International Financial Integration through Depositary Receipts (DRs)

The issue of liquidity and underdevelopment of the Organisation of Islamic Cooperation (OIC) stock markets has caused problems to companies in those countries that seek higher equity capital. One way out of this problem is to employ international markets more intensively by seeking cheaper cost of capital through Depositary Receipts (DRs). Many studies on DRs focused on emerging and developed countries, leaving many OIC countries behind. Thus, this study investigates the financial implication by examining the integration of returns of local and foreign stock markets via American Depositary Receipts (ADRs) and Global Depositary Receipts (GDRs) of OIC countries. Techniques employed in this study are cointegration and the speed of adjustments to examine the existence of integration between the local and foreign stock markets. The study covers a sample of 146 firms from 17 OIC countries that are cross-listed as ADRs or GDRs from 1992 to 2011. The findings show mixed results when some markets provide evidence of integration while others show evidence of segmentation. The study on the integration between DR and home equity markets has practical implications for both the international as well as domestic investors especially on portfolio selection, asset pricing and risk managemen

THE CONDUCT OF RISK MANAGEMENT IN TRADE FINANCING PROCESSES: EXPLORING THE PROSPECTS AND CHALLENGES IN FINTECH ERA

Purpose of the study: To investigate the conduct of risk management in trade financing processes as well as to identify potential issues in risk management relating to fintech in trade financing. At the same time, this study had the opportunity to explore all possible prospects and challenges that this new era of digital could offer to the banking industry. Methodology: The study employed an interview with experts for the means of data collection with the aim of gathering a wide range of information and opinion from the industry experts on the subjects of this study. The data collected from interview transcripts are analysed contextually based on thematic analysis and framework analysis. Main Findings: The findings suggested risk management in trade financing processes is critical due to the nature of cross-country transactions and the current era of fintech has further escalated the risk exposure to fintech-related types of risk. Strategies to improve the current conduct of risk management in trade finance processes have been identified where opportunities and challenges can be managed effectively. Applications of this study: Findings from this study will give valuable insights to the banking and finance industry’s practitioners, especially those who are directly involved in trade financing processes as well as the top management of the banks to further improve current risk management practices in particular catering for the new fintech era. This is essential in facing the wave of the 4th industrial revolution. Novelty/Originality of this study: This study has contributed to the limited number of published studies in this area. Most importantly, the attempt to investigate the current practice of risk management and identify actual issues and problems in trade financing processes through financial technology platform has not been researched and explored before

Determinants of Switching Barriers among Oman’s Retail Banking Consumers

This study examines the impact of switching barriers comprises of complexity, switching cost, locked-in, and apathy on the switching decision. The data were collected through a survey questionnaire from three cities (Muscat, Salalah, and Sohar) with a sample of 420 respondents. The participants were Omani nationals only. The data were analyzed using Structural Equation Modelling (SEM) Analysis using SPSS and AMOS software. The data were tested for the normality, descriptive analysis, reliability, correlation, exploratory Factor Analysis (EFA) and Confirmatory Factor Analysis (CFA). The result of the switching barriers indicates that apathy fail to influence the negative relationship with switching decision. However, switching cost, complexity and locked in had a negative impact on the decision to switch that creates barriers among the customers while switching from conventional banking to Islamic banking system. The study concludes that the government, management, and Shariah board of the Islamic banks should focus on establishing a robust and dynamic Islamic banking, which caters for customers’ needs. Finally, Islamic banking products and service, financial and non-financial strategies should address the customers’ financial needs and provide comprehensive banking services

A Review on Product Development of Islamic Social Finance in Tijari Sector

Social finance is not new, but most low-income earners are not keen to utilize social finance products due to its association with riba (usury). Islamic social finance on the other hand offers the alternative to generate economy and create wealth, with its Shariah-compliant underlying principles. This new mechanism offers the alternative for people under the paradigm of Islamic economic system. This instrument covers the deficiency of Islamic finance, in both ijtimaie and tijari sectors. Thus, it is crucial to the stages involved in the creation of Shariah-compliant products that can meet the objectives of ijtimaie and tijari sectors. The main objective of this paper is to review the concept and paradigm of Islamic economic system and the position of Islamic social finance. It also reviews the product development and innovation of this mechanism. The methodology used for this is qualitative in nature, namely content analysis of the secondary sources of similar themes. It was found that there is very limited discussion on product development in Islamic social finance

The product range conceptualization for Islamic SME financing

The SME sector is the most critical client for bank financing, particularly in commercial business banking. A dual banking system in which Islamic and conventional financial institutions coexist makes the financial market more competitive. To ensure that Islamic financial products and services can compete with the existing market, Islamic banking management must ensure that its services, particularly in the SME sector, have a place. Knowing the banking product preferences of those firms is one of the steps that should be taken. As a result, this study will develop a conceptual framework for the product range of Islamic banking products to investigate the SME owner's preference for Islamic SME financing. The product range of this range will be strengthened further with the theoretical support of planned behavior from the Managerial perspective among SMEs