Finance industry has become an essential part of the digital transformation in the perspective of Industry 4.0. The objective of this research is to find out the prospects of applying precious metal-backed cryptocurrency (PMBC) to Islamic finance by exploring its application to the different Islamic finance contracts for structuring Islamic finance products. A qualitative methodology is employed in conducting this research where relevant literature on the subject matter was reviewed. By using doctrinal approach, the paper presents Shari'ah compatibility of and issues in application of PMBC to Islamic finance contracts. The outcome of the research reveals that there is scope to use PMBC backed by gold to replace the function of fiat currency in Islamic finance contracts. However, there are specific Shari'ah rules applicable to each of the contract as derived from AAOIFI's Shari'ah standard No. 57 published in 2016. For the sustainable development and practical implementation of PMBC in Islamic finance, it is observed that there are certain inhibitions that need to be eliminated such as lack of political will in acknowledging it as a legal tender and development of an adequate and effective infrastructure with legal, regulatory and governance frameworks. It is anticipated that the outcome of this research will assist the policymakers and stakeholders of Islamic finance to prepare themselves to utilize PMBC in Islamic finance industry and to conduct further research in resolving the issues identified for adoption of PMBC backed by gold in a Shari'ah compliant way.

Zakat, being the third pillar of Islam, is an act of worship fulfilled by Muslims. As an obligatory means of alms giving expected of Muslims, it also helps to alleviate poverty in society by assisting such individuals to achieve a state of financial independence. It is maintained by Muslims that the principles of zakat derived from the Sharia is expected to remain unchanged with passing time. However, in order to achieve efficiency in the administration of zakat, innovation and technology can be used even within the parameters of Sharia. For students and researchers studying Islamic economics and zakat, it is hard to obtain the contemporary application of zakat from one single textbook as the books available in the market focus on elaborating the fiqh or jurisprudence of zakat. As such, the objective of this textbook is to provide the opportunity to learn the basics of zakat and its contemporary application by highlighting the innovative practices of zakat with issues and challenges.

Capital adequacy plays an important role in determining banking activities. A bank must hold a minimum level of capital to ensure sufficient funds to buffer against unexpected losses or adverse shocks. This study analyzes and compares Islamic and conventional banks in 14 Organization of Islamic Conference (OIC) countries from 1999 to 2009. The empirical evidence suggests that capital requirements have a significant impact on the deposit and lending behaviors of the 52 Islamic banks (IBs) and 186 conventional banks (CBs) in the sample. There is a strong positive relationship between capital requirements and deposit and loan growth for both IBs and CBs

The contention surrounding bitcoin's acceptability and usage has an unsettled premise in both conventional and Shari'ah law, although digital and cryptocurrencies reflect a lasting reality. This research analyses this contention by examining the concept of currency and/or money and the underpinning trust reposed on its issuing authority against the notion that cryptocurrencies and fiat money differ only in form but share the same substance and purport. Qualitative methodology provides an analysis from conventional as well as Shari'ah viewpoints to examine the extent cryptocurrencies can gain admittance in contemporary conventional and Islamic finance and economy. The methodology entails non-empirical secondary data sourced from libraries and online databases comprising journal articles, textbooks, newspapers and reports subjected to doctrinal content analysis. Research outcomes show division among stakeholders, including conventional and Shari'ah scholars, regarding bitcoin and cryptocurrencies. Further research is recommended inter alia on ways to adopt Shariah-compliant cryptocurrencies worldwide.

The objective of this element is to provide an overview of Islamic finance by highlighting the impact of the pandemic on it in a comprehensive manner by looking at two branches of Islamic finance: Islamic commercial finance; and Islamic social finance. The approach that is adopted in this element is to first provide an overview of Islamic finance to the readers in a simple and easy manner followed by the impact of pandemic discussed separately for both types of Islamic finance. Last, but not least, the element also recommends ways in which Islamic finance could be further improved in the light of the lessons learnt from the pandemic. It is anticipated that the recommendations made in this regard would assist policymakers, practitioners, researchers and other stakeholders of Islamic finance to understand the way to unlock the full potential of Islamic finance to reduce the wealth gap and achieve financial inclusion.

