Sheila Nu Nu Htay

Conceptual framework for Shari'ah corporate governance with special focus on Islamic capital market in Malaysia

Corporate governance issue emerged with the birth of the corporations. Similarly, the need for Shari’ah corporate governance is given attention by the regulators, industrial players, Shari’ah advisors and researchers with the bloom of Islamic finance. There are limited literature and Shari’ah governance guidelines available for Islamic financial institutions. The existing guidelines are general and they not as specific as conventional guidelines. In addition, there is no Shari’ah governance guideline for Islamic capital market in Malaysia. Therefore, this paper aims to propose conceptual framework for Shari’ah corporate governance with special focus on Islamic capital market by integrating the conventional concepts of governance. We believe that the concept of Islamic accountability, independency, competency and transparency should be the basic foundation in developing the conceptual framework for Shari’ah corporate governance.

An analysis of the viability of micro health takaful in Malaysia

Purpose - – This research aims to examine the viability of micro-health takaful in Malaysia. Current practices in the takaful industry in Malaysia reveal that takaful operators (TOs) are keen on offering products that are affordable for middle- to high-income people. However, the concept of takaful is based on mutual help, and, hence, it is believed that TOs should offer products affordable by the poor and lower income people. Design/methodology/approach - – To achieve this objective, the interest of the poor to participate in this product is examined by sending the questionnaire. In addition, TOs were approached to understand why micro-health takaful products have not been offered as yet. The regulator was also interviewed to gauge whether the government is supportive of this scheme. Findings - – From the survey, it was noted that the poor people are interested to participate in such a scheme. However, most of them are only willing to contribute about RM5 per month, while some of the respondents, especially, Research limitations/implications - – Particularly, this study only considers a limited geography in Malaysia to understand the viability of micro-health. On the same note, the current focus of the study is on micro-health takaful in which it has not tapped other potential micro takaful products. Originality/value - – This study is a pioneering effort in understanding the viability of the micro health takaful in Malaysia.

Quantitative Analysis on the Correlation between Risks: Empirical Evidence from Banks in United Kingdom

Financial institutions or banks are faced with several types of risks that are uniquely related to the nature of the industry. Therefore it is a must for banks to have risk mitigation methods in order to maintain its competitiveness and sustainability. For the purpose of this paper, four unique risks related to the banking industry will be discussed, as well as to provide empirical study on the relationship between these risks. These risks are liquidity risk, operational risk, credit risk and market risk. The focus of this study is on ten listed banks in United Kingdom with complete secondary data from the year 2002 to 2011. Liquidity risk is measured by the ratio of total loans to total deposits, operational risk is calculated based on two ratios, i.e. the ratio of operating expenses to total assets and the ratio of non-performing loans to total loans. Credit risk is based on the probability of default based on Altmans z score equation and market risk is calculated based on the standard deviation of quarterly stock returns. The findings show the evidence that there is a relationship between tested risk and it is expected that the findings will be the interest of the bankers to see which risk is the source of other risks.

Is the GCC Islamic Banks' Financial Performance Affected by the 2007 / 2008 Financial Crisis ?

The purpose of this study is to examine the influence of the 2007/2008 financial crisis into financial performance of Islamic banks in the GCC and determine factors that significantly influence financial performance of the Islamic banks during 2005-2010. Data of 23 Islamic banks that completely reported their financial statements during 2005-2010 was extracted from Bankscope database. The relationship between dependent and independent variables was tested using panel data regression analysis. The study found that the financial crisis significantly affected financial performance of Islamic banks in the GCC. The impacts of the crisis were even worse in the two years after the crisis. The study also found equity, short term funding, overhead expenses and GDP per capita as the factors which significantly influenced financial performance of Islamic banks in the GCC during 2005-2010. The study is expected to benefit stakeholders of Islamic banks in the GCC in order to understand the factors that influence Islamic banking financial performance and minimize the impacts of any future financial crises.

Shari"ah and Ethical Issues in the Practice of the Modified Mudharabah Family Takaful Model in Malaysia

Takaful has been known as Shari’ah compliant insurance and it is penetrating not only into the Muslim countries but also into the non-Muslim countries. Among the countries which offer Islamic finance products, Malaysia is well known as one of the leading countries encouraging this industry. Due to the rapid growth of the takaful industry, the prevailing guidelines and regulations might not be adequate to capture the current needs of takaful operations. Thus, the practice of takaful industry has been criticized from the Shari’ah and ethical aspects. It is important to examine these main issues because Shari’ah compliance and ethicality are the distinguishing factors that make takaful different from conventional insurance. We also believe that if these issues are not resolved, the participants and the investors will lose the confidence in the takaful industry and consequently, it will hinder the growth of takaful industry. This paper focuses on the Shari’ah and ethical issues in the modified mudarabah model used in family takaful products. They are related to profit (surplus) sharing practice and the usage of interest free loan. The findings of this paper reveal the existence of unfavorable Shari’ah and ethical issues in the practice of takaful operation in Malaysia. Therefore, we suggest that the regulators, Shari’ah advisors and industrial players should revisit on these issues in order to avoid reputational risk, Shari’ah compliant risk and early termination risk.