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Article
Publication date: 5 May 2023

Muhamad Nafik Hadi Ryandono, Tika Widiastuti, Eko Fajar Cahyono, Dian Filianti, A. Syifaul Qulub and Muhammad Ubaidillah Al Mustofa

Zakat is an important Islamic economic instrument that plays significant role in Sustainable Development Goals. Accordingly, Zakat Institutions must manage zakat in a proper and…

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Abstract

Purpose

Zakat is an important Islamic economic instrument that plays significant role in Sustainable Development Goals. Accordingly, Zakat Institutions must manage zakat in a proper and efficient manner. This study aims to examine the efficiency of Zakat Institutions based on their clusters which are government, business and social organizations.

Design/methodology/approach

This study uses three quantitative methods: data envelopment analysis (DEA), free disposal hull and super-efficiency DEA. The analytical method is based on production approach, variable return to scale assumption and output orientation. The sample consists of 14 Zakat Institutions from three clusters: Zakat Institutions managed by government, Zakat Institutions managed by corporation and Zakat Institution managed by social organizations.

Findings

The results revealed that all of three techniques culminate the same ranking order of efficiency. Zakat Institution managed by the government is the most efficient Zakat Institution, with the average value of 0.87 by using three approaches combined. Meanwhile, Zakat Institutions owned by company and social institutions cluster are in second and third position, with the average value of 0.65 and 0.4, respectively, based on the results of the three approaches. This study contends that the level of efficiency of Zakat Institutions may be supported by clusters (affiliations) in their management.

Research limitations/implications

This study’s limitation is the inadequacy of the required data. Nonetheless, this study provides insights to improve the efficiency of Zakat Institutions based on their clusters. Zakat Institutions in each cluster can improve their efficiency by optimizing inputs to produce multiple outputs.

Originality/value

This study enhances research on the efficiency of Zakat Institutions using three methods to assess the consistency and strength of Zakat Institutions’ efficiency values. In addition, this study examines the efficiency level of Zakat Institutions based on their clusters.

Details

Journal of Islamic Accounting and Business Research, vol. 14 no. 8
Type: Research Article
ISSN: 1759-0817

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Article
Publication date: 25 August 2021

Nisful Laila, Sylva Alif Rusmita, Eko Fajar Cahyono and W.N.W. Azman-Saini

This study aims to analyze the determinants of ratings of corporate bonds and sukuk issued by firms listed on the Indonesia Stock Exchange (IDX) for the 2013–2019 period.

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Abstract

Purpose

This study aims to analyze the determinants of ratings of corporate bonds and sukuk issued by firms listed on the Indonesia Stock Exchange (IDX) for the 2013–2019 period.

Design/methodology/approach

This study uses a quantitative approach by testing hypotheses and using logistic regression. Ordinal logistic endogenous (or dependent) variables (Y) in ordinal logistics use data in the form of levels (ordinal scale). Independent (or exogenous) variables (X), include financial and non-financial factors for dependent (or endogenous) variables (Y), namely, of corporate bonds and sukuk ratings. There are two approaches to the study they are Logit and Gompit (Negative Log-Log. The population of the study is Indonesian companies listed on the IDX that issued bonds and sukuk for the 2013–2019 periods. The sampling technique is purposive. In total, 16 corporate companies adhering to the above criteria and issuing bonds and sukuk were chosen. In total, 270 types of bonds and 280 types of sukuk were selected as samples.

Findings

The results of the Logit and Gompit regression show that leverage ratio, firm size, security structure and maturity date are important determinants of corporate bond ratings while profitability and liquidity ratios appear to have no influence on the rating. In the case of sukuk, profitability, liquidity and maturity date play important roles in influencing the corporate sukuk rating. However, there is no evidence to suggest that leverage ratio, company size and security structure may affect sukuk ratings.

Research limitations/implications

For both sukuk and bond issuers, it is necessary to pay attention to the factors that may affect the ratings. Specifically, Sukuk issuers need to pay attention to the return of asset, current ratio, growth and structure. On the other hand, bond issuers need to consider depth to equity, structure and maturity. As for investors, the findings of this study reveal that both bond and sukuk ratings reflect their performance.

Practical implications

This study provides useful information for investors that allows them to assess the risk of sukuk or bonds chosen based on rating and financial performance.