It is said that the COVID-19 pandemic has turned back the poverty clock. As such, there is a need to have social mechanisms put in place to provide relief to those who are affected in this regard. Islamic social finance consists of tools and institutions that could be used to alleviate poverty. This book explores the impact of COVID-19 on Islamic finance to better understand the effectiveness of Islamic social finance in helping those who have been affected by poverty overnight due to the halt in all major economic activities in the context of the pandemic. Since the struggle against poverty in each country will be different, the book attempts to shed light on the experiences of different countries by presenting successful models of Islamic social finance. The book first looks at poverty and COVID-19 before delving into the role of Islamic social financial institutions and how they have risen against COVID-19. The book concludes by examining the impact of COVID-19 on Islamic microfinance. This book is the first of its kind on the subject of COVID-19, and it intends to bridge the gap in the literature.

This paper aims to derive a compatible Shariah opinion on the permissibility of using cryptocurrencies by Muslims by reviewing the opinions expressed by Shariah scholars on the permissibility of cryptocurrencies. This is a qualitative desk review research where the opinions expressed by the Shariah scholars on the permissibility of cryptocurrencies and the issues related to it have been analyzed using the literature. All the Shariah parameters checked pertaining to currencies have been studied and assessed to derive the Shariah opinion. The research findings suggest that cryptocurrencies do not fully meet the characteristics of money according to Shariah principles. Scholars debate their classification as a medium of exchange due to concerns about volatility, intrinsic value and governance. The treatment of cryptocurrencies varies, and their decentralized nature prevents monopolization. Governance and resistance to manipulation are facilitated by blockchain technology. Classifying cryptocurrencies as hard money and their recognition as the primary unit of account face challenges. While they can be a store of value, price volatility and regulations must be considered. The network effect is crucial for their success, and their supply is controlled through complex protocols. These findings have implications for policymakers in Islamic finance.

This paper investigates the effects of religious screening on payout behavior of US firms. Shariah compliant (SC) indices serve as suitable sample as they are emerging as alternative investment class in the last two decades. Through an analysis of a sample of US firms belonging to Dow Jones proprietary database for the period 2006-2018, this study provides evidence that SC firms are more prone to make total payout, cash dividends and repurchases. We use panel logistic regressions with industry and year fixed effects. The findings reveal that the drivers of higher propensity of total payout are higher profitability, higher retained earnings, lower debt capital structure and lower asset growth. The factors that contribute to likelihood of paying higher cash dividends are higher profitability, lower governance levels and lower market/book assets ratio. Moreover, better governance, lower asset growth and lower equity/assets increase the propensity of SC firms to make higher repurchases. These findings are important contribution to the Islamic corporate finance and dividend policy literature.

Capital structure serves as an important device for mitigation of agency conflicts and, although firms combine debt and cash dividends to address the agency conflicts, debt is preferred as a bonding device by many managers due to its lower cost as compared to equity (John, Knyazeva & Knyazeva, 2015). However, shariah-compliant firms (SCF) cannot use this device due to prohibition of interest-bearing loans in Islam. In this scenario, the dividend payout policy becomes a highly important tool of corporate governance for shariah-compliant investors. Moreover, the managers of these firms cannot maintain stable dividends by issuing bonds and, therefore, the dividend policy of such firms would be different. This chapter highlights the dividend payout behaviour of SCF by comparing them to conventional firms.

This article examines the value-added phenomenon of Malaysian horizontal merger and acquisition activities (M&A) in the long run for the period 1994–2010. In this regard, this article used economic value-added (EVA) approach and cost-efficiency approach (stochastic frontier analysis (SFA)) to investigate synergistic benefits. The findings suggest that bidder firms experience no significant improvement in operating and financial efficiencies in the long run. Specifically, the operating performance of bidder firms deteriorated after the merger exercise, whereas the target firms had no significant improvement in operating performance over the same period. In summary, the findings suggest no synergistic gains from horizontal mergers in Malaysia. These findings imply that the long-run performance of firms in the horizontal mergers or acquisitions is driven by other motives rather than synergistic gains.

