This paper scrutinizes the ethicality of Islamic banks' (IBs') business model by employing the 'objectives of Islamic law' (Maqāsid al-Sharī'ah). This necessitates developing an ethical framework to construe two primary injunctions of Islamic finance, namely ribā and gharar. The former embodies financial decoupling (aggravating riskshifting) and unjust price gouging (provoking economic stagnation and financial exclusion), while the latter involves asymmetric information and excessive risk-taking behaviour (exacerbating financial fragility and thus systemic risk). We empirically and theoretically illustrate that these unethical issues are still prevalent in the IBs' modes of financing, despite the Sharī'ah-compliant endorsement of religious scholars (i.e. Sharī'ah supervisory boards). This affirms that ethicality is merely an impression management exercise of IBs instead of their true business identity. The way forward is to conceptualize IBs' modes of financing beyond just Sharī'ah compliance by scrutinizing their ethical impact on society at large. This would require updating centuries-old Islamic rulings (Fatāwā) on financial transactions and consulting finance academics and practitioners.

This study proposes a renewal of the contemporary Islamic banking Murabaha financing model as it aggravates financial fragility with waning economic efficiency. We adapt the working capital framework of successful US companies like Amazon and Walmart and model an innovative Murabaha facility as trade credit within the real sector of the economy. We then test its robustness in a range of simulation tests. Our approach is novel and stands in contrast to the familiar financial sector fixed-income facilities, characteristic of Western economies, stealthily mimicked as mark-up (interest rate based) Murabaha by Islamic banks. We argue that this is neither appropriate nor effective for Islamic economies, making them fragile under monetary pressures in crises like the current coronavirus and energy ones. Our simulation results indicate that the trade credit Murabaha not only transforms debt into a risk-sharing one but also offers more competitive financing rates, reduces systemic risk, and improves financial stability. Furthermore, our results imply that the trade credit Murabaha can increase the efficiency of Islamic financial systems and make them more resilient to shocks. Consequently, this paper discusses the integration of our novel Murabaha within a recreated architecture of Universal Banking. As an implication, this should promote business activity and contribute to global growth. Finally, we recommend how to deploy our novel Murabaha based on trade credit (as opposed to the currently deployed fixed-income-mimicked Murabaha) to alleviate twin agency debt costs (risk shifting, underinvestment) and solve the ownership transfer problem of modern Islamic banking.

Purpose Previous studies have challenged the Human Development Index’s (HDI) ability to emulate the achievement of falāh (happiness). This paper aims to evaluate the role of religious values in establishing a positive link between the current measurement of development and falāh. Design/methodology/approach First, this study derives an improved value-loaded development measure from the concept of Maqasid al-Shari’ah (the higher objectives of Islamic law). Second, this paper compares the calculated Maqasid al-Shari’ah Index (MSI) with the HDI of some Organisation of Islamic Cooperation (OIC) countries by using the parametric pair difference z-test and t-test along with the non-parametric Wilcoxon signed-rank test. Finally, the relationship of both indices and the proxy of falāh are examined by using the ordinary least square and the generalised method of moments estimations. Findings As far as the religious-led development is concerned, the HDI underestimates OIC countries’ development progress. Here, the MSI can better embody the attainment of falāh than the HDI. Research limitations/implications This study only covers limited OIC countries due to the data availability issue. Practical implications The cultural-based development stemming from the religious values proves useful for putting the government effort towards the attainment of the objective of human well-being in the right direction. Originality/value To the best of the authors’ knowledge, this is the first study examining the empirical relationship between the MSI and falāh.

No abstract

Dalam mengurangi kemacetan lalu lintas, Pemerintah Kota Tangerang memasang ATCS di beberapasimpang prioritas menggunakan konsep Green Wave (koordinasi lampu hijau dibeberapa simpangprioritas untuk mengurangi waktu tundaan). Studi ini mengamati perubahan emisi CO2 di terkaitpemasangan ATCS di ruas Jl. Jend. Sudirman melalui pengamatan kinerja lalu lintas (tundaan danwaktu perjalanan). Analisis menunjukkan bahwa pemasangan ATCS di lokasi kajian memperbaikikinerja lalu lintas ditandai pengurangan waktu tundaan rata-rata sebesar 5,633 detik (23,03%),pertambahan rata-rata kecepatan sebesar 1,56 km/jam (5,347%), pengurangan rata-rata emisi CO2(15,26% saat berhenti dan 6,208% saat berjalan), sehingga menghemat konsumsi bahan bakar. Dalamstudi ini, tundaan teridentifikasi sebagai variabel yang memberikan dampak yang paling besarterhadap emisi CO2. Studi ini berargumen bahwa pendekatan ATCS untuk optimasi simpang ini dapatdiperluas.Kata Kunci : ATCS, kinerja lalu lintas, CO2 emission