Special Issue "Islamic Finance"

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Banking and Finance".

Deadline for manuscript submissions: closed (15 January 2020).

Special Issue Editors

Assoc. Prof. Muhammad Ishaq Bhatti
E-Mail Website
Guest Editor
Department of Economics and Finance, La Trobe University, Melbourne, Australia
Interests: Oil prices, stocks, forecasting, copula, DCC models, wavelets, financial econometrics
Special Issues and Collections in MDPI journals
Dr. Lukman Arbi
E-Mail
Guest Editor
Department of Economics and Finance, La Trobe Business School, La Trobe University, Australia

Special Issue Information

Dear Colleagues,

The objective of this Special Issue is to consolidate rigorous research work focusing on risk management in Islamic finance. While Islamic finance traditionally carries a disposition towards legal matters, recent strides in its implementation and research have made it accessible to contemporary economic and financial theory. Academic works, such as those of El-Gamal (2008), Jobst (2009), and Ariff et al. (2012), have highlighted that Islamic finance securities (IFSs) have unique characteristics that can render conventional financial approaches inadequate. For example, one of the characteristics of Ṣukūk is that it must be backed by real economic assets and is subject to specific trading constraints. Alam et al. (2018) look into the possibility of such characteristics affecting issuer default using value-at-risk techniques, whereas Samsuddin et al. (2011) consider the applicability of the more sophisticated Merton model of default risk.

Other academic works focus on the role of Islamic law in defining Islamic financial practices, whether by analysing its mechanisms or implications. Examples include the universe of assets implied by Islamic law as in Derigs and Marzban (2008), strategies implied by said characterisation as in Derigs and Marzban (2009), and applications of Islamic law as a norm to corporate finance as in Basov and Bhatti (2013). There are also works such as Klein et al. (2017) and Khawaja et al. (2018), which analyze the behavior of IFS issuers and investors.

Prospective papers would be focused on risk-related topics such as identifying risks unique to Islamic finance and especially rigorous risk-management strategies. However, we do note that the types of risks encompassed by the Islamic finance literature is quite broad, including things such as Sharī`ah risk. Therefore, a discussion of topics such as how the distribution of financial practices adopted can affect certain financial variables would also be considered.

References

Alam, N., Bhatti, M. I., & Wong, J. T. F. 2018. Assessing Sukuk defaults using value-at-risk techniques. Managerial Finance, https://doi.org/10.1108/MF-05-2018-0218

Ariff, M., Iqbal, M., & Mohamad, S. (Eds.). 2012. The Islamic Debt Market for Sukuk Securities: The Theory and Practice of Profit Sharing Investment. Edward Elgar Publishing, Cheltenham.

Derigs, U. & Marzban, S. 2008. Review and analysis of current Shariah-compliant equity screening practices. International Journal of Islamic and Middle Eastern Finance and Management, Vol. 1, No. 4, pp. 285-303.

Derigs, U. & Marzban, S. 2009. New strategies and a new paradigm for Shariah-compliant portfolio optimization. Journal of Banking & Finance, Vol. 33, No. 6, pp. 1166-1176.

El-Gamal, M.A. 2008. Islamic Finance: Law, Economics, and Practice. Cambridge University Press, New York.

Jobst, A. A. 2009. Islamic Securitization After the Subprime Crisis. The Journal of Structured Finance, Vol. 14, No. 4, pp. 41-57.

Khawaja, Mohsin and Bhatti, M. Ishaq and Ashraf, Dawood and Henry, Darren, The Role of Ownership and Governance Structure in Raising Capital: An International Study. 9th Conference on Financial Markets and Corporate Governance (FMCG) 2018, organised by the La Trobe University Business School on January 15, 2018, http://dx.doi.org/10.2139/ssrn.3102108

Klein, P.-O., Turk, R., Weill, L., 2017. Religiosity vs. well-being e ects on investor behavior. Journal of Economic Behavior & Organization 138, 50-62.

Samsuddin, S., Tafri, F. H., Nawawi, A. H. M. & Aziz, N. A. 2011. Measuring the Default Risk of Sukuk Holders for Shariah Compliance Companies in Malaysia: Using Merton’s Model with Maximum Likelihood Estimator. Paper presented at the 2011 IEEE Symposium on Business, Engineering and Industrial Applications, IEEE, Langkawi, 25-28 September 2011.

