nep-isf New Economics Papers
on Islamic Finance
Issue of 2018‒05‒21
two papers chosen by
Halimatun Aris

  1. Does shariah stock index lead or lag the exchange rate and macroeconomic variables? evidence from Japan based on ARDL By Yousafzai, Essa; Masih, Mansur
  2. The role of zakat in the provision of social protection: a comparison between Jordan, Palestine and Sudan By Anna Carolina Machado; Charlotte Bilo; Imane Helmy

  1. By: Yousafzai, Essa; Masih, Mansur
    Abstract: This paper aims to investigate whether shariah stock index, exchange rate and macroeconomic forces in Japan have any long run relationship or not. If the relationship exists, does the Shariah stock index lead or lag? The paper is likely to be the first study that investigates the causal relationship of aforementioned variables and the Shariah Index in Japan. Current literature on the topic in different countries gives either contradictory or inclusive results. This study will try to fill two gaps, one relating to Japan, and another relating to Islamic Indices. This study employed quarterly data from 2007 to 2017. Auto-Regressive Distributed lag (ARDL) time series technique is applied to conduct the study. This technique is free from major limitations of the conventional cointegrating tests which suffer from the pre-test biases involved in the unit roots and cointegration.The empirical evidence tends to suggest that both in the short- and long- run, money supply, exchange rate, and GDP have a significant relationship with Japan’s Shariah stock prices. However, ARDL’s long run coefficients suggest that inflation does not have such impact on the Shariah stock price. The findings of the study tend to indicate that investors of shariah stocks in Japan and the Japanese government need to be more attentive to the money supply and exchange rate of the country. The findings of this study are plausible and have strong policy implications for an export-oriented country such as Japan.
    Keywords: Shariah stock index, macrovariables, lead-lag, ARDL
    JEL: C58 E44
    Date: 2017–12–31
  2. By: Anna Carolina Machado (IPC-IG); Charlotte Bilo (IPC-IG); Imane Helmy (IPC-IG)
    Abstract: "Zakat is one of the five pillars of Islam and can be understood as a form of religious duty, purifying one's wealth and at the same time functioning as a means to redistribute wealth to those in need. In Arabic, zakat means, among others, growth and purity (Dean and Khan 1997). In Muslim-majority countries, it has a long tradition of providing income, goods for consumption and other basic services such as health care and education to poor and marginalised populations. A growing body of research has investigated the role of zakat in the provision of social protection?understood here as income and in-kind transfers with the aim of protecting vulnerable people against risks?and its importance as a poverty reduction mechanism (see Ali 2014; Hassan 2010; Hassanain and Saaid 2016; Ibrahim and Ghazali 2014). Although much of the criticism of zakat institutions evolves around their lack of coordination, efficiency and transparency (Johari, Ali, and Aziz 2015), zakat has several advantages when it comes to assisting poor people. In countries where the State provides limited social protection?due to ongoing conflicts, for example?zakat can play a crucial role in providing support to those in need". (...)
    Keywords: Role, zakat, provision, social protection, comparison, Jordan, Palestine, Sudan
    Date: 2018–05

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