study introduces a comprehensive framework for the accurate and efficient quantification, indexing, and evaluation of financial sustainability within the American banking industry. Our approach begins by conceptualizing financial sustainability as a multi-stage, multifactor structure. We construct a composite index through a three-stage network data envelopment analysis (DEA) and subsequently develop a random forest classification model to predict financial sustainability outcomes. The classification model attains an average testing recall rate of 84.34 %. Additionally, we employ SHapley Additive exPlanations (SHAP) to scrutinize the impacts of contextual variables on financial sustainability performance across various substages and the overall banking process, as well as to improve the interpretability and transparency of the classification results. SHAP results reveal the significance and effects of contextual variables, and noteworthy differences in contextual impacts emerge among different banking substages. Specifically, loans and leases, interest income, total liabilities, total assets, and market capitalization positively contribute to the deposit stage; revenue to assets positively influences the loan stage; and revenue per share positively affects the profitability stage. This study serves the managerial objective of assisting banks in capturing financial sustainability and identifying potential sources of unsustainability. By unveiling the “black box” of financial sustainability and deciphering its internal dynamics and interactions, banks can enhance their ability to monitor and control financial sustainability performance more effectively.

QUO VADIS SUSTAINABLE FINANCE? DRIVERS AND BARRIERS TO GREEN FINANCE TRENDS IN THE WESTERN BALKANS

This article is in convergence with the newest and most trending movements of the last decades related to the reduction of pollution, created by the business sector on a global scale, as well as to the minimization of climate change. The contribution of this paper will be in terms of the operation of green finance in the framework of the sustainable economy, as well as to the results it produces. The main purpose of this study is to evaluate the real possibilities of the institutional operations of what is proclaimed on the grounds of creating preconditions for green financing. For this purpose, the sample of the Western Balkans countries has been considered for examining the sustainability of green finances. The research first reviews the latest theoretical framework related to the applicability of green finances in transition economies. Through analysis, was gathered evidence of internal and external drivers that justify green financing as an efficient input of a sustainable economy. The influence of state institutions through establishing regulations and laws that stimulate private sector developments in the transition economy through green financing as the first impetus is reviewed. The issues related to climate challenges suggested by the Kyoto Protocol are summarized. Meanwhile, the last impetus is the considerable influence of the EU, stimulating alignment with European regulatory standards, as a prerequisite for membership. Meanwhile, the results suggest that although numerous projects and funding’s were dedicated to the green finance development path, these countries are lagging mostly on the implementation of green finance infrastructure, thus we cannot look forward to more substantial development.

Behind the budget: analysing the factors driving sustainable urban development financing in Spain

ABSTRACT This study addresses the factors that determine EU-funded resources in the context of urban development policies in Spain. The interplay of institutional capacity, prior inertia, and local characteristics emerge as determinant variables on Spanish urban financing dynamics. The analysis of the 121 funded cases in the 2021 Spanish call for sustainable urban development reveals the presence of specific local characteristics to be crucial in assessing funding. Stable small and medium-sized municipalities with previous funding experience are more likely to secure funding. The Spanish case emerges as paradigmatic, illustrating how current urban funding frameworks recognise cities with unique characteristics as exemplary models.

Gram India: Scaling Up a Social Enterprise

This case focuses on Amrita Sharma, a social entrepreneur and the challenges her team faces in managing the social enterprise Gram India. Gram India is the marketing division of Parnana Parnani Education Society, which offers free education and employment opportunities to rural Indian women. Established as a Limited Liability Partnership on 18 December 2015, Gram India specializes in embroidery and offers products, such as handicrafts, suit covers, incense sticks and rural BPO services. The corporate office is in Jaipur, Rajasthan and the production centre is in Newai, Rajasthan. Gram India strives to balance two main objectives as a social enterprise: creating social value by employing rural women and achieving financial sustainability through sufficient revenue generation. However, several challenges impede their path to self-sustainability. These challenges include over-dependence on a single customer, the physical distance between the office and production centre, labour issues, funding uncertainties, distribution channel choices, staff management and inventory handling. After four successful years, Amrita and her team are contemplating strategies to ensure Gram India’s long-term sustainability. They need to devise effective plans to overcome these obstacles and secure the future of their enterprise.

An Application of an Initial Full Value of Vaccine Assessment Methodology to Measles-Rubella MAPs for Use in Low- and Middle-Income Countries.

