Research

Catherine S F Ho · Nur Hazimah Amran · Irfan Syarafuddin B Ab Aziz · Wahida Ahmad ·International Journal of Economics and Management ·2021 ·JEL: G11, G12, G15, G23

Financial crises and the geopolitical issues around the world have caused much volatility in returns and market uncertainty. This trend of higher uncertainty in risk and return causes vast changes in stock and investment values, which caused investors scrabbling to maintain the value of their wealth. It is therefore vital that investors understand and compare investment alternatives in order to maximize return. The purpose of this research is to analyze the performance of Islamic and conventional mutual funds and provide a comparison of fund performances to enable investors to make informed decisions. Mutual fund data from 2013 to 2017 for Saudi Arabia and Malaysia, the two largest Islamic fund markets are compiled and risk-adjusted performance statistics applied to arrive at measurement of performances. Although fund performance comparison is a wellresearched area, this study contributes to the literature in terms of a comprehensive investigation of various types of Islamic funds with an in-depth evaluation of different investment time horizons. Empirical evidence on risk-adjusted performance comparison indicates that Malaysian conventional equity, mixed asset and money market funds for all 1, 3 and 5-year horizons outperform their Islamic counterparts. Similarly, Saudi Arabian equity and mixed asset funds also outperform their Islamic counterparts for all time horizons. On the contrary, the Saudi Islamic money market funds outperform their conventional partners. Cross country comparison confirms that Malaysian funds achieve superior performance except for money market funds which underperform their Saudi counterparts. In summary, current evidence concludes that, depending on the investment horizon and risk appetite, investors are better off investing in the appropriate fund.

Nur Sa’adah Muhamad · Syahnaz Sulaiman · Khairul Akmaliah Adham · Mohd Fuaad Said ·Pertanika Journal of Social Science and Humanities ·2019

Halal tourism, which arises from the growth in the number of Muslim travellers world-wide and the rapid development of halal industry, is defined as the engagement of any object or action by Muslim travellers that conforms to the Islamic teachings and facilitates the practice of the religion. As such, the application of halal concept in tourism, including in its development and marketing, must be guided by the Islamic principles. With the purpose to understand the current state of knowledge and practice, we reviewed the literature on halal tourism that has been published in high-tier academic journals. Based on the review, we identified the emergent themes and the knowledge gaps for future research. Among others, we found that the industry is booming with increased participations from Muslimminority countries. However, there seems to be variations in the practice, perhaps due to the complexity of the market needs. The implementation of halal tourism by Muslimminority countries is the most pressing issue due to the need to ensure that the process and the service offered strictly comply with the requirements of Islamic teachings, while at the same time, to ensure that the countries are able to develop their halal sectors into competitive industries. Understanding the implementation of halal tourism is an important agenda for future research to ensure that the service provided addresses the fundamental issue of Muslims’ obligations to adhere to the Islamic teachings in all aspects of their lives including while travelling.

Hasnan Baber ·Malaysian Journal of Consumer and Family Economics ·2019

The study is aimed to investigate the gap between the level of service quality expectations and perception and its impact on customer satisfaction in Islamic banks of Malaysia. Shariah Compliance dimension was included in the SERVQUAL model of service quality. A 29 item questionnaire was employed to collect data from 721 customers of selected banks of Malaysia. In this study, data were statistically analysed through reliability analysis, paired sample t-test, exploratory factor analysis, regression analysis and followed by confirmed factor analysis. Structural equation modelling was used to measure service quality perception and customer satisfaction. This study revealed that there is a partial significant gap between expected and perceived service quality level except in Shariah Compliance and tangibility. The study suggested that there is a positive and significant impact of modified multidimensional SERVQUAL quality scale on customer satisfaction. Addition of Shariah compliance dimension showed the highest contributing factor among all dimensions and thus its inclusion was justified. The study was original and novel to find a quality gap and its impact on Malaysian Islamic bank customers and it will help policymakers of Malaysia and other countries to improve to meet customer expectations.

