Increasing Financial Inclusion in the Muslim World: Evidence from an Islamic Finance Marketing Experiment

Author(s):  
Dean Karlan ◽  
Adam Osman ◽  
Nour Shammout

Abstract Low utilization of household credit in developing countries may be partially due to religious considerations. In a randomized marketing experiment in Jordan, this paper estimates the effect of sharia-compliant loan features on demand for credit. To comply with Islamic law, the sharia-compliant product uses a bank fee rather than an interest payment structure, while keeping the rest of the product features very similar. Sharia-compliance increased the application rate for loans from 18 percent to 22 percent, an increase in demand that is equivalent to a 10 percent decrease in interest rates. This study also randomly varied the price of the sharia-compliant loan and finds that less religious individuals are twice as elastic with respect to price as the more religious. By comparing reasons for refusal across treatment groups, this paper estimates that survey measures that try to assess the importance of religious objections to conventional credit overestimate the importance of this type of objection by a third.

1977 ◽  
Vol 12 (4) ◽  
pp. 647-647
Author(s):  
Peter Lloyd-Davies

This papaer assesses some of the costs and benefits of aloowing banks to pay interest on demand deposits. With the help of a simple short-run model of the financial sector, it is shown that, barring a possible but unlikely perverse reaction, the deposit rate will tend to move in the same direction as other rates. This will moderate changes in the money supply accompanying a given change in interest rates; conversely, a given change in the excess demand for money will cause larger fluctuations in the level of interest rates. This can either be good or bad; if the excess demand for money corresponds to an excess demand for real output, the wider fluctuations in the interest rate will be more effective in eliminating it.


2021 ◽  
pp. 1-18
Author(s):  
Matthew D. Hilchey ◽  
Matthew Osborne ◽  
Dilip Soman

Abstract Regulators require lenders to display a subset of credit card features in summary tables before customers finalize a credit card choice. Some jurisdictions require some features to be displayed more prominently than others to help ensure that consumers are made aware of them. This approach could lead to untoward effects on choice, such that relevant but nonprominent product features do not factor in as significantly. To test this possibility, we instructed a random sample of 1615 adults to choose between two hypothetical credit cards whose features were shown side by side in tables. The sample was instructed to select the card that would result in the lowest financial charges, given a hypothetical scenario. Critically, we randomly varied whether the annual interest rates and fees were made visually salient by making one, both, or neither brighter than other features. The findings show that even among credit-savvy individuals, choice tends strongly toward the product that outperforms the other on a salient feature. As a result, we encourage regulators to consider not only whether a key feature should be made more salient, but also the guidelines regarding when a key feature should be displayed prominently during credit card acquisition.


2007 ◽  
Vol 26 (2) ◽  
pp. 123-133 ◽  
Author(s):  
Sanjay Chanda ◽  
Gregory Erexson ◽  
Denzil Frost ◽  
Sunita Babbar ◽  
Jo-Anne Burlew ◽  
...  

The objective of this study was to assess the oncogenic potential of trans-capsaicin when administered weekly via topical application to the dorsal skin of Tg.AC mice for 26 weeks. Male and female Tg.AC mice (25 mice/sex/group) received dose formulations containing trans-capsaicin dissolved in diethylene glycol monoethyl ether (DGME). The positive control was tetradecanoylphorbol-13-acetate (TPA) dissolved in DGME. Appropriate controls, including a topical lidocaine local anesthetic pretreatment (4% w/ w), were maintained. All groups were dosed once weekly, except for the TPA group, which was dosed twice per week. Analysis of the macroscopic observations after the final sacrifice revealed no noteworthy treatment-related findings, with the exception of dermal masses that were randomly dispersed throughout all treatment groups for both males and females. The frequency of dermal masses in the capsaicin-treated groups (at a dose level of up to 102 mg/kg and an application rate of 25.6 mg/cm2/kg/week) was not elevated in comparison to either concurrent vehicle or untreated controls. In contrast, a notable increase in the frequency of dermal masses was observed in the TPA-treated mice compared to both the concurrent vehicle and untreated controls. Dermal application of capsaicin resulted in no increased incidence of preneoplastic or neoplastic skin lesions. In contrast, over half the male and female mice exposed to TPA had multiple skin papillomas; the majority of the TPA-treated animals either died early or was humanely euthanized due to tumor load. Spontaneously occurring neoplasms were not appreciably increased in capsaicin-treated animals. Capsaicin-related non-neoplastic microscopic findings were seen sporadically in both genders and included acanthosis, hyperkeratosis/parakeratosis (primarily females), epidermal crusts, subepidermal fibrosis, epidermal ulcerations/erosions, and chronic-active inflammation. There was no evidence of a dose response in either the incidence or severity of these findings. The lidocaine- (at a dose level of 162 mg/kg and at an application rate of 40.5 mg/cm2/kg/week) and DGME-treated (at a dose level of 4.0 g/kg and at an application rate of 1 g/cm2/kg/week) control groups also did not display any evidence of increase in dermal masses. Based on these results, trans-capsaicin, lidocaine, and DGME should be considered nononcogenic in the Tg.AC mouse dermal model.


