Abdul Rafay

Causal Relationship between Macroeconomic Variables: Evidence from Developing Economy

Importance of stock market in the economic development of a country cannot be denied, and macroeconomic variables are important indicators that affect stock market of a country. Present study provides a great contribution to understand the association of these variables with stock market. This paper deals with the causal relationship among KSE 100 index and interest rate, exchange rate, consumer price index, imports and exports. For this purpose data of nineteen years has been collected from 1992 to 2010. Techniques of Augmented Dickey-Fuller test, regression analysis and Granger Causality test have been applied to examine the causal relationship of selected macroeconomic variables with KSE 100 index. Results of regression analysis indicate the presence of strong positive relation between IMP and KSEI. Furthermore, interest rate, exchange rate, consumer price index and exports have no relationship with KSE 100 index. Results of Granger Causality test demonstrate that bi-directional relationship exists between interest rate and KSE 100 index. Exchange rate and imports have uni-directional relationship with KSE 100 index and no causal relationship exists between consumer price index, exports and KSE 100 index. Present study provides valuable contribution in knowledge. It is important and attractive not only for investors but also for policy makers.

Uniform framework for Sukuk al-Ijarah – a proposed model for all madhahib

Purpose This paper aims to discuss the urgent need to develop a sound and robust universal framework that would prove helpful in creating uniform acceptability of Islamic financial instruments. Among many problems, a particular problem in developing a uniform global framework for Islamic financial instruments is the existence of different madhahib within Islamic Fiqh. The leading and the most prominent Sunni madhahib that have survived till today are four, the Hanbali, Shafi, Maliki and Hanafi, while the most prominent Shia madhab is the Jafari madhab. Design/methodology/approach The research approach was descriptive and exploratory in nature. Secondary resources were used except for a semi-structured interview with a Shariah scholar with the justification that his knowledge and experience regarding the subject matter may prove helpful. The methodology included a systematic review of already issued Sukuk by various madhahib. Compared to a simple narrative review of a few case studies regarding Sukuk, this methodology has a benefit to provide the reader the power to assess the review and even replicate it. The results of this systematic review are summarized in the form of tables. Findings Ingredients were determined that would help make a truly global Sukuk security, a model acceptable to all madhahib of Islamic Fiqh. These ingredients include rentals, relationship between special purpose vehicle (SPV) and originator, transference to SPV, Sukuk structure, guarantee, liquidity, listing and tradability, convertibility, subordination and post-Ijarah price. Moreover, specific steps were also analyzed that must be taken to issue such type of Sukuk al-Ijarah. Research limitations/implications This study is focused only on a type of Islamic financial instrument, i.e. Sukuk whose underlying was Ijarah-based contracts. This is due to lesser global acceptability for other Islamic financial instruments including other forms of Sukuk. Based on the nature of study, purposive/judgmental sampling was done. The sample population was 40 Sukuk (nine each from Hanafi, Shafi and Maliki madhahib, five each from Hanbali and Jafari madhahib and three from non-Muslim zones). Some Sukuk were dropped due to non-availability of enough data and to keep some semblance between the impact of the madhab on financial world and the data. Practical implications For practitioners and regulators, on the basis of the given recommendations, it would be possible to create a standardized product, acceptable for all madhahib of Islamic Fiqh. This standardization will lead to a unified platform that can attract a larger investor pool as well as better integration. For practical purposes, the proposed model of Sukuk al-Ijarah can be replicated for other Islamic financial instruments for global acceptability. Social implications For an Islamic society, the expansion of Islamic economic system depends principally on unity. So integration is critical and also essential for the success of any Islamic financial instrument. When the society will move away from Riba and its associated evil, the society will move in a positive direction, while still making profits. The proposed model may also be utilized for socially responsible initiatives like protection of natural resources, advancement of renewable energy, economic development and rehabilitation to name a few. Originality/value Previous studies were silent on the development of comprehensive frameworks acceptable to all madhahib of Islamic Fiqh. This research study is the first study of its kind and is the first step toward integration, as it would try to suggest a global framework for Sukuk al-Ijarah that can be acceptable by the followers of any madhab of Islamic Fiqh.

Shift Towards Next Generation Networks NGNs for Sustainability: Evidence from an Emerging Economy

This paper examined the shift towards the Next Generation Networks NGNs like 4G from 2G and the role of technology for sustainable development in the telecommunication sector of Pakistan. WARID was one of the four cellular companies of Pakistan. All the big players in the market had auctioned for 3G/4G licenses but WARID remained distant from the process of spectrum auction. The paper investigated issues and decisions involved when WARID decided to launch 4G/LTE nationwide due to its technology neutral license. It was also studied that how this decision was necessary and beneficial for all internal and external stakeholders of the organization in terms of sustainability, customer satisfaction, technological advancements etc. The study used secondary data as well as unstructured interviews where interaction with the management/employees of the organization was deliberated to stimulate discussions and opinions.

