Treating return of <i>mudharabah</i> time deposit as investment instrument

Anwar, Saiful; Romansyah, Dadang; Pramono, Sigit; Watanabe, Kenji

doi:10.1108/08288661011090893

Cited by 5 publications

(7 citation statements)

References 12 publications

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“…In a musharakah and VC contract, partners are exposed to high risk, which is consistent with the financial concept of “high risk, high return” (Wong, 2002; Anwar et al , 2010) and the Islamic legal maxim in business of “no pain, no gain” (Hasan et al , 2011).…”

Section: Literature Reviewsupporting

confidence: 60%

“…2. Given the high risk exposure of mudharabah , Anwar et al (2010) developed a new formula that can capture comprehensive and realistic market movements using an artificial neural network for calculating mudharabah time deposit as an investment instrument.…”

Section: Notesmentioning

confidence: 99%

“…However, equity-based financing contracts, such as musharakah and mudharabah [1], are deemed less favourable in the Islamic banking industry (Abdul-Rahman et al , 2014; Hassan and Aliyu, 2018; Abdul-Rahman et al , 2019), because they involve higher risk than other shariah contracts[2] (Anwar et al , 2010). In Malaysia, debt-based financing, such as bai bithaman ajil (deferred payment sale), ijarah (lease) and murabahah (cost plus profit), are financing concepts that are widely used in most products offered by Islamic financial institutions.…”

Section: Introductionmentioning

confidence: 99%

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The application of venture capital strategies tomusharakahfinancing

Rahman

Nor

Salmat³

2020

JIABR

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Purpose This paper aims to explore the strategies used by venture capital (VC) firms in assisting entrepreneurs who have business potential but lack capital. The study also aims to investigate whether the VC strategy can be adopted by Islamic banks through musharakah financing. Design/methodology/approach Apart from content analysis, primary data were gathered from several interview sessions with the management of three VC firms and two Islamic banks. Findings Islamic banks in Malaysia have great potential to offer musharakah financing and mitigate risk by adopting the following five VC strategies: method of selection, channelling of funds, monitoring, non-capital assistance and period of investment. We propose the channelling of corporate social responsibility funds for musharakah financing as an initial step in applying VC strategy. Research limitations/implications Given the limited number of willing and eligible respondents in Malaysia, the scope of this study can be widened to a cross-country analysis where musharakah financing is widely adopted. Practical implications This study motivates regulatory bodies and Islamic banks to consider musharakah financing using the risk monitoring strategy adopted from the VC industry. Originality/value This study is the first to empirically explore the strategy adopted by VC companies and evaluate whether such a strategy is suitable for the concept of musharakah financing.

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Section: Literature Reviewsupporting

confidence: 60%

Section: Notesmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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The application of venture capital strategies tomusharakahfinancing

Rahman

Nor

Salmat³

2020

JIABR

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“…Even though population consists of only five full‐fledged banks but it is comparatively better than the recent studies. For instance, Umaru et al (2011) surveyed four Islamic banks in Saudi Arabia; Anwar et al (2010) used neural network modelling for predicting investment return on Mudarabah time deposits without using any Islamic bank data from Indonesia. Hassan (2009) surveyed only three banks in Brunei Darussalam and Hassan (1999) surveyed only one bank in Bangladesh.…”

Section: Methodsmentioning

confidence: 99%

“…surveyed four Islamic banks in Saudi Arabia;Anwar et al (2010) used neural network modelling for predicting investment return on Mudarabah time deposits without using any Islamic bank data from Indonesia Hassan (2009). surveyed only three banks in Brunei Darussalam andHassan (1999) surveyed only one bank in Bangladesh.…”

mentioning

confidence: 99%

Information asymmetry and regulatory shortcomings in profit sharing investment accounts

Ameer

Othman

Mahzan

2012

International Journal of Islamic and Middle Eastern Finance and Management

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Purpose-The purpose of this paper is to explore the shortcomings in the compliance of the full-fledged Islamic banks with the Bank Negara Malaysia (BNM) disclosure guidelines related to the profit sharing investment accounts (PSIAs). Design/methodology/approach-This study uses interviews and a survey. Findings-It was found that only two out five full-fledged Islamic banks followed BNM guidelines which are based on the idea of self-regulation. The authors developed a checklist of disclosure items, and probed whether the sample banks would adopt these new disclosure items. As it transpired, some banks have been disclosing these items selectively, and/or recording them for internal control and management purposes. The findings show these banks do not disclose: policies, procedures, product design and structure; profit allocation basis, methodology of calculating profit attributable to investment account holders (IAHs). Nevertheless, disclosure related to Shari'ah compliance was given to a reasonable extent. It is intriguing that full-fledged Islamic banks do not provide comprehensive disclosure related to PSIAs because such disclosure is not mandatory; while foreign full-fledged Islamic banks provided such disclosure voluntarily. Research limitations/implications-The banking sector regulator is not sure of whether individual Islamic banks have actually complied with all of its guidelines. The shortcomings in the disclosure are due to lack of expertise, outdated information system structure, and shortage of support and highly trained staff. The authors propose that the Islamic jurists should use Istiqra-which is a comprehensive examination of contracting environment before a new definite ruling is made on the issue of accountability to the IAHs. This would involve exploratory study of how the securities regulator (not banking regulator) perceives the information risks faced by the IAHs and enforce new disclosure guidelines. Originality/value-This paper proposes new disclosure guidelines which incorporate transparency, appropriateness, and timeliness to reduce information asymmetry and enhance governance disclosure.

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Quantity versus quality: the value relevance of CSR disclosure of Saudi companies

Alotaibi¹,

Hussainey

2016

COC

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We offer a novel contribution by examining the impact of Corporate Social Responsibility (CSR) disclosure quantity and quality on firm value. We use a sample of 171 non-financial firms listed in the Saudi stock market for the period 2013-2014. We complement and extend the work of Hasseldine, Salama and Toms (2005) by measuring the quantity and quality of CSR disclosure and examining their impact on firm value. To measure CSR disclosure quality, we following Beest el al (2009) and capture all qualitative attributes of information quality as defined in the conceptual framework of the IASB (2010 a). We use a CSR disclosure index to measure the quantity of disclosure. Our analysis shows a positive association between CSR disclosure quality and quantity and market capitalisation. However, we did not find the same results when we use either Tobin’s Q or Return on Assets (ROA) as proxies for firm value. This suggests that both CSR disclosure quantity and quality have the same impact on firm value. However, the significance of this impact depends on whether the authors use market capitalisation, Tobin’s Q or ROA.

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Treating return of mudharabah time deposit as investment instrument

Cited by 5 publications

References 12 publications

The application of venture capital strategies tomusharakahfinancing

The application of venture capital strategies tomusharakahfinancing

Information asymmetry and regulatory shortcomings in profit sharing investment accounts

Quantity versus quality: the value relevance of CSR disclosure of Saudi companies

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