Islamic Finance

The structure of Islamic banking is built upon two basic pillars; the abolition of interest and the use of profit and loss sharing mechanism. Today, Islamic banks put effort to keep the first pillar strong whereas the second pillar is abandoned to its fate. Our hypothesis is that one of the basic reasons of the poor performance regarding to profit and loss sharing mechanism is asymmetric information problem. In that regard, the aim of this paper is to develop problem solving approaches lessening the asymmetric information pertaining to profit and loss sharing instruments.

The present study provides new empirical evidence on the impact of economic freedom on Islamic banks’ performance. The empirical analysis focuses on Islamic banks operating in the MENA banking sectors during the period 2000–2008. We find that the larger, more diversified, and better capitalized Islamic banks tend to be relatively more profitable, while credit risk and expense preference behaviour seem to exert negative impact. The findings suggest that greater financial freedom positively influence the profitability of Islamic banks operating in the MENA banking sectors.

This paper studies the factor of competitive conditions of conventional and Islamic banks operating in the same market in the MENA region. We determine the level of competitiveness between the two types of banks by using the PR-H statistic of Panzar and Ross (1987) and the Lerner index. Our estimations show that banking sectors in MENA operate under monopolistic competition. Our results confirm that Islamic banks are significantly more competitive than conventional banks and they express a higher degree of market power.

This study was conducted to compare the financial performance of Islamic and Conventional banks to facilitate depositors, bank managers, shareholders, investors and regulators by providing true picture of financial position of Islamic and Conventional banks in Pakistan. Financial ratios were estimated from annual reports and financial statements i.e. Income statement and Balance sheet for the period of 2006 to 2009.

This paper summarizes main points in the existing Islamic economics literature on the subject of fiscal and monetary policies. It outlines institutional framework for these policies from the Islamic economics perspective. Some fresh points on the nature and role of government in the light of the Shari’ah principles, are also noted. The general goals for macroeconomic policies are discussed along with separate goals for each of the two policies. The argument is capped with a look at practical considerations in the actual working of both the policies.

According to the World Bank, there are over a billion malnourished people worldwide today. A multitude of factors are expected to cause continued food price increases as evidenced by World Bank’s food price index in January 2011, which rose 29% above its level from a year earlier. From Egypt, Indonesia, Bangladesh, and Sudan, to Pakistan–many of the 57 OIC (Organization of Islamic Conference) member countries are facing some of the worst pains of this global food crisis.

Religious belief is a common human characteristic that is largely neglected within mainstream development practice and theory. Religious principles and social teaching however, can positively contribute to poverty alleviation. This paper explores examples of how Islamic principles of charity and finance can strengthen microfinance as a poverty alleviation strategy. It describes two cases study of Baitul Maal Muamalat Indonesia and Baitul Qiradh Baznas in Indonesia. The study shows although they have utilized

We examine the use of Islamic financial instruments in the capital structure of non-financial firms from 16 Islamic countries. Contrary to various bold claims of tremendous growth of Islamic finance over the time, a preliminary analysis reveals relatively low penetration of Islamic financial instruments in the firms’ capital structure mix. This poses a concern on the sustainability of Islamic finance growth. We argue that the Islamic financial instruments are less attractive to some corporations and further research will be undertaken to explore some of the plausible reasons.

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