Asian Economic and Financial Review

The impact of participatory Islamic finance on Shari'ah banks' profitability

Dayah Abdi Kulmie — 2024-05-20

Shari'ah Banks offer financing based on Islamic values, fairness, equity, and ethics, promoting stable economies and prosperous societies through employing a variety of methods, including participatory finance. The aim of this research is to investigate how participatory financing impacts the profitability of Shari'ah banks in Somalia. Specifically, the study focused on analyzing the influence of mudarabah and musharakah financing on Islamic banks' profitability. The research employed a correlational design to examine the relationship between variables, and primary data was analyzed using SPSS. The results of this study indicate a strong positive correlation between participatory Islamic financing and the profitability of Shari'ah Banks. The findings suggest that both mudarabah and musharakah financing have statistically significant positive effects on the profitability of Shari'ah Banks. According to the findings, the study concluded that an increased implementation of participatory Islamic financing methods could potentially enhance banking institutions' profitability and performance. Moreover, the article recommends that Shari'ah banks should expand their services, increase product exposure to attract new customers, promote participatory Islamic financing, and develop clear risk-handling policies and strategies. This paper adds valuable insights to the existing literature on Islamic banking and finance while also providing guidance for Islamic financial institutions to improve their profitability, growth, and performance through participatory Islamic finance.

The impact of trade reforms on industry wage premia in Pakistan: A sectoral perspective

Zhihong Chen — 2024-05-22

Pakistan witnessed significant trade liberalization reforms between 1988 and 2005. This study investigates the impact of Pakistan's significant trade liberalization policies in 1988 on industry wage premia. We use an estimation strategy that takes into account dispersion in sector wage premiums and trade reforms over time and across sectors. We employed the wage premium approach and Restricted Least Squares to obtain sectoral wage premia. We used weighted least squares and two-stage-least-squares (2SLS) to explore the liaison between trade reforms and sector wage premia. Contrary to previous empirical studies on less developed economies, our findings reveal a significant and resilient correlation between changes in trade reforms and fluctuations in sector wage premiums during the liberalisation period of 1990-2005. Our findings are consistent with short- and medium-run trade models in which workers are immobile across industries or, on the other hand, with the presence of sector rents that are reduced when trade policy is liberalized.

Causality relations and causality direction of shallots price changes in east java province, Indonesia

Laila Nuzuliyah — 2024-07-01

This study examines the existence of market integration and causality between prices at the consumer level and other locations in the shallot market. The time-series price data observed every month from 2013 to 2018 regarding the price level of consumers originating from farmers in Probolinggo, Nganjuk, and Malang districts were analyzed. Additionally, consumer price data was collected in Probolinggo Regency, Nganjuk Regency, Malang Regency, and Surabaya City. The data was analyzed using the Granger causality test. The results revealed significant findings at the producer level, indicating a negative causality between Nganjuk and Probolinggo producer prices. On the other hand, producer markets in Nganjuk, Probolinggo, and Malang districts influence consumer prices in Surabaya City. Finally, Nganjuk Regency, Probolinggo Regency, and Malang Regency's consumer markets had a negative influence on the Surabaya City consumer market. Market participants, such as farmers and traders, need to be aware of these price dynamics to effectively coordinate their activities and respond to market changes.