PhD

Wealth inequality has been a core field of research in economics in the post-Global Financial Crisis era since it is an important driver of economic/financial crises and inhibits long-term growth. Compelling evidence indicates that wealth inequality has been increasing over and above income inequality but traditional theories of inequality lack in explaining the causes of such an increase in wealth inequality. This study shows that interest-based debt contracts may be the underlying cause of wealth inequality. The study discusses that asset-based redistribution, which targets the re-distribution of wealth through re-designation of financial contracts, has pronounced advantages over and above income-based re-distribution policies. The study also underlines that risksharing mechanisms are the building blocks of asset -based re-distribution policies. Stock-flow consistent modeling approach (SFCA) allows measuring comparative benefits of implementing risk-sharing asset-based redistribution policies compared to the base scenario of debt-based financialized economy. In this regard, a large SFCA macroeconomic model is constructed in order to measure comparative advantages of asset-based redistribution tools above that income-based redistribution tools. The results accentuate that an interest rate and debt-based economy goes to absolute inequality without policy interruption. The subsequent simulation gauge distributional effects of different set of fiscal policies. As per the simulation results, asset-based risk-sharing policies are much effective compared to income-based redistribution policies in taming the wealth inequality. Among others, GDP-linked sukuk and zakah should be taken seriously as important asset-based redistribution policy alternatives.

There has been considerable research providing evidence of a negative link between natural resource abundance and economic growth leading to the coining of the term 'resource curse' (Yuxiang & Chen, 2009; Anshasy & Katsaiti, 2011). The member states of the Islamic Cooperation Countries (OIC) comprise 57 countries, including those that are resource rich. Given that oil exports revenue has been the main resource contributor, it is expected that continuous increase in fuel prices over the past decade would have positioned the OIC countries at the forefront of economic performance and growth. This research undertakes a review on ten of the Islamic Cooperation Countries (OIC) (‘the OIC Countries’) and assesses whether sustainable growth in economic performance is demonstrated from the discovery of their tradable resources. On this premise, the study evaluates whether the resource curse symptom exists and determines whether natural resource abundance in the OIC countries is a curse or a blessing. Using the Fixed Effect method, the analysis firstly explores whether there is negative relation between oil resources or rent and real GDP to prove the presence of a resource curse. The research also evaluates potential mechanism that account for the resource curse such as quality of institutions and financial development. The study ultimately attempts to provide policy recommendations on how the OIC countries could benefit more from their resource wealth by adopting welfare enhancing reforms of their policies and institutions according to the framework envisioned by the Qur’an.

The world is striving towards eradicating poverty via inclusive growth. Financial inclusion is seen as an important tool towards getting the unbanked, poor population into the financial system. Does greater financial inclusion create financial stability? Engaging the less financially capable people into the financial system is not a risk-free undertaking. Relaxation of rules and regulations which trigger sub-prime crisis in 2007-2008 has proven that more exposure to 'unfit' borrowers may lead to financial instability. Our study focuses on OIC countries for the impressive growth of lslamic finance during the past decade where 95% of the assets reside in the majority-Muslims countries yet their financial inclusion still within the lower range. We benchmark all the Research Questions against OECD countries which represent the advanced economies with higher level of financial development. Our first objective of the study is to identify the key determinants of financial inclusion. Following which, this study also analyses the impact of financial inclusion on financial stability. Succeeding the financial crisis in 2007-2008, the literature has been relating the important influence of institutional quality in maintaining financial stability. This brings us to our third objective of the study, which is to examine the role of institutional quality as a mediator for maintaining financial stability in both regions.