Institutionalizing social impact investing: implications for Islamic finance

2019 ◽  
Vol 46 (2) ◽  
pp. 226-240 ◽  
Author(s):  
Jeffrey Kappen ◽  
Matthew Mitchell ◽  
Kavilash Chawla
Keyword(s):  
Social Impact ◽  
Historical Analysis ◽  
Islamic Finance ◽  
Investment Strategies ◽  
The European Union ◽  
Impact Investing ◽  
Content Type ◽  
Finance Industry ◽  
Regulatory Frameworks ◽  
The Impact

PurposeThe purpose of this paper is to examine the institutionalization of screening and metrics in conventional finance and reflect upon the implications for Islamic finance.Design/methodology/approachThe study involves the analysis of archival data, interviews and fieldwork with current impact investors in North America and the European Union to trace the historical development of impact investing screening and metrics.FindingsFirst, the paper explores how conventional investors have applied positive and negative screens in the creation of their values/mission-based investment strategies. This is followed by a historical analysis of the development and implementation of impact metrics and regulatory frameworks that influenced the growth of conventional impact investing. The possible benefits of learning from these experiences for the Islamic finance industry are then considered. The paper concludes with an analysis of the potential value of mission/values-based investing for the economic development of the Middle East and North Africa region.Research limitations/implicationsThough not a comprehensive study of institutionalization, this study supports recent calls for more intentional use of capital for blended returns within Islamic markets. To support these initiatives, it provides scholars and practitioners with multiple recommended points of entry into this growing market.Originality/valueThere has been scant organizational research examining the development of best practices within the impact investment community and how these might be applied to other contexts such as Islamic finance.

Legal and Sharīʿah non-compliance risks in Nigerian Islamic finance industry: a review of the literature

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zakariya Mustapha ◽  
Sherin Binti Kunhibava ◽  
Aishath Muneeza
Keyword(s):  
Content Analysis ◽  
Qualitative Methodology ◽  
Financial Institution ◽  
Relevant Literature ◽  
Forward Direction ◽  
Islamic Finance ◽  
Content Type ◽  
Finance Industry ◽  
The Impact ◽  
Research Studies

Purpose The purpose of this paper is to review the literature on Islamic finance vis-à-vis legal and Sharīʿah non-compliance risks in its transactions and judicial dispute resolution in Nigeria. This is with a view to putting forward direction for future studies on the duo of legal and Sharīʿah non-compliance risks and their impact in Islamic finance. Design/methodology/approach This review is designed as an exploratory study and qualitative methodology is used in examining relevant literature comprising of primary and secondary data while identifying legal risk and Sharīʿah non-compliance risks of Nigeria’s Islamic finance industry. Using the doctrinal approach together with content analysis, relevant Nigerian laws and judicial precedents applicable to Islamic finance practice and related publications were examined in determining the identified risks. Findings Undeveloped laws, the uncertainty of Sharīʿah governance and enforceability issues are identified as legal gaps for Islamic finance under the Nigerian legal system. The gaps are inimical to and undermine investor confidence in Nigeria’s Islamic finance industry. The review reveals the necessity of tailor-made Sharīʿah-based regulations in addition to corresponding governance and oversight for a legally safe and Sharīʿah-compliant Islamic finance practice. It brings to light the imperative for mitigating the legal and Sharīʿah non-compliance risks associated with Islamic finance operations as crucial for Islamic finance businesses, Islamic finance institutions and their sustainable development. Research limitations/implications Based on content analysis, the review is wholly doctrinal and does not involve empirical data. Legal safety and Sharīʿah compliance are not to be compromised in Islamic finance operations. The review would assist relevant regulators and investors in Islamic financial enterprises to understand and determine the impact and potential ramifications of legal safety and Sharīʿah non-compliance on Islamic Finance Institutions. Practical implications This study provides an insight into the dimensions and ramifications of legal and Sharīʿah non-compliance risks of Nigeria’s Islamic finance industry. This study is premised on the imperative for research studies whose outcome would inform regulations that strike a balance between establishing Islamic financial institution/business and ensuring legal certainty and Sharīʿah compliance of their operations. This study paves way for this kind of research studies. Originality/value The findings and discussions provide a guide for regulators and researchers on the identification and mitigation of legal and Sharīʿah non-compliance risks in Islamic finance via a literature review. This study, the first of its kind in Nigeria, advances the idea that research into legal and Sharīʿah non-compliance risks of Islamic financial entities is key to mitigating the risks and fostering the entities and their businesses.