Blood ◽  
2018 ◽  
Vol 132 (Supplement 1) ◽  
pp. 1189-1189
Author(s):  
Mindy Simpson ◽  
Sanjay Ahuja ◽  
Despina Tseneklidou-Stoeter ◽  
Shadan Lalezari

Abstract Introduction: BAY 94-9027 is a B-domain-deleted recombinant factor VIII (FVIII) that is site-specifically PEGylated with a 60-kDa (2 × 30-kDa) polyethylene glycol (PEG) to extend its half-life. The efficacy and safety of BAY 94-9027 as prophylactic and on-demand therapy for patients with severe hemophilia A were demonstrated in the phase II/III PROTECT VIII trial. This analysis provides an updated assessment of the frequency of spontaneous bleeds with BAY 94-9027 prophylaxis during the PROTECT FVIII trial and its extension of more than 4 years. Methods: PROTECT VIII was a partially randomized, open-label trial of 134 males aged 12-65 years with severe hemophilia A (FVIII < 1%) and ≥ 150 FVIII exposure days (ED). Prophylaxis patients received BAY 94-9027 25 IU/kg twice weekly for a 10-week run-in period. Patients with ≤ 1 spontaneous or joint bleed during this period were randomized to 45-60 IU/kg every 5 days (E5D) or 60 IU/kg every 7 days (E7D) for the main 26-week study period; patients enrolling after the randomization arms were full, or with ≥ 2 bleeds in the run-in period, received 30-40 IU/kg twice weekly (2×W). Following completion of the main PROTECT VIII trial, patients could enter an extension, continuing BAY 94-9027 prophylaxis on either their regimen or switch regimens at the beginning or at any time during the extension. Prophylaxis patients who switched regimen at any time later than 7 days after the beginning of the extension period, were analyzed together in a variable frequency group. Annualized bleeding rates (ABRs) of spontaneous and trauma bleeds were calculated. Results: The intent-to-treat population in the PROTECT VIII study extension included 121 subjects (prophylaxis, n = 107; on demand, n = 14) of the 134 previously treated with BAY 94-9027 in the main study. At data cut-off (31 January 2018), patients in the prophylaxis arms had spent a median (range) of 3.9 (0.8; 5.4) years on-study (main and extension studies combined; a median of 3.2 years were in the extension), with 223 (23; 563) ED. Median dose of BAY 94-9027 prophylaxis during the extension study was 47.8 IU/kg/infusion, with total FVIII consumption of 3488 IU/kg/year. The overall adherence was 100%. At data cut-off or last visit, 34, 45 and 28 patients were in the 2xW, E5D and E7D treatment arms, respectively. During the extension period, median spontaneous ABR (Q1; Q3) was 0.7 (0.0; 2.9) in patients receiving BAY 94-9027 prophylaxis; 2×W (n = 23, 0.8 [0.0; 3.1]), E5D (n = 33, 0.7 [0.0; 2.9]), E7D (n = 23, 0.2 [0.0; 0.8]), or at a variable frequency (n = 28, 1.8 [0.7; 4.3]). This was consistent with median spontaneous ABRs (Q1; Q3) in the main study of 0.0 (0.0; 4.0), 0.0 (0.0; 4.0) and 1.9 (0.0; 6.3) for patients receiving BAY 94-9027 infusions 2×W (n = 24), E5D (n = 43), or E7D (n = 43), respectively; and with spontaneous ABRs for the last 12 months of the extension study of 1.5 (0.0; 2.0), 1.0 (0.0; 3.0) and 0.0 (0.0; 0.0) for these treatment groups (1.0 [1.0; 2.12] in the variable group). Rates of trauma bleeding were consistent across the study periods, with a median ABR of 0.0 in each prophylaxis group in the main study (0.0 [0.0; 2.0] for all prophylaxis patients), 0.3 (0.0; 1.3) for all prophylaxis patients in the extension and 0.0 (0.0; 1.0) for all prophylaxis patients in the last 12 months of the extension. Conclusions: Most patients were treated every 5 or 7 days with BAY 94-9027. Median spontaneous ABR remained < 1 with prophylaxis for > 4 years in all treatment groups (2×W, E5D and E7D). Disclosures Ahuja: Bayer: Honoraria; Bioverativ: Honoraria, Speakers Bureau; Shire: Honoraria, Speakers Bureau. Tseneklidou-Stoeter:Bayer: Employment.


