nep-isf New Economics Papers
on Islamic Finance
Issue of 2021‒03‒22
eight papers chosen by
Mohamed Mohamed Tolba Said

  1. Measuring the Money Demand in Pakistan: A Time Series Analysis By Roussel, Yannick; Ali, Amjad; Audi, Marc
  2. Diversifier or more? Hedge and safe haven properties of green bonds during COVID-19 By Muhammad Arif; Muhammad Abubakr Naeem; Saqib Farid; Rabindra Nepal; Tooraj Jamasb
  3. Weapons of discontent? Sketching a research agenda on social accountability in the Arab Middle East and North Africa By Vloeberghs, W.P.; Bergh, S.I.
  4. The EU-Africa summit 2021 : Quo vadis, in the light of Brexit and Corona By Kohnert, Dirk
  5. Comparative Analysis of Financial Sustainability Using the Altman Z-Score, Springate, Zmijewski and Grover Models for Companies Listed at Indonesia Stock Exchange Sub-Sector Telecommunication Period 2014 – 2019 By Fauzi, Samrony Eka; , Sudjono; Saluy, Ahmad Badawi; Institute of Research, Asian
  6. Economic preferences over risk-taking and corporate finance By Delis, Manthos; Iosifidi, Maria; Hasan, Iftekhar; Tsoumas, Chris
  7. The interactions between state budget and political budget in Syria By Mehchy, Zaki
  8. Migration and Redistribution: Federal Governance of an Economic Union Matters By Assaf Razin; Efraim Sadka

