An investigation into factors that determine the growth rate in the Islamic banking and finance

Nawaz, Huma

doi:10.1186/s43093-019-0003-7

Cited by 8 publications

(4 citation statements)

References 29 publications

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“…Over the past two decades, the Islamic finance industry has drawn the attention of investors across the international financial landscape. The increasing demand for this instrument has resulted in the remarkable growth of the Islamic financial system in the Eastern world (Said and Grassa, 2013; Afshar and Muhtaseb, 2014; Tabash and Dhankar, 2014; Chermi and Jerbi, 2015; Nawaz, 2019). While the Sukuk market has flourished in Muslim counties, these instruments have been recently starting to be embedded in the Western world’s conventional financial markets (Koutsokostas and Papathanasiou, 2017; Koutsokostas et al , 2018, 2019).…”

Section: Introductionmentioning

confidence: 99%

The connectedness between Sukuk and conventional bond markets and the implications for investors

Samitas¹,

Papathanasiou²,

Koutsokostas³

2021

IMEFM

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Purpose The purpose of this paper is to examine the connectedness across a variety of Sukuk and conventional bond indices and the implications for optimal asset allocation for the period January 1, 2010–April 30, 2020. Design/methodology/approach The data set consists of five major Sukuk (Dow Jones Sukuk, Thompson Reuters BPA Malaysia Sukuk, Indonesia Government Sukuk, S&P MENA Sukuk and Tadawul Sukuk and Bonds Index) and five conventional bond indexes, one for developed (USA) and four for emerging markets (Malaysia, Indonesia, Africa and Qatar). This study investigates the connectedness and volatility spillover effects across the aforementioned indices, by following the Diebold and Yilmaz (2012) approach, based on the time-varying parameter vector autoregressive (TVP-VAR) model. In addition, this paper provides optimal hedge ratios and portfolio weights for investors. Findings The empirical results show that Sukuk and conventional bond markets are highly integrated and that total connectedness exhibits sensitivity to exogenous shocks. The Dow Jones and the Malaysian Sukuk indices are the primary shock transmitters to other markets. However, the weak volatility spillovers between the Dow Jones and conventional bonds suggest that opportunities for optimal asset allocation may in fact exist. The highest (lowest) hedging effectiveness can be achieved by taking a short position in Malaysian (Qatarian) bonds. Originality/value To the best of the knowledge, this is the largest sample taken into account to investigate the connectedness between Sukuk and conventional bonds.

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Section: Introductionmentioning

confidence: 99%

The connectedness between Sukuk and conventional bond markets and the implications for investors

Samitas¹,

Papathanasiou²,

Koutsokostas³

2021

IMEFM

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“…Visibly, Shariah-tagged firms were considered safe and less effective during the last financial crisis, the recent pandemic, and during different inflation and economic regimes (see [13,31]). Moreover, these firms have more diversification options because they have less systematic risk and are thus able to maintain their earnings during financial crises [56]. Therefore, it has a significant impact on countries' financial growth and GDP.…”

Section: Discussionmentioning

confidence: 99%

What explain capital structure determinants choices of Shariah firms?

Rehan,

Sa’ad,

Rosman

et al. 2024

5003

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This study aims to discover key capital structure determinants for the entire Shariah firms operating in dissimilar contexts. Moreover, it also estimates the adjustment speed for these firms to maintain targeted capital structures at all times. For this purpose, 321 Shariah firms that are operational in Saudi Arabia, Pakistan, the UAE, and Indonesia are nominated. The empirical analysis is conducted using 11 years, i.e., 2011-2021, of balanced Panel Data. The debt-to-asset and debt-to-equity ratios are used as variables of interest, whereas the asset tangibility ratio, current ratio, return on equity, size, non-debt-tax shield, inflation, and gross domestic product are used as explanatory variables. The robust estimator, i.e., Generalized Method of Moments (GMM), is executed to perform the analysis. The results show that the most important factors for Shariah-tagged firms are inflation, the gross domestic product, the asset ratio, the return on equity, the non-debt tax shield, and the lagged dependent variables. The important role of asset tangibility, lagged variables, and the presence of adjustment speed postulate that Shariah-tagged firms are following the provided guidelines of Dynamic Trade-Off theory to preserve capital structure. The findings are a new contribution to the limited empirical inquiries of Shariah firms’ capital structure and a fresh addition to Islamic Finance literature. Besides, the outcomes are also helpful for policymakers and assist them in developing an optimal model of capital structure for Shariah-tagged firms that decreases overall capital costs and enhances these firms’ market value.

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“…From Figure 13, it can be seen that the most widely utilized financing mode is Murabahah financing. Previous studies by different scholars and reports from different institutions also suggest that Murabahah has been the most popular financing mode, although it is asset-based (Razak & Abdul-Wahab, 2018;Elasrag, 2016b;Nawaz, 2019;World Bank & Islamic Development Bank, 2015). The reason for its popularity is its simple implementation process and similar criteria compared to conventional financing for SMEs.…”

Section: Sources Of Islamic Finance For Smesmentioning

confidence: 99%

SMEs, Employment Generation, and Islamic Finance

Azam,

Abdullah

2024

IJIEF

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Almost wherever the economy is growing, small and medium-sized businesses (SMEs) are the ones doing the heavy lifting. Who are these SMEs? How does the definition of SME differ across different countries? What are the contributions of SMEs in terms of employment and GDP? How can Islamic finance play a significant role in scaling up the business performance of SMEs and, subsequently, their contribution to employment and the economy? What are the issues and challenges faced by SMEs and Islamic finance that would resolve into greater employment generation? Addressing all these questions, this paper provides an overview of SMEs globally and their definitions in different countries as well as in Malaysia. Simultaneously, some issues and challenges are discussed. Furthermore, the paper presents Islamic finance as a better solution to the financial accessibility of SMEs in future economic activities. The paper thus attempts to illustrate a model or framework that would work well for SMEs to generate productive employment opportunities in their respective economies. To achieve the objectives of this paper, secondary data was used to present all the statistical figures and tables. For any generalizations, recommendations, or conclusions, an extensive review of literature from various sources was conducted.

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An investigation into factors that determine the growth rate in the Islamic banking and finance

Cited by 8 publications

References 29 publications

The connectedness between Sukuk and conventional bond markets and the implications for investors

The connectedness between Sukuk and conventional bond markets and the implications for investors

What explain capital structure determinants choices of Shariah firms?

SMEs, Employment Generation, and Islamic Finance

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