The relationship between monetary policy and economic activity is one of the basic questions of macroeconomics. Economists have addressed this question in a number of ways. The traditional approach focuses on the importance of the liability side of the bank balance sheet. However, the...

The choice between debt and equity financing has been directed to seek the optimal capital structure. Under the agency costs hypothesis, a high leverage or a low equity/asset ratio reduces the agency costs of outside equity and increases firm value. Several studies show that a firm with high...

The aim of this study is to analyze the sustainability of Islamic micro-financing for developing micro-enterprises (ME). We use the sample of Baitul Mal Wat Tamwil (BMT), as Islamic microfinance institution in Indonesia. Two approaches will be used to explore the sustainability, i.e., technical...

This paper shows how a risk management mechanism through selling debt can affect the value of the Islamic banks. The Islamic banks are able to maximize their value from the sale of murabahah on housing debt in order to manage their risk arising from fluctuations in interest rates. A tractable...

Purpose – This paper aims to study the problems faced by microfinance institutions (MFIs) and relates it with Al-Tawhid to see the solutions. Design/methodology/approach – An exploratory method was used to examine various literature that discuss MFIs, the challenge issues growing in tandem...

Purpose This paper aims to integrate Islamic and mainstream economics framework towards a more realistic understanding of Muslim consumption behaviour. Design/methodology/approach The model incorporates some of the Islamic institutions like period-wise deduction of Zakat from endowments. It also...

Purpose The purposes of this study are twofold. First, to theoretically examine the profit-sharing (mudarabah) contract that produces an optimal distribution of return in the presence of social learning (shuratic process) within the environment of asymmetric information. Second, to empirically...

Purpose – The aim of this paper is to discuss the similarities and differences of both conventional and Islamic financial institutions from various institutional perspectives. Design/methodology/approach – This conceptual paper describes the insights held by the financial institution theory...

Purpose: This paper aims to propose a derivation of Shariah risk from both the Islamic finance theory and theory of contracts in Islamic law. Specifically, it deliberates the derivation of Shariah risk following the contracts validity and apprises the readers of the Shariah risk issues...

Purpose: This paper aims to study the cross section of expected returns on Shari’ah-compliant stocks in Pakistan by using single- and multi-factor asset pricing models. Design/methodology/approach: To estimate cross section of expected returns of Shari’ah-compliant stocks, the study uses...