Measles and rubella micro-array patches (MR-MAPs) are a promising innovation to address limitations of the current needle and syringe (N&S) presentation due to their single-dose presentation, ease of use, and improved thermostability. To direct and accelerate further research and interventions, an initial full value vaccine assessment (iFVVA) was initiated prior to MR-MAPs entering phase I trials to quantify their value and identify key data gaps and challenges. The iFVVA utilized a mixed-methods approach with rapid assessment of literature, stakeholder interviews and surveys, and quantitative data analyses to (i) assess global need for improved MR vaccines and how MR-MAPs could address MR problem statements; (ii) estimate costs and benefits of MR-MAPs; (iii) identify the best pathway from development to delivery; and (iv) identify outstanding areas of need where stakeholder intervention can be helpful. These analyses found that if MR-MAPs are broadly deployed, they can potentially reach an additional 80 million children compared to the N&S presentation between 2030-2040. MR-MAPs can avert up to 37 million measles cases, 400,000 measles deaths, and 26 million disability-adjusted life years (DALYs). MR-MAPs with the most optimal product characteristics of low price, controlled temperature chain (CTC) properties, and small cold chain volumes were shown to be cost saving for routine immunization (RI) in low- and middle-income countries (LMICs) compared to N&S. Uncertainties about price and future vaccine coverage impact the potential cost-effectiveness of introducing MR-MAPs in LMICs, indicating that it could be cost-effective in 16-81% of LMICs. Furthermore, this iFVVA highlighted the importance of upfront donor investment in manufacturing set-up and clinical studies and the critical influence of an appropriate price to ensure country and manufacturer financial sustainability. To ensure that MR-MAPs achieve the greatest public health benefit, MAP developers, vaccine manufacturers, donors, financiers, and policy- and decision-makers will need close collaboration and open communications.

Vertical acquisition and carbon capture and storage choices under cap-and-trade regulation with sustainable finance

In this paper, we establish a contingent claim framework for environmental management. The paper focuses on the vertical acquisition of a supply chain in the context of sustainable insurance (i.e., sustainable finance), specifically considering carbon capture and storage (CCS) technology choices and cap-and-trade regulations. The main results are as follows. Firstly, a more stringent cap-and-trade scheme increases equity efficiency in sustainable insurance, particularly when the green upstream manufacturer with advanced CCS technology acquires the brown downstream manufacturer, which also uses advanced CCS technology. Secondly, it harms risk efficiency, especially when the green upstream manufacturer with backward CCS technology acquires the brown downstream manufacturer, which uses advanced CCS technology. Thirdly, it increases the default risk in the insurer's equity, especially when the green upstream manufacturer with backward CCS technology acquires the brown downstream manufacturer, which also uses backward CCS technology. Overall, cap-and-trade's effects on equity and risk efficiency in vertical acquisition and default risk in insurer's equity within sustainable insurance depend on adopting CCS technology. Policymakers should incentivize advanced CCS technologies in vertical acquisitions to enhance equity and reduce default risks, supporting long-term financial stability and environmental sustainability toward Sustainable Development Goals.

Waqf and Microfinance Integration for Enabling Sustainable Financial Inclusion: Analysis of Sharīʿah Compliance

Purpose — Sustainability has remained one of the most significant challenges facing the microfinance industry, and Islamic microfinance is no exception. The need for Sharīʿah compliance poses an additional challenge for the Islamic microfinance industry. Many practitioners have argued that, in practice, social missions should be sacrificed for profitability so that microfinance institutions (MFIs) could achieve sustainability and competitiveness in the finance market. This paper investigates the potential of integrating waqf and microfinance to allay the challenge of balancing social responsibility (outreach) and financial sustainability within Islamic MFIs. Additionally, it analyses the Sharīʿah compliance requirements underpinning this integration. Design/Methodology/Approach — This study adopts a qualitative method of inquiry, utilising an inductive approach to understand the conceptual framework of waqf and financial inclusion and in discussing Sharīʿah compliance aspects of socially-oriented instruments in socio-economic development. Findings — The research finds some historical antecedents to evidence the inherent social mission of waqf which, if integrated with microfinance, ensures the sustainability of Islamic MFIs. This affirms that outreach and sustainability may not be mutually exclusive under waqf and Islamic microfinance integration. Originality/Value — This study, through historical antecedents and contemporary practices, establishes that waqf and microfinance integration can address the sustainability of the Islamic microfinance industry and preserve its social mission.