Originality/value

The novelty of this study lies in its econometric methodology used to identify factors which influence sukuk and bond ratings. Specifically, this study used two different techniques that allow a robust conclusion to be drawn. Furthermore, this study provides a systematic analysis which allows comparison between factors which affect bond and sukuk ratings in Indonesia.

Details

Journal of Islamic Accounting and Business Research, vol. 12 no. 8
Type: Research Article
ISSN: 1759-0817

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Article
Publication date: 26 February 2021

Tika Widiastuti, Eko Fajar Cahyono, Siti Zulaikha, Imron Mawardi and Muhammad Ubaidillah Al Mustofa

This study aims to formulate a strategy for optimizing zakat governance in zakat institutions in East Java Province by identifying priority problems, creating solutions and…

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Abstract

Purpose

This study aims to formulate a strategy for optimizing zakat governance in zakat institutions in East Java Province by identifying priority problems, creating solutions and developing strategies.

Design/methodology/approach

This qualitative research uses the analytical network process method. Ten respondents representing practitioners, academics, associations and regulators were selected for their expertise in zakat governance. The data were processed using Super Decision software program and Excel.

Findings

Priority issues in optimizing zakat governance found in this study are lack of information on Mustahik’s needs and development to Muzakki and the low motivation and ability of Mustahik to develop. Improving the quality and capacity of Amil’s, especially in the technological aspect, is a priority solution. The priority strategy considers intensification (by developing Amil’s ability to use technology) and extensification (by increasing Amil’s numbers who master technology).

Practical implications

The results highlight the urgency of increasing Amil’s capacity and capability in technology-based zakat management. Zakat institutions need to prepare for management’s transformation toward zakat technology as one of the priorities in optimizing zakat governance.

Originality/value

Problems, solutions and strategies for optimizing zakat governance are collected by connecting it to the Zakat Core Principles, namely, the ninth principle of collection management and the tenth principle of distribution management. Further, for identifying problems, solutions and strategies, four aspects must be considered of Amil, Muzakki, Mustahiq and other supporting elements to present better policies to optimize zakat governance.

Details

Journal of Islamic Accounting and Business Research, vol. 12 no. 3
Type: Research Article
ISSN: 1759-0817

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Article
Publication date: 27 April 2022

Marhanum Che Mohd Salleh, Mohammad Abdul Matin Chowdhury, Eko Fajar Cahyono and Tika Widiastuti

The main purpose of this study is to evaluate the performance of takaful operators in Malaysia.

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Abstract

Purpose

The main purpose of this study is to evaluate the performance of takaful operators in Malaysia.

Design/methodology/approach

The study applied the data envelopment analysis (DEA) technique and the ratio analysis, using secondary data available on Malaysian Takaful operators’ annual reports. The study period for the analysis ranged from 2013 to 2016.

Findings

Based on both analyses, the performance of Takaful operators was affected due to the additional cost imposed by the goods and services tax (GST) implementation. Results showed a decline in average technical efficiency for takaful operators upon GST implementation.

Research limitations/implications

The data were taken from the annual audited reports for selected firms that were available on the firm’s website only, which was limited. The data were taken till 2016, even though the GST is omitted from Malaysia on 1 June 2018. This study has applied Ratio analysis and DEA constant returns to scale (CRS) technique; the future study may adopt both DEA CRS and DEA carrying returns to scale model to evaluate along with other methods to identify the specific factors.

Practical implications

These findings may associate policymakers in identifying the shortcomings of GST or new tax implementation in a new and emerging industry. So, the policymakers and central banks may adopt necessary initiatives to support the industry. Because the Malaysian government is trying to push the takaful industry along with Islamic banking and finance in the competitive market, takaful operators may be exempted from the current sales and service tax (SST). In addition, takaful operators may use these findings to enhance their operational activities efficiently to improve performance. This paper might help the researchers and practitioners to learn the impact of GST. Even though GST seems not relevant anymore as the government has replaced it with SST, the trick is still the same as it is a kind of tax or costs incurred by the Takaful operators in running their business. Takaful managers may identify their efficient level in managerial aspects as well as the optimal scale of resources by the findings of this study.

Originality/value

To the best of the authors’ knowledge, this research is original in terms of data that is gathered directly from the annual report of the company during the GST period.

Details

Journal of Islamic Accounting and Business Research, vol. 13 no. 6
Type: Research Article
ISSN: 1759-0817

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