Purpose This paper aims to unveil the impact of government policy, socio-economic variable, Zakat Infaq Shadaqah (ZIS) and financing of Baitul Maal wat Tamwil (BMT) toward severe problem of poverty in Indonesia. Design/methodology/approach The paper considers dynamic circular causation model to produce proper solution on Indonesian style of poverty that hitherto remain unresolved. Findings All variables including ZIS, government policy, socio-economic variable and BMT financing have an impact toward poverty reduction. Research limitations/implications This paper confined to the scope of poverty that occurred in Indonesia only, and therefore all variables and literatures derived from Indonesian pedigree on poverty. Practical implications This paper implies that government policy will be shifted toward focusing on extending subsidy for rural society to uplift their income by involving in more real sector. Originality/value This paper considered to be scarce as focusing only for Indonesian style of poverty by using dynamic circular causation model as a solution.

Purpose This paper aims to propose a new pricing alternative called Rental Rate Index (RR-I) that captures the true value of property to be used by Islamic banks in Musharakah Mutanaqisah (MM) contract for home financing. Design/methodology/approach By formulating a profit rate based on Rental Index (RI) and House Price Index (HPI), the proposed rate eliminates conventional profit rate benchmarking, and, at the same time, suggests a fair, equitable and sustainable financing. This new RR-I (measured by RPI/HPI) enables computerization of the MM system in home financing to be easily implemented. A financial simulation is developed to demonstrate the feasibility of this newly proposed rate. Findings This newly proposed RR-I is found to be more stable, having less fluctuations, resilient to macroeconomic conditions and yet comparable to the conventional interest rates, without depending on them. It can also be regarded as a rate that is fair and sustainable to both the customer and the bank, as it measures the actual rate of return to both parties in MM contract. Research limitations/implications The paper confines one contract, namely, MM, as it is claimed to be more Shariah-compliant than others. Practical implications The finding also sheds some light on the recommendation by Bank Negara Malaysia, which is to consider RR that is more indicative of the actual rental price while taking into account the competitiveness of the product. (BNM, 2007). Social implications This paper wreaks customer patronage in selecting the contract of home financing. Originality/value This paper attempts to resolve the issue of benchmarking RR to the conventional interest rate in the MM contract. Studies conducted on this issue via simulation approach are meager.

No abstract

Purpose This study aims to investigate the interactions among macroeconomic variable shocks, banking fragility and home financing provided by conventional and Islamic banks in Malaysia. Identifying the causes of financial instability and the effects of macroeconomic shocks can help to foil the onset of future financial turbulence. Design/methodology/approach The autoregressive distributed lag bound-testing cointegration approach, impulse response functions (IRFs) and forecast error variance decomposition are used in this study to unravel the long-run and short-run dynamics among the selected macroeconomic variables and amount of home financing offered by both conventional and Islamic banks. In addition, the study uses Granger causality tests to investigate the short-run causalities among the selected variables to further understand the impact of one macroeconomic shock to Islamic and conventional home financing. Findings This study provides evidence that macroeconomic shocks have different long-run and short-run effects on amount of home financing offered by conventional and Islamic banks. Both in the long run and short run, home financing provided by Islamic banks is more linked to real sector economy and thus is more stable as compared to home financing provided by conventional banks. The Granger causality test reveals that only gross domestic product (GDP), Kuala Lumpur Syariah Index (KLSI)/Kuala Lumpur Composite Index (KLCI) and house price index (HPI) are found to have a statistically significant causal relationship with home financing offered by both conventional and Islamic banks. Unlike the case of Islamic banks, conventional home financing is found to have a unidirectional causality with interest rates. Research limitations/implications This study has focused on analyzing the macroeconomic shocks on home financing. However, this study does not assess the impact of financial deregulation and enhanced information technology on amount of financing offered by both conventional and Islamic banks. In addition, it is not within the ambit of this present study to examine the effects of agency costs and information asymmetry. Practical implications The analysis of cointegration and IRFs exhibits that in the long run and short run, home financing provided by Islamic banks are more linked to real sector economy like GDP and House Prices (HPI) and therefore more resilient to economic vulnerabilities as compared to home financing provided by conventional banks. However, in the long run, both conventional and Islamic banks are more susceptible to fluctuations in interest rates. The results of the study suggest that monetary policy ramifications to improve banking fragility should focus on stabilizing interest rates or finding an alternative that is free from interest. Social implications Because interest plays a significant role in pricing of home loans, the potential of an alternative such as rental rate is therefore timely and worth the effort to investigate further. Therefore, Islamic banks can explore the possibility of pricing home financing based on rental rate as proposed in this study. Originality/value This paper examines the unresolved issues in Islamic home financing where Islamic banks still benchmark their products especially home financing, to interest rates in dual banking system such as in the case of Malaysia. To the best of the authors’ knowledge, studies conducted in this area are meager and therefore is imperative to be examined.

