Laily Dwi Arsyianti, Fadiyah Hasta Puspitasari, Marhamah Muthohharoh
Financing is expected to positively support economic growth, especially using Islamic contracts, which are strictly obliged to link the monetary and real sectors. Crises can devastate the financial and economy sectors, and also shock the real sector. This study aims to analyse the effect of Islamic-based financing on economic growth in Indonesia using the ARDL method. Gross fixed capital formation, household expenditure, government expenditure, exports, imports and the consumer price index, together with Islamic financing, are analysed in terms of their effect on economic growth in Indonesia during the period 2003-2018, in which the 2008 crisis is set as a dummy variable. Musharaka financing, which is based on profit-loss sharing, has a relationship with economic growth in the short run, but not in the long run. Furthermore, mudaraba financing unpredictably shows a negative relationship with economic growth, while Murabaha does not have significant effect in either short- or long-run estimation. The results imply that the prevailing economy system, which accommodates household expenditure, leads to an increase in economic growth, so is recommended as a priority sector for development. This study supports the notion that the current traditional economic stance may not suit the measurement of Islamic finance implication towards economic growth. The Maqasid sharia inclusiveness measurement is considered as an alternative estimation of the effect of modes of financing on economic growth.
{"title":"MODES OF ISLAMIC FINANCING AND ECONOMIC GROWTH: EVIDENCE FROM INDONESIA","authors":"Laily Dwi Arsyianti, Fadiyah Hasta Puspitasari, Marhamah Muthohharoh","doi":"10.21098/jimf.v7i3.1374","DOIUrl":"https://doi.org/10.21098/jimf.v7i3.1374","url":null,"abstract":"Financing is expected to positively support economic growth, especially using Islamic contracts, which are strictly obliged to link the monetary and real sectors. Crises can devastate the financial and economy sectors, and also shock the real sector. This study aims to analyse the effect of Islamic-based financing on economic growth in Indonesia using the ARDL method. Gross fixed capital formation, household expenditure, government expenditure, exports, imports and the consumer price index, together with Islamic financing, are analysed in terms of their effect on economic growth in Indonesia during the period 2003-2018, in which the 2008 crisis is set as a dummy variable. Musharaka financing, which is based on profit-loss sharing, has a relationship with economic growth in the short run, but not in the long run. Furthermore, mudaraba financing unpredictably shows a negative relationship with economic growth, while Murabaha does not have significant effect in either short- or long-run estimation. The results imply that the prevailing economy system, which accommodates household expenditure, leads to an increase in economic growth, so is recommended as a priority sector for development. This study supports the notion that the current traditional economic stance may not suit the measurement of Islamic finance implication towards economic growth. The Maqasid sharia inclusiveness measurement is considered as an alternative estimation of the effect of modes of financing on economic growth.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"50 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-08-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85460424","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This research is conducted due to the un-ware contemporary Muslim economists on the feature of money whether exogenous or endogenous. Arguing that money in Islam should be endogenous, Choudhury (1997) asserts that fiat and fractional reserve systems makes money exogenous. If it is true, this condition leads to the un-oriented development of Islamic monetary and financial systems that are basically is fiat and fractional reserve systems. Accordingly, the empirical studies on Islamic monetary policy in Islamic financial system that is based on exogenous money concept cannot reveal the true money supply for the economy. This paper aims to propose the theoretical model of endogenous Islamic money and conduct an empirical study of the model on Islamic banking that is based on fiat and fractional reserve systems. The empirical method used is based on the ARDL and ECM. The result of the research gives evidence that the profit and loss sharing system is a core feature of the Islamic endogenous money system in the fractional reserve requirement system. Other evidence reveals that the development of the Islamic financial system can minimize the existence of exogenous money in a fiat monetary system. By these results, this study argues that Islamic endogenous money system can be developed in fiat and fractional reserve banking systems through the profit and loss sharing systems.
