nep-isf New Economics Papers
on Islamic Finance
Issue of 2018‒04‒23
six papers chosen by
Halimatun Aris

  1. Competition in dual markets: Implications for banking system stability By Tastaftiyan Risfandy; Amine Tarazi; Irwan Trinugroho
  2. Shariah-compliant capital asset pricing model: New mathematical modeling By Abdelkader Derbali; Abderrazek Khaldi; Fathi Jouini
  3. Religion and Economic Performance By Nurrachmi, Rininta
  4. Assessment of development trends of real estate investment funds implementations in Turkey By Gulnaz Sengul; Harun Tanrivermis; Yesim Aliefendioglu
  5. Alcoholic Drinks and Public Interest in case of Noe-liberalism and Islam By Hayat, Azmat; Mohd Shafiai, Dr Muhammad Hakimi; Latif Samian, Abdul
  6. Islamic Republic of Iran; 2018 Article IV Consultation - Press Release; Staff Report; and Statement by the Executive Director for the Islamic Republic of Iran By International Monetary Fund

  1. By: Tastaftiyan Risfandy (LAPE - Laboratoire d'Analyse et de Prospective Economique - IR SHS UNILIM - Institut Sciences de l'Homme et de la Société - UNILIM - Université de Limoges); Amine Tarazi (LAPE - Laboratoire d'Analyse et de Prospective Economique - IR SHS UNILIM - Institut Sciences de l'Homme et de la Société - UNILIM - Université de Limoges); Irwan Trinugroho (Faculty of Economics and Business - UNS - Universitas Sebelas Maret)
    Abstract: This paper examines the impact of market competition on the stability of Islamic and conventional banks in countries where these banks operate alongside one another. To investigate this issue, we use a sample of 100 Islamic and 390 conventional banks from 19 countries. Our baseline result shows that competition in a dual market erodes banks' stability. The heightened competitive pressure in a dual market encourages banks to engage in excessive risk-taking that can jeopardize their stability. However, the effect of competition is missing for Islamic banks, suggesting their superiority in having religious clients. Although our overall results support the 'competition-fragility' hypothesis, we find that competition can be beneficial for banks, especially at a low to medium competition level. Last, we also find that the adverse impact of competition can be reduced by having high capitalization, especially in the case of a conventional bank. Some policy implications are discussed in the paper.
    Keywords: Competition,stability,dual banking,Islamic banks,Z-score,Lerner index
    Date: 2018–04–04
  2. By: Abdelkader Derbali (Institut Supérieur de Gestion Sousse); Abderrazek Khaldi (Université de Sousse); Fathi Jouini (Université de Sousse)
    Abstract: The main objective of our paper is to propose a novel approach in pricing Islamic financial assets in accordance to shariah, advocated by contemporary investment theories of Markowitz's Mean-Variance Analysis and CAPM. The shariah-compliant Capital Asset Pricing Model that we developed with a few changing's of the traditional Capital Asset Pricing Model is integrating zakat, purification of return and exclusion of short sales. Then, we utilize a sample composed of 10 shariah-compliant public listed companies in Bursa Malaysia. The empirical results find that the proposed Islamic CAPM is appropriate and applicable in investigating the linkage amongst risk and return in the Islamic stock market. Our investigation contributes to existing body of knowledge by presenting an algorithm and mathematical modelling of the shariah-compliant CAPM which has been lacking in the literature of Islamic finance.
    Keywords: zakat,Islamic finance,purification,CAPM,shariah
    Date: 2017
  3. By: Nurrachmi, Rininta
    Abstract: Studies on religion and economy have attract many researchers. This paper is aim to observe how religion influence economy by seeing from microeconomic and Islamic perspective. Moreover, it elaborates the role of religion for economic performance. The finding indicates that social phenomena in the community can be understood by seeing the individual behavior as part of microeconomic level. Individual consumer sees religious expression as an economic good that must compete with other goods. While from Islamic perspective, economic activities should provide a better concept according to the Quran, Sunnah and hadith. Religion has a role to enhance economy by shaping individual values and attitudes particularly in terms honesty, work ethic and trust.
    Keywords: Religion, Economic performance, Islam and individual
    JEL: D0 D2
    Date: 2016–12–30
  4. By: Gulnaz Sengul; Harun Tanrivermis; Yesim Aliefendioglu
