Which is more important in terms of Profitability of Islamic banks: Bank Specific factors or Macroeconomic factors? An Empirical Study on Malaysian Islamic Banks

Studies of Islamic banks’ profitability are an important tool towards improving performance, evaluating bank operations and determining management plan to help in increasing the chance for the banks to survive in competitive markets. The present study seeks to fill a demanding gap in the literature by providing new empirical evidence on the factors that influence the profitability of the Islamic banking sector in Malaysia. The research thus conducts a comparative analysis of the determinants of the profitability of Islamic banks operating in Malaysia.  The Pooled Ordinary Least Square method is employed using annual data from the period 2007 to 2013 on 11 Islamic banks in Malaysia. In order to evaluate the financial performance of these Islamic banks the profitability are measured using the Return on Assets (ROA) indicator. The empirical findings of study reveals that endogenous factors such as the efficiency ratios (overhead costs) is negatively and statistically significant to the profitability of the Islamic bank’s performance, while equity financing is positive and statistically significant to the profitability of Islamic banks. The Credit risks and Liquidity risks factors are insignificant on the performance of the Islamic banks. On the other hand, exogenous factors such as inflation have a positive and statistically significant impact on the return on assets whereas savings on gross national income has a statistically significant and negative impact on the performance of Islamic banks. 

Why Islamic finance is different? a short review of Islamic jurisprudential interpretation about usury, ambiguity (Gharar), gambling (Maysir) and exploitative commercial arbitrage (Talaqi al-Rukban) / Mohammad Ashraful Ferdous Chowdhury.

Unlike the traditional Finance, Islamic finance must observe the teachings of Shari’ah whose basic teaching cannot be violated at any point in time. These basic teachings constitute the core element of the faiths that are best described as maqasid al-shari’ah. While prohibiting Riba, Gharar, Maysir, Islam promotes maslahah by protecting the interests and benefits of all parties involved in the market. This paper emphasizes on the main underlying causes (‘Illah) for the prohibition of these on the basis of Islamic and socio-economic point of views. This is paper is based on secondary sources such as classical books, articles etc. There is no difference of opinion among scholars that Riba, Gharar, Maysir is clearly prohibited by both Quran and the Sunnah. However, Questions continue to be raised about their meanings and implications because of the diverse applications in commercial transactions (Mu’malat). This paper is a humble attempt to clarify the meaning and implications of these terms

Socially responsible investment and Shariah-compliant investment compared: Can investors benefit from diversification? An ARDL approach

Islamic finance and Socially Responsible Investment (SRI) have been two of the most rapidly growing areas of finance over the last two decades. During this period, they have each grown at rates that far exceed that of the financial markets as a whole. The purpose of this paper is to take a comparative approach in comparing and contrasting the performance of both types of restricted investment portfolios by using ARDL bounds testing approach. The paper provides an innovative view to two different markets and suggests that there are commonalities which need to be exploited for the benefit of both markets. The study assesses the extent of correlation between social responsible investment funds and Sharia compliant investment funds in different economic situations to determine if the nature of relationship between funds changes in between the non-crisis period and the 2007 crisis period for four markets such as Dow Jones Islamic World, Dow Jones Islamic Europe; Dow Jones Sustainability World and Dow Jones Sustainability Europe. By estimating the short and long term dynamics between the socially responsible investment indexes and Islamic indexes, and the extent of cointegration between these two funds, the findings tend to indicate that the SRI and Islamic funds have significantly different behavior in both the short run and long run. Despite the differences in the screening criteria and portfolio management of both types of funds, this study suggests that the potential diversification benefits between Sharia compliant funds and the SRI funds are possible both in the crisis period and non-crisis period

Socially responsible investment and Shariah-compliant investment compared: Can investors benefit from diversification? An ARDL approach

Islamic finance and Socially Responsible Investment (SRI) have been two of the most rapidly growing areas of finance over the last two decades. During this period, they have each grown at rates that far exceed that of the financial markets as a whole. The purpose of this paper is to take a comparative approach in comparing and contrasting the performance of both types of restricted investment portfolios by using ARDL bounds testing approach. The paper provides an innovative view to two different markets and suggests that there are commonalities which need to be exploited for the benefit of both markets. The study assesses the extent of correlation between social responsible investment funds and Sharia compliant investment funds in different economic situations to determine if the nature of relationship between funds changes in between the non-crisis period and the 2007 crisis period for four markets such as Dow Jones Islamic World, Dow Jones Islamic Europe; Dow Jones Sustainability World and Dow Jones Sustainability Europe. By estimating the short and long term dynamics between the socially responsible investment indexes and Islamic indexes, and the extent of cointegration between these two funds, the findings tend to indicate that the SRI and Islamic funds have significantly different behavior in both the short run and long run. Despite the differences in the screening criteria and portfolio management of both types of funds, this study suggests that the potential diversification benefits between Sharia compliant funds and the SRI funds are possible both in the crisis period and non-crisis period

