Are non-Muslims willing to patronize Islamic financial services?

2019 ◽  
Vol 10 (3) ◽  
pp. 743-758 ◽  
Author(s):  
Wan Marhaini Wan Ahmad ◽  
Mohamed Hisham Hanifa ◽  
Kang Choong Hyo
Keyword(s):  
Financial Services ◽  
Kuala Lumpur ◽  
Financial Industry ◽  
Content Type ◽  
Korean People ◽  
South Korean ◽  
Financial Products ◽  
Muslim Majority ◽  
Near Future ◽  
Practical Implications

Purpose The purpose of this paper is to investigate the awareness of non-Muslims coming from a non-Muslim-majority country regarding Islamic financial services, in particular, the takaful products. Design/methodology/approach This paper uses structured questionnaires to acquire and understand South Korean citizens’ perceptions of Islamic financial services (primarily takaful) to reinforce the scant previous literature in this area of research. The questionnaires are developed and adapted based on a previous study by Htay and Salman (2013). The sample consisted of 121 Korean people who were living in Ampang, a popular suburb for South Koreans in Kuala Lumpur. Findings The findings indicate that even South Korean citizens who have dwelled in Malaysia for a significant amount of time had little awareness of Islamic financial services. Upon personal explanation about the product, however, they showed a significant interest to get to know about takaful and a willingness to subscribe to it in the near future. Research limitations/implications Respondents are limited to only South Koreans who are residing in Malaysia. Practical implications Understanding the level of awareness about Islamic financial services among non-Muslims residing in Muslim-majority country. Social implications There is ample scope to penetrate the non-Muslim market for Islamic financial products. Originality/value There is a growing concern over the lack of research in the area of perceptions of Islamic financial services among non-Muslims from non-Muslim-majority countries. The lack of study in this area of research has often been overshadowed by research studies on perceptions of Islamic financial services among non-Muslim residents in Muslim-majority countries, which may have led to a dearth of proper strategies in the Islamic financial industry to penetrate non-Muslim-majority markets.

Improving productivity among smallholder farmers in Ghana: does financial inclusion matter?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
James Atta Peprah ◽  
Isaac Koomson ◽  
Joshua Sebu ◽  
Bukari Chei
Keyword(s):  
Financial Services ◽  
Smallholder Farmers ◽  
Agricultural Productivity ◽  
Financial Inclusion ◽  
Living Standard ◽  
Content Type ◽  
Access To Credit ◽  
Pooled Data ◽  
Financial Products ◽  
Practical Implications

PurposeDoes financial inclusion matter for productivity among smallholder farmers? The authors answer this question by using the sixth and seventh rounds of the Ghana Living Standard Survey to examine the extent to which financial inclusion affects productivity among smallholder farmers in Ghana.Design/methodology/approachThe study uses a pooled data of the 6th and 7th rounds of the Ghana Living Standard Survey which are national representative data. The authors model an Instrumental Variable (IV) to correct for endogeneity in financial inclusion and a dominance analysis to examine the effects of access to credit, ownership of savings account and insurance product on farmers' productivity.FindingsResults from the study indicate that financial inclusion significantly enhances productivity. Moreover, credit, savings and insurance products influence productivity at various degrees. Thus, expanding the scope of financial services (access to credit, savings and insurance) among smallholder farmers is crucial for inclusive finance and sustainable agricultural production.Practical implicationsThe findings of the study have implications for financial institutions in the design of financial products that the meet the needs of smallholder farmers.Originality/valueSeveral studies have looked at how access to credit influences agricultural productivity in Africa. However, in recent times financial inclusion has been advocated for because it goes beyond mere access to credit. This paper to the best of our knowledge is the first of its kind to examine how financial inclusion could affect agricultural productivity in Ghana.

