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Article
Publication date: 29 November 2021

Abdul Rashid, Farooq Ahmad, Sarir Ud Din and Shar Zaman

This paper aims to explore the impact of corruption (CP) on income inequality (IN) by considering the size of informal sector (IFS) at different levels of percentiles.

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Abstract

Purpose

This paper aims to explore the impact of corruption (CP) on income inequality (IN) by considering the size of informal sector (IFS) at different levels of percentiles.

Design/methodology/approach

This paper uses a panel quantile regression approach for a sample of 50 developing countries. The study also applies panel co-integration (Kao residual co-integration test) in order to examine the long-run relationship between CP and IN.

Findings

This paper using a panel quantile regression approach shows that the high incidence of IFS in an economy marginalizes CP's positive effect because it works as a source of poor peoples' livelihood and skillful individuals. The spread of IFSs in the developing economies may raise earnings among groups and individuals who remain unemployed. Moreover, the results show that CP creates asymmetry in income distribution; fascinatingly, the asymmetric income distribution is high when CP is at higher percentiles.

Research limitations/implications

Due to non-availability of IFS, we restrict our analysis up to 50 developing countries.

Practical implications

CP devastates the effectiveness of institutions over time. Therefore, the government should have to take bold steps to reduce CP in society. Another policy implication of this study is that the government should reduce CP to decrease IN in less developing countries. Moreover, to increase the net base, the authorities need to bring IFS under the umbrella of regulation to avoid inequality in society. In developing economies, a higher part of labor force is related to IFS; therefore, our findings suggest a dire need to reduce labor exploitation in IFS. The policymakers can reduce labor exploitation by reducing the size of IFS, which ultimately reduces IN.

Social implications

On the basis of the authors’ findings, this paper further suggests that it is mandatory for government to reduce CP in order to reduce IN. Moreover, to reduce IN, one needs to reduce the size of IFS.

Originality/value

This study is unique as it is the first that examined the role of IFS in establishing the effect of CP on IN for developing countries at different percentiles.

Details

Journal of Economic and Administrative Sciences, vol. 39 no. 4
Type: Research Article
ISSN: 2054-6238

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Article
Publication date: 21 December 2021

Abu Talib Mohammad Monawer, Noor Naemah Abdul Rahman, Ameen Ahmed Abdullah Qasem Al-‎Nahari, Luqman Haji Abdullah, Abdul Karim Ali and Achour Meguellati

This paper aims to formulate a conceptual framework that will facilitate the actualization of maqāṣid al-Sharīʿah in product design and consumption within Islamic financial…

829

Abstract

Purpose

This paper aims to formulate a conceptual framework that will facilitate the actualization of maqāṣid al-Sharīʿah in product design and consumption within Islamic financial institutions (IFIs).

Design/methodology/approach

This paper relies on the classical and contemporary literature on maqāṣid al-Sharīʿah and Islamic finance and adopts a qualitative content analysis method and an inductive approach to outline the constituent elements that formulate the framework.

Findings

This study determines six vital constituents of maqāṣid al-Sharīʿah, namely, parameters of maqāṣid, particular objectives, appropriate means, micro provisions, level of need and legal maxims to develop a conceptual framework of actualizing maqāṣid al-Sharīʿah in Islamic finance. The framework covers the following three stages: identification of maqāṣid, operationalization of maqāṣid in product design and consumption based on maqāṣid.

Research limitations/implications

This paper proposes a conceptual framework without investigating the practice of any particular industry or products. Further research would focus on formulating a practical framework based on a focus group discussion with industry experts, elaborating the parameters of maqāṣid, scrutinizing the maqāṣid available in the literature by the parameters of maqāṣid and assessing the IFIs’ products and services using the proposed framework.

Practical implications

This paper provides insights into the importance of maqāṣid elements and the effects of overlooking them on IFIs and customers’ product consumption. Furthermore, a major implication of the proposed framework is to learn how to use the maqāṣid approach as the baseline for designing new financial products.