This chapter aims to evaluate the Hajj financial management system by Hajj Financial Management Agency (BPKH) with challenges that have the potential to impact the financial sustainability of hajj funds; assesses the effectiveness of the implementation of the hajj fund subsidy system associated with the financial sustainability of the hajj fund; and proposes solutions to overcome the hajj financial management system and hajj fund subsidy system. A qualitative research approach through interviews along with a documents review was used to collect data and achieve the research objectives. The results of the analysis show that there are challenges in the hajj fund management system in terms of regulation, which are the issuance of Law Number 8 of 2019, about the Management of Hajj and Umrah that regulates different things for the same substance in Law Number 34 of 2014 about Hajj Financial Management. This resulted in the unclear relationship and flow of hajj financial management related to the implementation of the hajj pilgrimage between two related institutions, which are the Ministry of Religion and the BPKH. In addition, regarding the financial sustainability of the hajj in the practice of providing subsidies for the implementation of the hajj, it can be stopped gradually. If the subsidy system is to be continued, it will make hajj finances unsustainable and not in accordance with Sharia principles and justice. This study is the first of its kind to examine the financial sustainability of the Hajj Financial Management Agency (BPKH) in Indonesia. In addition to being a reference for future researchers, this study could also serve as an impetus for policymakers to design strategies that overcome the weaknesses of the hajj financial management system and the hajj fund subsidy system.

COVID-19 was first considered to be a health crisis. However, the containment measures implemented by the respective governments of countries around the world led to an economic crisis which eventually led to a human crisis. It is said that due to the pandemic, the global poverty clock has turned back 30 years (Kharas and Hamel, 2020) and the impact of it in different countries depending on their level of development is affected. It is reported that COVID-19 virus has been found in all African countries, but the number of cases recorded is fewer which could be due to lack of capacity to test and report positive cases (United Nations, 2020). Apart from the health issues faced, other issues such as: scarcity of food and medical supplies; inability to work leading to loss of income; and the emergence of a debt crisis leading to political instability (United Nations, 2020). The main difference between the financial crisis of 2018 and the pandemic is that the pandemic crisis has affected more than just the financial sector and includes real economic activities like farming and trading (Muhammad and Ismail, 2020).

COVID-19 is considered by some as a 'black swan event', which is a pandemic that is unpredictable, unprepared for, and totally spontaneous (Gubler, 2020). This pandemic is different from four other recent pandemics the world has witnessed within the last 25 years (Gubler, 2020) as its impact has created not only a health crisis, but has led to an economic as well as human crisis brought due to a halt in all major economic activities in the world. The impact of COVID-19 on the sudden increase of poverty is uncontainable. By 12 March 2020, the World Health Organization (WHO) declared COVID-19 a pandemic, as, since December 2019, the disease had been spreading worldwide, putting the world population at risk. Simultaneously, the number of unemployed increased turning back the poverty clock (Kharas & Hamei, 2020). This is because as Sumner et al. (2020; p.2) state: 'global poverty could increase for the first time since 1990 and, depending on the poverty line, such increase could represent a reversal of approximately a decade in the world's progress in reducing poverty'. They also observe that in some regions, the poverty levels could be what they were exactly 30 years ago (Sumner et al., 2020) ruining the progress that has been achieved by the world so far in this regard. According to the International Labour Organization (ILO), the continuous decline in working hours globally due to COVID-19 means that 1.6 billion workers in the informal economy, which is nearly half of the global workforce, are at immediate risk of losing their livelihood (ILO, 2020).

This chapter explores the impact of the pandemic on Islamic commercial finance and Islamic social finance in a comprehensive manner. The chapter reveals that COVID-19 has provided more opportunities to Islamic social finance than Islamic commercial finance. The beauty of Islamic finance in this regard is reflected as the perception that Islamic finance does not achieve its objective as being a social finance is proved to be false as Islamic finance not only promotes profit maximization, but it has also the potential to achieve social objectives. Islamic commercial finance developments could be slower, but it is anticipated that Islamic social modes of financing will be used widely even by multilateral agencies to assist the communities who need help in this pandemic. The most important lesson one could learn from this pandemic in relation to Islamic finance is that Islamic finance is truly different from conventional finance and as such, it needs a unique legal, regulatory and governance framework to display the true potential of it.