Nurita Juhdi · Junaidah Hashim · Rozailin Abdul Rahman ·Malaysian Journal of Consumer and Family Economics ·2019

Malaysia is in the midst of embracing the Industrial Revolution 4.0 and is working hard to strengthen the educational sector so that the future human capital possesses high ethical values and morality. Term like internet of things become the buzzword of the day but still, Islamic education providers particularly private Islamic schools in Malaysia are still struggling to survive and coupled with high turnover rates among the teachers, they have difficulty in producing high quality Islamic education. They are in dire needs of teachers who are willing to stay and sacrifice for students. Despite the high turnover rate, there are teachers who are still willing to stay and hence, the study was conducted to investigate the reasons for the teachers to stay. Job embeddedness theory was used in this study because it was able to uncover the reasons why employees stay in organizations and thus, the study examined the relationship between job embeddedness and employee retention among teachers in private Islamic schools in Malaysia. Three hundred and ninety school teachers in private Islamic schools participated in the study and the data was collected using survey forms. The findings revealed that fit to organization, fit to Islamic school practices, fit to community, links to school and organization-related sacrifices were significantly related to employee retention. The findings contribute significantly to the school administrators. Islamic education aims to nurture the young people as the future leaders. High turnover rates could negatively affect the goal of Islamic education and thus, the administrators and the policy makers have to give attention to the pressing issue especially in the era of technological sophistication.

1 KHAIRI FAIZ MAZRI · RINA FADHILAH ISMAIL (Universiti Teknologi Mara (UiTM)) · ROSHAYANI ARSHAD (Universiti Teknologi Mara (UiTM)) · SITI AISYAH KAMARUZAMAN (Universiti Teknologi Mara (UiTM)) ·International Journal of Economics and Management ·2018 ·JEL: C63; G21

An increase in the number of Shariah-compliant companies in Malaysia has greatly contributed to stabilising the Islamic Capital Market (ICM). The aim of this study is to examine the nature and extent of Islamic Social Reporting (ISR) practices among Shariah-compliant companies listed on the ACE Market in Malaysia. The study also examines the potential existence of a relationship between corporate governance attributes and ISR. The study focuses on four attributes of corporate governance: Shariah supervisory board size, Audit quality, Audit committee and Muslim ownership. A sample was selected comprising 53 Shariah-compliant companies listed on the ACE Market of Bursa Malaysia during the three-year period of 2015–2017. The study uses content analysis, with ISR coded according to a modified Islamic Social Disclosure Index. The results show significant relationships between the corporate governance attributes of board size, audit quality and audit committee, and ISR. This may reflect the benefits of having more board members with a range of expertise and experience in terms of the ability to make better reporting decisions. The appointment of auditors from the Big 4 firms indicates more transparent reporting practices, while an audit committee, serving as a management watchdog, may encourage more transparent reporting in annual reports. The findings may help to strengthen the understanding of parties such as regulators, practitioners and potential investors of the attributes of effective governance among growing companies in Malaysia.

Gani Ibrahim Musa · Zakaria Bahari · Azreen Hamiza Abdul Aziz ·Jurnal Ekonomi Malaysia ·2020

The primary purpose of the financial sector of an economy is financial intermediation. Financial intermediation activities of channelling funds from surplus to the deficit units in the economy including through capital market affect the economic growth of a country. The role of Islamic capital market in the process of affecting the growth of an economy is another dimension in finance-growth nexus. This study empirically examines the impact of Islamic capital market on Malaysian economy. It employs the ARDL bounds test approach for cointegration. The results revealed that in the long-run, Islamic capital market contributes to the Malaysian economy by way of capital formation and the efficiency of the capital served as channels of transmitting growth. However, in the short run, only Islamic capital market measure of Islamic stock market turnover contributes to the economy with productivity of capital as the only channel of transmitting growth. Moreover, there is evidence of causality between the Islamic capital market turnover and the Malaysian economy. The findings imply that the Islamic capital market effectively channelled and pooled funds to productive investment activities. It further proves the notion that in general, Islamic finance is more inclined towards real sector growth as compared to conventional counterpart due to the emphasis on equity-based financing as opposed to debt-based financing.