Shariah supervisory systems in Islamic finance institutions across the OIC member countries

2015 ◽  
Vol 23 (2) ◽  
pp. 135-160 ◽  
Author(s):  
Rihab Grassa
Keyword(s):  
Critical Review ◽  
Islamic Finance ◽  
Governance System ◽  
Member States ◽  
Content Type ◽  
Supervisory System ◽  
Finance Industry ◽  
Regulatory Frameworks ◽  
Shariah Governance ◽  
Supervisory Practices

Purpose – This paper aims to discuss the different practices and regulatory frameworks of Shariah supervision in Islamic Financial Institutions (IFIs) across Organisation of Islamic Cooperation (OIC) member states and to identify the gaps in current Shariah supervisory practices. Parallel with the rapid growth of Islamic finance worldwide, corporate governance has received a considerable amount of attention in Islamic finance. Shariah is a unique characteristic of Islamic finance. That is why the need for a good and efficient Shariah governance system for IFIs is considered to be a crucial requirement to ensure the development and the stability of the Islamic finance industry. Design/methodology/approach – The paper is based on critical review of current laws and regulations for IFIs; this provides a reflective synthesis on the practical work of the Shariah supervisory system across the 25 different OIC member states. Findings – The paper reveals several findings. First, the authors observe a weak and poor Shariah supervisory system in most OIC member states. Furthermore, the authors detect various gaps in the current Shariah supervisory practices. Most of these shortfalls are linked to the current regulatory frameworks: the roles and the responsibilities of the national Shariah authority, and the institutional Shariah board’s duties and attributes. Originality/value – This paper’s originality and value lies in its critical review of current Shariah supervisory practices across 25 OIC member states. Also, the paper puts forward various suggestions to the regulatory authorities and to the Islamic Financial Services Board to enhance the Shariah governance system and to standardize the different practices of Shariah governance worldwide.

Impact investing in South Africa: managing tensions between financial returns and social impact

2019 ◽  
Vol 31 (3) ◽  
pp. 397-419 ◽  
Author(s):  
Eunivicia Matlhogonolo Mogapi ◽  
Margaret Mary Sutherland ◽  
Anthony Wilson-Prangley
Keyword(s):  
South Africa ◽  
Social Impact ◽  
Emerging Market ◽  
Financial Returns ◽  
African Countries ◽  
Financial Return ◽  
Impact Investing ◽  
Content Type ◽  
Trade Offs ◽  
The Impact

Purpose Impact investment is an emergent field worldwide and it can play an especially important role in Africa. The aim of this study was to examine how impact investors in South Africa manage the tensions between financial returns and social impact. Design/methodology/approach The research was based on 15 semi-structured interviews with key stakeholders in the impact investment community in South Africa to understand the related challenges, trade-offs and tensions. Findings There are two opposing views expressed as to whether the tensions between financial return and social impact result in trade-offs. It is proposed that impact investors embrace this duality and seek to approach it through a contingency and a paradox view. The tensions can be approached by focussing on values alignment, contracting processes, engaged leadership and sector identification. The authors integrate the findings into a proposed framework for effective tension management in an impact investment portfolio. Research limitations/implications This study was limited to selected South African interviewees. It would be valuable to extend the study to other African countries. Practical implications The issue of values alignment between investors, fund managers and investee firms is an important finding for practice. As is the four-part iterative framework for sensing the operating environment, defining impact, organising internally and defining the investment approach. Originality/value This study contributes empirical evidence to scholarship around organisational tensions, especially work in hybrid organisations. It affirms the value of a nuanced application of paradox theory. It examines these tensions through the lived experience of impact investing professionals in an emerging market context.

Impact investing will boost global Islamic finance

2015 ◽  
Keyword(s):  
Financial Markets ◽  
Social Impact ◽  
Islamic Finance ◽  
Financial Assets ◽  
Financial Return ◽  
Impact Investing ◽  
Content Type ◽  
Thomson Reuters ◽  
Social Impact Bonds ◽  
Investment Choices

Subject Impact investing and Islamic finance. Significance The share of Islamic financial assets remains limited, currently accounting for just 1.27% of global financial assets, according to the latest Zawya Thomson Reuters report on the 'State of the Islamic Economy'. However, new opportunities are ahead. Impact investing, defined by its ambition of achieving the dual goals of measurable positive social and environmental impact, and financial return, is a rapidly growing segment of international financial markets. It offers unique opportunities for Islamic investors looking for investment choices that meet the goals of an Islamic value-based investment approach. Impacts Impact investing will create impetus for further product development in the Islamic finance sector. New deals are in the pipeline after record innovation in 2015 in social-impact bonds that are compliant with Islamic financial principles. They will increase the attractiveness of the Islamic finance sector to a whole range of investors.

scholarly journals Does doing good pay off?

