PurposeThe purpose of this paper is to focus on various modes of Islamic finance and examines their risk and other characteristics by conducting a selective literature review.Design/methodology/approachDue to the Islamic prohibition of interest and in compliance with injunctions on permissible trade contracts, the savings and investment contracts offered by Islamic banks have a different risk profile than those of conventional banks. This gives rise to a number of regulatory issues pertaining to capital adequacy and liquidity requirements. Operational issues also arise as Islamic banks are limited in their choice of risk and liquidity management tools such as derivatives, options and bonds. All these issues are theoretically examined and various performance indicators of two Islamic banks are also examined to compare them with traditional banks that practice mark up pricing.FindingsThe balance sheets and various performance indicators show that there is evidence that Islamic banks in Pakistan tend to engage in little long‐term project financing. However, on the plus side these banks have shown good performance with respect to the returns on their assets and equity and have also demonstrated better risk management and maintained adequate liquidity.Research limitations/implicationsA larger set of banks across various countries needs to be examined before any substantive conclusions can be reached about the relative performance of Islamic versus conventional banks.Practical implicationsThese largely pertain to central bank prudential regulations which must ensure that a level playing field is created for Islamic banks to compete with traditional banks.Originality/valueThe paper is a commentary on the risk characteristics of Islamic banks and also analyzes for the first time the performance of the only two purely Islamic banks currently operating in Pakistan.

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PurposeThe study seeks to examine the extent and the causes of multidimensional poverty as opposed to the traditional unidimensional headcount poverty measures to understand the true face of economic deprivation in Punjab, Pakistan.Design/methodology/approachPoverty is measured through the Alkire–Foster index at the geographically disaggregated levels of divisions and districts, and the causes of pervasive poverty are analyzed through a logit model using the Multiple Indicators Cluster Survey (MICS) comprising of 95,238 households in 9 geographical divisions and their 36 districts.FindingsIt was found that poverty in Punjab is associated with larger household size, inadequate wealth, and low levels of educational attainment, and that both matric as well as post-matric education reduced the chances of poverty of household heads by approximately 19 percent. In addition to rural poverty, the study finds evidence of urban poverty across the geographical districts of Punjab. Contrary to common belief that chances of poverty are higher in females, it was found to be more likely in males. However, the statistical significance of gender as a determinant of poverty was not observed in the majority of divisions.Practical implicationsPractical implications were for focused policy interventions in poverty alleviation.Originality/valueThe analysis of determinants of multidimensional poverty at the geographically disaggregated level of divisions is an original contribution.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-01-2019-0037

The paper investigates the spatial interdependence of US MNE investments in the MENA region. Given the variations in resource endowments, governance structures and degree of infrastructure availability in MENA countries, one would expect these variables to affect an MNE's choice of FDI location. We do find that domestic non‐spatial factors such as own country inflation and governance measured by bureaucratic quality as well as infrastructure affect a host country's inward FDI. We also found that only one measure of natural resource endowment; that is, oil and gas exports were instrumental in attracting FDI. This non‐spatial result is generally robust and invariant to the two methodologies employed in this study, that is the spatially autoregressive (SAR) model and the spatial Durbin model (SDM). We found that neighbouring countries’ infrastructure availability measured either by “electricity used” or “energy used” affected FDI inflows in a host country. However, this spatial impact was found only in the SDM model. The spatial effects of neighbouring countries’ economic and political conditions and resource endowments were, however, not observed on a host country's inward FDI. The insignificance of both the surrounding market potential and the spatially weighted FDI suggests a purely horizontal motive of MNE investments in the MENA region.