Islamic finance ought to follow Shari'ah in all dimensions of it including regulatory, substantive and procedural matters of it. However, since the inception of the institutionalization of Islamic finance, it has been criticized for using conventional interest rates to benchmark its financial products. Irrespective of the criticisms made in this regard, from a Shari'ah perspective, this practice of Islamic finance has been defended and therefore, the practice continued until in July 2017 it was announced that there is a need to move away from LIBOR as an interest rate benchmark before the end of 2021. This announcement led to the creation of various risk-free rates and highlighted an opportunity to bring some reforms to Islamic finance by introducing financial benchmarks that could be compatible with Islamic finance principles. Therefore, the objective of this paper is to provide insight into the financial benchmark reforms required for Islamic finance by providing a review and preview of the topic using a desk review qualitative approach. The findings of this paper indicate that there could be no single benchmark that could be uniformly used for Shari'ah compliant financial products, and there is a need to introduce specific benchmarks for different types of Shari'ah contracts used in structuring Islamic finance products. It is expected that the findings of this paper would assist in understanding the theory and practice of implementing Islamic alternative benchmark to the London Inter-Bank Offered Rate (LIBOR) and would motivate regulatory authorities and standard setting bodies to consider enacting financial benchmarks that will reflect the behaviour of Islamic finance products and the underlying Shari'ah contract(s) used to structure them.

Zakat is an effective Islamic social financial tool that could be used to eliminate global poverty. The pandemic has turned back the world's poverty clock and as such, more work is required to bring equitable and shared prosperity to the world. International organizations that serve humanity could be used as intermediaries of zakat to reach out to those categories of legal recipients of zakat who are most deserved of such assistance, but who are unidentified and unreachable by the zakat organizations. This is with the ultimate objective of enhancing the effectivity of zakat as a social finance tool. However, using international organizations as zakat intermediaries is not a straightforward issue and limited literature are available on the matter to understand the contemporary practice and challenges in this regard. As such, using a qualitative research approach, this chapter sheds light on the issues revolving around the internationalization of zakat by looking at the existing practice of it by identifying the challenges in doing so. This chapter proposes a way to resolve the existing issues in internationalization of zakat by leveraging on blockchain technology where a proposition is made to introduce a crypto zakat platform. This chapter also reveals that in contemporary times, there are three ways in which international organizations have been involved as zakat intermediaries: by creating a zakat fund for specific purpose; by receiving zakat money to be distributed to transform the societies in countries other than where the zakat was collected; and by creating partnership with zakat organizations to use zakat money in the respective country in which zakat was collected. It is anticipated that soon the stakeholders of zakat would join hands with international organizations to effectively manage zakat to alleviate poverty in the world exacerbated by the ongoing pandemic.

Africa is a continent that has contributed significantly to the institutionalization and development of Islamic finance in the world. Islam is the major religion in many countries in Africa, particularly those in the north of the continent (Saleh, 2021). For instance, in countries like Somalia, Morocco, Mauritania and Algeria about 99% of the population are Muslims while in Egypt 90% of the population are Muslims (Saleh, 2021). In 1963, the first ever Islamic bank incorporated in the world was formed in Egypt (Orhan, 2018) while in 1979, the world's first takaful company was incorporated in Sudan (Billah et al. 2019). Though the institutionalization of Islamic finance began in the African continent, there is still a need to unlock the full potential of Islamic finance (Dey and Jen, 2018; Parker, 2021). For the huge necessity to finance infrastructure projects and to alleviate poverty via financial inclusion, Islamic finance has the potential to provide adequate solutions (Monnet, 2019). However, there are numerous challenges such as the regulatory gap and knowledge gap that must be resolved to implement Islamic finance in a sustainable manner in Africa (Dey and Jen, 2018). Lack of government support to utilize Islamic finance in Africa has also been identified as a challenge (Parker, 2021). The straw that broke the camel's back in this regard is COVID-19, which has become a threat not only to Africa but also the whole world in the quest to achieve sustainable development.