2019 ◽  
Vol 27 (1) ◽  
pp. 23-37
Author(s):  
Syed Marwan ◽  
Mohamed Aslam Haneef
Keyword(s):  
Risk Sharing ◽  
Social Impact ◽  
Third Sector ◽  
Theory And Practice ◽  
Sustainable Growth ◽  
Islamic Finance ◽  
Content Type ◽  
Responsible Investment ◽  
Finance Industry ◽  
Socially Motivated

Purpose The purpose of this paper is to examine the world’s first social impact bond (SIB) and the lessons that can be learned for the Islamic finance industry to fulfil its true objectives. Design/methodology/approach The Peterborough SIB was recently announced to be successful in achieving its targeted social and investment outcomes, reducing recidivism by 9 per cent and paying back investors a 3 per cent pa return. The paper compares Peterborough SIB with socially responsible investment (SRI) sukuk in terms of form and substance, and finds that there are various lessons from the Peterborough SIB that can be useful for future development of Islamic financial products. Findings Innovative social financial tools such as SIB exemplify the true spirit of risk sharing and social responsibility, which is arguably missing in current practices of the Islamic finance industry. With the growing interest towards SRI strategies and increase in socially motivated investors, such financial tools may not only help the sustainable growth of the Islamic finance industry, but also fill in the gap between its theory and practice. Practical implications As such, the paper also proposes a social impact sukuk model which integrates the key aspects learned from Peterborough SIB. This includes prioritising social impact, measurable success indicators, data and management systems, flexible contracts, third sector integration, risk sharing and fostering the culture of innovation. Originality/value The findings can offer some practical insights in dealing with the issue of Islamic finance practice being overly concerned with its formal adherence with Islamic legal rules whilst neglecting its true fundamental values.

Performance of Shari’ah-compliant and non-Shari’ah-compliant listed firms: a case study of Malaysia

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Irum Saba ◽  
Mohamed Ariff ◽  
Eskandar Shah Mohd Rasid
Keyword(s):  
Decision Making ◽  
Design Methodology ◽  
Islamic Finance ◽  
Decision Making Process ◽  
Content Type ◽  
Listed Firms ◽  
Finance Industry ◽  
The Impact ◽  
Statistical Results

Purpose Shari’ah provides the basic tenets of the Islamic finance industry and advocates banks to share their profits and losses with investors. But what it means for a firm to be “Shari’ah-compliant” and what form of connections it can have, even in theory, to either the firm’s value or profitability is still an untapped question. This study tries to answer this question. This study aims to find the impact of Shari’ah compliance on firm performance. The results obtained would be useful in helping investors, regulators, companies, government, academicians and practitioners in their decision-making process as to ensure better economic and business gains, both locally and globally. Design/methodology/approach Panel data on 634 Shari’ah-compliant firms have been used in this study for the period of 2000–2014. Findings The results indicate that Shari’ah compliance adds to the value of firms as firms perform transactions according to Shari’ah while avoiding non-permissible activities. Originality/value This study adds value to the existing literature by showing the statistical results for the impact of Shari’ah compliance on the performance of the listed firms on Bursa Malaysia.

The Fourth Market theory and interest rate benchmarking in the Islamic finance industry

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmed Tahiri Jouti
Keyword(s):  
Interest Rate ◽  
Business Model ◽  
Wealth Distribution ◽  
Islamic Finance ◽  
Economic Perspective ◽  
Profit Rate ◽  
Market Theory ◽  
Content Type ◽  
Finance Industry ◽  
The Impact

Purpose This paper aims to understand the issue of interest rate benchmarking in Islamic financial institutions (IFIs) from a macro-economic perspective and assessing the relevance of creating a Sharīʿah-compliant profit rate benchmark to solve this issue. This paper also aims at suggesting an Islamic alternative that will handle both the negative economic impact on IFIs as well as on their financial performance. Design/methodology/approach The paper is based on literature review of conventional finance and Islamic finance theories to construct a theoretical model to assess the impact of interest rate benchmarking on the ability of IFIs to achieve the objectives of the Islamic economy. Findings The macro-economic perspective concludes that conceiving a profit rate benchmark for the Islamic finance industry is not relevant to raising the Sharīʿah credibility of the industry. Indeed, several adjustments need to be introduced in terms of the business model. Research limitations/implications The recommendations of this paper require the involvement of financial authorities and governments for their implementation. Indeed, the adjustments require a macro-economic review. Practical implications The paper considers a profit rate benchmark irrelevant and inefficient. Instead, it suggests the necessary adjustments in terms of business model and economic approach for IFIs to achieve their objectives. Social implications The paper considers zakat implementation and the adjustment of IFIs as the real path to implement a fair wealth distribution in the society. Originality/value The creation of a profit rate benchmark has always been the only solution for the pricing issue in IFIs. This paper challenges this idea and tries to give a deeper understanding of the situation.

