nep-isf New Economics Papers
on Islamic Finance
Issue of 2020‒06‒29
seven papers chosen by

  1. Do macroeconomic factors affect the credit risk of islamic banks? evidence from Malaysia By Sapian, Safeza; Masih, Mansur
  2. Are the factors accounting for islamic and conventional bank credit cycles really different ? Malaysian evidence based on two-step GMM approach By Abu Bakr, Norhidayah; Masih, Mansur
  3. Religion in Economic History: A Survey By Becker, Sascha O.; Rubin, Jared; Woessmann, Ludger
  4. Do Islamic stocks and commodity markets comove at different investment horizons ? evidence from wavelet time-frequency approach By Khan, Aftab; Masih, Mansur
  5. Relationship between crude oil prices and global sukuk (islamic bond) index: evidence from Dow Jones Citygroup sukuk index By Hassan, Fatimatul; Masih, Mansur
  6. A Timeline Response: How Does Islamic Organizations Respond to COVID-19 in Indonesia? By Rahvy, Aisyah; Ridlo, Ilham Akhsanu
  7. Анализ механизмов религиозной радикализации молодёжи и сопоставление вариантов противодействия её проявлениям (на примере Северного Кавказа) By Starodubrovskaya, Irina (Стародубровская, Ирина)

  1. By: Sapian, Safeza; Masih, Mansur
    Abstract: This paper makes an attempt to investigate whether the macroeconomic factors contribute to the credit risk exposure and non-performing financing (NPF) of Islamic banks. Malaysia is taken as a case study. The standard time series techniques are used to analyze the issue. The variables that have been chosen for the study are gross domestic product (GDP), Non-Performing Financing rate, Islamic financing rate (IFR) and unemployment rate (UMPT). The findings tend to indicate that Islamic Financing rate (IFR) stands out as the only factor that had a significant impact on the credit risk exposure and non-performing financing as well as the performance of Islamic banks in the context of Malaysia.
    Keywords: Islamic Banks, Credit Risk, Non-performing Financing, Time Series Analysis, Malaysia
    JEL: C22 C58 E44 G21
    Date: 2018–11–25
  2. By: Abu Bakr, Norhidayah; Masih, Mansur
    Abstract: Credit instability can cause severe negative impact to the long-term economic growth. It is also directly related to the recurring systemic banking and financial crisis. Driven by these motivations, this study aims to empirically analyze the factors that might explain credit cycle at bank level by taking Malaysia as the case study. We aim to make a comparison between Islamic and conventional banks by identifying whether the factors accounting for credit cycles between the two systems are different. By dividing the estimations into two data sets, the findings suggest: lagged credit cycle, asset price, excessive extension of bank credit and capital outflow are the factors that might influence credit cycle in the long term. While in the short-term, the factors are asset price, availability of loanable funds, banks’ capital, banks’ size, inflation, real interest rate, and capital outflows. Interestingly, our analysis supports empirically that there are some differences between Islamic and conventional banking system. Our findings acknowledged that Islamic banks hold some unique characteristics in the principles of its operations. Another important implication is that policy makers and industry players could observe the behaviour of the suggested factors and take the right actions to reduce the severity of the impact of unpredictable credit crunch.
    Keywords: credit cycle, determinants factors, Islamic and conventional banks
    JEL: C22 C58 G21
    Date: 2018–10–30
  3. By: Becker, Sascha O. (Monash University); Rubin, Jared (Chapman University); Woessmann, Ludger (Ifo Institute for Economic Research)
    Abstract: This chapter surveys the recent social science literature on religion in economic history, covering both socioeconomic causes and consequences of religion. Following the rapidly growing literature, it focuses on the three main monotheisms—Judaism, Christianity, and Islam—and on the period up to WWII. Works on Judaism address Jewish occupational specialization, human capital, emancipation, and the causes and consequences of Jewish persecution. One set of papers on Christianity studies the role of the Catholic Church in European economic history since the medieval period. Taking advantage of newly digitized data and advanced econometric techniques, the voluminous literature on the Protestant Reformation studies its socioeconomic causes as well as its consequences for human capital, secularization, political change, technology diffusion, and social outcomes. Works on missionaries show that early access to Christian missions still has political, educational, and economic consequences in present-day Africa, Asia, and Latin America. Much of the economics of Islam focuses on the role that Islam and Islamic institutions played in political-economy outcomes and in the "long divergence" between the Middle East and Western Europe. Finally, cross-country analyses seek to understand the broader determinants of religious practice and its various effects across the world. We highlight three general insights that emerge from this literature. First, the monotheistic character of the Abrahamic religions facilitated a close historical interconnection of religion with political power and conflict. Second, human capital often played a leading role in the interconnection between religion and economic history. Third, many socioeconomic factors matter in the historical development of religions.
    Keywords: religion, economic history, Judaism, Christianity, Islam, economic development, education, persecution, political economy, finance, specialization, trade
    JEL: Z12 N00 J15 I15 I25
    Date: 2020–06
  4. By: Khan, Aftab; Masih, Mansur
