nep-isf New Economics Papers
on Islamic Finance
Issue of 2022‒02‒21
six papers chosen by

  1. Musharakah Mutanakisah (MM) Financing: Experience of Islamic Banks By Mouhoub Dalal; Deghmoum Hichem
  2. Economic and Social Crisis Management Strategies by Prophet Muhammad (PBUH) in Medina By Alani, Usama
  3. Financial determinants of informal financial development in Sub-Saharan Africa By Asongu, Simplice; Soumtang, Valentine; Edoh, Ofeh
  4. COVID-19 Global Pandemic, Financial Development and Financial Inclusion By Ojong, Nathanael; Asongu, Simplice
  5. Boosting social entrepreneurship and social enterprise development in Slovenia: In-depth policy review By OECD
  6. Bank Credit and Money Creation on Payment Networks: A Structural Analysis of Externalities and Key Players By Li, Ye; Li, Yi; Sun, Huijun

  1. By: Mouhoub Dalal (University of Algiers3.Algeria); Deghmoum Hichem (University of Algiers3.Algeria)
    Abstract: This study aims to analyze the concepts and practices of Musharakah Mutanakisah (MM) by Islamic banks. The findings revealed that the MM is a hybrid contract that combines three independent contracts namely: partnership, leasing and sale. MM could be used it for financing asset acquisition as well as for other types of partnership. Hence, MM has been successfully implemented by Islamic banks in Islamic and non-Islamic countries for house financing.
    Keywords: Islamic banks,Leasing and sale,Musharakah Mutanakisah (MM),Partnership
    Date: 2021–06–30
  2. By: Alani, Usama
    Abstract: Reviewing the actions of the Prophet (peace and blessings of Allah be upon him) represent a divine order should be followed, even though it has a devotional and transaction reflection in Muslim's life. His actions (PBUH) do not represent a novel, but a method that should be followed and learned. Muslims during their migration to Medina faced a lot of crises, Prophet (PBUH) realized it and turned them into an opportunity, so the paper tries to follow the strategies, which the Prophet (PBUH) used to solve the crisis The goals of the research are determining the characteristics of the economic and social crisis of migrants, explaining the crisis management strategies exercised by the Prophet (PBUH) to address the crisis and the place of these strategies in crisis management theory today. The research will cover the transitional stage that confronted the Muslims in establishing their state in Madina by managing the economic and social crisis of migrants.
    Keywords: Sunnah, Economic crisis, Social crisis, Crisis management strategy.
    JEL: B0
    Date: 2021–06
  3. By: Asongu, Simplice; Soumtang, Valentine; Edoh, Ofeh
    Abstract: This study assesses financial determinants of informal financial sector development in 48 Sub-Saharan African countries for the period 1995-2017. Quantile regressions are used as the empirical strategy which enables the study to assess the determinants throughout the conditional distribution of informal sector development dynamics. The following financial determinants affect informal financial development and financial informalization differently in terms of magnitude and sign: bank overhead costs; net internet margin; bank concentration; return on equity; bank cost to income ratio; financial stability; loans from non-resident banks; offshore bank deposits and remittances. The determinants are presented from a plethora of perspectives, inter alia: U-Shape, S-Shape and positive or negative thresholds. The study not only provides a practical way by which to assess the incidence of financial determinants on informal financial sector development, but also provides financial instruments by which informal financial development can be curbed.
    Keywords: Informal finance; financial development; Africa
    JEL: G2 O1 O55
    Date: 2021–08
  4. By: Ojong, Nathanael; Asongu, Simplice
    Abstract: This chapter examines how the Covid-19 pandemic has affected financial development and financial inclusion in African countries. The study provides both broad perspectives and country-specific frameworks based on selected country cases studies. Some emphasis is placed on the achievement of sustainable development goals (SDGs) that are related to financial inclusion. The study aims to understand what immediate challenges the COVID-19 pandemic has represented to the economies and societies on the one hand and on the other, the effect of the COVID-19 on the interconnected financial systems in terms of consequences of the pandemic. The relevance of the study builds on the importance of these insights in helping both scholars and policy makers understand how the effect of the pandemic on the financial system and by extension, the global economy can be mitigated for more financial inclusion.
    Keywords: Covid-19 pandemic; financial development; Financial inclusion; Africa
    JEL: G2 O1 O55
    Date: 2021–01
  5. By: OECD
    Abstract: This report provides an in-depth analysis of the policy ecosystem in place for social entrepreneurship and social enterprises in Slovenia. It identifies the country’s strengths and challenges and provides policy recommendations to support the development of a stronger policy ecosystem. After an overview of the socio-economic and political context (Chapter 1), the report describes the conceptual framework for social enterprises and the social economy (Chapter 2); and analyses institutional and legal frameworks for social enterprises (Chapter 3), access to finance for social enterprises (Chapter 4), and access to public and private markets (Chapter 5), along with social impact measurement and reporting for social enterprise development (Chapter 6).
    Keywords: local development, policy ecosystem, social economy, social enterprise, social entrepreneurship, social impact, social innovation
    JEL: L31 L33
    Date: 2022–02–08
  6. By: Li, Ye (Ohio State University); Li, Yi (Board of Governors of the Federal Reserve System); Sun, Huijun (Columbia Business School)
    Abstract: This paper documents a strong connection between payment system and credit supply. The dual role of deposits as financing instruments for banks and means of payment for bank customers implies spillover effects of bank lending. After a bank finances loans with new deposits, the deposit holders' payments cause reserves and deposits to flow from the lending bank to the payees' banks. The change in liquidity conditions for both banks and their customers gives rise to two opposing forces that generate respectively strategic complementarity and strategic substitution in banks' lending decisions. We model bank lending through a linear-quadratic game on a random graph of payment flows and structurally estimate the spillover effects using Fedwire data to quantify the probability distribution of payment-flow network. Payment network externalities reduce the average level of aggregate credit supply by 9% while amplify the volatility by 20%. We identify a small subset of banks that have a disproportionately large influence on credit supply due to their special positions in the payment-flow network.
    JEL: E42 E43 E44 E51 E52 G21 G28
    Date: 2021–12

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