    Abstract: Developing countries have improved their markets by accelerating capital movements with the economic and financial policies they have implemented and made an important contribution to integration with the outside world. For this reason, investors are looking for ways to increase their returns by targeting alternative investment instruments in order to benefit from international capital movements in emerging markets. Lease certificates (sukuk), real estate certificates and real estate investment funds stand out in the financing of real estate projects. Real estate investment funds, one of the increasingly attractive alternative investment instruments, are known as investment instruments for individuals and institutional investors with high financial wealth from the first day they were established in developed and emerging markets. A real estate investment fund is an institutional structure that enables individual savings to be brought together and is utilized collectively in professional investments in real estate. In the broadest sense, these funds that appeal to domestic and foreign savings owners, that all shareholders benefit from their profits in proportion to their shares, and that have certain tax advantages are assets governed and audited by the Capital Markets Board.The purpose of this paper to analyze the today’s situations of real estate investment funds in Turkey. In the first part of the report, current status of real estate investment funds as a new investment fund instrument in Turkey have been examined from the perspective of legal regulations and implementation. In the second part of the paper, the development of the funds established in Turkey and an analysis of the current situation and identification of the main problems have been made. Firstly, the names, structures, types, main projects that the funds make or tend to make investments, the basic problems of investors and solution opportunities regarding the real estate investment funds established in accordance with the legal regulations, which were put into effect by the Capital Markets Board in Turkey, were evaluated by means of secondary data as well as data collected from investors in face-to-face interviews. In this stage it was analyzed using the data gathered through face-to-face interviews with the managers and experts of funds, which have obtained the required permissions from the Board and have been operating, and other stakeholders. An in-depth interview technique was used for the data summarization and with using this method, open-ended questions related to the research were directed to the target persons in the face and face interviews, the contributions to country economics, real estate and construction sector, preferences for choosing REIFs for managers, advantages or disadvantages have been discussed by taking the opinions of fund investors and all the stakeholders.
    Keywords: Money and Capital Markets, Real Estate Investments, Real Estate Projects, Real Estate Investment Funds and Real Estate Mutual Funds
    JEL: R3
    Date: 2017–07–01
  5. By: Hayat, Azmat; Mohd Shafiai, Dr Muhammad Hakimi; Latif Samian, Abdul
    Abstract: Francis Fukuyama has explained that searching a meaningful pattern in the past events of mankind will always show the clash of ideologies, in which each idea attempted to establish itself as the universal faith for organizing the society and institutions according to its specific blueprint. The triumph of liberalism over Marxism and Fascism, established the superiority of liberalism which brought history to an end-point of mankind ideological evolution and the universalization of western liberal democracy as the final form of human civilization. Have we in fact arrived at the end-point of mankind ideological evolution? Should we believe that neoliberalism is capable to provide greatest interest to the greatest number. Muslims believes that Islam already provided the best and everlasting ideology for the welfare of humanity. Islam is based on the logic of intervention in the socioeconomic affairs of mankind, while neoliberalist believes on non-intervention. On the basis of alcoholic drinks, this paper on one hand highlighted the relationship between public interest in case of neoliberalism and Islam, while on the other hand it also highlighted the internal contradiction. Results indicate that besides contradiction, neoliberalism is attributable to the greatest harm to the greatest number while in the dogma of Islam there is greatest benefits to the greatest number.
    Keywords: Islam, Neo-liberalism, alcoholic drinks, Human wellbeing
    JEL: P1 P16 P51 Y9
    Date: 2018–03–23
  6. By: International Monetary Fund
    Abstract: The recovery has broadened to the non-oil sector and the authorities sustained macroeconomic stability in challenging circumstances. Nevertheless, the legacy of sanctions and policies of that period have left incomes at the levels of a decade ago and unemployment high. A weak banking sector, structural bottlenecks and heightened uncertainty constrain Iran’s growth potential.
    Date: 2018–03–29

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