The (mis)use of al-Hilah (legal trick) and al-Makhraj (legal exit) in Islamic finance

2020 ◽  
Vol 11 (9) ◽  
pp. 2169-2182
Author(s):  
Edib Smolo ◽  
Abubakar Muhammad Musa
Keyword(s):  
Financial Services ◽  
Islamic Finance ◽  
Research Approach ◽  
Financial Contracts ◽  
Content Type ◽  
Practical Applications ◽  
Finance Industry ◽  
Financial Products ◽  
Theoretical Paper ◽  
Practical Implications

Purpose The purpose of this paper is to discuss the concepts of hilah (legal stratagem or legal trick) and makhraj (legal exit) and to examine their relevance and application in the contemporary Islamic financial services and products. Design/methodology/approach This paper uses the qualitative research approach to provide a theoretical overview of hilah and makhraj literally and technically and to examine their practical applications in Islamic financial products and services. In particular, this paper evaluates several Islamic financial contracts and examines its practices in light of the implications of hilah or makhraj. Findings The paper finds that there is a glaring difference in perception and application of hilah and makhraj, as argued by some scholars. It has been found that the principle of hilah has been extensively used in the Islamic finance industry as a way to circumvent the riba prohibition. For example, Islamic financial instruments such as bay’ bithaman al-ajil, bay’ al-‘inah, tawarruq, commodity murabahah, musharakah mutanaqisah and, in some cases, the sale and lease back sukuk are found to be tainted by hilah. Research limitations/implications Because this is a theoretical paper, it should be explored in more detail, and critical analysis of Islamic financial services and products should be reviewed in line with these two principles to ascertain if the products and services are in line with Shariah requirements and devoid of hilah practices or not and to align the industry with the maqasid al-Shariah. Practical implications This paper identifies a serious challenge that Islamic finance practitioners face in product development in their effort to provide more competitive services to their customers. As a result, it demonstrates the need to proactively use makhraj in innovating Islamic financial products and proffering more sustainable and competitive solutions. Originality/value This paper discusses a topic that attempts to dispel the suspicious perceptions of some analysts as to the genuineness of Islamic financial practices.

Islamic religiosity and Islamic financial asset holdings (IFAH)

2019 ◽  
Vol 10 (4) ◽  
pp. 591-606
Author(s):  
Rozaimah Zainudin ◽  
Nurul Shahnaz Mahdzan ◽  
Rosmawani Che Hashim ◽  
Noor Adwa Sulaiman
Keyword(s):  
Religious Education ◽  
Generalized Linear Model ◽  
Financial Asset ◽  
Financial Assets ◽  
Kuala Lumpur ◽  
Content Type ◽  
Financial Products ◽  
The Relationship ◽  
Practical Implications ◽  
Asset Holdings

Purpose This paper aims to examine the relationship between Islamic religiosity and Islamic financial asset holdings (IFAH) among Muslim individuals in Malaysia. Design/methodology/approach Data for this study were collected through a survey questionnaire, and a sample of 751 working Muslims in Kuala Lumpur was obtained. Islamic religiosity was measured via religiosity levels and religiosity dimensions. IFAH was measured as the fraction of Islamic financial assets held in a financial portfolio. A generalized linear model (GLM) was used to estimate the relationships. Findings The results show that religiosity level influences the IFAH. Devout Muslims held more Islamic financial assets than casual Muslims. All religiosity dimensions influenced IFAH, with faith having the greatest influence and virtues the least. Educational level strongly influenced IFAH. Research limitations/implications The sample consisted of working Muslims in Kuala Lumpur; hence, generalization cannot be made to all Malaysian Muslims. This study only focused on Islamic financial assets and did not consider other types of Islamic financial products, such as financing. Practical implications Efforts to encourage Muslims to opt for Islamic financial assets may be more effective if they begin from the core of religious education. Educating individuals on Islamic principles, including the values and concepts of Islamic finance, is important to encourage the Islamic banking industry to prosper among Muslims. Originality/value The paper provides an extension of current literature on spirituality and religion by incorporating a comprehensive measure of Islamic religiosity and its relationship with financial asset holdings.

