Partici patory financing arrangements including Musharakah and Mudarabah are the essence of Islamic banking and represent the true spirit of Islamic banking and finance. Therefore, Islamic banks are expected to allow and promote partici patory financing. In practice, they do not adopt partici patory financing on the assets side due to several constraints. By far, the non-partici patory financing arrangements, particularly Murabahah and Ijarah, are the most dominant modes of financing around the globe. Many authors have provided different explanations for the tendency of Islamic banks to avoid partici patory financing. However, literature is divergent and the typology of the constraints to partici patory financing is missing. Therefore, there is no unified understanding of the constraints to partici patory financing. The present study employs insights form the extant literature using a systematic literature review and synthesizes a coherent partici patory financing constraints framework using the thematic synthesis method to name and make sense of what makes partici patory financing a less attractive option for Islamic banks. This study adds to the Islamic banking and finance literature by synthesizing the divergent literature, and conceptualizing a partici patory financing constraints framework which can be used as a dependable framework for assessment in any related case study and policy implications. Moreover, it demonstrates an application of systematic review in Islamic banking research.

The provinces of Khyber Pakhtunkhwa Province (KPK) and Baluchistan have historically lagged behind other provinces in the race for industrialization because of their geographical disadvantage and the law and order situation prevailing in their regions. Recent figures show that the number of closures and ailing industrial units in KPK has been increasing. Statistics indicate that 55% of firms administered by SIDB 1 and 64% of firms administered by SDA 2 have closed down. In the wake of increase in terrorism activities in KPK and the rampant unemployment, the importance of revival of closed and sick industrial units has further increased. To know the nature and severity of the problems that small industrial units face in KPK, we selected Hayatabad Industrial Estate (HIE), Peshawar as a case study. During the data collection process, we distributed questionnaires and conducted interviews with owners or managers of 48 industrial units in HIE. The survey results indicate that anarchy and terrorism, power outages & energy costs, locational disadvantages, lack of skilled labor force, and inconsistent government policies are major problems as perceived by owners of industrial units. We discuss the implications of these problems and present policy choices to mitigate their impact.

Pairs Trading refers to a statistical arbitrage approach devised to take advantage from short term fluctuations simultaneously depicted by two stocks from long run equilibrium position. In this study a technique has been designed for the selection of pairs for pairs trading strategy. Engle-Granger 2-step Cointegration approach has been applied for identifying the trading pairs. The data employed in this study comprised of daily stock prices of Commercial Banks and Financial Services Sector. Restricted pairs have been formed out of highly liquid log share price series of 22 Commercial Banks and 19 Financial Services companies listed on Karachi Stock Exchange. Sample time period extended from November 2, 2009 to June 28, 2013 having total 911 observations for each share prices series incorporated in the study. Out of 231 pairs of commercial banks 25 were found cointegrated whereas 40 cointegrated pairs were identified among 156 pairs formed in Financial Services Sector. Furthermore a Cointegration relationship was estimated by regressing one stock price series on another, whereas the order of regression is accessed through Granger Causality Test. The mean reverting residual of Cointegration regression is modeled through the Vector Error Correction Model in order to assess the speed of adjustment coefficient for the statistical arbitrage opportunity. The findings of the study depict that the cointegrated stocks can be combined linearly in a long/short portfolio having stationary dynamics. Although for the given strategy profitability has not been assessed in this study yet the VECM results for residual series show significant deviations around the mean which identify the statistical arbitrage opportunity and ensure profitability of the pairs trading strategy. JEL classifications: C32, C53, G17 Keywords: Pairs Trading, Statistical Arbitrage, Engle-Granger 2-step Cointegration Approach, VECM.

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While 49 firm-level determinants of low-technology (LT) innovation