Standard economics and policy prescriptions adopt the modernization thesis as its base, which says that developing countries can modernize by undergoing secularization and westernization. However,
Despite the huge amount of wealth in the hands of Muslims, most countries with a Muslim majority population fall in the category of developing nations.
Due to the global financial crisis of 2008, the economic performance of OIC member states was adversely affected in 2009 in terms of decelerating economic growth and deteriorating current account balances. However, in the post-crisis period, the OIC member states have recovered rapidly. In the medium-term scenario (2011–2015), the economic recovery in OIC states is projected to be robust but real GDP growth and is likely to remain below the level achieved in the pre-crisis period (2000–2007).
The last few decades have seen a phenomenal growth of the emerging discipline of Islamic Economics and Finance. In this paper I trace the origins and birth of this nascent science, examining the various factors that gave impetus to its emergence and development. I contrast the different characterisations of the discipline as it has developed within the broader sociopolitical context and the reasons thereof.
The purpose of monetary policy is to affect the economic activity through various channels of monetary transmission. One of the transmission channels is via Islamic banking through financing to various sectors of the economy. The change of monetary instruments certainly affects economic sectors differently. Given the dual monetary system (Islamic and conventional) in Indonesia, it is interesting to see how those rates influence each of the economic sectors.
Basel Accords promote Value at Risk (VaR) – which is the most used method – as the preferred one to measure and report market risks of financial institutions. Using VaR usually requires having asset valuation models and identifying their risk factors as model input parameters, allowing thus to stress them and calculate valuations (mark–to–market or mark–to–model). The previous requirements will make VaR calculation – roughly adapted from conventional finance – complicated for Islamic finance as there are not well–known valuation models, and the risk factors may not be easily identified.
This paper examines the relationship between the volume of investment deposits (profit sharing investment accounts–PSIA) and capitalization of Islamic commercial banks in a context of asymmetric information. Unlike current accounts holders, investment accounts holders may support part or all of the losses on assets value, which could be a source of moral hazard among bank managers and shareholders. To test these assumptions, we use the system generalized method of moments (System GMM) on a dynamic panel of 59 Islamic banks observed during the period 2005–2009.
This study aims to determine the stability of Islamic banking as compared with conventional banking in Indonesia. In this case, the level of bank stability is measured individually using an accounting-based bank soundness measurement called the Z-score indicator. Using the parametric statistical t-test, the study shows that the level of stability in Islamic banks versus conventional banks is significantly different. This research uses the sample data of 12 Islamic banks and 71 conventional banks in Indonesia during the period of 2004–2009.
This paper examines the effects of currency and the banking crises on economic downturns in North Africa and GCC countries based on a Financial Stress Index (FSI). The paper identifies episodes of financial turmoil according to FSI values and proposes an analytical framework to assess the impact of financial stress – in particular the effect of Islamic banks distress and conventional banks distress – on the economic downturn.