{"title":"ISLAMIC ENDOGENOUS MONEY: EVIDENCE FROM ISLAMIC BANKING SYSTEM IN INDONESIA AND MALAYSIA","authors":"K. Umam, A. Ismail, Achmad Tohirin, J. Sriyana","doi":"10.21098/jimf.v7i3.1351","DOIUrl":"https://doi.org/10.21098/jimf.v7i3.1351","url":null,"abstract":"This research is conducted due to the un-ware contemporary Muslim economists on the feature of money whether exogenous or endogenous. Arguing that money in Islam should be endogenous, Choudhury (1997) asserts that fiat and fractional reserve systems makes money exogenous. If it is true, this condition leads to the un-oriented development of Islamic monetary and financial systems that are basically is fiat and fractional reserve systems. Accordingly, the empirical studies on Islamic monetary policy in Islamic financial system that is based on exogenous money concept cannot reveal the true money supply for the economy. This paper aims to propose the theoretical model of endogenous Islamic money and conduct an empirical study of the model on Islamic banking that is based on fiat and fractional reserve systems. The empirical method used is based on the ARDL and ECM. The result of the research gives evidence that the profit and loss sharing system is a core feature of the Islamic endogenous money system in the fractional reserve requirement system. Other evidence reveals that the development of the Islamic financial system can minimize the existence of exogenous money in a fiat monetary system. By these results, this study argues that Islamic endogenous money system can be developed in fiat and fractional reserve banking systems through the profit and loss sharing systems.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"25 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-08-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84638708","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
As a Malaysian Halal Food Standard, MS1500 is established to strengthen Malaysian role in the global halal market. This study aims to identify the factors affecting the implementation of MS1500, the positive impact of this implementation and the relationship between the implementation and its impact. Food and Beverages Industry in Malaysia which already got Halal Certificate and Halal Logo was chosen as scope of population. This study applied Covariance-Based Structural-Equation-Modelling (CB-SEM) method with 212 sample companies. The results showed that Perception-On-Implementation, Halal-Control-System-Activity and Owner-Management-Employee-Limitation are the factors affecting the Implementation of MS1500. It is also found four Positive Impact of Implementation of this MS: Trade & Free Movement, Innovation, Clean & Save Production-Process and Consumer & Corporate Image. Additionally, this study discovered that the better the implementation of MS 1500, the higher the positive impact that can be accomplished by the industry. It is also found that in Malaysia, finance and regulation were not the factors that cause the limitation on implementation of Halal Food Standard. Finding of this study can be used as an input for Malaysian government in planning any suitable programme to promote the implementation of this standard. Additionally, the extent of the positive impacts of this implementation for the industry is expected to be able to encourage all food industry in Malaysia to apply and fully implement this MS1500 in their daily operations.
{"title":"IMPLEMENTATION AND IMPACT OF HALAL FOOD STANDARD: AN EMPIRICAL STUDY IN MALAYSIA","authors":"I. Jaswir, D. Sari, M. Daud","doi":"10.21098/jimf.v7i3.1302","DOIUrl":"https://doi.org/10.21098/jimf.v7i3.1302","url":null,"abstract":"As a Malaysian Halal Food Standard, MS1500 is established to strengthen Malaysian role in the global halal market. This study aims to identify the factors affecting the implementation of MS1500, the positive impact of this implementation and the relationship between the implementation and its impact. Food and Beverages Industry in Malaysia which already got Halal Certificate and Halal Logo was chosen as scope of population. This study applied Covariance-Based Structural-Equation-Modelling (CB-SEM) method with 212 sample companies. The results showed that Perception-On-Implementation, Halal-Control-System-Activity and Owner-Management-Employee-Limitation are the factors affecting the Implementation of MS1500. It is also found four Positive Impact of Implementation of this MS: Trade & Free Movement, Innovation, Clean & Save Production-Process and Consumer & Corporate Image. Additionally, this study discovered that the better the implementation of MS 1500, the higher the positive impact that can be accomplished by the industry. It is also found that in Malaysia, finance and regulation were not the factors that cause the limitation on implementation of Halal Food Standard. Finding of this study can be used as an input for Malaysian government in planning any suitable programme to promote the implementation of this standard. Additionally, the extent of the positive impacts of this implementation for the industry is expected to be able to encourage all food industry in Malaysia to apply and fully implement this MS1500 in their daily operations.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"14 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-08-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90899376","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper presents a Bayesian Game model for a profit-and-loss sharing (PLS) contract. We develop our model into two parts, namely the model for non-social bank and the model for social bank. We propose the model to reduce adverse selection problem in offering a PLS contract. The Bayesian game starts with an incomplete information. Islamic banks do not know exactly what type of agent is applying for a PLS contract, efficient or non-efficient, the information of the bank is incomplete. In Bayesian game, we assume that the Islamic Bank assigns the agent type with a prior probability. Determination of the profit-sharing ratio of the contract will be discussed. We look for the Bayesian Nash equilibrium of the game in our model which is considered a solution. We show that the bank offers an interesting but risky contract to the agent if the bank assigns that the agent is efficient with a high probability, otherwise the bank offers a less risky contract to the agent if the bank assigns that the agent is a non-efficient agent with high probability. The results can be considered by Islamic banks to reduce the adverse selection problem in PLS contract.