Maisyarah Stapah @ Salleh · Bayu Taufiq Possumah · Nizam Ahmat ·Jurnal Ekonomi Malaysia ·2018

This study investigates the determinants of Net Profit Margin (NPM) in Malaysia’s Islamic banking system for the period of 2011-2015 by using static panel data analysis. In Malaysia, conventional banks through its Islamic subsidiary banks are dominating the Islamic banking system in terms of total assets, total loans and total deposits. Therefore this paper attempts to investigate the impact of these Islamic subsidiaries of conventional banks towards the NPM. In relation to that, the impact of the conventional parent banks’ Net Interest Margin (NIM) towards its Islamic subsidiary banks’ NPM is also investigated. For the first objective, the displayed results shows positive relationship indicating that the Islamic subsidiaries of conventional banks’ NPM is higher than the full-fledge Islamic banks’ NPM. While the empirical results on the banks’ specific variables suggest that size, risk aversion and operating cost are positively related to NPM. However, credit risk tends to reduce NPM. Besides that, this study also finds that market concentrations and GDP growth will influence NPM in negative ways whilst inflation and Islamic stock market developments will increase NPM. Liquidity however is found insignificant to NPM. As for the second objective, the Islamic subsidiaries of conventional banks’ NPM is observed as being independent from its conventional parent banks’ NIM.

Nik Hadiyan Nik Azman · Mohd Zaidi Md Zabri · Ema Izati Zull Kepili ·Jurnal Ekonomi Malaysia ·2021 ·JEL: A1, G0, G5, I3, O1, R2

Islamic microfinance is expanding and penetrating its potential market over the globe. Access to credit or financing, especially during the COVID-19 pandemic, is vital for micro-entrepreneurs in climbing the socio-economic ladder that will contemporaneously increase their household income. In Malaysia, most of the MEs can hardly access financing from formal financial institutions due to poor credit rating, having zero to little collateral, income instability, small loan amounts, and high transaction costs. Alternatively, MEs approach Islamic microfinance institutions for their financing solution. Therefore, this study intends to investigate how far the utilization of Islamic microfinancing by MEs could enhance their quality of life. One hundred seven (107) usable questionnaires were analysed via the Structural Equation Modelling (SEM) AMOS using IBM® SPSS and found that both investment and expansion factors played key roles in affecting the financial wellbeing of the micro-entrepreneurs. The results lend credence to the positive effect of Islamic microfinance products may have on MEs and indirectly support the long-term economic development for MEs. This study deliver implication to various angles. In practical part, it opens the eyes of micro-entrepreneurs to opt for the right path (expansion and investment) to achieve financial wellbeing. Government (regulators) can enhance the ability of Islamic microfinancing as a tool towards financial wellbeing and in theoretical part, this study deepens the scope of Schumpeter’s theory by inculcate this theory with Islamic finance scope of study.

Noryati Ahmad · Wan Evva Wan Suriea · Ummu Naziha Mohd Ariffin ·Malaysian Journal of Consumer and Family Economics ·2019

In Malaysia, the insurance industry is operated by conventional insurance companies and Islamic insurance companies (or better known as Takaful.). Even though the nature of business of these two types of companies is almost similar however at operational and investment level, Islamic insurance companies must be in tune with the Shariah principles. Policyholders, investors and regulators are interested in the performance of these companies. Hence, this study aims to investigate the determinants of investment performance of Islamic and conventional insurance companies in Malaysia. Company-specific factors (company size, solvency margin and liquidity) and macro factors (GDP, interest and profit rates, equity returns and inflation) are independent variables employed in the study. A panel regression was estimated on 11 Islamic and 14 conventional insurance companies in Malaysia from the year 2006 to 2015. Interestingly empirical findings revealed that only liquidity and lagged GDP statistically significant relationship with the investment performance of Islamic insurance companies. On the other hand, in addition to liquidity and lagged GD, the investment performance of conventional insurance companies is also statistically and significantly influenced by interest rate and equity returns. These findings provide policyholders, investors as well as regulators with pertinent information related to an appropriate decision made on Islamic and conventional insurance companies.

