nep-isf New Economics Papers
on Islamic Finance
Issue of 2021‒06‒28
three papers chosen by
Mohamed Mohamed Tolba Said

  1. Economic Diversification Under Saudi Vision 2030 By David Havrlant; Abdulelah Darandary
  3. Islamic economics: morality, rationality, and research By Hasan, Zubair

  1. By: David Havrlant; Abdulelah Darandary (King Abdullah Petroleum Studies and Research Center)
    Abstract: The last decade has brought a row of substantial changes that have profound implications for the hydrocarbon resource-rich economies. The general answer to a changing environment is: Adapt! From the macroeconomic perspective, this means diversifying the economy to broaden the income base and reduce the dependence on oil revenues. This discussion paper examines the preferred diversification paths for the Saudi economy, with a focus on the foreseen adjustments in the sectoral composition along with broader macroeconomic shifts. The evaluation of the expected diversification impacts is based on the updated Vision 2030 Input-Output Table that maps the changing economic structure over the coming decade. The advances in economic diversification are measured by applying the Shannon-Weaver index to sectoral GDP and household income. We also conduct a sensitivity analysis to examine the effects of the foreseen diversification on the resilience of the Saudi economy to external shocks.
    Keywords: Economic Diversification
    Date: 2021–04–14
  2. By: Arya Sasongko; Ali Sakti
    Abstract: Green Sukuk continues to grow, but it still has problems in pricing. It has an unexplainable pricing difference between Green and Non-Green financing instruments. The research selects to takea fundamental asset pricing methodology that analyzes environmental risk. Sukuk and other financings might finance environmentally-harmful projects which support waste generation and accumulation. We noticed that unique environmental risks impose Sukuk holders, i.e., systemic and reputation risks. Finally, the model confirmed that these risks cause the price difference.
    Keywords: Islamic finance, Climate risk, Climate finance, Environmental systemic risk premium, Environmental Reputation Risk Premium
    JEL: F64 G12 Q51 Q54 L14
    Date: 2020
  3. By: Hasan, Zubair
    Abstract: The lead paper of Asad Zaman (2021) – Islamic alternatives to the secular morality embedded in modern economics– under review, is lucid and well documented; it speaks of his scholarship. The author talks of secular moral values ingrained in secular economics. Among them, the learned author focuses on ‘pleasure and profit’ as the goals of modern economics and scarcity buried in its foundations. He regards these two as definitional for secular rationality leading to positivism and what it implies. Since this view, in his opinion, is devoid of human traits like compassion, equity, and altruism, he proposes an Islamic alternative as a replacement. While some observations of the author in this regard are well-meaning and well taken, we shall evaluate the author’s critique of mainstream positions to see if they need rejection or reform for compatibility with Islamic norms. We shall argue that reform is a better alternative than refusal.
    Keywords: Morality, Rational behavior, Positivism, Islamic norms, Research issues.
    JEL: B4 C0 Z1
    Date: 2020–07–01

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