nep-isf New Economics Papers
on Islamic Finance
Issue of 2024‒02‒19
three papers chosen by
Ali Polat, Ankara Yıldırım Beyazıt Üniversitesi

  1. Objective Performance Evaluation of The Islamic Banking Services Industry: Evidence from Pakistan By Hanif, Muhammad; Farooqi, M Nauman
  2. Islamic Law, Western European Law and the Roots of Middle East's Long Divergence: a Comparative Empirical Investigation (800-1600) By Hans-Bernd Schaefer; Rok Spruk
  3. Consumer Legal Protection of Culinary Products in Realizing Sharia Tourism in Gorontalo City By Darwis, Rizal; Sakka, Abdullah; Diab, Ashadi L.; Hanafi, Syawaluddin

  1. By: Hanif, Muhammad; Farooqi, M Nauman
    Abstract: Purpose — The study documents the performance of the Islamic banking services industry (IBSI) in light of the Islamic finance objectives, notably financial stability, equitable distribution of wealth, and social responsibility. Design/Methodology/Approach — After drawing the performance evaluation framework based on the objectives, the research conducts a balance sheet analysis of the IBSI in Pakistan for 32 quarters (2013Q4–2021Q3). The analysis examines sources and uses of funds by looking at the application of financial contracts and sectoral distribution of financing. Objectively classified data trends are reported through graphs. Findings — Findings suggest that the domestic IBSI has shown progress in achieving primary and intermediate objectives, including commercial performance, contribution to equitable wealth distribution, and financial stability. However, the industry’s in-practice business models lack any significant contribution to the social sector, which represents a more advanced objective. Originality/Value — The contributions to the literature include development of a performance evaluation framework based on Islamic finance objectives, and documentation of findings on the IBSI’s achievements in Pakistan. Research Implications — The study recommends that regulators develop a legal framework for business models of the IBSI. It also recommends that managers of domestic Islamic banks include the social sector as well as agricultural and rural areas in financing and investment portfolios.
    Date: 2023–04–03
  2. By: Hans-Bernd Schaefer; Rok Spruk
    Abstract: We examine the impact of Islamic legal institutions to the comparative economic decline of the Middle East behind Latin Europe, which can be observed since the late Middle Ages. To this end, we explore whether the sacralization of Islamic law and its focus on the Sharia as supreme, sacred and unchangeable legal text, which reached its culmination in the 13th century had an impact on economic development. We use the population size of 145 cities in Islamic countries and 648 European cities for the period 800-1800 as proxies for the level of economic development, and construct novel estimates of the number of law schools (i.e. madaris) and estimate their contribution to the pre-industrial economic development. Our triple-differences estimates show that a higher density of madrasas before the sacralization of Islamic law predicts a more vibrant urban economy characterized by higher urban growth. After the consolidation of the sharia sacralization of law in the 13th century, greater density of law schools is associated with stagnating population size. We show that the economic decline of the Middle East can be partly explained by the absence of legal innovations or substitutes of them, which paved the way for the economic rise of Latin Europe, where ground-breaking legal reforms introduced a series of legal innovations conducive for economic growth. We find that the number of learned lawyers trained in universities with law schools is highly and positively correlated with the western European city population. We also show with counterfactual estimates that almost all Islamic cities under consideration would have had much bigger larger by the year 1700 if legal innovations comparable to those in Western Europe were introduced. By making use of a series of synthetic control and difference-in-differences estimators our findings are robust against a large number of model specification checks.
    Date: 2024–01
  3. By: Darwis, Rizal; Sakka, Abdullah; Diab, Ashadi L.; Hanafi, Syawaluddin
    Abstract: Everyone has the right to legal protection in various activities of his life, including between producers and consumers. This article aims to discuss the prospects of sharia tourism in Gorontalo City and consumer legal protection of culinary products in realizing sharia tourism in Gorontalo City. This research is a field research with an empirical juridical approach. Data collection is in the form of literature, observation, questionnaires, and interviews. Furthermore, the collected data is analyzed with qualitative description. This qualitative descriptive uses a data display with 3 activity paths, namely data reduction, data presentation, and conclusion drawing and verification. The results showed that: first, the prospect of sharia tourism development in Gorontalo City is very promising, both in terms of geography and demographics; second, legal protection for consumers of culinary products by restaurants and food stalls in Gorontalo City is in principle by consumer protection laws, but on the one hand related to halal certification of the business they do is still low and still it needs to be improved based on the Tourism Law and the Halal Product Guarantee Act.
    Date: 2023–12–27

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