With the development of Islamic banking and finance in most Muslim countries, money market became necessary for financial institution to solve the liquidity problems. However, there is much criticism of Islamic banks and financial products for their pegging to the interest rate. Islamic money market is based on the same PLS principle with other Islamic financial products, if such products are pegged to their rate of interest, then they are not PLS. More correctly, they are based on well-and sometimes not so well-hidden conventional or interest-based contracts ...

For the first time, this study investigates whether, in mimicking conventional banks, Islamic banks have become less stable than their theoretical equivalent: cooperative banks in Europe. Theoretically, the prohibition of interest should have pushed Islamic banks towards mutuality and profit-sharing, which have been argued as stabilising. In practice, however, banks are pushed for growth under a debt-driven commercial banking model, which is not only antithetical to the Shariah but is also destabilising. This may explain why empirical findings are still divergent in Islamic banking stability studies. Our study employs the generalised method of moments (GMM) system to compare the stability of 37 Islamic banks against 1,536 cooperative banks in Europe during the 2008 crisis and post-non-crisis years. Interestingly, we found consistent and significant evidence that Islamic banks are less stable than cooperative banks in both macroeconomic conditions. This has significant policy implications, the most important of which is to steer reform efforts away from refurbishing Islamic commercial banks and towards building an entirely new Islamic cooperative bank, based on the model in Europe.

Theoretically, a monetary policy intervention of a central bank in form of exchange rate devaluation will make exports of such a country cheaper with a resultant increased competitiveness. However, should developing country such as Nigeria that is mostly import-dependent adopt the same approach? Will a greater focus on the structural and developmental changes be a better option? In a long-run, what is the lead-lag relationship between exchange rate and the Balance of Payment (BOP)? These are issues this project paper sets out to empirically investigate through a multivariate vector error correction framework ...

The main purpose of this study is to conduct a time-series analysis to investigate empirically the causal relations among economic growth, trade liberalization and income inequality in Bangladesh between 1985 and 2018. Upon deciding the order of integration through running the stationarity test, Vector Error Correction Model has been estimated, followed by the co-integration test for determining the long-run relationship among the variables. Significant long-run relationship has been found among the variables in addition to some evidence on bi-directional causal relationship in between economic growth and income inequality and between trade liberalization and economic growth. Moreover, the most relevant endogenous variables have been picked up using the Variance Decomposition test, the results of which are presented graphically through Impulse-response Function. However, little evidence has been found regarding trade affecting income distribution significantly. Furthermore, evidence strongly recommends that investment is highly significant for trade.

This paper aims to investigate whether Shari'ah stock index, exchange rates and macroeconomic forces in Japan have any long run relationship or not. If the relationship exists, does the Shari'ah stock index lead or lag? The paper is likely to be the first study that investigates the causal relationship of aforementioned variables and the Shari'ah Index in Japan. Current literature on the topic in different countries gives either contradictory or inclusive results. This study will try to fill two gaps, one relating to Japan, and another relating to Islamic Indices. It employed quarterly data from 2007 to 2017. Auto-Regressive Distributed lag (ARDL) time series technique is applied to conduct the study. This technique is free of major limitations of the conventional cointegrating tests as they suffer from the pre-test biases involved in the unit roots and cointegration. The empirical evidence tends to suggest that both in the short- and long-run, money supply, exchange rate, and GOP have a significant relationship with Japan's Shari'ah stock prices ...

Understandably, Naohiro Kitano's work experience at the Japan International Cooperation Agency (JICA) has given him a comparative advantage in writing a paper on China's foreign aid. China's foray into international economic cooperation as a donor is admirably documented in his paper (Kitano, 2014). The paper provides valuable insights into the network of Chinese aid programs. It is amazing that China, a major recipient of external aid in the past (largely from Soviet sources), could emerge as a major donor in its own right with visible signs, but it is unclear if that experience has influenced its own aid programs. It is amazing that China, a major recipient of external aid in the past (largely from Soviet sources), could emerge as a major donor in its own right with visible signs, but it is unclear if that experience has influenced its own aid programs. Amazing as it indeed is, it is unsurprising, as the Chinese economy has grown so big that it could replace Japan as the second largest economy in the world, saddled with the largest external reserves in the world.

Based on solid research, Hasan et al. (2017) has an interesting insight to share about India's apparel sector. Notwithstanding the fact that India is among the largest producers and exporters of apparel products, the study suggests that the main reason why the sector has not been up to its potential lies in the firm size distribution which is heavily dominated by small firms. Hasan et al. argue that small firms suffer from a serious lack of scale economies which deprives them of access to modern production and management technologies, and attribute it largely to India's labor regulations and enforcement regime.

The attempt by Severino (2011) to cover the width and depth of the intriguing integration process in Southeast Asia over four decades merits serious attention. One can hardly disagree with the comprehensive description and crispy analysis by Severino, a former Secretary General of the Association of Southeast Asian Nations (ASEAN). Nevertheless, it will be useful to revisit some of the highlights and issues.