Indonesian Islamic Banks’ Post-Pandemic Profitability Alignment with Sustainability Goals

Purpose — The Islamic banking sector in Indonesia has recovered from the COVID-19 pandemic. Despite the sector’s resilience to the crisis, Islamic banks have lower levels of profitability than their conventional counterparts. They therefore need to optimise profitability as well as implement sustainability practices due to their high reliance on income from intermediary functions and their core principle of protecting life and preventing harm. This study aims to optimise the post-pandemic profitability of Indonesian Islamic banks while seeking to align profitability with sustainable development goals (SDGs). Design/Methodology/Approach — The model is developed based on the combination of linear programming and financial analysis, with constraints considering banking regulations and practices. The model highlights financing product types, financing fields of business, and types of deposit products that contribute to higher profits and support sustainability practices. Findings — The recommended financing product types, financing fields of business, and deposit product types lead to profitability growth of up to 85 per cent, even better than the pre-pandemic performance of Islamic banking and the overall Indonesian banking industry. This research also finds that Islamic banks’ strategy for profit optimisation is consistent with the increasing support for SDGs. Originality/Value — There is a lack of literature discussing the alignment of Islamic banks’ profit optimisation with the SDGs. This study contributes to the literature by aligning the Islamic banks’ profitability strategy with sustainable financing. Research Limitations/Implications — The study is expected to promote the implementation of sustainability practices as well as increase the profitability of Islamic banks, drawing from evidence in Indonesia.

Financial constraints and sustainability in bioeconomy firms

AbstractIn the current scenario, sustainability has become vitally important. This paper focuses on bioeconomy as it links the economic systems and sustainable development, promoting innovative and environmentally friendly solutions. The bioeconomy firms need financial resources that play a critical role in their ordinary activities and in the activities that contribute to sustainability. The relationship between firms' ESG (environmental, social and governance) factors and their financing decisions has received little attention. Therefore, the objective of this article was to analyse the relationship between financial constraints and ESG performance focusing on bioeconomy firms. To carry out the analyses we have used 227 European bioeconomy firms developing three machine learning models. The main findings highlight the importance of the profitability (return on equity—ROE and return on assets—ROA) and the indebtedness in characterising firms' constraints, and the impact of non‐disclosure of ESG results. The study emphasises the economic importance of ESG practices in enhancing companies' financial conditions and access to capital, by using their corporate strategy and management: non‐disclosure of ESG information is related to an increase in funding constraints for listed bio companies. Thus, improving both economic and ESG performance can enhance access to capital, guiding business decisions.

Financial Accountability, Resources and Competence of Proprietors, and Performance of Private Universities in Uganda

Abstract: The purpose of this study was to examine the effect of financial accountability on performance of private universities in Uganda. The study is guided by a hypothesis, that financial accountability have a statistically significant effect on the performance of private universities. The study taps into the voices of university stakeholders seeking their opinion on how to address the university performance challenges and 162 sample units were selected and participated in the study. The study follows the post-positivism philosophical stance which calls for the use of mixed techniques, while a descriptive, analytical and cross-sectional research design was utilized. Data was analyzed using two statistical software programs: Analysis of Moments of Structures (AMOS) for structural equation modeling (SEM), and SPSS was used for preliminary data analysis. In contrast, content analysis was employed in the qualitative approach. The results were presented using, Scatter plots, regression analysis, correlation coefficients and percentage tables while SEM was used to perform confirmatory factor analysis, principle component analysis, variance analysis, correlation coefficients and regression analysis. There was positive significant correlation between the financial accountability and the University performance (r = 0.641, P<0.01). The results further indicate that financial accountability individually explains 41.1% (R Square Change = .411) of the variations in University performance. The study found out that all dimensions of financial accountability exhibit a positive and significant relationship with performance. Hence value for money, financial reporting and audited accounts can ensure transparent financial transactions avoid diversion of funds, create robust strategies for mobilizing resources and save funds that can be utilized to improve financial sustainability and education quality in private universities. The study recommends that private universities should establish transparent financial reporting, promote active engagement of proprietors in financial decision making and resource mobilization, adherence to fiscal responsibilities, and effective financial governance as well as training proprietors in university financial management.