Originality/value

The novelty of this paper lies in its pioneering attempt of harmonizing all essential maqāṣid elements and using them as constituents to formulate a comprehensive framework that actualizes maqāṣid al-Sharīʿah in the Islamic finance industry.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 15 no. 5
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 8 August 2008

Mahmood Mohamed Sanusi

The purpose of this paper is to explain the theoretical framework of money laundering and expanded to study it from the Islamic perspective. As money laundering sustain truly…

1974

Abstract

Purpose

The purpose of this paper is to explain the theoretical framework of money laundering and expanded to study it from the Islamic perspective. As money laundering sustain truly “global issues” and thus should be treated as such. The purpose is to examine the conception of money laundering under Islamic law in conjunction with the discussion of Islamic law of contract; the most common methods in money laundering involving numerous cash deposits at various bank branches, followed by the purchase of a secured bank instrument, such as cashiers' check; how far is Islamic law able to provide rules, norms in protecting financial institutions, customers and the public from criminal activities?

Design/methodology/approach

The paper depended on primary data. The data were procured from the Holy Quran, Prophetic Sunnah which embodied all tenets of Islamic law, and in addition, from the books of the Classical Muslim scholars.

Findings

It has been revealed that Islam has initially taken great interest in the market condition, business conduct and economic system. Generally speaking Islam law prohibits all business conducts which compromise unjustified consumption, misappropriation of one's wealth thus creating parasitical classes of people obtaining wealth and money being the root of all criminal activities; financial crimes and the concept of money laundering have been categorised as a division of Islamic criminal law which has been addressed via many provisions in the Quran and Prophet's Sunnah; the prophet and his successors have developed the Institution of Hisbah to control malpractices and criminal activities. Moreover, Islamic law prescribes a set of principles, rules and measures to deal with acts that are most likely to affect the economic scenario.

Originality/value

This invaluable paper identifies the attitude of the Islamic law in monitoring and preventing the concept of money laundering, further distinguishing between illicit gains (al‐Kasb al Haram) and lawful gains. Finally, this paper reviews the Islamic norms relating to confiscation and forfeiture of Ill‐gotten wealth and property.

Details

Journal of Money Laundering Control, vol. 11 no. 3
Type: Research Article
ISSN: 1368-5201

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Article
Publication date: 10 June 2021

Afef Khalil and Imen Ben Slimene

The purpose of this paper is to examine the Board of Directors’ characteristics and their impact on the financial soundness of Islamic banks.

657

Abstract

Purpose

The purpose of this paper is to examine the Board of Directors’ characteristics and their impact on the financial soundness of Islamic banks.

Design/methodology/approach

Regression analysis is applied to test the impact of the Board of Directors’ characteristics on the financial soundness of Islamic banks, using a panel data set of 67 Islamic banks covering 20 countries from 2005 to 2018. The Z-score indicator is used to evaluate the Islamic banks’ soundness. To check the robustness of the results, this paper uses other dependent variables (CAMEL) than the Z-score.

Findings

The main results show that the presence of an independent non-executive director negatively impacts the financial soundness of Islamic banks, while the chief executive officer duality practice has a positive effect on it. Other characteristics of the Board of Directors do not significantly impact the financial soundness of Islamic banks (foreign director, institutional director, chairman with a Shari’ah degree, interlocked chairman and the Board of Directors’ size).

Practical implications

This study aims to fill the gaps in the literature that discuss the Board of Directors’ role in corporate governance and its impact on the financial soundness of Islamic banks. In other words, it shows the role played by the Board of Directors and improves the knowledge of the corporate governance-financial soundness relationship. Plus, managers, investors and regulators may gain evocative insights, particularly those looking to improve their Islamic banks’ soundness by restructuring their boards’ composition.

Originality/value

This study sheds new light on the literature on Islamic banking by clarifying the relationship between the Board of Directors and the financial soundness of Islamic banks. Contrary to previous research, this paper uses an additional hypothesis stating that a chairman with a Shari’ah degree (Fiqh Muamalt) has a positive impact on the financial soundness of Islamic banks.

