Shariah Ethical Investment Products in Indonesian Capital Market: The Debates on Their Integration Process in the Transitional Stage

Islamic investments are a unique form of socially responsible investments because Islam makes no division between the spiritual and the secular. The Shariah ethical investment products do not only provide opportunities for moslem community to apply their religion and belief in business sector, but also provide investment opportunities for universal investors. Investors will not only look at investment performance or Shariah compatibility alone. They will demand both Shariah compliance and good returns. The Shariah ethical investment products in Indonesian capital market as investment instruments play vital role at this sense. However, to realize the ultimate goals of Shariah ethical investment in Indonesian capital market the process will be not easy. In one side, there will be a tendency to bring Shariah ethical investment products in a legal-formal approach and in the other side there will be a tendency to bring Shariah ethical investment products to a more substantive approach in term of realizing the objectives of shariah. This paper argued that the Shariah ethical investment products in Indonesian capital market are still in the transitional stages. The tendency of imitating conventional products will be more dominant. However, the regulator needs to step forward to develop a more substantive investment products based on Islamic true objectives

Niche Markets and Their Lessons

Markets are full of nooks and crannies. Out of the glare of the big economies and their public exchanges, markets specializing by financial product, activity, or industry thrive, often attracting little by way of formal regulatory oversight. But there is another kind of specialized market, one which is geographically and politically determined albeit internationally focused. Luxembourg, Ireland, Dubai, Bahrain, Malaysia, Singapore, Switzerland, among others, these are some of the world’s niche markets.It is a hard business being a niche market, operating in a competitive and often unforgiving environment, engaging in constant repositioning and facing inherent limitations on growth. Surprisingly, perhaps, there are lots of niche markets and a very diverse grouping they are, deploying a variety of survival strategies. In all cases, state capitalism, in various guises, supports these markets. In earlier times, reputation, a friendly regulator, and good business practices might have sufficed. Now, there is a new dynamic. This chapter in a new book, International Capital Markets: Law and Institutions (Oxford University Press, 2014), examines the characteristics of niche markets, such as a high tolerance for legal pluralism and the role of state capitalism, the vulnerabilities of niche markets, especially to change, and the secrets of their success

Regulating islamic financial institutions : The nature of the regulated

More than 200 Islamic financial institutions (IFIs) operate in 48 countries. Their combined assets exceed $200 billion, with an annual growth rate between 12 percent and 15 percent. The regulatory regime governing IFIs varies significantly across countries. A number of international organizations have been established with the mandate to set standards that would strengthen and harmonize prudential regulations as they apply to IFIs. The authors contribute to the discussion on the nature of prudential standards to be developed. They clarify the risks that IFIs are exposed to and the type of regulations that are needed to systematically manage them. They consider that the industry is still in a development process whose eventual outcome is the convergence of the practice of Islamic financial intermediation with its conceptual foundations. The authors contrast the risks and regulations needed in the case of Islamic financial intermediation operating according to core principles and current practice. They outline implications for approaches to capital adequacy, licensing requirements, and reliance on market discipline. They then propose an organization of the industry that wouldallow it to develop in compliance with its principles and prudent risk management, and facilitate its regulation.Labor Policies,Payment Systems&Infrastructure,International Terrorism&Counterterrorism,Financial Intermediation,Banks&Banking Reform,Financial Intermediation,Banks&Banking Reform,Environmental Economics&Policies,Economic Theory&Research,Banking Law

Perbankan Syariah Dan Pengangguran: Suatu Aplikasi Empiris Teori Search and Matching Model

The development of shariah banking gave some positive impacts in many fields, including in reducing unemployment,since the growing number of Islamic banks could raise the number of labor employ. Unfortunatelythe equilibrium condition of labor demand and supply was not only necessary through market mechanism, butalso through the job search process, and compatibility with the existing work. Therefore, by using appliedresearch method, this study aimed to describe the opportunities and challenges of shariah banking in reducingthe unemployment rate as empirical application from one of theory unemployment, namely the Search andMatching Model theory

Corporate governance, Islamic governance and earnings management in Oman: A new empirical insights from a behavioural theoretical framework

Purpose: This paper examines the impact of corporate (CG) and Islamic (IG) governance mechanisms on corporate earnings management (EM) behaviour in Oman. Design/Methodology/Approach: We employ one of the largest and extensive datasets to-date on CG, IG and EM in any developing country, consisting of a sample of 116 unique Omani listed corporations from 2001 to 2011 (i.e.,1,152 firm-year observations) and a broad CG index containing 72 CG provisions. We also employ a number of robust econometric models that sufficiently account for alternative CG/EM proxies and potential endogeneities. Findings: First, we find that, on average, better-governed corporations tend to engage significantly less in EM than their poorly-governed counterparts. Second, our evidence suggests that corporations that depict greater commitment towards incorporating Islamic religious beliefs and values into their operations through the establishment of an IG committee tend to engage significantly less in EM than their counterparts without such a committee. Finally and by contrast, we do not find any evidence that board size, audit firm size, the presence of a CG committee and board gender diversity have any significant relationship with the extent of EM. Originality: To the best of our knowledge, this is a first empirical attempt at examining the extent to which CG and IG structures may drive EM practices that explicitly seeks to draw new insights from a behavioural theoretical framework (i.e., behavioural theory of corporate boards and governance). Keywords: Corporate governance, Islamic governance, earnings management, behavioural theory, endogeneity, Oman. Paper type: Research pape

Islamic concept of corporate social responsibility (CSR) from the perspective of CSR players at Bank Islam Malaysia Berhad

The issue of CSR has received an increasingly high profile in recent years all over the world. Most of the prior studies on CSR are based on the conventional concept, which the concept is failed to explain the religious or spiritual obligations of business entities towards the society and other stakeholders.From the Islamic perspective, the business social responsibility is broadly discussed in many Quranic verses and Hadith and covered spiritual, moral and material obligations. Thus, this study aims to describe the Islamic concept of CSR and to identify the objectives of such engagements to fulfill various stakeholders’ demands and needs.Using a case study approach, a group of CSR key players at Bank Islam Malaysia Berhad were interviewed and several series of in-field observations of CSR events were conducted as well as documentation was reviewed in order to better understand the concept.The findings of this study indicate that CSR relates to any activities in which the bank engages to discharge religious, social and economic responsibilities and account abilities to attain barakah (Allah’s blessings) and to enhance the well being of the stakeholders and the business. Hence, this study may enhance the body of knowledge of CSR from the Islamic perspective to reflect Islamic teachings, values and principles

The Islamic Inter bank Money Market and a Dual Banking System : The Malaysian Experience

This paper examines the operation of an Islamic Interbank Money market (IIMM), within a dual banking system. The paper argues that even though an Islamic Money market operates in an interest free environment and trades shariah compliant instruments, many of the risks associated with conventional money markets, including interest rate risk is relevant to an Islamic Money Market operating within a dual banking system. The empirical evidence based on Malaysian data, points to Islamic money market profit rates/yields that are highly correlated and move in sync with conventional money market rates. Given the dynamics of fund flows and cross linkages, an IIMM operating within a dual banking system cannot sterilize itself from interest rate risk. In fact, the paper argues that such an IIMM may actually enhance interest rate risk transmission to the Islamic banking sector, by providing additional channels of transmission. Ironical as it may be, the operations of an IIMM in a dual banking system may serve to bring the Islamic banking sector into closer orbit with the conventional sector.Islamic Interbank Money Market, Dual Banking, Malaysia