A Survey on the Objective of the Firm and Models of Producer Behavior in the Islamic Framework

Yusof, Selamah Abdullah; Amin, Ruzita Mohammad

doi:10.4197/islec.20-2.1

Cited by 6 publications

(5 citation statements)

References 2 publications

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“…Islamic firms are expected to make "normal" profit rather than the highest possible one based on economic theory (Yusof and Amin, 2007). To verify such a claim, this study examines whether firms are less inclined to hoard cash to take advantage of any upcoming growth/investment opportunities in Muslim majority countries than in other countries.…”

Section: Cg and Corporate Liquiditymentioning

confidence: 99%

Corporate Liquidity: Evidence from Islamic and non-Islamic Countries

CHEN¹

2020

International Journal of Islamic Economics and Finance Studies

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This study examines whether and how Islam has bearings on corporate liquidity (cash holdings). A review of 34,895 non-financial firms from 68 countries (12 Muslim majority countries and 56 other countries, which consist of 26 developing and 30 developed countries) from 1996 to 2011 reveals that cash holdings are lower in Muslim majority countries than in other countries, particularly developed countries. This phenomenon appears to be more pronounced when financial development is high or anti-director rights are weak in Muslim majority countries. The lower cash holdings in Muslim majority countries can be explained by the modifying effect of Islam and Sharia compliance (SC) on cash determination. Specifically, the negative effect of leverage on cash is stronger in Muslim majority countries than in other developing countries when financial development is high, financial structure is market-based, or national governance is strong in the former. Moreover, SC has a direct and negative effect on cash, which is more pronounced when financial development is low, financial structure is bank-based, or anti-director rights are weak in Muslim majority countries. Furthermore, SC negatively affects cash through growth opportunities and dividend payment. Specifically, SC weakens the positive effect of growth opportunities on cash when financial structure is market-based. SC also weakens the positive effect of dividend payment on cash, and such a modifying effect is stronger when anti-director rights are weak. Overall, the results suggest the uniqueness of the cash policy in Muslim majority countries compared with other countries.

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Section: Cg and Corporate Liquiditymentioning

confidence: 99%

Corporate Liquidity: Evidence from Islamic and non-Islamic Countries

CHEN¹

2020

International Journal of Islamic Economics and Finance Studies

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“…As stated by Heckathorn (2001) rational choice theory has appeared as the lead in discussing a number of disciplines and has not just been limited to the field of economics, especially in the last two decades. This is evidenced in a multitude of past research where the theory is used in discussing different areas such as criminal activity (Becker, 1968), tax compliance and evasion behavior (Allingham & Sandmo, 1972), producer behavior (Yusof & Amin, 2007), fishermen compliance behavior (Ali & Abdullah, 2010) and zakat compliance behavior (Ahmad & Daud, 2010;Khamis, 2014;Nashwan et al, 2020;Khamis et al, 2011). This illustrates that the rational choice theory is a general theory that can be adapted and applied to explain various cases such as compliance which cannot be explained by one comprehensive theory as mentioned by Mai and Ofori (2010) and Herfeld (2022).…”

Section: Literature Reviewmentioning

confidence: 93%

The Economic Theory Assumption and Utility Maximization Model: The Perspective of Zakat Compliance Behavior

Khamis

Kamarudin

2023

IMBR

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The dearth of studies on the economic theory and model from the perspective of zakat compliance behavior is hardly found in the literature and empirical evidence as well. Numerous studies have been explained through utility maximization and compliance behavior especially in the context of taxation based on the economic theory assumption. Discussion on compliance behavior has two basic theories that are associated with compliance; firstly, the psychological and sociological theory, and secondly, the economic theory that is always used to discuss compliance behavior in taxation. Due to that, this study aims to discuss the relevant economic theory and model from the perspective of zakat compliance behavior. In reviewing the relevant literature, this article provides a discussion on economic theory and model as a basis for explaining zakat compliance which includes a number of aspects like the economic aspect, psychological and sociological aspects as well as the Islamic aspect as previously suggested by some studies. Additionally, it demonstrates that economic theory and model also can be used to discuss Zakat compliance behavior and not purposely in the taxation system. Based on the discussion, this study will hopefully shed some light that even though the theory and model mainly discuss conventional perspectives such as the taxation system but it’s also can be adapted to discuss on Islamic perspective with some modification.

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“…Whenever discussing the hazards and harms of capitalism, theory of the firm is attacked first. For example, Yusof and Amin (2007) have tried to survey quite a good amount of literature "objective of an Islamic firm". They quote Siddiqi (1979) and Tahir (1992) while discussing that Siddique rationalizes producer behaviour in Islamic economic theory and says that a Muslim producer should be well versed in Islamic teachings and he/she will take into account the aspects of Falah fi dunya wal akhira 3 and benevolence.…”

Section: Review Of Literaturementioning

confidence: 99%

“…Doing so, they make the critical mistake of making the social science of economics resemble a physical science, which only believes that whatever is visible and can be felt is knowledge. Muslim economist though not agreeing to the philosophy still follow the methodology that has come into existence on the basis of the philosophy of logical positivism (Metwally, 1992;1997;Bendjilali & Taher, 1990;Hallaq, 1995, Al-Safar, 1998Yusof & Amin, 2007).…”

Section: Review Of Literaturementioning

confidence: 99%

Preferences and constraints on an Islamic consumer: An analysis from Islamic perspective

Khan

2021

J. Humanit. Soc. Manag. Sci.

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Consumption is one of the central activity of an economy. It is perhaps the ultimate aim of all economic activity. The paper investigates Muslim consumer behaviour. The question that this study answers are what Muslim consumer behaviour is and how does it differ from Nep-Classical approach. This Study has adopted a realist ontological stance and interpretivist Epistemology. Units of data collection for the study were the Quranic verses and the texts of Hadith. The study found that an optimal Muslim consumer is confined in his consumption and spending to the boundaries of Sharia i.e., to stay away from Tabzir (pre-eminence) and Israf (extravagance) and follows the balanced approach, which is moderation and unlike modern day neo-classical Consumer theory, consumption is not the ultimate aim of human being. The paper suggests that the consumption behaviour of Muslim consumer must be guided by Islamic Principles. The paper also finds that the Muslim consumer should prioritize his/her expenditure within the domain of the Halal earning and spending. Thus, the findings of the paper show a compact Islamic consumer framework.

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A Survey on the Objective of the Firm and Models of Producer Behavior in the Islamic Framework

Cited by 6 publications

References 2 publications

Corporate Liquidity: Evidence from Islamic and non-Islamic Countries

Corporate Liquidity: Evidence from Islamic and non-Islamic Countries

The Economic Theory Assumption and Utility Maximization Model: The Perspective of Zakat Compliance Behavior

Preferences and constraints on an Islamic consumer: An analysis from Islamic perspective

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