scholarly journals The impact of young people's participation in events

2014 ◽  
Vol 5 (3) ◽  
pp. 198-218 ◽  
Author(s):  
Eliza Hixson
Keyword(s):  
Young People ◽  
Identity Development ◽  
Focus Groups ◽  
Social Impact ◽  
Transitional Period ◽  
School Students ◽  
Content Type ◽  
The Social ◽  
Sense Of Involvement ◽  
The Impact

Purpose – This paper aims to explore the social impact that two events, the Adelaide Fringe Festival and the Clipsal 500, have on young residents (16-19 years old) of Adelaide. The purpose of this paper is to examine how young people participate in these events and how this affects their sense of involvement in the event and contributes to their identity development. Design/methodology/approach – A mixed methods approach was adopted in which focus groups and questionnaires were conducted with secondary school students. As an exploratory study, focus groups (n=24) were conducted in the first stage of the research. The results of the focus groups were used to develop a questionnaire that resulted in 226 useable responses. The final stage of the research explored one event in further depth in order to determine the influence of different participation levels. Findings – This study found that young people demonstrated more involvement in the Adelaide Fringe Festival and their identities were more influenced by this event. Further investigation of the Adelaide Fringe Festival also indicated that level of participation affects the social outcomes gained, with those participating to a greater degree achieving higher involvement and increased identity awareness. This is demonstrated through a model which aims to illustrate how an event impact an individual based on their role during the event. Originality/value – This paper applies two leisure concepts in order to analyse the impact of events. Activity involvement is a concept which examines the importance of the activity in the participant's life. Also of importance to young people is how activities contribute to their identities, especially because they are in a transitional period of their lives.

Zie ik het of zie ik het niet?

2021 ◽  
Vol 49 (1) ◽  
pp. 51-83
Author(s):  
Jorre Vannieuwenhuyze ◽  
Karen Donders ◽  
Ike Picone
Keyword(s):  
European Union ◽  
Government Regulation ◽  
Video On Demand ◽  
The European Union ◽  
Content Type ◽  
Consumption Behavior ◽  
Local Content ◽  
Positive Effects ◽  
On Demand ◽  
The Impact

Abstract Do I see or not? A study on the impact of placement on program consumption in an on-demand environment The European Union (2018) stipulates that Member States can implement rules to ensure the findability and visibility of local content in video- on- demand environments. Indeed, several countries are concerned that their own audiovisual programs or journalistic products will be consumed less in such environments. It is argued that, in such environments, media users completely decide themselves about their consumption agency, but such statements are also contested. In this research we analyze the impact of placement on the consumption of audiovisual programs in the video-on-demand environments of the Flemish broadcasters VRT and DPG. From experimental research we conclude that there is indeed a significant impact of placement on consumption behavior and that, in other words, manipulations by intermediary gatekeepers can have potentially negative and positive effects on the consumption of local content. Government regulation would therefore be a useful tool to safeguard the importance of proximity of content.

The impact of library associations: preliminary findings of a qualitative study

2014 ◽  
Vol 15 (3) ◽  
pp. 122-144 ◽  
Author(s):  
Susan Henczel
Keyword(s):  
Social Impact ◽  
Assessment Tool ◽  
Professional Associations ◽  
Qualitative Assessment ◽  
Structured Interviews ◽  
National Library ◽  
Content Type ◽  
Library Associations ◽  
Evidence Of Impact ◽  
The Impact

Purpose – The purpose of this paper is to provide an overview, including methodology and preliminary findings, of a current and ongoing doctoral research study of the impact of national library associations. The study uses the impact assessment framework provided by ISO16439:2014 Methods and procedures for assessing the impact of libraries. Design/methodology/approach – If the professional associations supporting the profession are to become sustainable we need to understand the difference they make to the individual members of the profession, to the employers of those individuals and to the profession of librarianship. This study applies the framework provided by ISO 16439:2014 to the national library association environment to explore and gather evidence of impact. To align with the ISO model, impact is differentiated into impact on individuals; social impact – institution (library or employing organization); and social impact – community (the profession). Preliminary findings show evidence of impact in all categories. Findings – Data were gathered through semi-structured interviews that were conducted with members of national library associations in Australia, New Zealand, the UK and the USA during the third quarter of 2013. Originality/value – This study contributes to research methodologies by testing the use of a qualitative assessment tool in a way that could be transferable to other associations both within and external to the library environment and to enable it to be adapted more broadly for other purposes within the library and information environment.

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