Details

Corporate Governance: The International Journal of Business in Society, vol. 21 no. 7
Type: Research Article
ISSN: 1472-0701

Keywords

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Publication date: 1 March 2021

Siti Khomsatun, Hilda Rossieta, Fitriany Fitriany and Mustafa Edwin Nasution

The unique characteristic of Islamic bank leads in governance and disclosure. Using stakeholder, signaling, and market discipline theory, governance and adequate disclosure may…

Abstract

The unique characteristic of Islamic bank leads in governance and disclosure. Using stakeholder, signaling, and market discipline theory, governance and adequate disclosure may increase bank soundness. This study aims to investigate the relationship of sharia disclosure and Sharia Supervisory Board in influencing Islamic bank soundness in the different regulatory framework of the country. Using purposive sampling, the research covered 84 Islamic banks in 16 countries during the period 2013–2015 with lag data of Islamic bank soundness. The result shows sharia disclosure influences on Islamic bank soundness for management efficiency, capital adequacy ratio, asset quality, and liquidity. The results also show that sharia disclosure mediates the indirect effect of SSB on Islamic bank soundness. The regulatory framework (sharia accounting standard and SSB regulation) shows moderating effect of regulation framework proved on the association of sharia disclosure with management efficiency, capital, and liquidity. The effect is indirectly depending on the regulatory framework for proxy management efficiency, capital, and liquidity. The implication of the research suggests that sharia disclosure could increase the market discipline mechanism of Islamic bank stream. The Islamic bank can increase the transparency using sharia disclosure as a branding for increasing public trust, even though in the deficient Islamic bank regulation countries.

Details

Recent Developments in Asian Economics International Symposia in Economic Theory and Econometrics
Type: Book
ISBN: 978-1-83867-359-8

Keywords

Available. Open Access. Open Access
Article
Publication date: 16 March 2021

Haithem Kader

This study argues that in order to address the problems associated with the modern market economy at their core, such as persistent poverty, growing inequality and environmental…

7589

Abstract

Purpose

This study argues that in order to address the problems associated with the modern market economy at their core, such as persistent poverty, growing inequality and environmental degradation, it is imperative to re-assess the well-being and moral philosophy underpinning economic thinking. The author attempts to offer a preliminary way forward with reference to the Islamic intellectual tradition.

Design/methodology/approach

This study employs content analysis of classical and contemporary Islamic texts on human well-being and economic ethics to derive a conceptual well-being model. The paper is structured in four sections: section one provides an overview of relevant secondary literature on moral economic approaches; section two outlines the main well-being frameworks; section three discusses the concept of human well-being in Islam informed by the Islamic worldview of tawḥīd, the Islamic philosophy of saʿādah, and the higher objectives of Islamic Law (maqās.id al-Sharīʿah); and finally, section four discusses policy implications and next steps forward.

Findings

A conceptual model of human well-being from an Islamic perspective is developed by integrating philosophical insights of happiness (saʿādah) with an objective list of five essential goods: religion (Dīn), self (Nafs), intellect ('Aql), progeny (Nasl) and wealth (Māl) that correspond to spiritual, physical and psychological, intellectual, familial and social, and material well-being, respectively.

Research limitations/implications

Further research is needed to translate this conceptual model into a composite well-being index to inform policy and practice.

Practical implications

This model can be used to review the performance of the Islamic finance sector, not solely in terms of growth and profitability, but in terms of realising human necessities, needs and refinements. It can also provide the basis for the Organisation of Islamic Co-operation (OIC) countries to jointly develop a well-being index to guide national and regional co-operation. More generally, this study highlights the need for research in Islamic economics to be more firmly rooted within Islamic ontology and epistemology, while simultaneously engaging in productive dialogue with other moral schools of economic thought to offer practical solutions to contemporary challenges.

Originality/value

This study offers three aspects of originality. First, by outlining well-being frameworks, it highlights key differences between the utilitarian understanding of well-being underpinning modern economic theory and virtue-based understandings, such as the Aristotelian, Christian and Islamic approaches. Second, it provides a well-being model from an Islamic perspective by integrating the Islamic worldview of tawḥīd, the Islamic philosophy of saʿādah, and the higher objectives of Islamic Law (maqāṣid al-Sharīʿah). Third, it proposes an ethical framework for informing economic policy and practice.

Details

Islamic Economic Studies, vol. 28 no. 2
Type: Research Article
ISSN: 1319-1616

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Article
Publication date: 14 November 2024

Iin Mayasari, Handrix Chris Haryanto, Handi Risza and Gancar Premananto

The study analyzes brand love in local eco-hijab fashion (LEHF) by discussing the value of collectivism, fashion consciousness, environmental value, religiosity and brand…

106

Abstract

Purpose

The study analyzes brand love in local eco-hijab fashion (LEHF) by discussing the value of collectivism, fashion consciousness, environmental value, religiosity and brand advocacy. LEHF becomes the trend pursued by consumers, so this can create market opportunities to optimize marketing strategies. The focus on LEHF in a sustainable fashion would allow local businesses to develop local values-based companies. This study uses the value attitude-behavior model to analyze data.