Numerous attempts have been made to study the impact of competition on banking-stability before and after the recent global financial crisis. In the rich theoretical and empirical literature on the topic, two contradictory views have surfaced, i.e. the competition-fragility view and the competition-stability view. This thesis provides empirical evidence of a nonlinear relationship between competition and stability that explains, at least partially, the conflicting results of previous theoretical and empirical studies. Furthermore, while the existing literature focuses on conventional banking, this thesis investigates both Islamic and conventional banks in dual banking systems and explores whether or not bank types affect the competition-stability relationship. Using GMM technique on panel data covering the dual-banking countries that have significant share of Islamic banking for the period from 2004 until 2014, this thesis finds that the relationship between market power and stability is nonlinear for both Islamic and conventional banks, albeit with a marginal difference between them. The impact of market power is initially positive "supporting the charter value theory," but it turns to be negative as soon as banks' market power exceeds a certain limit, probably because the negative impact of the "too-important-to-fail" moral hazard overcomes the initial positive impact.

The COVID-19 outbreak hit the fan in December 2019 in Wuhan, China. There is much controversy over the genesis of this new pandemic which is haunting the humanity the world over. Contradictory, if not competing, conspiracy theories have emerged, with China and the US blaming each other. Some have described COVID-19 as a Black Swan which took the world completely unawares, while others contend it was not unforeseen, as people like Bill Gates have been talking about an impending pandemic of Biblical proportions, for nearly five years.

What is really "new" about New Malaysia? The term "New Malaysia" connotes new thinking, new ideas and new solutions based on a new paradigm. New Malaysia warrants a new mindset, but some pronouncements by politicians, on both sides of the divide, show that they are still unable to delink themselves from the past.

Understanding the determinants of portfolio investment inflows is imperative in a region highly susceptible to large amount of capital inflows like ASEAN. And to formulate the right policy, intervention and upgrade, ASEAN needs to have a good grasp on these determinants before it can manage volatile capital flows and the accompanying disruptive potential. Although a number of studies focusing on the drivers of gross capital inflows into EMEs has been established, one on ASEAN's has been largerly left out. The need for studying gross inflows is simple, as its movement has direct implication on financial stability and the vulnerability of the overall financial system ...

GDP, often the proxy to measure progress in policy implementations, does not fully reflect the wellbeing of a nation, although it may be one of the contributing factors. Applying an estimation model based on panel data of 22 sample countries, we illustrate that wellbeing in general can be improved with intrinsic growth, influenced by economic stability, demand composition and sectoral composition. Additionally, key economic and quality of life factors - such as, broader income distribution, lower housing prices, lower infant mortality, effective health expenditure, higher education attainment and broadband access - are significant to households ...

This study examines the impact of foreign aid on the institutional quality (IQ) of the OIC countries. Using the data of OIC countries for the three-year average period from 1991 to 2016, the system GMM finds that aid in general deteriorates the IQ for the aid recipient countries. However, quantile regression suggests that the negative impact of foreign aid on institutional quality (IQ) is relatively greater in the countries where the existing quality of institution is poor. The findings of the study suggest that improving the existing capacity is essential for reaping the optimum benefit of foreign aid on institutional development.

Efficiency measurement has received increased attention amid global changes and growing competition within the finance industry in all countries, including developing countries such as Yemen. The evaluation of efficiency is crucial for players in the industry, not only to assess their ability for survival, but also to remain competitive in the market. Besides, efficiency would have consequences on other areas including bank margins and earnings manipulations. Like others, Yemen's banking industry has witnessed structural changes over the past decade, which paved the way for the industry to upgrade its efforts to emulate international standards. The present study analyses the efficiency of Yemen's banking sector during the 1996-2011 period. A two-stage analysis using Data Envelopment Windows Analysis (DEWA) was employed in the first stage of the research to measure the efficiency trends of industry, followed by the panel regression technique in the second stage to examine the determinants of efficiency. As efficiency of is a major concern for all stakeholders given its implications for various areas of banking operation such as bank margins and the opportunistic behaviour via discretionary accruals "manipulation" of earnings, the study also examines on whether the effeciency would have impacted the bank margins and earnings quality.

In spite of the expanding number of studies investigating the effect of institutional quality on capital flows, a very few attempts has been made to investigate the impact of capital flows on the institutional quality of host countries.This study investigates the role of capital flows on the institutional infrastructure of the OIC countries, which are divided into three separate essays. The first essay investigates the impact of the official development assistance (ODA) on the institutional development of the OIC counties. The research uses system GMM, and the data for this study is obtained from 40 OIC countries for the three-year average period from 1991 to 2016. Empirical findings suggest that aid reduces the Institutional quality for the aid recipient countries. For robustness test and heterogeneous relationship among aid recipient countries, this study uses panel quantile regression and finds that foreign aid generally reduces Institutional quality, and its reduction effect is greater in less institutionally developed countries ...