What do bankers think about Halal financial services?

2019 ◽  
Vol 7 (2) ◽  
pp. 18
Author(s):  
Zaimy Johana Johan ◽  
Mohd Zainee Hussain
Keyword(s):  
Customer Service ◽  
Financial Services ◽  
Structured Interview ◽  
City Centre ◽  
Kuala Lumpur ◽  
Financial Industry ◽  
Product Packaging ◽  
Financial Products ◽  
Product Features ◽  
Banking Institutions

Over the past three decades, Malaysian halal financial services have become one of the fastest growing industries with a range of products and services accepted by both Muslims and non-Muslims.  However, the Islamic financial products and its Islamic banking institutions are facing stiff competition from conventional products in relation to marketing coverage, branding, product packaging and other pivotal aspects such as product features, benefits and advantages.  Moreover, there is an immense pressure on the institutions to remain competitive along with the national goals of building shariah-driven ecosystem within the halal industry.  Against the backdrop of the competitive financial industry landscape, this qualitative study examines the crucial attributes of Islamic financial services with focus on knowledge, attitude and level of acceptance of bankers in promoting, marketing and selling Islamic financial products and services.  Employing semi structured interview technique; customer service officers of seven banks within Kuala Lumpur City Centre were selected.  This exploratory study is aimed to identify the perception of bankers towards halal financial services and the study has discovered bankers' knowledge, attitude and level of acceptance of specific products can generate customer’s positive perception, awareness and acceptance of the product offered which will increase their satisfaction and loyalty.  This study is expected to promote knowledge advancement and understanding of Islamic financial services towards fostering a healthy and complete offering of shariah compliant financial solutions. It can later further expand the asset base and outreach of the Islamic financial industry, and subsequently contributes towards increased customer satisfaction and loyalty.

The SEC’s Municipal Advisor Rule will prompt new practices for market participants

2014 ◽  
Vol 15 (2) ◽  
pp. 10-17
Author(s):  
David Bannard ◽  
Reed Groethe
Keyword(s):  
Financial Services ◽  
Design Methodology ◽  
Securities Market ◽  
Information Flows ◽  
Content Type ◽  
Market Participants ◽  
Financial Products ◽  
Practical Guidance ◽  
Flow Of Information ◽  
Practical Implications

Purpose – To explain the new Municipal Advisor Rule that will take effect on July 1, 2014, which regulates persons and firms that provide advice to municipal issuers and obligated parties regarding municipal financial products or the issuance of municipal securities or that engage in certain solicitation of municipalities or obligors on behalf of third parties. Design/methodology/approach – Explains who is treated as a Municipal Advisor, the standards applicable to Municipal Advisors, how the Rule may affect municipal securities issuers and obligated persons (collectively referred to as “Borrowers”) as well as other market participants, describes the exceptions and exemption s to the requirements of the Rule, and concludes with suggestions as to how Borrowers and other market participants may promote the flow of information. Findings – The Rule will carry out a requirement of the Dodd-Frank Act, which provides that any party that provides advice to a Borrower regarding municipal financial products or the issuance of municipal securities must register with the SEC and the MSRB as a Municipal Advisor, unless such party qualifies for an exception or exemption under the Rule. Practical Implications: The Rule will change how information flows in the municipal securities market. Some consequences of the Rule may disadvantage Borrowers and other market participants. The Rule may restrict the flow of information provided to Borrowers by participants in the municipal securities marketplace that are not Municipal Advisors. Originality/value – Practical guidance from experienced financial services lawyers.