Prof. Dr. M. Ishaq Bhatti
Dr. Lukman Arbi
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All papers will be peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1000 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • Islamic finance
  • Securitisation
  • Risk Management
  • Financial management
  • Behavioural finance
  • Insurance/Takaful
  • Contract theory/ Mechanism design in Islamic finance

Published Papers (4 papers)

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Research

Open AccessArticle
Exploring Compliance of AAOIFI Shariah Standard on Ijarah Financing: Analysis on the Practices of Islamic Banks in Malaysia
J. Risk Financial Manag. 2020, 13(2), 29; https://doi.org/10.3390/jrfm13020029 - 05 Feb 2020
Abstract
This paper aims to explore whether the practices of Ijarah financing by Islamic banks in Malaysia are in line with the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Shariah Standard No: (9) on Ijarah financing. Semi- structured interviews based on open-ended [...] Read more.
This paper aims to explore whether the practices of Ijarah financing by Islamic banks in Malaysia are in line with the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) Shariah Standard No: (9) on Ijarah financing. Semi- structured interviews based on open-ended questionnaires were conducted, recorded verbatim, and transcribed for content analysis. Our study revealed flaws in the contemporary practice of Ijarah financing and indicated that it was slightly out of line with the AAOIFI Shariah standard. The study will not only help the Islamic banking industry of Malaysia to reduce, if not eliminate the gap between the practices of Bank Negara Malaysia (BNM) and AAOIFI Shariah standards pertaining to Ijarah financing but also create novel literature due to the fact that, no study has been undertaken to date, which analyzes the practices of Ijarah financing by Malaysian Islamic banks in the light of the AAOIFI Shariah standards. Full article
(This article belongs to the Special Issue Islamic Finance)
Open AccessArticle
Marketing Islamic Financial Services: A Review, Critique, and Agenda for Future Research
J. Risk Financial Manag. 2020, 13(1), 12; https://doi.org/10.3390/jrfm13010012 - 04 Jan 2020
Abstract
Islamic finance has experienced rapid growth globally, surpassing the USD 2 trillion mark in 2017. As a result, the literature related to Islamic finance and banking is rather rich. Despite the richness of the literature, our knowledge of the marketing issues related to [...] Read more.
Islamic finance has experienced rapid growth globally, surpassing the USD 2 trillion mark in 2017. As a result, the literature related to Islamic finance and banking is rather rich. Despite the richness of the literature, our knowledge of the marketing issues related to Islamic finance is modest and somewhat ambiguous. Therefore, we review several decades of research about the Islamic finance in various parts of the world. We identify and discuss three main research themes that draw on different conceptualization and theoretical lenses. After synthesizing their respective findings, we propose several avenues for future research that integrate these three research themes with the goal of developing a more nuanced understanding of Islamic finance and its marketing. While we believe that our review will mainly serve as a crucial reinvigoration and launch point for future research on Islamic finance marketing, it is also of great practical benefit for policymakers of various countries and especially managers of financial service firms interested in marketing Islamic banking and financial services to their customers. Full article
(This article belongs to the Special Issue Islamic Finance)
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Open AccessArticle
Managing Shariah Non-Compliance Risk via Islamic Dispute Resolution
J. Risk Financial Manag. 2020, 13(1), 2; https://doi.org/10.3390/jrfm13010002 - 18 Dec 2019
Abstract
This article discusses Shariah non-compliance risk as a form of operational risk intending to ensure that operations in the Islamic and banking finance industry comply with Shariah procedures. In the field of Islamic finance, Shariah non-compliance risk refers to the possibility that Islamic [...] Read more.
This article discusses Shariah non-compliance risk as a form of operational risk intending to ensure that operations in the Islamic and banking finance industry comply with Shariah procedures. In the field of Islamic finance, Shariah non-compliance risk refers to the possibility that Islamic finance transactions may be challenged based on Shariah non-compliance. This article uses a comparative and normative approach as well as a legal analysis of the case of Beximco. The article proposes the management of Shariah non-compliance risk by augmenting the effectiveness of Shariah governance systems with Islamic banking and finance arbitration; arbitration should be an enforced part of Islamic finance institutional arrangements—as it always has been classically—to provide flexibility for dispute resolution. To this end, the article examines contemporary implementations of Shariah arbitration rules to assess how Shariah non-compliance risk can be better managed via Islamic dispute resolution procedures. Full article
(This article belongs to the Special Issue Islamic Finance)
Open AccessArticle
A Nontechnical Guide on Optimal Incentives for Islamic Insurance Operators
J. Risk Financial Manag. 2019, 12(3), 127; https://doi.org/10.3390/jrfm12030127 - 25 Jul 2019
Abstract
The takaful industry is searching for an optimal model for Islamic insurance operation, which has turned out to be a challenging task. This paper translates the abstract scientific knowledge accumulated in the optimal contracting literature into a simple, nontechnical, analytical framework to analyze [...] Read more.
The takaful industry is searching for an optimal model for Islamic insurance operation, which has turned out to be a challenging task. This paper translates the abstract scientific knowledge accumulated in the optimal contracting literature into a simple, nontechnical, analytical framework to analyze alternative business models which could be used by regulators to align the best interest of shareholders and policyholders in the takaful industry. This paper shows that the wakalahsurplus-sharing hybrid serves as the optimal structure for takaful operation; in the presence of Akerlof’s (1982) gift-exchange, the wakalah fee reduces the adverse selection problem; and the wakalah fee could be used to protect infant takaful operators. Full article
(This article belongs to the Special Issue Islamic Finance)
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