{"title":"A BAYESIAN GAME FOR A PROFIT AND LOSS SHARING CONTRACT","authors":"Djaffar Lessy, Marc J. Diener, F. Diener","doi":"10.21098/jimf.v7i3.1367","DOIUrl":"https://doi.org/10.21098/jimf.v7i3.1367","url":null,"abstract":"This paper presents a Bayesian Game model for a profit-and-loss sharing (PLS) contract. We develop our model into two parts, namely the model for non-social bank and the model for social bank. We propose the model to reduce adverse selection problem in offering a PLS contract. The Bayesian game starts with an incomplete information. Islamic banks do not know exactly what type of agent is applying for a PLS contract, efficient or non-efficient, the information of the bank is incomplete. In Bayesian game, we assume that the Islamic Bank assigns the agent type with a prior probability. Determination of the profit-sharing ratio of the contract will be discussed. We look for the Bayesian Nash equilibrium of the game in our model which is considered a solution. We show that the bank offers an interesting but risky contract to the agent if the bank assigns that the agent is efficient with a high probability, otherwise the bank offers a less risky contract to the agent if the bank assigns that the agent is a non-efficient agent with high probability. The results can be considered by Islamic banks to reduce the adverse selection problem in PLS contract.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"21 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-08-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"91239838","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study applies the Banker, Charnes and Cooper (BCC) model as a basic approach to the data envelopment analysis used to measure the level of productivity of 24 Islamic banks in four ASEAN countries (Indonesia, Malaysia, Brunei Darussalam and Thailand) over the 2010-2019 period. The Malmquist index was also employed, which is intended to accommodate improvements in efficiency, together with advancementsin technology. According to the Malmquist index scores on total factor productivity (TFP) change, 17 of the 24 Islamic banks (or 70.8 percent) achieved an improvement in productivity over the research period, with Thailand recording the highest productivity level increase. Overall, the most productive Islamic bank was Affin Islamic Bank Berhad. Finally, it was observed that there was a productivity growth in the last two years of the period, namely 2017-2018 and 2018-2019. The productivity change was driven more by efficiency than by technology, implying that Islamic banks in ASEAN countries must improve this aspect.