FINRA’s disciplinary actions in 2017: increased restitution ordered with minimal changes in number of cases

2018 ◽  
Vol 19 (2) ◽  
pp. 19-23
Author(s):  
Brian Rubin ◽  
Adam Pollet
Keyword(s):  
Money Laundering ◽  
Design Methodology ◽  
Disciplinary Actions ◽  
Financial Industry ◽  
Electronic Communications ◽  
Content Type ◽  
The Past ◽  
Expert Analysis ◽  
Research Analysts ◽  
Practical Implications

Purpose The purpose of this paper is to analyze the Financial Industry Regulatory Authority’s (FINRA) 2017 disciplinary actions, the issues that resulted in the most significant fines and restitution and the emerging enforcement trends from 2017 and beyond. Design/methodology/approach The approach of this paper discusses the disciplinary actions in 2017 and prior years, details the top 2017 enforcement issues measured by total fines assessed, including anti-money laundering, trade reporting, electronic communications, books and records, research analysts and research reports, and explains current enforcement trends, including restitution, suitability cases and technological issues. Findings In 2017, restitution more than doubled from the prior year, resulting in the fourth highest total sanctions (fines combined with restitution and disgorgement) assessed by FINRA over the past 10 years. Practical implications Firms and their representatives should heed the trends in both the substantial restitution FINRA is ordering and the related enforcement issues in the cases FINRA has brought. Originality/value This paper provides expert analysis and guidance from experienced securities enforcement lawyers.

Quality financial inclusion and its determinants in South Africa: evidence from survey data

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kudakwashe Joshua Chipunza ◽  
Ashenafi Fanta
Keyword(s):  
South Africa ◽  
Survey Data ◽  
Financial Services ◽  
Ordinary Least Squares ◽  
Financial Inclusion ◽  
Least Squares Regression ◽  
Content Type ◽  
Demographic Groups ◽  
Financial Products ◽  
Data Limitations

PurposeThe study measured quality financial inclusion, a more comprehensive measure of financial inclusion, and examined its determinants at a consumer level in South Africa.Design/methodology/approachThis study leveraged on FinScope 2015 survey data to compute a quality financial inclusion index using polychoric principal component analysis. Subsequently, a heteroscedasticity consistent ordinary least squares regression model was employed to assess determinants of quality financial inclusion.FindingsThe empirical findings indicated that gender, education, financial literacy, income, location and geographical proximity determine quality financial inclusion. These findings could inform policymakers and financial services providers on how quality financial inclusion can be promoted through tailoring financial products for various socio-demographic groups.Research limitations/implicationsDue to data limitations, the study was confined to South Africa and did not capture digital financial inclusion. Hence, future studies could replicate the study in Sub-Saharan Africa's context and compute an index that captures digital financial inclusion.Practical implicationsThese findings could inform policymakers and financial services providers on how quality financial inclusion can be promoted through tailoring financial products for various socio-demographic groups.Originality/valueThis study proposed a more comprehensive measure of quality financial inclusion from a demand-side perspective by accounting for important dimensions that include diversity, affordability, appropriateness and flexibility of financial products and services.

The SEC turns up the heat on private equity expense allocations

2016 ◽  
Vol 17 (2) ◽  
pp. 35-38
Author(s):  
Samuel Lieberman ◽  
John T. Araneo
Keyword(s):  
Financial Services ◽  
Private Equity ◽  
Equity Fund ◽  
Content Type ◽  
Private Equity Fund ◽  
Fund Managers ◽  
Compliance Programs ◽  
Raising Awareness ◽  
The Us ◽  
Practical Implications

Purpose To discuss the US Securities and Exchange Commission’s (“SEC’s”) increasing focus on disclosure and conflict-of-interest problems arising from how private equity fund (“PE Fund”) managers allocate expenses between management and fund investors. Design/methodology/approach This article summarizes the background of this focus on expense allocations and, drawing from the recent SEC enforcement actions focused on this issue, and identifies the types of both expenses and disclosures that have caught SEC attention. Findings After spending the first two or three years post Dodd-Frank raising awareness of these issues, the SEC has begun to impose large fines over expense-allocation conflicts and disclosure issues. Practical implications It is imperative for PE Fund managers to retain counsel to review their fund offering documents, expense allocation practices, and compliance programs to ensure consistency with the SEC’s recent decisions on these issues. Originality/value Practical guidance from experienced financial services lawyers.

