Search results

This paper aims to assess the rank of Shariah compliance (SC) and its impact on the financial performance of non-financial companies listed on the Saudi Stock Exchange. It seeks to understand the relationship between adherence to Shariah principles and the financial success of these companies, providing insights into the importance of SC in the Saudi Arabian context.

The study adopts a quantitative research approach, using financial and SC data from non-financial companies listed on the Saudi Stock Exchange. SC is measured using the Accounting and Auditing Organization for Islamic Financial Institutions standards. Financial performance is evaluated using various financial indicators, including return on assets (ROA), return on equity (ROE) and return on investments (ROI). Statistical analysis, including regression analysis, is conducted to examine the relationship between SC and financial performance.

The findings indicate a positive association between SC and financial performance in non-financial companies listed on the Saudi Stock Exchange. Companies with higher ranks of SC demonstrate superior financial performance, as evidenced by higher ROA, ROE and ROI. This suggests that adhering to Shariah principles can contribute to improved financial outcomes for companies operating in the Saudi Arabian market.

The study highlights the practical implications of maintaining SC for non-financial companies in Saudi Arabia. It emphasizes the importance of aligning business practices with Shariah principles to enhance financial performance. The findings suggest that companies can benefit from implementing Shariah-compliant strategies and practices, potentially attracting investors and improving their overall competitiveness in the market.

The social implications of SC in the Saudi Arabian context are significant. Adhering to Shariah principles not only ensures compliance with religious and cultural norms but also promotes ethical and responsible business behaviour. Companies that prioritize SC contribute to the development of a socially responsible and sustainable business environment.

To the best of the authors’ knowledge, this study represents the first investigation into the impact of SC rank on financial performance. By examining non-financial companies listed on the Saudi market, it contributes significantly to existing literature by providing empirical evidence supporting a positive correlation between SC rank and financial outcomes. The findings offer valuable insights for companies, investors and policymakers in Saudi Arabia, enhancing their understanding of the unique dynamics between SC rank and financial performance. This research enriches the body of knowledge in Islamic finance and business, making a notable contribution to the field and opening avenues for further exploration.

The purpose of this paper is to explore the existence of underpricing in the cooperative insurance sector in the Saudi Arabian market and to examine whether Sharia compliance requirements have an impact on the level of underpricing.

Underpricing and the effect of Sharia compliance are analysed using a comprehensive sample of 33 insurance companies with data collected between 2007 and 2013, after taking into account market movements, as well as some factors well-known in the literature.

The authors find that underpricing not only exists but also is among the highest in the world (455 per cent), which contradicts the literature on initial public offerings (IPOs)’ pricing in highly regulated sectors. In light of one of the other findings of the authors, namely, the small number of insurance underwriters, the authors attribute these very high levels of underpricing in part to the monopsony power of insurance underwriters in Saudi Arabia. Regarding the Sharia compliance effect, they find that it does not significantly reduce the underpricing of insurance offerings. The authors interpret this as the fact that Sharia status might not be taken into account by underwriters when they price the offerings of insurance companies, due to a major drawback in the implementing regulations of cooperative insurance which have been highly criticised by practitioners.

Future research should try to include more factors that might explain the underpricing and its determinants. Two important recommendations flowing from this study for regulatory and supervisory institutions are the need to improve disclosure and transparency conditions and to work towards reducing the monopsony power enjoyed by the underwriters. As for Sharia effect, the Saudi central bank should resolve the issue of Sharia compliance by adopting one of the Sharia-friendly models suggested by Islamic finance scholars, such as wakala or mudaraba.

To the best of authors’ knowledge, this paper is among the first to offer empirical evidence of the impact of Sharia compliance on the initial return of the IPOs of cooperative insurance firms.

This study aims to investigate the dynamic co-movement and interconnection among 69 security investment indices in China using the multi-time scale framework.

The authors first use the multiple coherence analysis method to exhibit the degree of relationships among the variables under study. In addition, the wavelet multiple correlation and wavelet multiple cross-correlation analyses are used to examine the time-frequency synchronization interdependence structure among the variables.

From the empirical findings, one may infer less opportunity for portfolio diversification at higher time scales. Obviously, at these scales, the authors find that the 69 Chinese investment indices generate a simple security investment class, as indicated by higher interconnection between the indices.