    Abstract: The financial crisis during the last decade did not only affect the stock markets but also the commodity markets. The behavior and relation of these two markets have changed during and after the financial crisis. Therefore, an understanding of the relationship between commodities and stock markets is crucial, especially during the crisis, when investors are looking for alternative investment opportunities. In this paper, we focus on commodity markets and their relation with Islamic stock markets during the financial crisis. This is one of the first attempts to study this relationship in the important and growing area of Islamic capital markets. The paper applies the recent wavelet analysis to Dow Jones Islamic index and two commodity sector indices (Energy and Precious Metal) and it aims to reveal how they commoved in the period of the Global Financial crisis, which began in the USA as the Subprime mortgage crisis. Empirical results revealed that Islamic stock market commoved to a certain extent with the commodity indices during the whole period. Also, the wavelet correlation of stock markets and commodities differ significantly when talking about different investment horizons. We observed that stock markets are in general more correlated at different horizons with Energy sector than with Precious Metal. Further, based on wavelet coherence, it is observed that the co-movement between DJ Islamic and Energy Sector is significantly more compared to the co-movement with the Precious Metal commodity sector at different time scales and frequencies.
    Keywords: Islamic stocks, commodity markets, wavelets
    JEL: C22 C58 G11 Q41 Q43
    Date: 2019–11–14
  5. By: Hassan, Fatimatul; Masih, Mansur
    Abstract: The global Islamic bond started gaining attention in capital markets just a few years ago. Since the launch of Dow Jones Citygroup Sukuk Index in 2006 , the number of issuance of global Islamic bonds has been sharply increasing. Saudi Arabia, UAE and Qatar had become major issuers of global bonds which are highly demanded by the investors .The rationale behind this might be because of religious commitment to get involved in riba (interest)-free investment or might be due to some other contributing factors. Realizing that the majority of global sukuk issuer is from the oil exporting countries, it might be related to the price of crude oil. This study attempts to find out the possible impact of the oil price on the global sukuk index using standard time series techniques. The findings evidence a significant relationship between the crude oil price and the global sukuk index. The US interest rate also influenced the global sukuk index based on the fact that the sukuk is denominated in US dollar and the interest rate had an inverse relationship with the bond price. Thus, crude oil price and the US interest rate should be taken into consideration by the global sukuk issuer as well as the investors. From this study, the investors might take the increase in crude oil prices as a positive signal and be motivated to buy global sukuk especially from the oil producing countries as it would give them a good yield on global sukuk. From the perspective of bond issuers, the appreciation or depreciation of US dollar against other currencies was one of the factors which affected their decision to issue global sukuk or not. An US interest rate affected the exchange rate of US dollar, since an increase in US interest rate led to the appreciation of US dollar in the short term and therefore influenced the global sukuk prices as well.
    Keywords: Global sukuk (Islamic bond), oil price, VECM, VDC
    JEL: C22 C58 G15 Q43
    Date: 2018–09–30
  6. By: Rahvy, Aisyah; Ridlo, Ilham Akhsanu (Universitas Airlangga)
    Abstract: Indonesia has made several regulations to end the pandemic, including PSBB. This regulation is related to physical distancing in all sectors and activities, including religious activities. To strengthen this policy, MUI and other Islamic organizations have made fatwa and official statement about how worships, especially those which are done in groups should be conducted during this pandemic. But efforts made by government and other organizations are not enough to ensure society that these regulations will not affect their religiousity. This paper is a literature review aimed to describe and analyze religious-related cases of COVID-19 pandemic in Indonesia. It includes MUI, Muhammadiyah, and Nahdlatul Ulama responses (fatwa and official statement) to this issue and public responses as well. It also compared this case to vaccine hesitancy case, due to similarities between these two cases. Both of these cases are dealing with religious dogma as it affects the policies’ effectivity. Religious and community leaders are needed in this kind of cases in order to help government promote and educate people about health issues from religious perspectives. Moreover, some kinds of punishment made by government are needed to strengthen fatwas and rulings, as most of these religious opinions do not have legal enforcement.
    Date: 2020–06–06
  7. By: Starodubrovskaya, Irina (Стародубровская, Ирина) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: This paper examines the approaches and theories that have become widespread in the analysis of the process of radicalization and religiously motivated violence. The development of intellectual thought in this area went through two main stages. At the first stage, research focused on the problems of terrorism without a special analysis of its religious motivation. At the second stage, the focus was on issues of Islamic radicalization and religiously motivated violence. The analysis of these problems has become more specific, radicalization has become regarded as a process.
    Date: 2020–03

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