Design/methodology/approach

This research uses a quantitative survey to obtain data. The questionnaire is spread to 300 respondents with a purposive sampling approach, especially respondents who have worn LEHF.

Findings

This study shows that collectivism values, fashion consciousness, environmental values and religiosity influence brand love, while brand love influences brand advocacy related to LEHF. On the other hand, consumers are the target market with a fashion consciousness to follow the trend of hijab clothes. This also shows they wear clothes to fulfill religious values while prioritizing the latest styles.

Research limitations/implications

Since this study focuses on LEHF, this product is only relevant to hijab fashion. This takes into account the potential of Muslim-dominated Indonesian society. The fashion category can be enlarged to include more local products in future studies. A large selection of goods may promote greater use of regional interests.

Practical implications

For business actors, particularly micro and medium firms that are just starting to grow to support the local hijab fashion industry company, this research has managerial implications. This presents a chance for business actors to improve the local economy and opens doors for establishing more employment possibilities. The growth of the regional hijab fashion market offers an opportunity to satisfy the demands of customers who favor regional goods. Brand love in LEHF may foster business revenue growth and help local firms compete favorably with international brands. Marketers for LEHF are anticipated to intensify their efforts to advance socialism, the environment and fashion sensibility. Additionally, LEHF marketers emphasize the importance of religiosity when promoting their products to the target population. Marketers are also aware that the study’s environment is Indonesia, which has 90% Muslim population. Marketers have an excellent opportunity to maximize this scenario.

Social implications

This study also had social implications. The goal of producing locally made eco-hijabs is to benefit nearby communities and the environment. This aligns with the more general objectives of ethical and sustainable fashion. Sustainable methods are used in production, such as using eco-friendly colors, water conservation and waste reduction. Sustainable manufacturing methods are designed to reduce their adverse effects on the environment and encourage ethical production. Empowerment and community engagement may be involved in the manufacturing of locally-made eco-hijabs. This can entail educating and hiring regional craftspeople or incorporating neighborhood residents in manufacturing.

Originality/value

The study focuses on religiosity and environmental value to further analyze its influence on LEHF. The context of the products analyzed in this study is LEHF, which prioritized local production and strengthened local wisdom through pro-environment. The study used the VAB (value, attitude, behavior) model to analyze the concept.

Details

Journal of Islamic Marketing, vol. 16 no. 3
Type: Research Article
ISSN: 1759-0833

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Article
Publication date: 1 January 1998

Hanafi Mohd. Noor

Razi's theory has an axiological and epistemological relevance that ethical values are established on knowledge model which is developed by interactive preferences between polity…

532

Abstract

Razi's theory has an axiological and epistemological relevance that ethical values are established on knowledge model which is developed by interactive preferences between polity and the value system. The point of departure for the understanding of the differences of Razi's human needs theory vis‐a‐vis the contemporary ideas are the metaphysical principle that underlies the notion of the theory. By means of this principle we come to understand the place of human being in the universe, his function and purpose in life and his final destination, therefore his needs and motivations. Thus an economic system based on Razi's human needs theory is an ethico‐economy which tilts neither toward socialism nor laissez‐faire capitalism. The notion of need can be interpreted as a reaction against allegedly value‐free or value‐neutral approaches in the social sciences. In this sense, the work of Razi can be most usefully seen as part of those ethical ideas which he invoked in the 12th century. Razi's writing on ethics that very closely related to philosophy is much less well known. Yet it is essential in an attempt to evaluate his contribution to the development of Islamic thought. The scope of his writings is remarkable, ranging from his early analyses of theological and legal controversies in the eastern part of the Muslim world, through a book on Qur'anic Exegesis and ethics; from medical sciences to his sustained polemic on credology and philosophy. In short, his writings embrace diversity of areas, from theology to philosophy, from natural to applied sciences including chemistry, astronomy and medicine. In his writings, he succeeded in proving his claim that excellence and perfection of man are not realized by means of bodily sensual pleasure. Rather, it is realized instead, by means of knowledge, power and excellent manners. This paper gives an account of the relevancies of knowledge‐based world view in the light of Razi's view of human needs. In dealing with this topic, two questions are explored: (1) what is his view of human needs? and, (2) what is the relevance of his view to ethics and economics?

