nep-isf New Economics Papers
on Islamic Finance
Issue of 2020‒08‒24
three papers chosen by

  1. Religion in Economic History: A Survey By Sascha O. Becker; Jared Rubin; Ludger Woessmann
  2. Shari’ah-compliant Stock Screening: A Financial Perspective By Raghibi, Abdessamad; Oubdi, Lahsen
  3. Malaysia; Selected Issues By International Monetary Fund

  1. By: Sascha O. Becker; Jared Rubin; Ludger Woessmann
    Abstract: This paper 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 I25
    Date: 2020
  2. By: Raghibi, Abdessamad; Oubdi, Lahsen
    Abstract: Stock markets have always provided countries with a practical and flexible way to finance their economies. Hence, Islamic finance has embraced the stock market since the early 90s adopting the same framework as an ethical investment. Accordingly, Islamic investors in emerging countries shall have a range of choices when constructing a financial portfolio. However, existing screening methodologies lack flexibility as they are mainly based on rigid ratios and irrelevant thresholds. Consequently, these methodologies lead to an inefficient stock index as they completely ignore the features of each stock market along with the specificities of each industry. Thus, our study will try to propose a new screening methodology based on the optimal financial structure of each industry. The main objective of our study is to propose a methodology that will overcome different loopholes addressed in the literature. The present paper is an explanatory study which needs an empirical confirmation of the proposed methodology in order to measure its performance and efficiency against existing shari’ah-compliant indices. Hence, the main preliminary finding of our research is to enrich the academic debate on shari’ah-compliant screening methodologies through appealing to conventional corporate finance framework to enhance current methodologies.
    Keywords: Screening methodology, stock markets, Stock Index.
    JEL: D53 G11 G15
    Date: 2020–04
  3. By: International Monetary Fund
    Abstract: This Selected Issues paper investigates impact of financial technology (FinTech) on Malaysia’s financial sector. Malaysia is digitally enabled to seize the opportunities brought by FinTech. Malaysian banks continue to dominate in deposits, lending and capital raising, but they have been gradually reducing their emphasis on physical distribution networks. The top five Malaysian banks have increased their technology-related spending over the past three years. Regulators have been mindful of developments outside of the traditional regulatory perimeter that could pose financial stability risks. Rapidly evolving technology is likely to bring multiple challenges to the financial sector. Regulatory requirements are an important component of operating in the FinTech space. Regulators must strike a balance between ensuring financial stability and consumer protection, while promoting innovation and competition. In order to address the lack of regulatory acumen among FinTech industry players, Bank Negara Malaysia has spearheaded various initiatives. A key challenge for Malaysian regulators is to strike a balance between reaping the benefits of FinTech and mitigating potential downside risks in both conventional and Islamic finance. Frequent refinements to regulations and supervision are required to keep pace with the highly dynamic nature of FinTech to balance benefits and risks.
    Keywords: Islamic finance;Financial services;Macroprudential policies and financial stability;Financial institutions;Financial systems;ISCR,CR,e-money,sandbox,FTEG,mobile bank,capital raise
    Date: 2020–02–28

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NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.