How does Salam financing affect farmers’ income? A system dynamics approach

Abstract

Purpose This study aims to simulate and compare the effect of two financing schemes, Salam and conventional financing, on farmers’ cash flows. Design/methodology/approach The system dynamics simulation is used to conduct a multiple scenario-driven analysis to understand the behavior and the dynamic patterns concerning relationships among the variables in the model that are chosen and parameterized using both qualitative and quantitative data collected from West Java, Indonesia. Findings The authors affirm that farmers cannot rely solely on paddy fields and should seek other livelihoods to support their daily needs. The main finding is that the Salam scheme provides a higher income that can contribute to improving farmer welfare. The Islamic scheme also requires less adjustment than the standard scheme to meet the farmers’ needs. Research limitations/implications The probable effect of implementing the Salam method is not considered from the point of view of the financiers, as the scope of the study is limited to farmers. Furthermore, the implications of this study and recommendations for future research are presented. Originality/value To the best of the authors’ knowledge, this study adds to the extensive literature on Salam financing by being among the first to provide a quantifiable evaluation of the Islamic method compared to its conventional counterpart.

On improving the adoption of Bai’ Salam by Islamic banks of Pakistan: an interpretive phenomenological analysis

“…These solutions increased the profit of banks and helped provide innovative products that can improve the farmer’s welfare and education. This outcome is also confirmed by Sifa and Wiryono (2023).…”

“…According to Waluyo and Rozza's (2020) These solutions increased the profit of banks and helped provide innovative products that can improve the farmer's welfare and education. This outcome is also confirmed by Sifa and Wiryono (2023). Roziq et al (2014) find the problems implementing the Salam contract is "no capital used to pay cash upfront or advance, risk of loss of capital, lousy character or yields sold to other parties due to an increased price."…”

Predicting Saudi Stock Market Index by Using Multivariate Time Series Based on Deep Learning

“…Quantitative system-dynamics data from historical performance and qualitative fundamental data from various news sources affect the performance of TS data obtained from economic markets [2]. As both types of data can be combined to effectively identify patterns in economic data, they are currently of significant interest and are researched by both professionals and academics alike.…”