Financial system plays a significant role to spur economic growth through capital accumulation and efficient distribution of resources. As an alternative to conventional financial system, Islamic finance has emerged to fulfil the demand of Muslim population but not limited to it. Islamic banking is now considered a mainstream industry and has been growing significantly, especially in Muslim countries. Bangladesh has marked impressive growth rate for past several years and Islamic finance has been gaining market share in the country. Even though the studies on finance-growth nexus has been done extensively, to the best of the author's knowledge, no studies have been initiated based on distinct Islamic finance and conventional finance framework. Therefore, this study attempts to find the long-run relationship and short-run dynamic interactions among Islamic finance development, conventional finance development and advancement of the economy of Bangladesh. Annual data from 2001-2019 have been collected for the research. The study employs Vector Error Correction Model (VECM), Granger Causality and Impulse Response Function (IRF) approaches to investigate the relationship.

Despite the increase in studies on Islamic banks, there is a number of issues. Firstly, the comparison is with commercial banks although in reality, Islamic banks have strayed from their theoretical foundations of mutuality and profit-sharing. A more apt comparison is thus with cooperative banks, which share similar theoretical foundations with Islamic banks. Secondly, this comparison may unlock the stability puzzle for Islamic banks. While theoretically they are argued to be stabilising, empirically, the evidence is mixed. Several works concur with the notion of superior stability in Islamic compared to conventional banks but of late, there are increasing findings to the contrary. This study thus seeks to first ascertain whether in mimicking conventional banks, Islamic banks have become just as unstable, or worse, during the 2008 financial crisis and the 'new normal' years between 2010 and 2015 ...

The issues of earning management has received attention from practitioners and academicians since the last couple of decades in banking sector. It is evident that bank managers practice the discretion in estimating loan/finance loss provisions for various motives such as reducing earnings variability (Agarwal, Chomsisengphet, Liu & Rhee, 2007; Kanagaretnam, 2004). Majority of the studies have been focusing on conventional banks, and only a few studies have focussed on Islamic banks, for instance, Zoubi and Al-Khazali (2007) and Othman and Mersni (2014). The significance of examining the issues in the context of Islamic banks stems from the fact that Islamic banks should not manage their earnings the way their conventional banks do. This is because the underlying theoretical basis of Islamic banks are based on Shariah principles which is different from conventional banks.

The paper investigates whether there is a significance difference between the practices of discretionary loan/finance loss provisions between Islamic and conventional banks. Same time, the paper tests whether the efficiency may influence the behaviour of discretionary loans/finance loss provisions, taken into consideration other micro and macro variables. The study utilizes panel data runs over 1996-2011 with unbalanced observations for 16 banks, of which 4 Islamic banks. In order to achieve research objectives, the two-stage approach is adopted to examine the factors that may influence the behaviour of discretionary loan/finance loss provisions with specific emphasize on the efficiency. Furthermore, efficiency scores are estimated using Data Envelopment Windows Analysis. The findings of the research show that Islamic banks employ the discretionary loans/finance loss provisions to manage their earnings. However, the magnitude of discretion of accruals is significantly lower than conventional banks with exception for foreign banks which have reported lower discretionary loans/finance loss provisions than Islamic banks. Moreover, the analysis showed that efficiency affects the overall discretionary loans/finance loss provision positively, although this impact is shaped differently for Islamic and conventional banks.

Theoretically, one of the ways governments that aim to improve economic growth in their countries is by increasing expenditure on human capital. However, some empirical evidence from OIC countries do not support the finding that expenditure on the two most important aspects of human capital (expenditure on education and health) affects growth positively. One of the plausible reasons for the observed unusual finding could be the presence of moderating variables. Therefore, this study investigates the relevance and applicability of one such moderating variable, namely the quality of institutions, given the relatively low global ranking of OIC countries in terms of institutional quality. This study contributes to the new institutional economics literature by discovering that some institutional quality variables determine the way human capital expenditure affects economic growth. This study uses the methodology of panel data analysis and interaction graph plots. Interaction graph plots show the marginal effect of a continuous variable on another continuous variable. Without the inclusion of interaction terms, we find that, on average, in OIC countries, the effect of government education expenditure (GEE) on growth is insignificant while the effect of government health expenditure (GHE) on growth is either insignificant or significant and negative. The interaction graph plots show the effect of government human capital expenditure on growth at different levels of growth. When we consider the marginal effect of institutional quality, we find that generally, better bureaucracy quality, control of corruption, government effectiveness, law & order and rule of law augment the positive effect of GEE on growth. We also find that better government effectiveness and law & order augment the positive effect of GHE on growth.