Infrastructure-FDI nexus in Nigeria: insights from nonlinear threshold regression model

Infrastructural development of the host country is one of the major determinants of attracting FDI. However, the nonlinear threshold relationship between the infrastructural development and FDI inflow is yet to be explored. The objective of this research is to find the threshold effect of infrastructure on FDI in Nigeria. Using Hansen’s (2000) threshold regression over the period 1972–2015, the study found that the relationship between infrastructure development and FDI is nonlinear. Furthermore, the relationship between infrastructure and FDI is positive in both regimes; however, the marginal positive impact of infrastructural development in attracting FDI is more evident after the threshold level. The findings provide support to the regulators and policy makers to improve infrastructural development for attracting more FDI in the economy which can foster economic growth

Do political and social globalization promote female labour in Bangladesh? An empirical reassessment

This study unfolds inverted -U nexus between female labour and political globalization through the lens of autoregressive distributed lag bounds test approach based on annual data from 1984 -2019 in Bangladesh. Political globalization initially fosters female workforce and after attaining a maximum threshold level, this slowly declines. This reinforces the evidence that, initially female absorption in labour market ascends via creation of employment opportunities in service sector for educated female labour and in industrial sector for the less educated. Consequently, the demand for female labour reduces significantly as the country becomes reliant more on import- based automated industries. This non- linear quadratic inverted U relation holds in short run and in the long run. This study also divulges that social globalization has negative and significant impact on female labour in the short- run, possibly corroborating persistent gender inequality in ICT for uneducated female labour. This research disentangles that interactive term of political and social globalization has positive and significant impact on female labour in the short- run. This positive effect is strongly significant in long run as well, supporting the fact that political globalization has the moderating role to subside gender disparity in the ICT sector for educated women. This research obtains conclusive evidence for stable long run inverted U relation between female labour and political globalization. This co-integrating relation holds under presumption of endogenous structural break. Findings of this study are important for formulating right policies to promote female labour in Bangladesh

Nexus between institutional quality and corporate sustainable performance: European evidence

By analysing 796 companies' data from 21 European countries, this research uncovered the nexus between institutional quality (IQ) and corporate sustainable performance (CSP). The relationship was theoretically examined with the lens of institutional theory and then empirically tested. The findings show that IQ has a positive and significant impact in safeguarding CSP, and firms’ characteristics play an essential preamble in this regard. We additionally found the heterogeneous impact of IQ on CSP. To come to a conclusion, we have applied random effect, two-step system GMM and quantile regression models. Our findings are consistent and empirically robust; therefore, the study disseminates key messages to policymakers and practitioners about the role of IQ in safeguarding CSP

BONIK: A Blockchain Empowered Chatbot for Financial Transactions

A Chatbot is a popular platform to enable users to interact with a software or website to gather information or execute actions in an automated fashion. In recent years, chatbots are being used for executing financial transactions, however, there are a number of security issues, such as secure authentication, data integrity, system availability and transparency, that must be carefully handled for their wide-scale adoption. Recently, the blockchain technology, with a number of security advantages, has emerged as one of the foundational technologies with the potential to disrupt a number of application domains, particularly in the financial sector. In this paper, we forward the idea of integrating a chatbot with blockchain technology in the view to improve the security issues in financial chatbots. More specifically, we present BONIK, a blockchain empowered chatbot for financial transactions, and discuss its architecture and design choices. Furthermore, we explore the developed Proof-of-Concept (PoC), evaluate its performance, analyse how different security and privacy issues are mitigated using BONIK.Peer reviewe

Asymmetric effect of energy price on commodity price: new evidence from NARDL and time frequency wavelet approaches

The growing literature on volatility spillover and shock transfer between energy and food prices largely ignored the nonlinearities in the volatility patterns. This study evaluates the nonlinear interaction and co-movement between world energy prices and world food prices, including their individual components. Using monthly data from 1992 to 2017, we used Nonlinear Autoregressive Distributed Lag (NARDL) to investigate the short-term and long-term dynamics of food prices concerning the positive and negative shocks in energy prices. The result indicates that the impact of energy prices on food prices is asymmetric. A positive change in energy prices has a higher and long-lasting effect on agriculture commodity than a negative change. The wavelet coherence analysis suggests that a statistically significant lead-lag relationship exists. Both wheat and corn prices lead by energy prices. The relationship is rather long-run than the short-run, as we find the most dominant frequency is the 16th month and remains positive until the 64th month. Interestingly, we also observe that in the long-run, rice price lead oil and coal price. For the robustness test, we consider fertilizer and diesel as the control variables and find a similar asymmetric relationship with food prices