Zarinah Hamid

A comparative analysis of the performance of conventional and Islamic unit trust companies in Malaysia

Purpose - The purpose of this paper is to investigate the efficiency of selected conventional and Islamic unit trust companies in Malaysia during the period 2002 to 2005. Design/methodology/approach - The paper adopts Data Envelopment Analysis (DEA) to investigate efficiency, as measured by the Malmquist index, which is decomposed into two components: efficiency change and technical change indexes. Findings - The study indicates that technical efficiency is the main contributor to enhancing the efficiency of the Malaysian unit trust industry. In addition, the larger the size of the unit trust companies, the more inefficient the performance. In comparing the efficiency of unit trust companies, the study finds that some of the Islamic unit trust companies perform better than their conventional counterparts. Research limitations/implications - The study is limited to five Islamic unit trust companies. Thus, the findings of this study are indicative, but inconclusive for the unit trust industry as a whole. Practical implications - The results have two important implications for both conventional and Islamic unit trust companies in Malaysia. First, the deterioration of total factor productivity (TFP) in the unit trust industry in Malaysia is due to the deficiency of innovation in technical components. Second, the size of the unit trust companies has an adverse effect on the TFP performance. Originality/value - The contribution of this study is that it analyzes the efficiency of the two types of unit trust industry which are important and relevant for Malaysia. This significance arises from the dual financial system, in which the Islamic unit trust companies operate in parallel with their conventional counterparts. The comparison sheds some light on the performance of the Islamic unit trust companies, whose operations are based on profit-sharing, in contrast to the conventional unit trust companies.

Determining the viability of rental price to benchmark Islamic home financing products: Evidence from Malaysia

Purpose – The purpose of this paper is to analyze the possibility of relying on the rental rate to price Islamic home financing product.Design/methodology/approach – By comparing two models consisting of either rental rate or lending rate (LR) and selected macroeconomic variables that could influence property value, the study focuses on the Malaysian data covering the period from 1990 to 2006. The study adopts several econometric time‐series analysis, such as the autoregressive distributed lag estimates, bi‐variate Granger causality, and multivariate causality based on the vector error‐correction model.Findings – The study finds consistent evidence that the rental price (RP) is a better alternative than the LR to price Islamic home financing product. In particular, the rental rate is found to be resilient to short‐term economic volatility, while in the long run, it is truly reflective of the economic fundamentals.Practical implications – This feature of the RP renders it as a fair pricing mechanism for th...

Concentration of exports and patterns of trade:a time-series evidence of Malaysia

This paper investigates the magnitude of geographic as well as commodity concentration for Malaysia from 1970 to 2003 and how the pattern of trade and instability has changed over time. The instability index is regressed upon a set of explanatory variables including commodity concentration, geographic concentration and share of primary commodity exports. The results indicate that the commodity concentration appears as a significant variable in explaining the export earnings instability. The paper recommends Malaysia takes several measures in order to remain immune from negative effects of instability. They include the continuous effort to stay competitive by maintaining productivity higher than production cost, to diversify as well as broaden its industrial base and constantly find new markets for new products. These measures, in the presence of right macro-economic policies supplemented by increasing foreign direct investment with intra-regional trade paved the way for market-friendly approach backed by a number of liberalization measures.

Using lexical ontology for semi-automatic logical data warehouse design

Data Warehouse has become a very important tool for data analysis but the conversion from Operational Database to Data Warehouse is very complex. This paper presents a new method to design a data warehouse multidimensional model based on supply driven framework. We propose a semi-automatic tool using lexical ontology as the knowledge domain. The tool is able to identify fact and dimensional tables using the knowledge domain. Once fact table is identified, the following step is to generate Data Warehouse multidimensional model with minimal user interaction. The feasibility of the proposed method is demonstrated by a prototype using WordNet as knowledge domain.

The Impact of Subprime Crisis on Asia-Pacific Islamic Stock Markets

The objective of this study is to examine the impact of the U.S. subprime crisis on the long-term and short-term dynamic relationships between selected Asia-Pacific Islamic stock markets and conventional stock markets in the region. The comovements among these stock markets are examined through cointegration tests, and vector error correction model–based Granger causality tests, for the period from February 2006 to December 2010. The study reveals that, after the debut of the U.S. subprime crisis, Asia-Pacific Islamic stock markets increasingly integrated among themselves and with their conventional counterparts. In addition, the conventional markets of the United States and Japan significantly influence the short-run fluctuations of Asia-Pacific Islamic and conventional markets.