2016 ◽  
Vol 3 (1) ◽  
pp. 122
Author(s):  
Ardvin Kraja

Banks perform an economic activity that is based on principles similar to those of an ordinary business. Banking activity includes the acceptance of deposits of individuals, firms, etc. As a result of the major needs and demands of the economy, household credit, with pertaining high interest rates, the banking sector dynamics experienced a high development. This progress has emerged since the establishment of relations between these banks and individuals by creating a particular system of rights as the law of banking, the focus of which is in the relationship between banks and customers. This kind of relationship is focused on banking contract. Various problems that have emerged from the effect of agreements between parties have brought the need for rating this field of law. Except the provisions provided in the Civil Code about the banking contract, specific laws for the regulation of this relation were approved. As instance could be mentioned the Law on Banks in the Republic of Albania and the normative framework that addresses the whole activity of banks in the territory, upon which the Albanian state has sovereignty. Specific treatment is required about the relations of banks with the customers, where may arise major legal and economic difficulties, because banks are major monetary formations


2017 ◽  
Vol 2 (3) ◽  
pp. 101 ◽  
Author(s):  
Jane W. Kiboi ◽  
Prof. Paul Katuse ◽  
Prof Zachary Mosoti

Purpose: The purpose of this paper was to investigate the price and non-price determinants of demand for air passenger transport among selected airlines.Methodology: The study target population was airlines across the World. The study used a sample of 10 airlines across the World. The airlines included; British Airways, Ethiopian Airways, Emirates , Qatar Airways, Turkish Airlines, South Africa Airlines, China Southern Airlines, Kenya Airways, Egypt air and Air France. Secondary data of the selected airlines was collected from the International Air Transport Association (IATA) for the period from 2005 to 2014. The data collected was analyzed using STATA software to generate descriptive, trends and inferential statistics which were used to derive conclusions and generalizations regarding the population. The panel data regression model was used to determine the relationship between study variables.Results: Based on the findings, the study concluded that both domestic and global interest rates have a negative and significant effect on demand for air passenger transport. Further, the study concluded that GDP growth (domestic), GDP growth (global) and GDP per capita have a positive and significant effect on demand for air passenger transport.Recommendations: Based on the findings, the study recommended that, at a macro level, airlines should consider adjusting their travel prices using the directional movements of the above mentioned variables as a guideline. Based on the findings, the study recommended that governments should use the study of demand drivers to forecast their capital investment plan for the improvement of the air transportation systems in their respective countries and design policies that require use of the demand drivers observed in this study for planning of aviation infrastructure expansion. 


2019 ◽  
Vol 26 (6) ◽  
pp. 1353-1382
Author(s):  
Per Engström ◽  
Eskil Forsell ◽  
Johannes Hagen ◽  
Arnaldur Stefánsson

AbstractUsing a randomized field experiment in the Swedish pension system, we investigate whether receiving an information letter affects the take-up rate of the housing allowance for pensioners. We also investigate whether the framing of the information letter affects take-up. The results show that simple information letters had a significant effect on the application rate and subsequent take-up rate: The baseline application rate in the targeted control population was only 1.4%, while the corresponding rates in the different treatment groups were between 9.9 and 12.1%. However, while the applications in the control group were accepted in almost 3 out of 4 cases, up to 50% of the applications in the treatment group were declined. The lower conditional acceptance rate in the treatment group seems to be largely driven by wealth, which the Pensions Agency cannot observe prior to submission. Information campaigns aimed at increasing benefit take-up therefore need careful design in situations with imperfect targeting.


2020 ◽  
Vol 11 (1) ◽  
pp. 201-215 ◽  
Author(s):  
Rida Ahroum ◽  
Othmane Touri ◽  
Boujemâa Achchab

