nep-isf New Economics Papers
on Islamic Finance
Issue of 2022‒04‒04
six papers chosen by

  1. Profil Literasi Keuangan Islam Karyawan dan Nasabah Baitul Maal Wa Tamwil Daarut Tauhid Bandung By Nugraha, Ahmad Lukman; Susilo, Adib; Rizqon, Abdul Latif; Fajaruddin, Achmad; Sholihah, Nurdiyanah
  2. Resilience to stress in bipartite networks: Application to the Islamic State recruitment network By Wang, Selena; Edgerton, Jared
  3. Testimony on Exploring Financial Risks on Banking Posed by Climate Change By Dina Maher
  4. Maintenance Problem of Insufficiently Financed Pension Funds -- A Stochastic Approach By Manuel Alberto M. Ferreira
  5. Financial conditions and zombie companies: International evidence By Joel Bowman
  6. Risk Transmission between Green Markets and Commodities By Naeem, Muhammad Abubakr; Karim, Sitara; Jamasb, Tooraj; Nepal, Rabindra

  1. By: Nugraha, Ahmad Lukman; Susilo, Adib; Rizqon, Abdul Latif; Fajaruddin, Achmad; Sholihah, Nurdiyanah
    Abstract: This study aims to determine the profile of Islamic financial literacy in employees and customers of Baitu-l-maal wa Tamwil Darut Tauhid Bandung. This research uses descriptive quantitative method with interval formula to determine the literacy level of the respondents. The data collection technique used a questionnaire to 121 respondents. The results of this study indicate that the profile of Islamic financial literacy among BMT employees and customers is moderate. The employee profile has an Islamic financial level of 0.76. The profile of the level of Islamic financial literacy shows that the level of behavior towards Islamic finance among employees is not in accordance with the knowledge and attitudes of employees in managing finances. The customer profile has an Islamic financial literacy level of 0.50. The level of customer Islamic financial literacy shows that the level of customer behavior towards Islamic finance is not in accordance with the level of customer knowledge and attitudes in managing finances.
    Date: 2020–11–24
  2. By: Wang, Selena; Edgerton, Jared
    Abstract: Networks are resilient to internal failures or external attacks. The resiliency is often beneficial, but there are scenarios where the collapse of a social system, network, or organization would be beneficial to society, such as the dismantlement of terrorist, rebel, or organized crime groups. In this article, we develop a methodology to estimate the effect of knockouts and apply our method to the Islamic State recruitment network. Using our novel application, we demonstrate how coordinated attacks against recruiters might reduce the Islamic State's ability to mobilize new fighters. This analysis has direct implications for studies of network resilience and terrorist recruitment.
    Date: 2021–09–26
  3. By: Dina Maher
    Abstract: Testimony before the New York State Senate Committees on Banks, Finance, and Environmental Conservation (delivered via videoconference).
    Keywords: climate-related financial risk; physical risk; transition risk; Federal Reserve; New York State; climate change; supervision
    Date: 2022–03–01
  4. By: Manuel Alberto M. Ferreira
    Abstract: The generic case of pensions fund that it is not sufficiently auto financed and it is thoroughly maintained with an external financing effort is considered in this chapter. To represent the unrestricted reserves value process of this kind of funds, a time homogeneous diffusion stochastic process with finite expected time to ruin is proposed. Then it is projected a financial tool that regenerates the diffusion at some level with positive value every time the diffusion hits a barrier placed at the origin. So, the financing effort can be modeled as a renewal-reward process if the regeneration level is preserved constant. The perpetual maintenance cost expected values and the finite time maintenance cost evaluations are studied. An application of this approach when the unrestricted reserves value process behaves as a generalized Brownian motion process is presented.
    Date: 2022–03
  5. By: Joel Bowman
    Abstract: Financial conditions eased after the global financial crisis and during the COVID-19 pandemic as policymakers across most countries adopted large scale monetary policy easing. This has increased concern amongst some that a prolonged period of accommodative financial conditions has fostered the growth of zombie companies − businesses that are consistently unable to meet their interest expenses from current profits. This paper finds that an easing in self-constructed measures of financial conditions is correlated with an increase in the share of resources sunk into zombie companies using a sample of listed companies across 20 OECD countries and 11 industries over the period 2003 to 2019. However, the size of this relationship is higher for countries with banking systems that are in poorer financial health. As a result, fears that accommodative financial conditions foster more capital being sunk into inefficient zombie companies is likely to be less of a concern for countries with healthy banking systems.
    Keywords: Financial Conditions, Zombie Companies, Bank Health
    JEL: E44 E52 G21
    Date: 2022–03
  6. By: Naeem, Muhammad Abubakr (Accounting and Finance Department, United Arab Emirates University, United Arab Emirates; South Ural State University, Russian Federation); Karim, Sitara (Department of Business Administration, Faculty of Management Sciences, ILMA University, Karachi, Pakistan); Jamasb, Tooraj (Department of Economics, Copenhagen Business School); Nepal, Rabindra (School of Business, Faculty of Business and Law, University of Wollongong, Australia)
    Abstract: The current study examines the risk transmission between green markets and commodities spanning 3 January 2011 to 20 June 2021. We use two novel methodologies of volatility transmission using dynamic conditional correlation (DCC-GARCH) and the other time-varying parameters vector autoregression (TVP-VAR) technique of connectedness. We found parallel results of risk transmission between green markets and commodities using these measures of connectedness. Results demonstrate that green markets and commodities form a weakly knitted sphere of connectedness where intra-group clustering dominates the inter-group connectedness. Clean energy markets and precious metals form two distinct groups of connectedness for respective markets. However, crude oil, natural gas and wheat remained indifferent to the shocks highlighting their potential to serve as diversifiers due to their low risk bearing features. Further, time-varying dynamics emphasize the occurrence of sizable events that disrupted the operations of green and commodity markets, accentuating the attention of investors, portfolio managers, and financial market participants. Intense spillovers shaped the overall connectedness of the network where green markets (commodities) are fashioned in positive (negative) risk spillovers. Finally, we propose recommendations for policymakers, regulators, investors, portfolio managers, and market participants to devise policies and investment goals to shield their investments from unexpected circumstances.
    Keywords: Green markets; Commodities; DCC-GARCH; TVP-VAR; Volatility transmission
    JEL: G10 G11 G19 Q01
    Date: 2022–02–24

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.