Shariah Supervisory Board Report (SSBR) in Islamic banks: An experimental study of investors’ perception and behavior

Purpose The primary purpose of this study is to determine the impact of information ordering in Shariah Supervisory Board Report (SSBR) on investors’ behavior and perception about the performance of Islamic bank in terms of Shariah compliance and other conventional parameters. Design/methodology/approach The study used the belief adjustment model to evaluate the desired effects of ordering positive and negative information (if any) in SSBR of an Islamic bank. This study extends the previous literature on information ordering as a pioneer experimental study in emerging economies. Findings Evidence shows that investors and technical users of performance reports consider SSBR as significant for financial and investment decisions from the Islamic perspective. The results indicate that the primacy effect does exist and is statistically significant. Practical implications The SSBR provides the management with an excellent opportunity to communicate and convince the investors about Shariah compliance features of an Islamic bank. Additionally, it also highlights the functional use of impression management to manipulate the investor’ behavior and perception. Originality/value For the first time, this study specifically investigates the effect of conscious information ordering in SSBR of Islamic banks on investors perceptions and behaviors.

The primacy of innovation in strategic financial management-understanding the impact of innovation and performance on capital structure

This paper intends to determine the impact of pursuing a strategy for innovation on capital structure decisions and performance. It builds on the R&D management research which is country-focused and utilizes an international sample. This is significant when considering the sample of the study. While past studies have focused on single country samples, this study utilizes the most innovative firms in the world, thereby raising a new aspect in the innovation theory. Interestingly, this study finds that directionality of leverage, R&D investment and performance relationships observed appear to be contrary to existing research. This is attributed to the cross-country characteristics within the sample. This study differs from existing research by indicating variations in patterns of advertisement intensity and R&D investment across countries, as well as variations in patterns of innovation scores and business sophistication. Future research may explore the country characteristics associated with firms that pursue a strategy for innovation.

Structural Mix of Credit Portfolios in Islamic Banking System: Evidence from a South Asian Economy

Abstract Purpose Inquiring into the role of Islamic and conventional banks regarding the core responsibility of lending is an established phenomenon. This chapter is based on key findings regarding dynamic changes in the structural mix of credit portfolios in Islamic banks and conventional banks of Pakistan. Methodology/approach The nature of the study is exploratory; the sample consists of 5 Islamic banks and 20 conventional banks of Pakistan comparatively evaluated for the time frame of 2008–2014. Findings Our findings show that for Islamic banks, there is an increasing trend in the credit portfolios as a proportion to assets as well as to equity, whereas in case of conventional banks the findings are opposite. The results further prove a positive and negative growth of credit portfolios as proportional to assets and equity in case of Islamic and conventional banks respectively. It is also observed that credit portfolios of Islamic banks are growing with higher degree as a proportion to equity as compared to proportion to assets. On the other hand, conventional banks show higher degree of decline of credit portfolios as a proportion to equity as compared to assets. Originality/value These findings also show that primary stakeholders in Islamic banks are more risk seekers thus more inclined towards risky investments than ordinary credits.

Exploring the Issues and New Insights of Global Branding and Strategic Corporate Social Responsibility (CSR): A Case of Pakistani Organizations

The purpose of this paper is to demonstrate the concept of global branding, what it stands for being socially responsible, and what its link with leverage is. It also highlights the range of social responsibility issues with reference to Pakistani brands and explores the relevant issues and deep insights from strategic corporate social responsibility (CSR) literature and global branding literature in the context of Pakistani organizations. It also suggests future implications for theorists, practitioners and academicians with reference to effective strategic CSR and global branding. This paper embarks on the intellectual journey with the concept of CSR and global branding in local context of Pakistan, while reviewing the relevant literature and addressing the issue of complexity in Pakistani context. This study gives insights about the issue of complexity at the time of strategically integrating CSR into global band and sorts out three strands of complexity namely, 1) issue complexity, 2) organizational complexity, and 3) communication complexity in the context of Pakistan. The limitation of this paper is due to the limited academic literature, giving insights about how global organizations in corporate CSR initiatives for the development of brands, and insights dealing with the issues needed to be taken into account at the time of integrating into branding strategies. This paper gives fresh enquiry to the issue complexity, organizational complexity and communication complexity with reference to global brands and CSR activities in the context of Pakistan which has been applied so far.