Search IKR
Featured Publications
Recently added
A comprehensive governance, regulatory and supervisory framework is required for the financial market to operate on a sound footing. The presence of a conducive and efficient regulatory environment not only helps promote market stability but also adds to the confidence and trust of the investors, public and other stakeholders. Since the inception of the Islamic finance industry, domestic regulators and international standard-setting bodies have strived to develop suitable regulatory and governance frameworks that cater for the unique nature and specific risks of Islamic financial institutions (IFIs). Regulators have been instrumental in supporting the development of the industry via ensuring clarity through appropriate regulations, gradual harmonisation of industry standards, robust Shari’a governance frameworks and a supportive legislative infrastructure. These measures, which are underway in Asia, the Middle East, Europe and even in sub-Saharan Africa lately, are critical for the smooth and sustainable expansion of the industry. Despite this, variations in Shari’a interpretations and differences in the Shari’a governance frameworks can result in legal uncertainties and hamper the potential growth prospects of the industry by decreasing stakeholders’ confidence. Therefore, the efforts by international organisations like the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the Islamic Financial Services Board (IFSB) and the International Islamic Financial Market (IIFM) in terms of standardisation and harmonisation of the Shari’a governance, Shari’a interpretation and market practices are key for the sustainability of the industry
This study empirically investigates the impact of FDI on the three dimensions of sustainable development (SD): economic growth, income distribution, and environment in an integrated framework and a case of developing countries. We also test how such impacts are moderated by the host countries conditions, including financial development, human capital, and institution. Then we further examine the role of Islamic finance in a smaller sample of Muslim developing countries and how it shapes the impact of FDI. Our study applies the two-step System GMM estimator and, for robustness check, the LSDVC method. Our data are sourced mainly from the World Bank, IMF, and Bank Scope databases. The thesis has the following important findings. FDI enhances sustainable development when financial development, human capital, and institution are sufficiently developed; there are thresholds or the minimum levels of these conditions where the impact of FDI becomes favorable to each SD dimension. Specifically, we found that FDI has a positive impact on growth when all three conditions reach their thresholds or higher. In addition, FDI does not worsen income distribution and the environment when human capital and institution reach the thresholds. If human capital and institution are not adequately developed, FDI contributes to higher income inequality and pollution. Another finding is that, in a smaller sample of Muslim developing countries, Islamic finance is a significant moderator of FDI impact. Similarly, we witness the thresholds or the minimum levels of Islamic financial development, beyond which the impact of FDI becomes favorable to sustainable development. Specifically, FDI increases economic growth and improves income distribution when Islamic finance reaches the thresholds or higher. Compared to the conventional counterpart, Islamic finance has additional benefits since it enhances the effect of FDI to reduce income inequality while its conventional counterpart does not. However, Islamic finance does not moderate the impact of FDI on the environment. These results contribute to the empirical literature in the field of sustainable development and Islamic finance. They also have significant policy implications. First, policymakers in developing countries are suggested to develop their financial systems, human resources, and institutional qualities at least to the thresholds or higher so that FDI positively contributes to sustainable development. Second, policymakers in Muslim developing countries are encouraged to develop Islamic finance to the thresholds or higher to receive the economic and social benefits of foreign investment. Besides, Islamic banks are suggested to become more proactive when providing fundings to ensure that FDI projects do not damage the environment. The caveat in this study is that our measures of sustainable development dimensions, namely economic growth, Gini coefficient, and carbon dioxide emission, might not fully include all aspects of the economic, social, and environmental pillars. Thus, future research could examine other measures of the SD dimension. For instance, they could capture the social pillar with poverty. In addition, they could explore how other conditioning variables, such as trade openness, moderate the impact of FDI on sustainable development in an integrated framework.
On the 1st November 2024, the Maldives Islamic Bank (MIB) introduced a series of new banking products at an event in Hulhumale s Central Park. The line-up included FaisaWear, a payment ring designed to be used as a contactless payment option. The rings, available in four styles black with a diamond cut, plain black, foral black and foral white provide an alternative to traditional bank cards and will be available at MIB branches across the Maldives starting Sunday, the 3rd November 2024.
The Islamic banking industry has gained a remarkable position across the globe which requires a strong emphasis on intellectual capital (IC) that includes dedicated human capital, reliable structural capital and trusted relational capital among participants in the Islamic banking ecosystem. This book introduces the concepts of intellectual capital and highlights the distinctive elements of Shariah capital that can give Islamic banks a competitive advantage. It also aims to explore and compare the intellectual capital disclosure (ICD) practices of Islamic banks under two different reporting regimes. The IFRS issued by IASB and FAS issued standards for financial reporting by by AAOIFI I are the two commonly used Islamic banks. Several issues and concerns were Islamic highlighted in the book, particularly discussion unique form on the Shariah capital elements as a of intellectual capital for Islamic banks that can catapult Islamic banking industry into a new era. Strong and good corporate governance is also essential for Islamic banks since they are exposed to additional risks such as Shariah noncompliance risk that conventional banks do not own; and deal with real real economic activities with more distinct stakeholders such as the investment depositors who participate in the profit and loss like shareholders.
Purpose This study aims to assess the impact of banking models on the relationship between corporate social performance (CSP) and corporate financial performance (CFP) in determining a viable model for sustainable banking. Design/Methodology/Approach The study uses a cross-country sample of 117 financial institutions across 36 countries over an 8-year observation period between 2013 and 2020. To address heterogeneity and endogeneity issues, the authors use the System Generalised Methods of Moments (GMM) estimation models. The study also constructs a novel CSP Index as the independent variable for the research. This CSP Index comprises six indicators reflecting dimensions of financial inclusion and intermediation, serving as proxies for sustainable banking. Findings The findings reveal that the distinct banking models have a significant impact and can alter the direction of the CSP-CFP relationship. Specifically, the conventional banking (CB) model exhibits a statistically significant negative association between CSP and CFP. Conversely, the Islamic banking (IB) model emerges as a promising avenue for sustainable finance, indicating that increased corporate social responsibility (CSR) activities within Islamic banks (IBs) lead to greater profitability. This difference arises from the inherent strengths of the IB system in conducting financial intermediation and inclusion activities. This contrasts with the CB model's reliance on debt-based instruments, which exacerbates risk and detrimentally impacts financial performance. The findings also show that the social banking (SB) model has a significant effect on the CSP-CFP relationship. Originality/Value The findings give new insights into the longstanding debate on the CSP-CFP relationship by examining the impact of banking models. Introducing a novel CSP Index, characterised by its objectivity and verifiability, addresses the prevalent issue of bias inherent in the CSP indices of previous studies.