Further research can increase the sample size to re-investigate the empirical relationship for security investment indices.

In the nutshell, the results demonstrate the potential for Chinese investors to invest in security investment indices to earn from portfolio diversification at lower time frequencies. The Chinese investment market indices under study yield further opportunities of portfolio diversification toward the short-term investors than the long-term investors.

To the best of the authors’ knowledge, this is the first paper to examine the dynamic co-movement and interconnection for security investment indices in China.

The purpose of this study is to examine whether the relationship between asset quality and profitability is linear or nonlinear, using a global dataset containing 2,943 banks from advanced and emerging economies.

The authors use the U-shape test to investigate the existence of a nonlinear relationship between asset quality and profitability. In addition, the dynamic panel generalised method of moments (GMM) and quantile regression are used to examine the nonlinear effect of profitability on nonperforming loans (NPLs).

After controlling for macroeconomic and bank internal factors, the authors find empirical evidence supporting the existence of a nonlinear relationship in the form of a U-shape. This is also confirmed through the three-stage U test procedure. After distinguishing between advanced and emerging economies, the authors also find that, in advanced markets, the credit policy responds more rapidly to changes in credit market conditions than in emerging markets, providing insights into credit market dynamics.

Further research can check the robustness of this study’s findings in different markets and investigate the existence of nonlinearity in other bank variables.

In a nutshell, the results demonstrate potential implications for policymakers who need to carefully monitor banks' lending behaviour to ensure that banks do not lower lending standards. In addition, banking regulators and supervisors should consider the possible nonlinear relationship in their risk assessments and macrostress tests. Further, these results are important for bank managers, who should monitor the performance of their loan portfolios to ensure that their credit officers do not lower credit standards. Likewise, for banks located in an emerging economy, investing in human capital and advanced technologies can enable them to respond more effectively to changes in the credit market.

To the best of the authors' knowledge, this study is considered the first to provide empirical evidence for the nonlinear relationship between asset quality and profitability.

The purpose of this paper is to explore the extent of underpricing in the Saudi Arabian market of initial public offerings (IPOs), offer explanations and consider whether Sharia-compliance had a significant impact on the initial returns.

A comprehensive sample of 72 IPOs in Saudi Arabia between 2004 and September 2010 is used to analyse the initial return after adjusting it to the market movement as well as controlling for some common factors.

This paper finds that not only underpricing occurs but it is also among the highest levels in the world. While traditional factors affecting initial returns include age, market timing and firm size, it is found that Sharia compliance significantly reduces underpricing in Saudi Arabia. This may imply that Sharia compliance helps to reduce the uncertainty and consequences of the limited information inherent in IPOs.

Further research is needed to see if the effect of Sharia compliance status on the short-run performance of IPOs extends to other Islamic countries or is a country-specific characteristic. More firms need to be examined to identify the market characteristics that drive the returns.

Very substantial sums are being “left on the table” and more efficient pricing of IPOs would be of considerable benefit to firms.

By considering two different regimes, this paper offers some important lessons for the treatment of risk-taking, particularly in Islamic countries.

This paper is among the first to provide an empirical evidence of the impact of Sharia compliance on the initial return pattern in the IPO market.

The purpose of this paper is to explore the people’s perceptions of sustainable housing in Saudi Arabia using Riyadh as a case study. Riyadh was chosen as a case study for two reasons: it is the capital city of Saudi Arabia and the largest city in the country; and there are no major differences between the characteristics of people in Riyadh and other major Saudi cities.

The questionnaire survey technique was used in this study to achieve the main purpose. The study used descriptive statistics (frequency, percentage) with the aid of the Statistical Package of Social Science Software (SPSS) to analyze the data.

The findings reveal that there is a lack of people’s awareness about the sustainable housing. However, it shows a positive response regarding people’s willingness to live in sustainable housing in the future as well as to adjust their current houses to be more environmentally friendly houses.

The thoughts of stakeholders who are involved in the housing field, including policymakers and real estate developers, are very significant, however, due to the time limitation it has not been explored in this study. Therefore, future research is recommended to investigate the opinions of different stakeholders to have better insights for delivering sustainable housing.

