nep-isf New Economics Papers
on Islamic Finance
Issue of 2022‒05‒16
six papers chosen by

  1. Back to the Roots of Internal Credit Risk Models: Why Do Banks’ Risk-Weighted Asset Levels Converge over Time? By Victoria Böhnke; Steven Ongena; Florentina Paraschiv; Endre J Reite
  2. Perbankan syariah By Azifah, Nurul
  3. The COVID-19 Pandemic and Indonesia’s Fintech Markets By Sugandi, Eric Alexander
  4. Pakistan Opportunity To Excel: Now And The Future By Nadeem Ul Haque; Durr-e-Nayab
  5. Mining revenue, fiscal space and social policies: the case of Zambia By Rafael Aguirre Unceta
  6. Investment and access to external finance in Europe: Does analyst coverage matter? By Sébastien Galanti; Aurélien Leroy; Anne-Gaël Vaubourg

  1. By: Victoria Böhnke (University of Münster); Steven Ongena (University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)); Florentina Paraschiv (Zeppelin University, Chair of Finance; Norwegian University of Science and Technology, Faculty of Economics and Management, NTNU Business School; University of St. Gallen, Institute for Operations Research and Computational Finance); Endre J Reite (Norwegian University of Science and Technology (NTNU) - Department of International Business)
    Abstract: The internal ratings-based (IRB) approach maps banks’ risk profiles more adequately than the standardized approach. After switching to IRB, banks’ risk-weighted asset (RWA) densities are thus expected to diverge, especially across countries with different supervisory strictness and risk levels. However, when examining 52 listed banks headquartered in 14 European countries that adopted the IRB approach, we observe a convergence of their RWA densities over time. We test if this convergence can be entirely explained by differences in the size of the banks, loss levels, country risk, and/or time of IRB implementation, yet this is not the case. Whereas banks in high-risk countries, with lax regulation, reduce their RWA densities, banks elsewhere increase theirs. Especially for banks in high-risk countries, RWA densities underestimate banks’ actual economic risk. Hence, the IRB approach allows for regulatory arbitrage, whereby authorities only enforce strict supervision on capital requirements if they do not jeopardize bank resilience.
    Keywords: Capital regulation, credit risk, internal ratings-based approach, regulatory arbitrage, risk-weighted assets
    JEL: G21 G28
    Date: 2022–04
  2. By: Azifah, Nurul
    Abstract: Bank syariah atau dalam istilah internasional dikenal sebagai Islamic Banking atau disebut dengan interest free banking. Kata Islamic tidak dapat dilepaskan dari asal usul sistem perbankan itu sendiri. Bank syariah pada awalnya dikembangkan sebagai bentuk suatu respon dari beberapa kelompok ekonom muslim dan kalangan kalangan praktisi perbankan muslim yang berupaya memenuhi dan mengakomodasi desakan dari berbagai pihak yang menginginkan tersedianya lembaga jasa keuangan yang dilaksanakan sesuai dengan prinsip islam. Sektor keuangan islam sangat mempengaruhi pertumbuhan ekonomi dalam tiga dekade terakhir. Institusi keuangan syariah seperti bank syariah telah mampu bersaing dan dan beroperasi secara efektif dan efisien. Industri perbankan syariah berkontribusi pada stabilitas sistem keuangan dan lebih mampu menahan guncangan krisis (Rizvi (Rizvi et al, 2019). Pada tahun 2007 terjadi krisis pinjaman (subprime) di Amerika Serikat yang berimbas langsung terhadap kestabilan ekonomi global, semua lembaga-lembaga keuangan tidak stabil dan ekonomi sedang buruk sementara perbankan syariah tetap beroperasi secara stabil (Mat Rahim & Zakaria, 2013; N. Trad et al 2017).
    Date: 2022–04–13
  3. By: Sugandi, Eric Alexander (Asian Development Bank Institute)
    Abstract: We investigate the impacts of the COVID-19 pandemic and the large-scale social distancing (PSBB) policy on Indonesia’s financial technology (fintech) markets. We also elaborate on the roles fintech companies can play in the national economic recovery. We find that Indonesia’s fintech markets were relatively resilient during the COVID-19 pandemic. The pandemic did not have significant impacts on Indonesia’s fintech markets, but the PSBB harmed phone banking, mobile banking, and internet banking transaction values as well as peer-to-peer (P2P) fintech lending. Nevertheless, the PSBB increased electronic money transactions. The relatively short PSBB period prevented the restrictions on economic activities from imposing too much damage on the fintech markets. The Indonesian authorities involved the fintech industry as a component of the national economic recovery program (PEN), particularly the pre-employment card (Kartu Prakerja) program. There are still many areas in which the government can utilize the fintech industry for economic recovery, including direct cash transfers to poor households and extensions of subsidized loans for micro, small, and medium-sized enterprises (MSMEs).
    Keywords: fintech; Indonesia; MSMEs
    JEL: G23 G29 O33 O39
    Date: 2021–08
  4. By: Nadeem Ul Haque (Pakistan Institute of Development Economics Islamabad); Durr-e-Nayab (Pakistan Institute of Development Economics Islamabad)
    Abstract: Availability of opportunities implies that people have a range of life options, * specifically economic, to pick from, and have a realistic chance to adopt what they want to do and succeed in it. For Pakistan, where nearly sixty percent of the population is aged under 30 years, opportunities become even more significant. The fact that we live in a world where technology is changing the way things are done at an unprecedented pace makes it very easy for those not keeping up to be left far behind, without opportunities. Is Pakistan offering such opportunities to its people to take up and excel? Is the country doing what needs to be done for its population to excel in future?
    Keywords: Pakistan, Opportunity, Excel,
    Date: 2022
  5. By: Rafael Aguirre Unceta (IPC-IG)
    Keywords: Zambia; natural resources; taxation; public finances; development policies
    Date: 2021–07
  6. By: Sébastien Galanti (LEO - Laboratoire d'Économie d'Orleans - UO - Université d'Orléans - UT - Université de Tours); Aurélien Leroy (UB - Université de Bordeaux, BSE - Bordeaux Sciences Economiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Anne-Gaël Vaubourg (CRIEF - Centre de recherche sur l'intégration économique et financière - Université de Poitiers)
    Abstract: We aim to determine whether analyst coverage improves European firms' access to capital markets and investment. Based on a data set that includes firms from several European countries between 2000 and 2015, we implement a treatment effect framework and an instrumental variables (IV) approach, in which the intensity of industry-level waves in coverage is used as an instrument for firm-level coverage. We show that analyst coverage is favorable to firms' debt and share issuance and their investment expenses. Our paper emphasizes the key role of financial analysts in improving European firms' financial conditions
    Keywords: nvestment,debt issuance,share issuance,analyst,coverage
    Date: 2022–03

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