本研究将Banker, Charnes和Cooper (BCC)模型作为数据包膜分析的基本方法，用于测量2010-2019年期间四个东盟国家(印度尼西亚，马来西亚，文莱达鲁萨兰国和泰国)的24家伊斯兰银行的生产率水平。还采用了Malmquist指数，该指数旨在适应效率的提高以及技术的进步。根据Malmquist关于全要素生产率(TFP)变化的指数得分，24家伊斯兰银行中有17家(70.8%)在研究期间实现了生产率的提高，其中泰国的生产率提高幅度最大。总体而言，最具生产力的伊斯兰银行是Affin Islamic bank Berhad。最后，我们观察到，在这一时期的最后两年，即2017-2018年和2018-2019年，生产率出现了增长。生产率的变化更多地是由效率而不是技术驱动的，这意味着东盟国家的伊斯兰银行必须改善这方面的状况。
{"title":"ADVANCEMENT AND SETBACK IN ISLAMIC BANKING PRODUCTIVITY IN ASEAN: DO TECHNOLOGICAL CHANGES MATTER?","authors":"A. Rusydiana, Aisyah Assalafiyah","doi":"10.21098/jimf.v7i3.1322","DOIUrl":"https://doi.org/10.21098/jimf.v7i3.1322","url":null,"abstract":"This study applies the Banker, Charnes and Cooper (BCC) model as a basic approach to the data envelopment analysis used to measure the level of productivity of 24 Islamic banks in four ASEAN countries (Indonesia, Malaysia, Brunei Darussalam and Thailand) over the 2010-2019 period. The Malmquist index was also employed, which is intended to accommodate improvements in efficiency, together with advancementsin technology. According to the Malmquist index scores on total factor productivity (TFP) change, 17 of the 24 Islamic banks (or 70.8 percent) achieved an improvement in productivity over the research period, with Thailand recording the highest productivity level increase. Overall, the most productive Islamic bank was Affin Islamic Bank Berhad. Finally, it was observed that there was a productivity growth in the last two years of the period, namely 2017-2018 and 2018-2019. The productivity change was driven more by efficiency than by technology, implying that Islamic banks in ASEAN countries must improve this aspect.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"2 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-08-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88534955","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the market discipline of Islamic banks, as manifested by the responses of depositors with regard to their deposits and profit-sharing ratio to the fundamentals of the banks in the case of Indonesia. We analyse the supply and demand function of deposits using panel data from 10 Islamic banks from 2010 Q1 to 2019 Q4. We empirically find that market discipline in Indonesian Islamic banks is relatively weak, and conjecture that this is for two reasons. First, religious depositors have driven the unusual behaviour of Islamic banks, as we find that they stay with the same bank, even if it has poor fundamental conditions. Second, the profit and loss sharing mechanism means that Islamic bank depositors do not have great flexibility in demanding a higher rate relevant to the risk they must bear. This is because depositors' actual return is set to be consistent with the actual profit obtained from the banks' lending activities. Our results lead to the call for policymakers to effectively monitor the fundamental conditions of Islamic banks and to collaborate with agencies and organisations that promote Islamic bank development in Indonesia.
{"title":"ISLAMIC BANKING MARKET DISCIPLINE IN INDONESIA","authors":"Joko Suliyono, T. Risfandy","doi":"10.21098/jimf.v7i3.1376","DOIUrl":"https://doi.org/10.21098/jimf.v7i3.1376","url":null,"abstract":"This paper examines the market discipline of Islamic banks, as manifested by the responses of depositors with regard to their deposits and profit-sharing ratio to the fundamentals of the banks in the case of Indonesia. We analyse the supply and demand function of deposits using panel data from 10 Islamic banks from 2010 Q1 to 2019 Q4. We empirically find that market discipline in Indonesian Islamic banks is relatively weak, and conjecture that this is for two reasons. First, religious depositors have driven the unusual behaviour of Islamic banks, as we find that they stay with the same bank, even if it has poor fundamental conditions. Second, the profit and loss sharing mechanism means that Islamic bank depositors do not have great flexibility in demanding a higher rate relevant to the risk they must bear. This is because depositors' actual return is set to be consistent with the actual profit obtained from the banks' lending activities. Our results lead to the call for policymakers to effectively monitor the fundamental conditions of Islamic banks and to collaborate with agencies and organisations that promote Islamic bank development in Indonesia.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"29 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-08-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79314038","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In its early history, monetary policy focused on numerous objectives, including stable growth, full employment, stable exchange rates and price stability. In the 1990s, many countries shifted their monetary policy framework from monetary aggregate/interest rate targeting to inflation targeting, in which inflation was regarded as the primary target of monetary policy, and interest rates the primary tool for achieving target inflation. Inflation targeting has diverted the focus of central banks from growth and employment to price stability. Unfortunately, there is considerable evidence which shows that inflation targeting frameworks are unable to control inflation in the way central banks want, and in fact lead to a greater departure from optimal growth and employment, the two key targets of sustainable development goals (SDGs). There is also evidence suggesting a strong association between inflation targeting and the move away from several other SDGs. Employing a systematic review of the related literature and Granger causality tests applied to data from various countries, this paper shows that inflation targeting fails to control inflation and has several undesirable impacts on a wide range of socioeconomic indicators. It is argued that the zero-interest regime is the optimal regime with respect to the impact on socioeconomic indicators, and also supports the interest free economy advocated by Islam.
