nep-isf New Economics Papers
on Islamic Finance
Issue of 2022‒05‒30
four papers chosen by

  1. Makalah Gambaran Umum Perbankan Syariah Di Indonesia By , Nurhayati
  2. Corporate Vulnerabilities in the Middle East, North Africa, and Pakistan in the Wake of COVID-19 Pandemic By Nordine Abidi; Mohamed Belkhir
  3. The impact of Artficial Intelligence and how it is shaping banking By Theuri, Joseph; Olukuru, John
  4. Sovereign Debt Repatriation During Crises By Mr. Serkan Arslanalp; Laura Sunder-Plassmann

  1. By: , Nurhayati
    Abstract: Bank syariah adalah bank yang beroperasi sesuai dengan prinsip-prinsip syariah Islam yaitu mengikuti ketentuan-ketentuan syariah Islam khususnya yang menyangkat tata cara bermuamalat secara Islam. Secara khusus peranan Bank Syari’ah secara nyata dapat terwujud dalam aspek?aspek berikut: “Menjadi perekat nasioanlisme baru, artinya bank syariah dapat menjadi fasilitator aktif bagi terbentuknya jaringan usaha ekonomi kerakyatan. Di samping itu, bank syariah perlu mencontoh keberhasilan sarekat dagang islam, kemudian di tarik keberhasilannya untuk masa kini (nasionalis, demokratis, religius, ekonomi).”
    Date: 2022–04–10
  2. By: Nordine Abidi; Mohamed Belkhir
    Abstract: This paper analyzes corporate vulnerabilities in the Middle East, North Africa and Pakistan (MENAP hereafter) in the wake of the COVID-19 pandemic shock. Using a sample of nearly 700 firms from eleven countries in MENAP, we assess the non-financial corporate (NFC) sector’s liquidity and solvency risk and viability over the medium term under different stress test scenarios. Our findings suggest that the health crisis has exacerbated vulnerabilities in the corporate sector, though the effects are heterogenous across the region. Small firms, which entered the pandemic in a more vulnerable position, would remain under high liquidity stress over the medium term, putting a substantial share of these firms’ debt at risk of default. Similarly, liquidity needs of firms in contact-intensive sectors have also worsened and would remain elevated in 2022-23. We also show that an adverse scenario of subdued growth and premature withdrawal of policy support would impair the capacity to service interest expenses, especially among small firms, resulting in higher insolvency risk. Overall, our results indicate that some segments of the MENAP corporate sector could remain reliant on policy support during the recovery phase and that structural reforms are critical to save distressed but viable firms from bankruptcy and ensure an efficient liquidation of “zombie” firms.
    Keywords: MENAP, COVID-19 crisis, non-financial corporate vulnerabilities, stress tests, “zombification”, policy support.; non-financial corporate; solvency risk; liquidity needs; NFC stress tests; vulnerabilities in the Middle East; COVID-19; Liquidity; Solvency; Stress testing; Corporate sector; Middle East; North Africa; Middle East and Central Asia; Global
    Date: 2022–04–29
  3. By: Theuri, Joseph; Olukuru, John
    Abstract: The importance and adoption of Artificial Intelligence schemes in supporting business operations in risk management and spurring revenue growth continues to gain traction globally. While this has been exacerbated by the disruptions caused by COVID-19 pandemic on the traditional sources of information, its utilization remains low particularly across many countries. In advanced economies however, as AI gains popularity in banking, financial institutions (FIs) are building on their existing solutions to transform customer experiences to solve increasingly complex challenges and expectations. This paper illustrates the potential of employing AI in banking to reduce costs, including through opportunities it offers to banks to leverage algorithms on the front end to smooth customer identification and authentication, mimic live employees through chatbots and voice assistants, deepen customer relationships, and provide personalized insights and recommendations.Further, AI can also be used by banks within middle-office functions to assess risks, detect and prevent payments fraud, improve processes for anti-money laundering (AML) and perform know-your-customer (KYC) regulatory checks.The main output involves an interactive dashboard illustrating application of the descriptive and predictive analytics at a click for a given business unit of a bank.
    Date: 2022
  4. By: Mr. Serkan Arslanalp; Laura Sunder-Plassmann
    Abstract: We use a new, comprehensive data set on the sovereign debt investor base to document three novel empirical facts: (i) sovereign debt is repatriated - that is, shifted from external private to domestic investors - prior to sovereign defaults; (ii) not all crises are equal: evidence for repatriation during banking and currency crises is more limited; and (iii) the nature of defaults matters: external investors do not leave during preemptive debt restructurings. We further show that repatriation appears to be prevalent when defaults happen in large markets with low capital controls. The data set we use is uniquely suited to analyzing investor base dynamics during rare crises due to its large cross-section and time series, covering 180 countries from 1989 to 2020.
    Keywords: Sovereign debt, External debt, Capital flows, Sovereign default, Financial crisis, Banking crisis, Currency crisis
    Date: 2022–04–29

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