Purpose This study aims to provide an interest-free valuation methodology for Murabaha and Musharakah Moutanaquissah contracts. Indeed, In Islamic finance, Murabaha contracts are widely negotiated. Their yield depends mainly on the contracted profit margin. In the current practices, this latter is based on a reference interest rate, which is highly criticized in Islamic literature, just like Musharakah Moutanaquissah contracts. In this perspective, authors suggest a new valuation methodology with parameters related to the real economy. Design/methodology/approach The authors apply an indirect method to determine a lower bound of the profit margin of a Murabaha contract. Considering Musharakah Moutanaquissah as an equivalent contract, the new valuation methodology is based on participation and focuses on parameters from the real economy: the market rent and the rate of return used for an equivalent project. Findings The results show that the pricing of Musharakah Moutanaquissah contracts could be based on several parameters linked to the real economy. Consequently, an implied value of the profit margin could be computed. Also, the interest rate is no longer implicated in the pricing of neither Murabaha nor Musharakah Moutanaquissah contracts. Research limitations/implications The valuation methodology is applicable only if the underlying asset’s financing can be made with Murabaha and Musharakah Moutanaquissah contracts. Practical implications This work will restore the link between Islamic contracts and the real economy. For Islamic banks in particular, the suggested model would reduce the exposure to reputational risk and enhance the compliance to the Sharia (Islamic Law). Originality/value Several studies have analyzed the dependence between Islamic contracts and interest rates. In general, these studies confirm this dependence and few of them have suggested alternatives. Thus, the authors contribute to the literature by providing a practical and applicable model to detach the valuation of Murabaha and Musharakah Moutanaquissah from the interest rate.


HUMANIKA ◽  
2015 ◽  
Vol 21 (1) ◽  
pp. 75
Author(s):  
Agus Sarono

Bank interest is considered usury. One is to be scrutinized if the bank interest as usury, because usury is often mentioned in the texts is characterized oppress and torment the community. As with the conventional bank interest, how many small and medium enterprises which helped because Free Master in conventional banks. Problems found in the writing of this paper is; Why people ignore the MUI fatwa on usury interest as knife analysis; Unger critical legal theory, theory of responsiveness Nonet Sezlnick, the theory of legal culture Lawrence M Friedman progressive Satjipto Rahardjo and Usul Fiqh used to find alternative meanings of texts relating to usury From search and review of the problems concluded that after the birth of four Imam Muslim schools stuck in the mindset of the four Imams Madzhab and afraid to ijtihad. Therefore, the Muslims thought of usury is not far from what has been inferred by the four Imam mazdhab. Finally Islamic law really can not answer the development of society. Bank interest is equated with usury which both born differ in the time span, the different communities of the background, a different effect. Therefore interest rates clearly differ from usury and should not be equated with riba. That is why people ignore the MUI fatwa in business transactions. Should the scholars 'move from positivistic Jurisprudence to understanding Sociological Jurisprudence positivistic Jurisprudence.Oleh Hence the scholars can use the legal pluralisme approach in defining legal meaning.


2016 ◽  
Vol 9 (4) ◽  
pp. 601-626 ◽  
Author(s):  
Rosylin Mohd Yusof ◽  
Mejda Bahlous ◽  
Roszaini Haniffa

Purpose This paper aims to contribute to the banking and housing market literature by proposing an alternative measure of rate of return for Islamic banks that is based on the rental rate of the property. This alternative Islamic mortgage pricing mechanism could be adopted by Islamic banks as a replacement for mortgage rates if it is found to be independent from any form of interest rates as required by Islamic law. Design/methodology/approach By investigating the short run and long run dynamics between rental price index (RPI) and the proposed Islamic Rental Rate (RR-I) and, three selected macroeconomic indicators in the UK via autoregressive distributed lag model, the authors examine the link between RPI, RR-I and the real economy. Findings The findings provide evidence that while RPI in the UK is significantly related to three leading macroeconomic variables, namely, gross domestic product (GDP), real effective exchange rate and interest rates measures, while RR-I is only impacted by changes in GDP. More importantly, the authors show that there is no short or long run dynamics between the rental rate and any form of interest rates. Research limitations/implications This paper did not attempt to investigate the impact of the physical attributes of the rental property to formalize the model describing the relationship between RPI and RR-I. Also, other macroeconomic factors like household income growth, risk, house value growth rate and taxation could be included in future models. Practical implications As Rental Rate is not linked to the macroeconomic determinants, it is therefore more stable, resilient and sustainable and, at the same time, making the financing less risky for both parties, as they are less susceptible to economic vulnerabilities. Social implications Some calculations incorporating the proposed RR-I can also be extended to the pricing of products based on other contracts such as Tawarruq, Bai Bithaman Ajil or even Murabahah for a fairer and just pricing to both the banks and customers. Originality/value The results suggest that Islamic banks should consider incorporating the proposed rental rate (RR-I) when pricing their home financing products, as this will lead to less dependence on interest rates for benchmarking. In addition, using the proposed rental rate (RR-I) reduces the exposure to the subjective evaluation by property valuators and speculative macroeconomic elements.


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