Abul Hassan

Risk management practices of Islamic banks of Brunei Darussalam

Purpose - The objective of this paper is to assess the degree to which Islamic banks in Brunei Darussalam use risk management practices (RMPs) and techniques in dealing with different types of risk. Design/methodology/approach - The researcher developed a questionnaire which covers six aspects in the first part: understanding risk and risk management, risk assessment and analysis (RAA), risk identification (RI), risk monitoring, credit risk analysis and RMPs. The second part consists of two questions based on an ordinal scale dealing with two topics: methods of RI and risk facing the sample banks. Findings - This study found that that the three most important types of risk that the Islamic banks in Brunei Darussalam facing are foreign-exchange risk, followed by credit risk and then operating risk. It also found that the Islamic banks are somewhat reasonably efficient in managing risk where RI and RAA are the most influencing variables in RMPs. Research limitations/implications - The papers findings are limited to the RMPs of Islamic banks in Brunei Darussalam. Originality/value - The paper explores the RMPs of the Islamic banks in Brunei Darussalam. The results can be used as a valuable feed back for improvement of RMPs in the Islamic banks in Brunei and will be of value to those people who are interested in the Islamic banking system.

Exploring corporate social responsibility disclosure: the case of Islamic banks

Purpose - The purpose of this paper is to explore whether any discrepancy exists between the corporate social activities disclosed in the annual reports of Islamic banks and the corporate social responsibility (CSR) disclosure index which has been developed based on the Islamic business ethics framework. Design/methodology/approach - This paper reports on a survey of annual reports of seven Islamic banks using the method of content analysis to measure the volume of CSR disclosure. Findings - The results show the overall mean CSR disclosure index of one Islamic bank out of seven to be above average and the issues of CSR are not of major concern for most Islamic banks. Research limitations/implications - CSR disclosure in the Islamic banks is experimental and could be explored in greater depth in future studies. Practical implications - The findings have important implications for academics and researchers, as they pave the ways for further investigation. The results also have important implication for Accounting and Auditing Organisation for Islamic Financial Institutions in developing a CSR reporting standard if Islamic banks are to enhance their image and reputation globally, as well as to remain competitive. Originality/value - The paper contributes to the growing debate on CSR in ethical perspective and key underlying issues associated with the emergence of new disclosure practices for Islamic financial institutions. Through this paper, new visibilities explored, and competing dilemmas opened up.

Corporate social responsibility of Islamic financial institutions and businesses: Optimizing charity value

Purpose - As per Islamic business ethics, corporate social responsibility (CSR) of the business organizations and Islamic financial institutions (IFIs) should be seen as a benefit rather than a cost. The intense commitment of Islam to justice and brotherhood demands that business organization should take care of some of the needs of the community, Therefore, there is needed that the IFIs should create a congenial atmosphere of strategic linkage between Islamic charity organizations and business companies. The main purpose of this paper is to study the current practices of CSR of the business organizations as well as IFIs and to explore further scope of optimizing charity value. Design/methodology/approach - The study evaluates the CSR of the businesses and IFIs based on secondary sources information and develops a model which creates a strategic link between Islamic charity organizations and business companies. Findings - A collective approach of businesses, IFIs and Originality/value - In order to fulfill the role of CSR and to optimize charity value, the businesses should build up non-profit infrastructure to achieve their objectives more cost-effectively. On the other hand, the Islamic charities can also get benefits by using the commercial infrastructure of the business organizations and to make contributions more effectively in the social sector. There is no inherent contradiction between improving competitive context of business and making a sincere commitment to bettering society.

Islamic ethical responsibilities for business and sustainable development

Islamic doctrine provides the worldview, which influences the whole human personality, behaviour, life-style, tastes and preferences and attitudes towards human beings, resources and environment etc. Therefore sustainabledevelopment may be viewed as part of the interwoven framework of Islamic business ethics. This paper discusses the concept of sustainable development in the context of the determination on economic viability, social equality, and environmental development. Efforts are also made to build-up the concept of sustainable development from the Islamic perspective. Apart from these, this paper addresses the problem of whether sustainable development should be viewed as Islamic ethical responsibility for business? To what extent should business be involved in the sustainable development activities? Attributes of the various levels of behaviour of organisation are also examined in the paper.