Decomposition of yield curves is important for pricing of fixed income instruments, inflation management, and modeling term structure of interest rates. Therefore, this study investigates whether the long term profit rate of different classes of Sukuk (Islamic bond) is a viable predictor of future spot profit rates. Data on Malaysian Sukuk from 2001-2010 was used to estimate yield curves and forward rates. Regression findings suggest that the forward rate is a weak predictor of future spot profit rate, implying long term profit rates are not average of future spot rate s on long term Sukuk. The findings do not support the expectation hypothesis. However, comparison with securities of the same default risk, but with different maturities, reveals the presence of an-in-bulit support for term premium in the yield curves of corporate Sukuk. This finding is consistent with the Liquidity Preference Theory. We also find further support for Market Segmentation Theory as we find a humped shaped yield curve in the Sukuk market

Islamic economics is ethical as its principles are derived from the religion Islam that gives paramount consideration to application of moral principles in all aspects of human lives. As such, there is no need to mention the word ethics with Islamic economics to describe its moral dimension since ethical values are inherently included in Islamic economics. This chapter provides a basic overview of the lex loci applicable to Islamic economics, which is Shariah, in order to understand the Islamic world view surrounding the subject and its economic teachings derived from tawheed. Furthermore, the differences between an Islamic economic system, on the one hand, and socialism and capitalism, on the other hand, are also provided, followed by a discussion of Islamic economic governance via the institution of hisbab and the practice of Islamic economics in classical and contemporary times. This chapter aims to provide readers with an understanding of Islamic economics by presenting the theoretical foundations undergirding it contemporaneous practical application.

Even though the Dutch Muslim community of approximately one million people have been going through a socio-economic development for the last few decades, house ownership within this community has still been significantly low compared to other Dutch citizens belonging to other religions. The absence of Islamic financial solutions in the Netherlands is one of the major reasons behind this phenomenon. Islamic financial offerings have started to emerge in Western Europe, but it has not reached the Netherlands and as such, Muslims in the Netherlands are unable to have an Islamic solution to obtain financing facilities to own homes. There is need to conduct a study to find out the demand of the Muslim population of the Netherlands on Islamic finance. This study delineates the stance of the Dutch Muslim community towards Islamic finance in terms of their understanding of its concept, their level of acceptance towards conventional financing and finally their preference for either Islamic home-financing solutions, conventional mortgages or property renting.

Islamic finance is an alternative source of financing to the conventional financing that emerged via institutionalization in the 1960s. It has gained popularity in the world irrespective of faith convictions due to the universal and ethical principles adhered in the practice of it. In this regard, North America is not an exception. In the United States and Canada, Islamic finance has been adopted, and there is an established regulatory environment for the operation of it with political support. There is also a wide range of innovative Islamic finance products structured and used in this part of the world that is conducive to the demand of the population and regulatory environment of Islamic finance found in the respective jurisdictions. These two countries are often described as competitors in the region, but the reality is despite the competitive relationship they are in by default, they are also collaborators in developing Islamic finance in the region. More than one million self-identified Muslims in Canada represents 3.2 percent of the total Canadian population. In comparison, the Muslim population in the United States represents 0.9 percent of the total population. Hence, Canada has been viewed as more suitable to become the hub of Islamic finance in the region simply because the number of Muslims in Canada is greater than that found in the United States in terms of religious representation in each nation's total population. Furthermore, in terms of the regulatory environment, though the regulatory landscape applicable to financial institutions including Islamic financial institutions in the United States is much more sophisticated, the lack of a regulatory environment in Canada for Islamic finance is viewed as an opportunity for Canada as this provides flexibility required to develop and innovate unique Islamic finance products and increase the number of institutions dealing with Islamic finance. Sharia governance is the backbone of the Islamic finance industry in any jurisdiction. A common weakness found in both countries in the development of Islamic finance is on adopting a uniform Sharia governance framework applicable to all institutions offering Islamic finance products and services. In the early 21st century, the practice of Islamic financial institutions in the region indicates that there is no uniform yardstick to adopt in this regard, leading to confusion as well as lack of confidence-not only among 'laypeople' but among Sharia scholars as well-in the Sharia-compliant products offered. In the absence of regulatory backing in this regard, an agreement among the industry stakeholders in the region would be sufficient to standardize this practice and implement procedural requirements that ought to be followed in offering Sharia-compliant products and services.