{"title":"SAY NO TO INFLATION TARGETING: A CALL FOR THE ADAPTATION OF A ZERO-INTEREST REGIME","authors":"A. Rehman","doi":"10.21098/jimf.v7i3.1366","DOIUrl":"https://doi.org/10.21098/jimf.v7i3.1366","url":null,"abstract":"In its early history, monetary policy focused on numerous objectives, including stable growth, full employment, stable exchange rates and price stability. In the 1990s, many countries shifted their monetary policy framework from monetary aggregate/interest rate targeting to inflation targeting, in which inflation was regarded as the primary target of monetary policy, and interest rates the primary tool for achieving target inflation. Inflation targeting has diverted the focus of central banks from growth and employment to price stability. Unfortunately, there is considerable evidence which shows that inflation targeting frameworks are unable to control inflation in the way central banks want, and in fact lead to a greater departure from optimal growth and employment, the two key targets of sustainable development goals (SDGs). There is also evidence suggesting a strong association between inflation targeting and the move away from several other SDGs. Employing a systematic review of the related literature and Granger causality tests applied to data from various countries, this paper shows that inflation targeting fails to control inflation and has several undesirable impacts on a wide range of socioeconomic indicators. It is argued that the zero-interest regime is the optimal regime with respect to the impact on socioeconomic indicators, and also supports the interest free economy advocated by Islam.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"30 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-08-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82339185","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study argues that the effect of Islamic banking development on financial inclusion is enhanced when there exist better quality institutions. A cross section dependency test, cointegration test, causality test, and system GMM (generalized method of moments) are applied to achieve this objective. Employing panel data from 30 Organisation of Islamic Cooperation (OIC) member countries over the period 2013-2018, the analysis suggests that Islamic banking promotes financial inclusion. Furthermore, it documents evidence which suggests negative and significant coefficients of the interaction between Islamic banking development and institutional quality. This means that Islamic banking development works well in promoting financial inclusion in countries with low institutional quality.
{"title":"ISLAMIC BANKING DEVELOPMENT AND FINANCIAL INCLUSION IN OIC MEMBER COUNTRIES: THE MODERATING ROLE OF INSTITUTIONS","authors":"Kabiru Kamalu, W. Ibrahim","doi":"10.21098/jimf.v7i3.1364","DOIUrl":"https://doi.org/10.21098/jimf.v7i3.1364","url":null,"abstract":"This study argues that the effect of Islamic banking development on financial inclusion is enhanced when there exist better quality institutions. A cross section dependency test, cointegration test, causality test, and system GMM (generalized method of moments) are applied to achieve this objective. Employing panel data from 30 Organisation of Islamic Cooperation (OIC) member countries over the period 2013-2018, the analysis suggests that Islamic banking promotes financial inclusion. Furthermore, it documents evidence which suggests negative and significant coefficients of the interaction between Islamic banking development and institutional quality. This means that Islamic banking development works well in promoting financial inclusion in countries with low institutional quality. ","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"58 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-08-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80237642","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The challenges facing the Islamic banking and finance industry include, inter alia, resolving the issue of ‘form over substance’, adopting value-based social and ethical finance, and reinforcing public confidence that its business and services conform to the principles of Shari’ah in both letter and spirit. These challenges can be faced only if Islamic finance is based on the money and monetary perspective of Islamic economics. An important aspect for discussion in this context is the issue of money creation. This paper is based on an analysis of the literature on conventional and Islamic economics and Islamic finance. It comprises observational and narrative research mainly because monetary policy from an Islamic perspective has not been implemented in any jurisdiction in the modern world. Its objective is thus to suggest how monetary policy might evolve from the perspective of Islamic law of contracts. It discusses an economic model in which a new theory of monetary economics could become a basis for evolving Islamic finance in its value-based perspective. It also discusses monetary economics and monetary policy from an Islamic perspective in the context of contemporary Muslim economies. The Islamic financial system must be based on the Islamic system of money, monetary economics and exchange principles. Hence, economists and policymakers may first focus on evolving monetary economics and policy from an Islamic perspective, to serve as a basis for structural reforms.