Abdelkader O.El Alaoui · Hashim Bin Jusoh · Sheila Ainon Yussof · Mohamed Hisham Hanifa ·Quarterly Review of Economics and Finance ·2019

This paper, for the best of our knowledge, is the first attempt to assess the role of money in the Malaysian economy using wavelet techniques. To do so, a macroeconomic model-based policy rules has been formulated. In relation with the recurring financial crises, we analyse the relationship between the quantity of money, interest rate, inflation, exchange rate, index of industrial production and equity indices, in the case of Malaysia. In this analysis, UK economy aggregates are taken as benchmark. Therefore, the relationships between monetary policy variables and macroeconomic variables are evolving with time and have non-homogeneous trends across different time scales. Some strong correlations have been found in regard to Malaysian Monetary Policy using, major monetary aggregates; the quantity of Money, the interest rate and the exchange rate inducing some lead-lag interactions between those key variables. In addition, we analyse the effect of LIBOR on Malaysian interest rate (KLIBOR). We found that the KLIBOR is lagging behind the LIBOR in most of the time. In the end, some lessons will be drawn for the monetary policy in Malaysia, in terms of the high impact of the role of money and the expected implications regarding an effective Islamic monetary policy.

Adam Abdullah ·Journal of King Abdulaziz University: Islamic Economics ·2020 ·JEL: E12, E31, E42, E52

The purpose of this study is to contrast two recent monetary reform proposals involving the neo-chartalist Modern Monetary Theory (MMT) and the metallist Islamic Monetary Theory of Value (IMTV). Money is the common denominator for all economic transactions and yet, under the fiat standard, we have witnessed an exponential increase in prices and 425 instances of monetary, debt, and financial crises. Therefore, genuine monetary reform must protect the store of value function of money over the long term to protect wealth from confiscation by inflation thereby ensuring monetary and economic stability. This study adopts an MMT sectoral balance analysis of Malaysian macroeconomic data, as well as an IMTV analysis of Malaysian macroeconomic and gold price data to evaluate the effect on nominal and real prices. It finds that MMT provides no new insights about monetary theory, while making unsubstantiated claims about macroeconomic policy that would merely extend the highly inflationary monetary policies experienced under a centralized debt-based monetary system. Conversely, this study empirically establishes that a de-centralized monetary system based on the IMTV and the intrinsic value of pure gold (or silver), maintains its p

Shaikh Hamzah Abdul Razak ·International Journal of Sociology and Social Policy ·2020

Purpose Zakat has a strong humanitarian and social-political value. Zakat occupies a central role in Islamic fiscal policy and operations. At the same time, it does not preclude the use of modern tools and techniques in raising the state revenues. Islam provides its own comprehensive approach how the state can raise its revenue and how the revenue should be spend. Zakat is collected from those who are qualified and distributed to the eight recipients as identified in the Quran. Waqf instrument plays an important role in Muslim societies as its support the aged, the poor, the orphans through provision of education, training and business activities. The creation of waqf is strongly advocated, especially the creation of cash waqf in view of the expensiveness of land as waqf. There are collaboration efforts for cash waqf and zakat collection being done through Islamic banks and takaful. The paper aims to discuss these issues. Design/methodology/approach The data were source from the inland revenue, government agencies and state religious authorities, interviews, articles and conference reviews, as well as economic reports and later transcribe into charts and figures. Findings Its shows the efficiency of wealth distribution according to the Islamic principles and application of the financial inclusion in the Islamic society. Research limitations/implications The limitation is in verifying the accuracy of data gathering from the government agencies. Social implications The study can be used in financial inclusion through the application of zakah and waqf being applied to alleviate poverty. Originality/value The research is an extended work done on zakah and waqf in Islamic wealth distribution.

