Purpose Both developed and developing countries, Muslim and non-Muslim, have been showing keen interest in sukuk financing. This interest was because of the lesson learned by both Asian and non-Asian economies that having a developed capital market is very essential to enable an economy resilient to the financial crisis. Therefore, this study aims to produce theoretical relationships and identify empirical support for the determinants of sukuk market development. Design/methodology/approach By using panel data analysis, the study covers the period from 1993 until 2017, and includes 13 sukuk issuing economies as per the availability of data. Findings The findings of the study revealed that the stage of economic development, banking system, money supply and current account balance are positively associated with sukuk market. Interestingly, economic size and exports appear to be negatively associated with sukuk. Practical implications To flourish the domestic sukuk market, authorities need to strengthen the existing financial system and economic development. Originality/value The study contributes in a limited body of knowledge on determinants of sukuk market development by exploring novel determining factors of foreign capital inflows as well as macroeconomic and financial factors.
In recent past, the Asian economies faced various financial crises, 1997 & 2008, because of underdeveloped or small capital markets. Most of the countries continued to heavily depend on the mere banking system for sovereign and corporate financing needs which made the region repeatedly vulnerable to the crises state. Therefore, the last decade has witnessed the remarkable growth in the alternative arrangement in the form sukuk and bond markets. The academic literature on the topic mainly focuses on bond market ignoring largely the determinants of sukuk market. Using content analysis approach, this conceptual study proposes the theoretical relationships of sukuk with some new possible determining factors along with some other factors which have not received enough attention in the literature. The study focuses on the dynamics of foreign capital inflows, macroeconomic and financial variables with respect to sukuk market development.
Purpose -This paper aims to analyse the new standards on Sukuk which was issued by the Accounting and Auditing Organization for Islamic Financial Institution (AAOIFI) as a result of the strong critics posed by Shaykh Taqi in the end of 2007 that 85 percent of Sukuk issuance were not in line with the teachings of Shariah. Design/methodology/approach -This study reviewed samples of Sukuk prior and after the new AAOIFI pronouncement by focusing on controversial areas such as ownership transfer, pricing and guarantee element. This paper used content analysis approaches to analyse the pronouncement and the samples. Findings -The findings showed that there were negligible changes on the principle term and condition (PTC) of the Sukuk after the pronouncement, thus it did not have much effect in changing the Shariah Advisors and industry players when deciding more authentic principles and decisions. Originality/value -Based on the findings, it is acceptable that the advisors tried their very best in making efforts to minimize controversial decisions as to suit current financial practices.
Purpose- To diversify financing portfolio and reduce the reliance on the banking system, developing economies have realized the importance of bond market development. Bond markets facilitate economies to be more resilient towards the events of financial crises. Therefore, the share of the bond market in the financial system of the Asian economies has remarkably increased in the last decade. However, the academic literature on the bond market is very limited as compared to bank and equity markets. This was mainly because of the unavailability of vast data due to the absence of secondary markets for bonds in most of the economies. To fill this gap, this conceptual study postulates the theoretical relationships of bond market with various macroeconomic and financial factors. The study also assumes some new dimensions for bond financing and opens discussion for scholarly literature and empirical justifications. Design/Methodology- Content analysis approach is used to review relevant literature for the possible associations of the bond market with macroeconomic and financial factors. Practical Implications- The theoretical relationships discussed in the paper need empirical testing in future research to conclude policy implications. If the relationship between foreign capital and bond securities is established with empirical justification, we draw the policy that concerned authorities need to create a suitable environment for the attraction of foreign capital to provide support to the development of domestic debt market.
Purpose Despite the significant growth in Islamic economies and the increasing number of Muslim youths inclining digital services, empirical-based research addressing the adoption of digital Islamic services is still limited. ZakaTech is a new phrase that has recently emerged as a modern term describing novel technologies adopted by zakat institutions; yet, it has been largely neglected in the literature. Therefore, this study aims to provide an integrated model that scrutinizes the determinants of acceptance and use of technology (UTAUT) of ZakaTech, combined with social cognitive theory (SCT), in the midst of the COVID-19 crisis where social distancing is the norm in conducting economic activities. Design/methodology/approach Based on cross-national evidence from two Muslim-majority countries, a total of 1,006 valid responses were collected from zakat payer users in Saudi Arabia and Egypt using a Web-based survey. To validate the research model and draw significant insights, SmartPLS structural equation modeling was used. Findings By analyzing both Saudi and Egyptian samples, the authors found that all UTAUT constructs are statistically significant, except for effort expectancy in Egypt. The effects of self-efficacy and social isolation on ZakaTech adoption are supported across both countries. Trust in technology reduces users’ inherent risks and increases their likelihood of adopting ZakaTech services in Saudi Arabia, while this is not the case in Egypt. However, the study revealed that trust in electronic-zakat systems (EZSs) is a vital predictor for mitigating perceived risk among Egyptian users of ZakaTech, but it is not the case in Saudi Arabia. Moreover, significant gender differences were found between males and females in the adoption of such digital services in both countries, particularly regarding self-efficacy, trust in EZSs, social isolation and social influence. Practical implications The results provide meaningful insights for policymakers to find ways to develop strategies to escalate the adoption of technology in zakat administration and also to create awareness among the users of ZakaTech in a gender-balanced manner that will include zakat payers and recipients as well in the hope that the digital gender divide will be bridged. Bridging the digital gender divide in this regard is imperative for sustainable inclusive development of zakat. Further, strategies need to be developed to provide incentives to zakat authorities and zakat organizations that adopt technology in managing zakat. This is important to escalate the process of fusing technology with zakat, which is an important social finance tool to eradicate poverty in the world. Originality/value This research serves as a building block for literature by empirically testing an integrated model of UTAUT-SCT within a modern and unique related context like ZakaTech. Also, it adds value by testing gender disparities in ZakaTech adoption among Muslims.
Ijarah (lease contract) is one of the essential financing contracts offered by Islamic banking institutions to meet the demand of the clients. This study investigates the impact of Ijarah financing on Islamic bank performance in Malaysia for the period from 2004-2018 using Fixed and Random Effect Models. Ijarah financing (IJFA) which becomes the focus variable of this study with other six independent variables; operating efficiency (EXTA), bank size (LTA), total financing (TFTA), base rate (BR), consumer price index (CPI) and gross domestic product (GDP) were regressed against return on asset (ROA) and net profit margin (NPM). The results show that Ijarah financing has a positive and significant impact on NPM. The findings suggest that Islamic banks should increase their portfolio of Ijarah financing and this is also support the concentration strategy used by banks in improving Islamic bank performances. An increase in demand for Ijarah financing will increase Islamic banks performance and this reflects that Ijarah financing as an asset creation tool that banks prefer particularly for generating income.
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