Special Issue "Islamic Finance II"

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: 31 May 2022.

Special Issue Editors

Prof. Dr. Muhammad Ishaq Bhatti
E-Mail Website
Guest Editor
Department of Economics and Finance, La Trobe Business School, La Trobe University, Melbourne, VIC 3108, Australia
Interests: oil prices; stocks; forecasting; copula; DCC models; wavelets; financial econometrics
Special Issues and Collections in MDPI journals
Dr. Naseem Al Rahahleh
E-Mail
Guest Editor
Department of Finance, Faculty of Economics and Administration, King Abdulaziz University, Jeddah 21589, Saudi Arabia
Interests: islamic finance; market integration andefficiency; behavioral finance; derivatives; market microstructure

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. Muhammad Ishaq Bhatti
Dr. Naseem Al Rahahleh
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 1200 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 (2 papers)

Order results
Result details
Select all
Export citation of selected articles as:

Research

Article
Due Diligence and Risk Alleviation in Innovative Ventures—An Alternative Investment Model from Islamic Finance
J. Risk Financial Manag. 2021, 14(6), 276; https://doi.org/10.3390/jrfm14060276 - 18 Jun 2021
Viewed by 301
Abstract
Risk is a big concern for anyone contemplating investing in new, especially innovative ventures. However, if successful, the returns can be extraordinary, serving as an impetus for many venture capitalists to provide greater funding. Still, many new ventures never see the end of [...] Read more.
Risk is a big concern for anyone contemplating investing in new, especially innovative ventures. However, if successful, the returns can be extraordinary, serving as an impetus for many venture capitalists to provide greater funding. Still, many new ventures never see the end of the tunnel, and success stories are scant. The venture capital market is growing, yet many investors feel on edge when investing in new and innovative ventures. This paper is based on field survey data to evaluate the importance of risk and return components of an alternative venture investment approach called diminishing Musharakah (DM). DM has roots in Islamic modes of investment that are more suited for ventures with a higher risk profile. This paper focuses on four key ingredients, i.e., due diligence (DD), flexibility (Flex), moral hazard reduction (MHR), and risk reduction (RR) inherent in this mode of investment. All these components contribute towards the end goal of any investment, i.e., value enhancement (VE). DM is based on investment modes approved by Islamic law, called Shariah, and Islamic jurisprudence, called Fiqh. The analysis and the paper’s results show that the proposed model is perceived as flexible enough to accommodate a wide variety of investment possibilities. The model carries the potential to encourage venture investment through various stages of growth of a venture. The findings are based on original perception data through a field survey across a broad spectrum of banking users who were interested in alternative and Islamic modes of investment. Findings and analysis of the survey data strongly support our connotations. We propose that the Shariah-based investment model presented in this paper will bring a vast new market into play, i.e., the Islamic money market, thus providing greater venture financing possibilities. As a result, we hope that the number of successful venture investment projects will significantly increase over time as we put the proposed investment model into use. Full article
(This article belongs to the Special Issue Islamic Finance II)
Show Figures

Figure 1

Article
Impact of Audit Committee Quality on the Financial Performance of Conventional and Islamic Banks
J. Risk Financial Manag. 2021, 14(4), 176; https://doi.org/10.3390/jrfm14040176 - 12 Apr 2021
Cited by 1 | Viewed by 592
Abstract
A lot of previous research studied the relationship between audit committee quality and the financial performance of conventional banks before and during the subprime crisis, whereas some other investigations analyzed the same association in the framework of Islamic banks. However, no study has [...] Read more.
A lot of previous research studied the relationship between audit committee quality and the financial performance of conventional banks before and during the subprime crisis, whereas some other investigations analyzed the same association in the framework of Islamic banks. However, no study has compared these two correlations either before, during, or after the subprime crisis. Several reasons explain the differences, such as the audit committee quality of each bank type, the evaluation method of the financial performance, the research peculiarities, the methodology, the data, and the interpretation. This research aims to compare the impacts of the audit committees’ quality on the financial performance of Islamic and conventional banks between 2010 and 2019. The financial performance measures and audit committees’ determinants of the conventional and Islamic banks concerned 112 banks of each type. The collected data covered four continents: America, Asia, Africa, and Europe. Impacts were compared by using the Generalized Least Squares analysis. The results showed that the audit committee reduced the profitability of two bank types. Moreover, it harmed the conventional banks’ efficiency but reported an unclear effect within Islamic banks. Even so, we noticed that the audit committee had a positive impact on the conventional banks’ liquidity, while the same effect was apparently ambiguous for the Islamic banks’ liquidity. For solvency, the audit committee positively influenced conventional banks while it affected that of Islamic banks. Full article
(This article belongs to the Special Issue Islamic Finance II)
Back to TopTop