Halal food is one of the biggest issues that fill the academic and practical space in the sharia economy in the world today, so it is very important to be of more concern, especially in conducting sharia economic researches. Indonesia which is the largest Muslim-populated country in the world is the largest consumer of halal food in the world compared to other countries. In this study, consumers want to see halal labeled food that is influenced by religiosity and orientation over maslahah. In this study, the method used is the Structural equation model with the Amos Software tool. The sample used in this study was 176 Muslim students at the Mulia Cikarang Global Islamic Business Economics College.In this study, it was found that consumer loyalty is influenced by the satisfaction of consumers of halal-labeled foods. While the satisfaction of consumers of halal labeled food is influenced by religiosity and maslahah. This study also found that halal awareness is a variable that is significantly influenced by religiosity and not influenced by maslahah. So it is important to do more widespread ikhtiyar to build a more religious society to build halal awareness in the community. The findings are unique in this study where the direct influence of religiosity and orientation on maslahah is only significant to satisfaction and insignificant to loyalty. This means that the level of religiosity and orientation of existing maslahah in the new society can lead consumers of halal-labeled food to be satisfied consumers but not yet loyal consumers.

This research aims to analyze the influence factors in fashion consciousness on consumers in Indonesia, especially in relation to consumption of hijab-fashion. These factors are religiosity, dressing style, source of knowledge, fashion motivation, and uniqueness also the fashion consciousness as a intervening variable. This study use a structural equation. The first interesting finding was that religiosity has a negative effect to hijab fashion consciousness. Furthermore, there is a positive significant influence on dressing style and fashion motivation in fashion consciousness, but there is no significant influence on the source of knowledge and the uniqueness in the fashion consciousness. This study also found that fashion consciousness has a significant effect on the consumption of hijab-fashion in Indonesia. By looking at the results of this study, it is hoped that it can be useful especially for hijab-fashion manufacturers and industry in Indonesia in considering a more effective strategy in attracting the attention of Muslim consumers in Indonesia. Producers are expected to be able to provide the consumer expectations, especially for religious consumers. Because religious consumers will be more critical in decision related to the selection of fashion models and consumption of hijab-fashion.

This study aims to investigate the stability of profitability of Islamic banks resulted from the behaviour of corporate social responsibility in the short term as well as long term taking Indonesia as representative for Asean perspective and Turkey for Europe perspective. The study employs Vector Autoregression (VAR) and followed by Vector Error Correction Models (VECM) if there is co-integration. The IRF (Impulse Response Function) denotes different findings whilst Variance Decomposition emphasizes the most affected profitability variables resulted from the behaviour of corporate social responsibility. IRF result shows only return on asset of Islamic bank in Turkey found to have stability whether in the short terms or long terms. The other variables concluded to have similar pattern for Turkey and Indonesia as they tend to decline even very sharp in the long terms except return on equity for Indonesia has positive response where it tends to increase regardless of the changes in the behaviour or shock of corporate social responsibility. The behaviour of corporate social responsibility in Indonesia mostly influenced return on asset while it influences greatly towards return on equity for Islamic banks in Turkey. The application of corporate social responsibility varies depending on the policy of respective banks that linked to normative and perception of the bank and appears to be more important in disclosing of non-financial information in the annual report. The findings reveal that quite a few challenges lie ahead in shaping proper behaviour of corporate social responsibility that affect profitability of Islamic banks in Indonesia and Turkey. This needs to be taken on promptly by management teams of Islamic banks especially in Indonesia that focus on corporate social responsibility for Muslim society. While profitability variables in Turkey would affect the proper function of corporate social responsibility that aimed for social benefit. This paper is one of few studies which employ VAR/VECM model to investigate and forecast the shock or behaviour of corporate social responsibility towards profitability of Islamic banks in a country who adopt dual banking systems.

Islamic home financing in Islamic financial institution hitherto remains an arduous to resolve as it contains many issues. One of the main issues is interest benchmarking that inseparable part of banking system. Amid this reality, many Islamic financial institutions ignored the existence of Islamic social funds to mobilize the funds and hence ameliorate the affordability of low income family to purchase a house. This paper therefore aims to explore the untapped potentials of Islamic social funds such as waqf, Shodaqah and infaq to mobilize funds and create more affordable house for low income families. This paper undertakes library review as qualitative approach to strengthen the discussion. This paper concludes that the synergy between Nazir of social funds and Islamic micro finance institution able to produce Islamic social funds to be utilized to help low income family afford to purchase a house. This paper implies practically on the expected remarkable growth of Islamic micro finance institution offering Islamic home financing using Islamic social funds approach.