Trade and Human Development in OIC Countries: A Panel Data Analysis

This study examines the relationship between trade and the OIC countries’ social developments as measured by the Human Development Index (HDI) using the generalized method of moments (GMM) procedure in a panel data distributed lag model for the years 1980 to 2005, with a five-year increments as well as annual data from 2000 to 2009. It addresses two questions: (i) whether trade has a positive relationship with human development as reflected by longevity, educational attainment and income in the HDI measurement, and (ii) whether trade still has a positive relationship with human development, when the income component of the HDI is excluded. Comparisons are made across OIC countries based on three World Bank Classifications by Income, namely, high income, middle income and low income countries. Trade is found to have a significant positive relationship with HDI for all income categories, but insignificant relationship with nonincome HDI. The finding indicates that trade is associated with human development only through income channels, and it is not associated with other components, such as longevity, literacy level and educational attainment. More of appropriate and effective public policies need to be formulated and implemented so as to achieve the desired outcomes of multidimensional human development in the true sense of the word.

Tax arrears amongst individual income taxpayers in Malaysia

Purpose The purpose of this paper is to investigate the relationship between tax arrears and socio-psychological demographic factors on individual taxpayers as well as macroeconomic factors in Malaysia. Design/methodology/approach In this study, using proprietary data from Inland Revenue Board of Malaysia on individual income tax returns for the year of 2004 through 2012, the authors run a panel data fixed effect model analysis to examine the impact of socio-psychological demographic factors such as age, gender, marital status, income level, occupational sector, place of residence of individual tax payers as well macroeconomic factors such as real GDP, inflation and economic growth on tax arrears in Malaysia. Findings We find that, by and large, older male taxpayers in big towns, with high incomes, tend to accumulate tax arrears. Tax arrears are also significantly affected by real GDP, but not by marital status or occupational sector. Originality/value To the best of our knowledge, this is one the few studies that uses individual tax returns data to study determinants of tax arrears.

Automatic data warehouse conceptual design

This paper presents a methodology to develop a dimensional data warehouse by integrating all three development approaches such as supply-driven, goal-driven and demand-driven. By having the combination of all three approaches, the final design will ensure that user requirements, company interest and existing source of data are included in the model. We proposed an automatic system using ontology as the knowledge domain. Starting from operational ER-D (Entity Relationship-Diagram), the selection of facts table, verification of terms and consistency checking will utilize domain ontology. The model will also be verified against user and company requirements. Any discrepancy in the final design requires designer and user intervention. The proposed methodology is supported by a prototype using a business data warehouse example.

Cash economy: tax evasion amongst SMEs in Malaysia

Purpose The purpose of this study is to investigate the relationship between tax evasion and certain demographic factors such as location, engagement of tax agent, size and type of small- and medium-sized enterprises (SMEs) industry in Malaysia. Design/methodology/approach In this study, using proprietary tax audit data from the Inland Revenue Board of Malaysia (IRBM) on the 2011 tax returns of SMEs, the authors run a multiple regression analysis to examine the impact of location, agent, type of industry, size of enterprise and type of tax evasion on SMEs’ tax evasion in Malaysia. Findings The authors find that tax evasion among SMEs in Malaysia is the highest when the business is located in a suburban environment and has no tax agent. Tax evasion is also influenced by the size of the SME (micro or medium). Originality/value This study gives insight that the IRBM can use to aid its collection department in profiling SMEs that have a higher tendency to evade paying tax.

COMBINING LOCAL AND GLOBAL MARKETS IN ASSET PRICING IN EMERGING MARKETS: EVIDENCE FROM THREE BRICS NATIONS

Asset pricing models, originally designed for the US market, assume sufficiency of local market in capturing systematic market risk in the stock returns. The models were extended to other developed markets that are fully integrated with the US market by replacing the local market with the global market. However, the ability of these models to capture systematic risks and explain stock returns in emerging markets is undermined by emerging markets’ partial integration with and structural differences from the developed markets. In these markets, relying only on local or global market is expected to cause loss of valuable return-relevant information leading to inaccuracies in the return estimates. To customize the asset pricing models to emerging markets settings, we propose combining local and global markets in the models. In this regard, we extend Koedijk et al. model by replacing global instruments with global market portfolio to propose a two-factor CAPM, and Fama & French three-factor model by adding global market portfolio as the fourth factor. We test the proposed models in three BRICS nations, China, India, and South Africa, using ten-year, monthly data from January 2004 to December 2013 on non-financial firms with positive equity holdings. We apply Fama & French double sort on size and book to market value of equity on listed firms to construct nine dependent portfolios. The sort procedure is also used to construct two portfolios—SMB and HML—used along with market portfolios as explanatory variables in Fama & French models. The test results of the models reveal differences in the behaviors of the markets studied. The Chinese market behaves like a fully segmented market wherein local market portfolio subsumes the effect of the global market in both models. On the other hand, the South African market acts like a partially integrated market where both local and global market portfolios have significant impact on the stock returns. The Indian market behaves like a segmented market in two-factor model and like a partially-integrated market in the four-factor model. Hence, we conclude that incorporation of local and global markets in asset pricing in emerging markets in necessary to insure against inaccuracies in the stock return estimates. The proposed models provide investors and investment managers with tools for gauging risks involved in investing in emerging markets and making well-informed investment decisions.