After the credit crunch: the future of Shari’ah compliant sustainable investing

Purpose - The purpose of this paper is to examine the role of Shari’ah compliant sustainable investing in the light of the credit crisis and catastrophic climate change. Design/methodology/approach - The paper discusses that the climate change, natural resource shortages, fuel crisis and global financial crisis, etc. will not go away just because there is a recession. In this regard, Shari’ah compliant finance has a broader responsibility to consider societal goals and should be preparing for the post-credit crunch world. The paper evaluates the performance of Shari’ah compliant sustainable funds using the traditional measures of performance in relation to risk-adjusted benchmarks to see if there is any ethical effect. Findings - The paper advocates that preventing future market meltdowns and avoiding catastrophic climate change requires a new era of longterism in Shari’ah compliant sustainable investing. The study assesses the performance of the Shari’ah compliant sustainable investing. The result shows that Shari’ah compliant funds outperformed the conventional benchmark and therefore, the challenge for Shari’ah compliant sustainable investing is not to become like conventional investing but, rather, to replace. Research limitations/implications - Shari’ah compliant sustainable finance is a recent phenomena and therefore, rigorous analytical predication of Shari’ah compliant sustainable investing variables are at present not possible using evolutionary and complex system approaches; however, such system can be fruitfully studied in future through simulation methods and certain types of econometric modeling when the long-term data will be made available. Originality/value - As the credit crunch has evolved into a full-blown economic crisis, many have turned to the Shari’ah compliant finance to provide a route map out of recession. With an increasing number of conventional banks and corporations struggling to find funds to support their businesses, Shari’ah compliant financial institutions represent a potential solution to bridge the liquidity gap in the global markets.

Rise and fall of knowledge power: an in‐depth investigation

Purpose - Muslims as an Design/methodology/approach - An in-depth analysis was made based on the information from secondary sources. Findings - In order to restore the flagging knowledge power, six factors have been identified and analyzed in the light of presenting the scope for initiative to power the knowledge economy in the Muslim world. Originality/value - The paper shows that the concept of knowledge power not only identifies circumstances in which the Muslim world can restore knowledge economy well but also in which it should come up with a realistic action plan in the area of higher education and human resources development.

Financial Sectors Reform and Economic Growth in Morocco: An Empirical Analysis

This study analyses the impact of financial sector reforms from the early 1990s on promoting economic growth in Morocco. To derive feasible policy implications, we estimate not only pooled regressions, but also variance decompositions of GDP growth rates to examine what proxy measures of financial development are most important in economic growth over time and how much they contribute to economic growth across geographic regions and income groups. We find strong linkages between financial development and economic growth in high-income OECD countries, but not in East Asia and Pacific, South Asian and Sub-Saharan African regions, in the short run. Therefore, it may be necessary for Morocco to make different policy efforts to achieve steady economic growth in the long run. JEL Classification: G21, O16, C33

Sterilisation and Monetary Control by the GCC Member Countries

The prevailing dollar peg of the Gulf Cooperation Council (GCC) countries and the absence of any significant current and capital account restrictions led some to believe that these countries have lost monetary independence. However, the paper presents evidence that interest rates of the GCC countries did not converge to the interest rates of the US implying that the assets of the GCC countries are not perfect substitutes to the US assets. This imperfect asset substitutability has allowed the GCC countries to manoeuvre their monetary policies and the central banks of the GCC countries have had some control over their money growth rates by sterilising the changes in international reserves. Results indicate that the monetary authorities of these countries used domestic credit policy to attain some domestic policy objective while engaging in sterilised foreign exchange intervention. This result implies that the proposed GCC central bank should be able to maintain the monetary independence as a group and can reap the benefit of monetary efficiency of the proposed Gulf Monetary Union.

Coskewness in Islamic, Socially Responsible and Conventional Mutual Funds: An Asset Pricing Test

Intuition suggests that constraint investment strategies will result in losses due to a limited portfolio allocation. Two types of constrained assets have been particularly growing over the last few decades: Islamic Mutual Funds and Socially Responsible Mutual Funds. Although research regarding the performance of these types of constrained investments has been performed, little attention has been given to their relative performance. In this paper we assess, and rank, the relative performance of Islamic, Socially Responsible, and conventional mutual funds from 11 Islamic markets and the United States by expanding the traditional mean-variance frontier to account for higher moments; constrained assets tend to be smaller and skewed in nature, thus violating the normality assumption under the mean-variance frontier. We find that controlling for skewness risk, by using an unconditional coskewness measure, has the power to improve asset pricing tests by expanding the mean-variance frontier specification. We find supporting evidence suggesting that Islamic mutual funds perform better than Socially Responsible Investing, which in turn outperform conventional mutual funds.

An Islamic microfinance business model in Bangladesh: Its role in alleviation of poverty and socio-economic well-being of women

Purpose - The main purpose of this study is two-fold: first, it aims to confirm or disapprove a positive relationship between Islamic microfinance and the socio-economic welfare of women and, second, it aims to explore the perspective in which Islamic microfinance packages function in Bangladesh and the system of their performance can be enhanced. Design/methodology/approach - Based on structured questionnaires’ survey, this study addressed two research questions: What should be anticipated from the programmes of Islamic microfinance on the well-being of beneficiaries and under what circumstances would such programmes be more useful? Findings - The main result of this study shows that growth in women’s revenue and resources played an important role in improving women’s financial freedom and sense of self-possession. A significant policy endorsement in this study is that it is essential to redirect Islamic microfinance to spread in the developmental activities which will drive to contribute towards the well-being of the recipients in the long run. Originality/value - Examination of the Rural Development Scheme of Islami Bank Bangladesh is undertaken, aiming to critically review their Islamic microfinance programme in the matter of fighting poverty in Bangladesh and to suggest to diversify the Islamic microfinance scheme to spread in the developmental activities which will drive to contribute towards the well-being of the recipients in the long run.