The study contributes to exploring the people’s perceptions of sustainable housing in Saudi Arabia using Riyadh as a case study. Only a few studies have discussed this issue, so this study was conducted to bridge this research gap and build upon the literature.

The purpose of this paper is to identify the obstacles to the availability of suitable housing units for various socioeconomic segments of society with an emphasis on single-family homes, which is the most preferred housing type in the Saudi society.

To achieve the aim of this paper, the Delphi method was used to explore the experts’ opinions on the most important obstacles.

The findings of the study underline 17 different obstacles affecting the availability of suitable housing units for various segments of the Saudi society. The most critical obstacle is the high cost of land followed by the low income of the families, high cost of construction, high interest rate of mortgages and shortage of suitable residential lands.

The study concludes with a number of proposed recommendations that can contribute to address the current shortage of suitable housing units.

The purpose of this paper is to discuss the housing delivery within the Saudi Vision 2030 through an in-depth reading of the Saudi Vision 2030 from the researcher’s point of view and to identify the most significant aspects that may affect housing delivery in the country.

In this study, the desktop study technique was followed to review the key related literature, collect the data and analyze secondary data. The content analysis technique was used for data analysis of gathered documents and secondary data.

The findings reveal that there are several commitments in the Saudi Vision 2030 from the Saudi Government to be an exemplary leading nation in all aspects, including the delivery of affordable housing. Housing shortage, housing cost, demographic changes and land scarcity are identified as significant reasons for the lack of providing affordable housing.

The opinions of policymakers is very important, but due to time limitation, it has not been addressed. Future research can assess the Saudi Vision 2030 based on the study of the policymakers, professionals and academics to have better insights.

The paper contributes to discussing the housing delivery within the Saudi Vision 2030 and identifying the most significant aspects that may affect the housing delivery from the researcher’s point of view. Only a few studies have discussed the housing issues within the Saudi Vision 2030.

The purpose of this paper is to assess the nature of gated communities in the Kingdom of Saudi Arabia (KSA) focusing on the experiences of residents from different gated communities in the Dammam Metropolitan Area (DMA). It seeks to assess the socio-economic background of such communities and find out why people choose to live in gated communities and their perceptions of such housing patterns.

The questionnaire survey technique was used in this study to achieve the main purpose. The study used the triangulation method, which includes both qualitative and quantitative techniques as the most appropriate approach to be adopted. Qualitative data was analyzed using content analysis, while statistical analysis was performed to analyze quantitative data.

The findings of the study highlight that although gated communities are physically closed by walls and gates, it is distinguished by good social relations not only among their residents but even with the external surroundings, which makes these communities more attractive. Of course, this contrasts to some extent with the prevailing thinking that such communities live in a state of social isolation.

The ideas of people who live outside gated communities are very important, however, it was not explored in this study due to time limitations. So, future research could focus on citizens’ perceptions of this type of urban settlement.

To the best of the author’s knowledge, this is the first study assessing the nature of gated communities in KSA by focusing on the experiences of residents of different gated communities in DMA. Only a few studies have been done in this regard, so this research paper was conducted to bridge this research gap and build upon the literature.

This paper examines the influence of Shariah compliance (SC) on firms' net working capital (NWC) target and adjustment speed.

The study samples of non-financial firms taken from six Gulf Cooperation countries between 2005 and 2019 and employs static and dynamic models to answer the present study research questions.

The outcomes of the study indicate that SC is one of the major determinants of the decision made by the corporation regarding their NWC. More specifically, enterprises that are compliant with restrictions within Shariah are seen to have laid targets of their NWC at a level that exceeds that of enterprises that are not compliant. Furthermore, compared to conventional firms, they seem to have higher speed when adjusting to meet set NWC targets. Submission to Islamic laws limits the choices from which an enterprise can outsource capital from existing funding instruments. Therefore, they experience a higher expected cost of bankruptcy. That being the case, such financial managers should readily maintain and adjust to higher NWC targets to meet current corporate needs, alleviate the risk of bankruptcy and lower dependency on expensive external funding options.

To the authors’ knowledge, this is the first study to explore the influence of SC on firms' NWC target and adjustment speed.