  1. By: Roussel, Yannick; Ali, Amjad; Audi, Marc
    Abstract: This study has explored the factor impacting money demand in the case of Pakistan from 1980 to 2019. Broad Money is taken as the dependent variable, consumption of the household, consumption of government, interest rate, consumer price index, population growth, and remittances are selected independent variables. Augmented Dickey-fuller (ADF) and Phillip Perron (PP) unit root tests are used for examining the stationary of the variables. ARDL method is used for finding the cointegration among the variables of the model. Granger Causality test is used for examining the causal relationship among variables. The results of this study show that there is mixed order of integration among variables of the model. The estimated results of the study show that socio-economic factors play an important role in determining the money demand in Pakistan. So, socio-economic factors play an important role in determining money demand in the case of Pakistan.
    Keywords: Money demand, consumption, interest rate, population growth, remittances
    JEL: E21 P23 P44
    Date: 2021–03
  2. By: Muhammad Arif; Muhammad Abubakr Naeem; Saqib Farid; Rabindra Nepal; Tooraj Jamasb
    Abstract: Against the backdrop of the Covid-19 pandemic, this study explores the hedging and safe-haven potential of green bonds for conventional equity, fixed income, commodity, and forex investments. We use the cross-quantilogram approach that provides a better understanding of the dynamic relationship between assets under different market conditions. Our full sample results show that the green bond index could serve as a diversifier asset for medium- and long-term equity investors. Besides, it can also serve as a hedging and safe haven instrument for currency and commodity investments. Moreover, the sub-sample analysis of the pandemic crisis period shows a heightened short- and medium-term lead-lag association between the green bond index and conventional investment returns. However, the green bond index emerges as a significant hedging and safe-haven asset for the long-term investors of conventional financial assets. Our results offer insights for long-term investors whose portfolios comprise conventional assets such as equities, commodities, forex, and fixed income securities. Further, our findings reveal the potential role that the green bond investments could play in global financial recovery efforts without compromising the low-carbon transition targets.
    Keywords: Green bonds, hedge, safe-haven, cross-quantilogram, COVID-19
    JEL: G10 G11 G19 Q01
    Date: 2021–02
  3. By: Vloeberghs, W.P.; Bergh, S.I.
    Abstract: Put simply, accountability is about saying what you do and doing what you say. This paper explores the concept of social accountability (SA), which we understand here as any citizen-led action beyond elections that aims to enhance the accountability of state actors. We approach SA in the Middle East and North Africa (MENA) region from a perspective that blends development studies with comparative politics and Middle East studies. First, we trace the notion of accountability as a governance concept. Secondly, we discuss dominant theories on SA as a mechanism to improve public service delivery. Thirdly, we identify three main categories of social accountability initiatives (SAI’s) and summarize their respective strengths and weaknesses. We then observe how the scholarly literature on SA has largely bypassed the MENA region. We argue that this neglect is underserved and surprising, given the many initiatives that emerged across the region during the decade following the 2011 uprisings. In the final part of the paper, we propose three thematic axes that form a future research agenda which we hope is relevant for researchers based in the region as well as for (international, regional and national) policy makers and practitioners.
    Keywords: activism, advocacy, Arab world, authoritarianism, brokers, citizen engagement, civil society, clientelism, corruption, empowerment, MENA, participatory governance, service delivery, social accountability, state-society relations, transparency
    Date: 2021–03–10
  4. By: Kohnert, Dirk
    Abstract: Every three years, the AU-EU summit reunites African and EU leaders to outline the future direction of cooperation. The 6th summit had been to reaffirm and renew the partnership between the two blocks already in October 2020, but it was pushed back to the first quarter of 2021 or even later due to COVID-19 crisis. Besides, Brussels had to deal with its own post-Brexit situation and its repercussions on EU-Africa relations, excluding the UK. African states, for their part, wanted to renegotiate the EU-Africa partnership and to balance it with new promising Post-Brexit visions of the British premier Johnson about increased economic ties with the African Angloshere. China and other global players compete with the EU and its member states in the new scramble for African resources. Given that Africa is increasingly courted by other partners it could be inclined to successively limit its relations with the EU and see it as a mere provider of aid and security against Islamic terrorism. This trend was reinforced by the fact that the new EU-Africa strategy still hasn't been approved by EU member states. And a timely replacement of the Cotonou Agreement, which expires in November 2021, is open to question.
    Keywords: Corona, Brexit, Africa, UK, EU, international trade, economic recession, poverty, violence,
    JEL: F13 F35 F45 F63 G15 I1 I18 N17 N47 N67 O17 P16 Z13
    Date: 2021–03–04
  5. By: Fauzi, Samrony Eka; , Sudjono; Saluy, Ahmad Badawi; Institute of Research, Asian
    Abstract: This study aims to compare the best bankruptcy prediction models between Altman, Springate, Zmijewski and Grover models against companies listed on the Indonesian stock exchange in the telecommunications sub-sector for the 2014-2019 period. The purposive sampling method is used to obtain a sample of companies with the following criteria: Companies listed on the Indonesian stock exchange, the telecommunications sub-sector, the company has conducted an IPO in 2010, the company is obedient in reporting annual reports from 2014 - 2019 and the company is free from delisting issues. There are 4 companies that meet the purposive sampling criteria, namely PT. Telkom TBK, PT. Indosat TBK. PT. XL Axiata TBK and PT. Smartfren TBK. The data used in this research is secondary panel data. The results showed that only PT. Telkom which is in a healthy financial condition. Meanwhile, PT. Indosat, PT. XL Axiata and PT. Smartfren is consistently in an unhealthy condition based on the analysis of the Altman and Springate models. The calculation of Zmijewski's model and Grover's model gave inconsistent results. Comparative testing of the four bankruptcy analysis models resulted in the Altman, Springate and Grover models recording accurate results but Altman modelling is the best because it is an accurate, consistent, and tested model both descriptively and statistically.
    Date: 2021–02–02
  6. By: Delis, Manthos; Iosifidi, Maria; Hasan, Iftekhar; Tsoumas, Chris
    Abstract: We contend that economic preferences over risk-taking in different subnational regions worldwide affect fundamental aspects of firms’ corporate financing, namely financing costs and capital structure. We study this hypothesis, by hand-matching firms’ regions worldwide with the corresponding regional economic risk-taking preferences. Our baseline results show that credit and bond pricing increase with higher risk-taking preferences, whereas such preferences yield lower ratios of book leverage and short-term debt. We backup our baseline results with an instrumental variables approach, which is based on the premise that high-yield agricultural societies in the pre-industrial era exhibit low risk-taking preferences.
    Keywords: Economic preferences; Risk-taking; Financing costs; Loan spreads; Bond spreads; Capital structure
    JEL: G21 G32 Z13
    Date: 2021–02–27
  7. By: Mehchy, Zaki
    Abstract: This memo aims to understand how the Syrian regime has used the state budget as a tool to reallocate resources for the benefit of warlords and crony capitalists. This mechanism plays multiple roles in Syria’s contemporary political economy: on one hand, it is one of the means by which elites are given access to political funds in exchange for their loyalty (and other political services). At the same time, it represents one of the different ways in which the regime can replenish its political budget, which refers to the funds available for the ruler for discretionary spending on its elites to ensure their loyalty (de Waal, 2016). The memo analyzes the interactions between state budget and political budget from the perspective of an authoritarian bargain during the conflict in Syria. This approach assumes that repression is not sufficient for authoritarian regimes, including the Syrian one, to sustain control over their countries (Desai et al., 2009). Thus, in parallel to using coercive measures, they need to bargain with people and elites. Finally, the memo also investigates the modalities through which the elites have increasingly benefitted from public spending.
    JEL: E6 N0
    Date: 2021–02–02
  8. By: Assaf Razin; Efraim Sadka
    Abstract: Both the U.S. and the EU are an economic union: There is a single market for goods, capital, finance, and labor. That is, there is free mobility of goods and services, physical and financial capital, and labor among the member countries of the union. Nevertheless, there is much higher degree of economic policy coordination among the member states of the U.S than of the EU. We argue, by using a model of a union exhibiting migration-based fiscal externality, that the degree of coordination among the member states potentially contribute a great deal to our understanding of observed policy differences between the EU and the US as economic unions: the generosity of the welfare state and the skill composition of migration.
    JEL: F02 H0 H77
    Date: 2021–03

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