{"title":"EVOLVING MONETARY ECONOMICS IN ISLAMIC PERSPECTIVE","authors":"M. Ayub, M. Khan","doi":"10.21098/JIMF.V7I2.1372","DOIUrl":"https://doi.org/10.21098/JIMF.V7I2.1372","url":null,"abstract":"The challenges facing the Islamic banking and finance industry include, inter alia, resolving the issue of ‘form over substance’, adopting value-based social and ethical finance, and reinforcing public confidence that its business and services conform to the principles of Shari’ah in both letter and spirit. These challenges can be faced only if Islamic finance is based on the money and monetary perspective of Islamic economics. An important aspect for discussion in this context is the issue of money creation. This paper is based on an analysis of the literature on conventional and Islamic economics and Islamic finance. It comprises observational and narrative research mainly because monetary policy from an Islamic perspective has not been implemented in any jurisdiction in the modern world. Its objective is thus to suggest how monetary policy might evolve from the perspective of Islamic law of contracts. It discusses an economic model in which a new theory of monetary economics could become a basis for evolving Islamic finance in its value-based perspective. It also discusses monetary economics and monetary policy from an Islamic perspective in the context of contemporary Muslim economies. The Islamic financial system must be based on the Islamic system of money, monetary economics and exchange principles. Hence, economists and policymakers may first focus on evolving monetary economics and policy from an Islamic perspective, to serve as a basis for structural reforms.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"50 1","pages":"317-340"},"PeriodicalIF":0.0,"publicationDate":"2021-04-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85892476","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This research aims to explore the model of interconnection between the Islamic Bank and Zakat Management Organisation, as the two represent the implementation of Islamic economics in Indonesia. Using the Group Method of Data Handling (GMHD) tool to discern the strength of the relationship between the two representative entities, Bank Muamalat Indonesia and Baitulmaal Muamalat, it also followed the hyper postphenomenology approach to sharpen the result by obtaining essential confirmation from key informants with respect to determining the ideal model. The result showed a robust and reciprocal correlation between the account variables and its influence was statistically significant. Furthermore, it was interpreted as an effort to improve the image of the banking system while providing added value, forms of corporate responsibility and a spirit of service to customers. The results led to convergence on the formulation of the ideal model, which depends on the moral intentions of the owners of capital, government alignment and the literacy of directors, control needs and public awareness. Thus, it bridges the findings of previous studies and recommends a model that inseparable moral economic instruments.
{"title":"SOCIAL-COMMERCIAL INTERCONNECTION: LESSONS FROM BANK MUAMALAT INDONESIA & BAITULMAAL MUAMALAT AFFILIATION","authors":"Ai Nur Bayinah, M. Said, M. Suparta","doi":"10.21098/JIMF.V7I2.1339","DOIUrl":"https://doi.org/10.21098/JIMF.V7I2.1339","url":null,"abstract":"This research aims to explore the model of interconnection between the Islamic Bank and Zakat Management Organisation, as the two represent the implementation of Islamic economics in Indonesia. Using the Group Method of Data Handling (GMHD) tool to discern the strength of the relationship between the two representative entities, Bank Muamalat Indonesia and Baitulmaal Muamalat, it also followed the hyper postphenomenology approach to sharpen the result by obtaining essential confirmation from key informants with respect to determining the ideal model. The result showed a robust and reciprocal correlation between the account variables and its influence was statistically significant. Furthermore, it was interpreted as an effort to improve the image of the banking system while providing added value, forms of corporate responsibility and a spirit of service to customers. The results led to convergence on the formulation of the ideal model, which depends on the moral intentions of the owners of capital, government alignment and the literacy of directors, control needs and public awareness. Thus, it bridges the findings of previous studies and recommends a model that inseparable moral economic instruments.","PeriodicalId":31622,"journal":{"name":"Journal of Islamic Monetary Economics and Finance","volume":"160 1","pages":"341-368"},"PeriodicalIF":0.0,"publicationDate":"2021-04-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76625169","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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