Financial Sustainability of Social Insurance: The Case of Korean Workers’ Compensation Insurance and Possibility of Triple Moral Hazard

Abstract This study examines the economic stability of Korean Workers’ Compensation Insurance (WCI), highlighting the system’s vulnerability to triple moral hazard. Korean WCI features more generous worker compensation, lower employer premiums, and more active government involvement in accident prevention in addition to a higher industrial accident rate, compared to the system in Germany and Japan. The negotiation process of the WCI among workers, employers, and insurance managers often prioritizes short-term benefits, undermining long-term financial health. Workers seek greater compensation, employers push for lower premiums, and insurance managers may prioritize collective interests, exacerbating the system’s economic instability. Over recent years, applications for occupational disease recognition have surged, and premium rates have decreased, indicating increasing strain. To mitigate these issues, the study proposes enhancing transparency and rationality, involving non-political experts in decision-making, and clearly defining the government’s role in managing WCI. These measures aim to balance stakeholder interests and ensure the WCI system’s sustainability for future generations.

Forecasting health financing sustainability under the unified pool reform: evidence from China’s Urban Employee Basic Medical Insurance

ObjectiveThe integration of the health insurance fund pool may threaten the sustainability of the fund by increasing its expenditures through the exacerbation of the moral hazard of participations. The purpose of this paper is to assess and predict the impact of the single pool reform of China’s Urban Employee Basic Medical Insurance (UEBMI) on the expenditure and sustainability of the health insurance fund.MethodsIn this paper, we consider the pilot implementation of the single pool reform in some provinces of China as a quasi-natural experiment, and develop a staggered DID model to assess the impact of the single pool reform on medical reimbursement expenditure. Based on the results, an actuarial model is developed to predict the impact on the accumulated balance of China’s health insurance fund if the single pool reform is continued.ResultsWe found that the medical reimbursement expenditure would increase by 66.4% per insured person after the unified provincial-level pool reform. There is individual heterogeneity in the effects of the unified single pool reform on medical reimbursement expenditure, and the reimbursement expenditure of retired elderly has the largest increase. If the unified single pool reform is gradually promoted, the current and accumulated balance of the UEBMI pooling fund would have gaps in 2031 and 2042, respectively.ConclusionWe verified that a larger fund pool will bring unreasonable growth of fund expenditures, which will threaten the sustainable development of health insurance. To minimize the impact of the unified single pool reform on the sustainability of the health insurance fund, we suggest strengthening the monitoring of moral hazard behavior, promoting the delayed retirement system, and encouraging childbearing.

Technology for advancing behavioral health integration: implications for behavioral health practice and policy.

Behavioral health integration (BHI) encompasses the integration of general health, mental health, and substance use care. BHI has promise for healthcare improvement, yet several challenges limit its uptake and successful implementation. Translational Behavioral Medicine published the Continuum-Based Framework by Goldman et al., 2020 to create comprehensive guidance for BHI within primary care settings. Technology can help advance BHI and provide evidence to support it. This commentary describes challenges and illustrative use cases in which technology solutions help organizations achieve BHI through the Continuum-Based Framework domains. Two rounds of semi-structured interviews with field leaders, practice sites, and technology stakeholders identified key barriers in BHI amenable to technology solutions, applications of technologies, and how they facilitate BHI. Findings showed that technology can facilitate the implementation and scaling of BHI by reducing care fragmentation and improving patient engagement, accountability and financial sustainability, provider experience and support, and equitable access to culturally competent care. Continued efforts by stakeholders to address legacy policy and implementation issues (e.g. incentives, investment, privacy, and workforce) are needed to optimize the impact of technology on BHI.

Financial Sustainability of Selected Waqf Institutions in Malaysia During Covid-19

Financial Sustainability of Selected Waqf Institutions in Malaysia During Covid-19

Corporate Social Responsibility and Stakeholder Engagement: Impact on Organizational Performance

Corporate Social Responsibility (CSR) has become increasingly pivotal in shaping organizational strategies, impacting not only societal perceptions but also organizational performance metrics. This paper explores the multifaceted relationship between CSR initiatives, stakeholder engagement practices, and their collective influence on organizational performance. By reviewing theoretical frameworks and empirical studies, it examines how CSR activities contribute to enhancing brand reputation, fostering stakeholder trust, and mitigating risks. Furthermore, the study delves into the strategic alignment of CSR with business objectives, emphasizing its role in driving long-term financial sustainability and competitive advantage. Through a comprehensive analysis of case studies and industry examples, this research elucidates the nuanced impacts of CSR and effective stakeholder engagement on organizational success in contemporary business environments.