Muhamed Zulkhibri ·Journal of Economics, Finance and Administrative Science ·2018

Purpose This paper aims to examine the distributional differences of Islamic bank financing responses to financing rate across bank-specific characteristics in dual banking system. The study also aims to provide understanding of how efficiently Islamic banks perform their roles as suppliers of capital for businesses and entrepreneurs. Design/methodology/approach The study uses panel regression methodology covering all Islamic banks in Malaysia. The study estimates the benchmark model for Islamic bank financing with respect to bank characteristics and monetary policy. Findings The evidence suggests that bank-specific characteristics are important in determining Islamic financing behaviour. The Islamic financing behaviour is consistent with conventional lending behaviour that the Islamic bank financing operates depending on the level of bank size, liquidity and capital. There is no significant difference between Islamic bank financing and conventional bank lending behaviour with respect to changes in monetary policy. Originality/value Many problems and challenges relating to Islamic financing instruments, financial markets and regulations must be addressed and resolved. In practice, it would be a good idea if Islamic banks move away from developing debt-based instruments and concentrate more efforts to develop profit and loss sharing instruments.

Mongi Lassoued ·Quarterly Review of Economics and Finance ·2018 ·JEL: G18; G21; G32; G33

The study of credit risk is a great interest and the debate over the relative credit risk of Islamic banks remains open. The study aims at addressing this key question: Do Islamic banks (IBs) have higher credit risk than conventional banks (CBs) in Malaysia? Accordingly, some papers tried to answer this question but they were performed using cross-country data. The cross-country data should have been treated more cautiously since every country has its own developmental backgrounds and regional resulting in different characteristics of banking industry. Moreover, different financial systems that give support or limit the operation of Islamic banks will also make more difficult to compare the data of each country. For that reason, it is suggested to take suitable control for heterogeneity across countries to obtain consistently good conclusions about the credit risk. Different from the cross-country works, this study will focus on the country-level data of Malaysia. A panel data model was applied and it was used the generalized least squares (GLS) model and a yearly bank level data to evaluate the credit risk of 22 conventional banks and 17 Islamic banks in Malaysia. In addition, the study period, which lasted from 2005 to 2015, seems to be representative since it encompasses the period of the sub-prime crisis. This project is an extension of the study begun by Čihák and Hesse (2008) that used cross-country bank data such Malaysia. The results are particularly interesting and do not confirm the results generated by these researchers. The main contribution that this work will hopefully make is to show the reasons which account for the Islamic banks' higher degree of credit risk, and particularly to provide additional insights and complement the existing cross-country studies on Islamic bank stability.

Abdo Yousef Qaid Saad · Amer M Alhusini Alshehri ·Journal of Asian Finance, Economics and Business ·2021 ·JEL: M00, M31, G1, G2, G21

The study aims to measures the service quality of Islamic banking in Malaysia from non-Malaysian customers’ perspective based on the six different dimensions of the SERVQUAL model, namely, Shariah, assurance, reliability, tangibles, empathy and responsiveness. This study surveyed 100 non-Malaysian respondents from 25 different countries who have first-hand experience with Islamic banking services in Malaysia. The collected data were analysed by using the SPSS v23 for reliability analysis and descriptive statistics. The results indicates that customers’ impressions of Islamic banks’ service quality in Malaysia did not meet their standards. The independent variables, namely, compliance, assurance, reliability and empathy have positively affected customer satisfaction, while two dimensions, namely, tangibility and responsiveness does not significantly influence non-Malaysian customer satisfaction in the Islamic banking system in Malaysia. The findings of the study suggested that the Islamic banks should develop and obey the customer perception’s policy by following customers’ expectations and the results are also expected to include recommendations for improving the level of satisfaction of the Islamic banking system’s foreign clients in Malaysia. Since this study was limited to Islamic banks in Malaysia, the findings may not be applicable to other traditional banks.