Could perverse incentives encourage financial services compliance and internal audit staff to ignore or engage in illegal behaviour?

2018 ◽  
Vol 33 (1) ◽  
pp. 64-89 ◽  
Author(s):  
Bryane Michael ◽  
Mark Williams
Keyword(s):  
Financial Services ◽  
Internal Audit ◽  
Economic Incentives ◽  
Financial Industry ◽  
Self Assessment ◽  
Content Type ◽  
Internal Auditors ◽  
Financial Firms ◽  
Perverse Incentives ◽  
Using Data

Purpose The purpose of this paper is to understand why managers, internal auditors and compliance staff (in financial firms specifically and using Malaysia as a concrete example) can want to ignore compliance-related legislation (a law on anticompetitive behaviour in this case). Design/methodology/approach The authors review, discuss and critique the literature on compliance and institutions in the light of existing data from Malaysia’s financial industry (literally confronting theory with data). Findings Legislative design can actually encourage managers and their auditors disobey/ignore the law for reasons which previous theories cannot explain. Research limitations/implications This research does not use the regression techniques in vogue now. The findings, nevertheless, imply that attempts to explain phenomenon in management auditing should start with the laws governing managerial activity. Practical implications Auditors may use the methods used in this study to assess the extent to which financial services firms’ managers have incentives to comply with laws. Similarly, this research can quantify the extent to which internal auditors in these firms have incentives to find untoward conduct. Social implications Poorly designed laws affecting managerial auditing derive from pre-existing social relationships, as well as help shape them (as shown using data). Identifying areas of non-compliance may actually signal deeper problems in the way businessmen and lawmakers make and enforce laws requiring compliance and self-assessment. Originality/value The authors know of no study looking at the economic incentives driving internal auditors’ behaviour – particularly in the area of antitrust. They show how law shapes management and auditors’ incentives, quantify these incentives and show how/why previous research fails to explain these incentives.

How positive service experiences contribute to service captivity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Constantino Stavros ◽  
Kate Westberg ◽  
Roslyn Russell ◽  
Marcus Banks
Keyword(s):  
Financial Services ◽  
Financial Vulnerability ◽  
Socially Responsible ◽  
Content Type ◽  
Welfare Policies ◽  
Regulatory Frameworks ◽  
Alternative Financial Services ◽  
Service Experiences ◽  
Service Relationship ◽  
Practical Implications

Purpose Service captivity is described as the experience of constrained choice whereby a consumer has no power and feels unable to exit a service relationship. This study aims to explore how positive service experiences can contribute to service captivity in the alternative financial services (AFS) sector for consumers experiencing financial vulnerability. Design/methodology/approach A total of 31 interviews were undertaken with Australian consumers of payday loans and/or consumer leases. Findings The authors reveal a typology of consumers based on their financial vulnerability and their experience with AFS providers. Then they present three themes relating to how the marketing practices of these providers create a positive service experience, and, in doing so, can contribute to service captivity for consumers experiencing financial vulnerability. Research limitations/implications The benefits derived from positive service experiences, including accessible solutions, self-esteem, and a sense of control over their financial situation, contribute to the service captivity of some consumers, rendering alternative avenues less attractive. Practical implications AFS providers must ensure a socially responsible approach to their marketing practices to minimize potentially harmful outcomes for consumers. However, a systems-level approach is needed to tackle the wider issue of financial precarity. Policymakers need to address the marketplace gaps, regulatory frameworks and social welfare policies that contribute to both vulnerability and captivity. Originality/value This research extends the understanding of service captivity by demonstrating how positive service experiences can perpetuate this situation. Further, specific solutions are proposed at each level of the service system to address service captivity in the AFS sector.

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