Details

Humanomics, vol. 14 no. 1
Type: Research Article
ISSN: 0828-8666

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Article
Publication date: 30 December 2020

Luthfi Hamidi and Andrew C. Worthington

This paper aims to outline the argument for social outcomes as an objective for Islamic banks and investigate whether social failure exists in Islamic banking in Indonesia by…

688

Abstract

Purpose

This paper aims to outline the argument for social outcomes as an objective for Islamic banks and investigate whether social failure exists in Islamic banking in Indonesia by assessing it against this performance dimension.

Design/methodology/approach

Content analysis of the annual reports of a sample of 12 Islamic commercial banks, seven Islamic banking units, and seven Islamic rural banks operating in Indonesia. The social outcomes to be measured employ the social objectives and disclosure measures from the prevailing literature, combined with the Kinder, Lydenberg, Domini Research and Analytics index of corporate social performance, the United Nations’ 17 Sustainable Development Goals and five Environment Social Governance Scorecards developed by Oikocredit, a global cooperative and social investor group.

Findings

Social failure evident in all Islamic rural banks and half of all Islamic commercial banks, but in only one of the seven Islamic bank units where most banks appear to pursue social outcomes at the accommodative level (accepting and doing all that is required). A social outcome-weighted asset formulation reveals Islamic banking has improved in meeting its social objectives over time, but sometimes at the cost of other objectives relating to the environment and customers.

Research limitations/implications

Single-country context for analysis and limited period of analysis given rapid growth of industry and less stringent reporting requirements in the past.

Practical implications

Islamic banking in Indonesia needs to continue to improve its social outcomes, particularly in relation to the environment and customer benefits.

Social implications

Emphasis on banking supervisory bodies to regulate and provide incentives for the industry to address the social issues upon which consumer support, industry efforts and regulation draws.

Originality/value

Few existing studies investigate the social dimension of Islamic banking, not least in Indonesia. Novel quantitative and qualitative application of content analysis.

Details

Society and Business Review, vol. 16 no. 1
Type: Research Article
ISSN: 1746-5680

Keywords

Available. Open Access. Open Access
Article
Publication date: 3 November 2020

Muhammad Hanif

This study aims to evaluate the role of the prevailing currency systems in achieving (or departing from) the socio-economic objectives of a progressive and just society; i.e…

3487

Abstract

Purpose

This study aims to evaluate the role of the prevailing currency systems in achieving (or departing from) the socio-economic objectives of a progressive and just society; i.e. featuring stability and equitable distribution of wealth.

Design/methodology/approach

After documenting historical developments in currency systems, the study reviews the Islamic perspective on the matter. Features of an ideal currency system are listed and then a critical evaluation of existing currency systems – fiat, banking and cryptocurrency – is undertaken.

Findings

It is found that existing currency systems – fiat, banking and cryptocurrency – are not compatible with the socio-economic objectives of a forward-looking, progressive society, which upholds transparency and justice as its core values. The study documents that Sharīʿah norms have no preference or dislike for any of the existing currency systems. Any prudent currency system compatible with the objectives of the Islamic financial system (i.e. stability and equitable distribution of wealth) is acceptable. A single international reserve currency (with country-specific legal tendering) is subject to the risk of destabilisation across global markets.

Practical implications

This paper recommends autonomy of central banking, the spending of seigniorage for the welfare of community members, development of asset-backed currencies (following ṣukūk structures), as well as multiple international reserve currencies and joining of hands by professionals and Sharīʿah scholars to design a currency system compatible with the Islamic financial system. This paper’s recommendation is against the adoption of cryptocurrency that lacks the backing of real assets.

Originality/value

The study contributes to the literature by evaluating the compatibility of existing currency systems in the achievement of socio-economic objectives of a welfare state which seeks to uphold justice and equitable resource distribution as core values in the financial system.

Details

ISRA International Journal of Islamic Finance, vol. 12 no. 3
Type: Research Article
ISSN: 0128-1976

Keywords

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