Journal of King Abdulaziz University: Islamic Economics

The Significance of Moral Agency for Socioeconomic Justice and its Absence in Islamic Economics and Finance

2023-10-16T20:18:15+00:00

The paper attempts to build a case for the moral agency of individuals operating within organic social networks – in contrast to the impersonal nature of financial institutions – as a necessary medium for practicing Islamic economic principles, for the goal of achieving socioeconomic justice in society. Through comparative analysis, the paper argues that the modern institutional framework due to its impersonal nature, capitalist orientation, agency cost, and socially disintegrative nature is not a suitable medium for advancing the agenda of Islamic economics. A market environment where individuals exercise their moral agency to the fullest is perhaps necessary. To make this argument, the paper looks at the history of Muslim bazaars and the norms in Muslim business communities in the contemporary world to explore the significance of the personal agency of morally conscious and pious individuals. The individual traders or investors would operate within their organic social networks while exercising socioeconomic justice among their stakeholders. To achieve the desired socioeconomic goals sought through the implementation of Islamic economic principles, a culture of trust and mutual support needs to be cultivated (or preserved where it already exists) between individual traders and investors in any market. This is possible only when the traders or investors can fully exercise their moral agency, have concern for each other and voluntarily demonstrate trustworthiness. In absence of such a culture, the paper argues, it would be difficult to come close to the satisfactory implementation of the principles of Islamic economics in marketplaces, let alone the achievement of the desired socioeconomic goals.

Mapping Issues in Labor Economics: An Islamic Perspective for Research and Policy Development

2023-12-20T08:18:29+00:00

This study has been set out to map the literature on labor economics from an Islamic perspective to identify the concentration of research, gaps in the literature, major obstacles to the development of the field, and how Islamic principles can guide policymaking in this area. The literature survey revealed three key themes in the mapping of issues in labor economics from an Islamic perspective: religious or cultural, behavioral, and systemic aspects. The religious aspect involves the direct interpretation and/or implementation of Islamic principles, rulings and behavioral norms derived from the divine texts in labor economics. The role of culture (‘urf) may have an effect on how religious texts are interpreted, which in turn shapes religious views. The behavioral aspect is concerned with the role of individual behavior, ethics, and morality in shaping labor market outcomes. The systemic aspect is about the shortcomings or loopholes in the economic system that cause problems in the labor market, such as poverty, unemployment, and inequality. In general, the study found that research in labor economics from an Islamic perspective is limited compared to other fields like Islamic banking and finance. Published articles on the topic is relatively scanty, especially in providing deep insights into the theoretical, empirical and policy related perspective. The study identified three main directions of research in labor economics from an Islamic perspective: (i) Islamic work ethics, (ii) Islamic labor markets, and (iii) Islamic labor policies. Most of the literature are mainly concentrated on addressing the Islamic work ethics.

Impact of Non-interest Financial Inclusion on Household Livelihood in the North-West Nigeria: A Preliminary Investigation

2023-11-22T08:36:21+00:00

The first step for building self-sufficiency and sustainable livelihood is re-establishing the necessary assets for income generation. This study assesses the likelihood impact of non-interest financial inclusion across eighty (80) selected households in the Northwest region of Nigeria. Intuitively, the study considered three dimensions through which the impact could be felt; through change in households’ income, consumption, and savings. Guided by evidence in the empirical literature, the paper employs logistic regression model in its analyses. Preliminarily, the Cronbach’s alpha value of 0.62 suggests good acceptability and reliability of the research instruments. Empirical results show that the household’s change in income model is significantly influenced by household’s age, household size and cost of obtaining non-interest facility. The household’s consumption model shows that household headed by a female, those households who use public means of transportation and those able to access a non-interest facility witnessed increase in their livelihood. In the household’s savings model, the study found that years of business experience increases household’s savings habit, thus improves livelihood. Consequently, the study posits that measures aimed at improving access to non-interest financial services, especially for women, is capable of enhancing livelihood in the study area.

Determinants for Acceptance and Use of Sharīʿah Banking Digital Services in Indonesia: Applying UTAUT 3, Trust, and Sharīʿah Compliance

2023-10-15T08:30:15+00:00

Digital banking is one of the services of sharīʿah banking, so the quality of these services needs to be considered. This study investigates the determinants of intention and use of sharīʿah banking digital services by Indonesian Muslims, using the modified unified theory of technology acceptance and use (UTAUT) 3 model with sharīʿah compliance and trust variables. The model was empirically tested in the Jakarta Metropolitan area using 129 responses from a field survey. The collected data were analyzed using partial least squares structural equation modeling. The results show that habit, personal innovativeness, and trust significantly influence the intention to use sharīʿah banking digital services. Performance expectations, personal innovativeness, and sharīʿah compliance significantly affect the actual use of sharīʿah banking digital services. The results of this study also prove the role of sharīʿah compliance in moderating the effect of business expectations on the intention to use sharīʿah banking digital services. The practical implications of the results of this study can be used to encourage the development of sharīʿah banking digital services and decision-making in formulating strategies to increase the acceptance and use of sharīʿah banking digital services. This research also contributes to the development of literature as an initial effort to investigate the factors that influence the acceptance and use of sharīʿah banking digital services using the modified UTAUT 3 model with sharīʿah compliance and trust variables.

Sharīʿah Compliant Investing: Examining Ijārah Ṣukūk Market Determinants in Pakistan

2023-12-06T08:54:15+00:00

This study explores the influence of Ijārah Ṣukūk market determinants on Sharīʿah compliant investments in Pakistan during a significant financial crisis that the country witnessed over the past two years (2022 2023). Utilizing a modified questionnaire, the research gathered data from three hundred (300) ṣukūk investors, analyzed using SmartPLS software. The study identifies Sharīʿah Compliance as the most influential factor in the restructured Islamic Market of Pakistan, followed by secondary market impact and credit ratings. The introduction of Sharīʿah compliant securities is expected to attract investors to the benefits of structured markets, including yield, market liquidity, and balance in both long and short term ṣukūk instruments. The application of this research in Pakistan's emerging Islamic Market highlights the role of ṣukūk market determinants in Sharīʿah
compliant investment. The findings are valuable for countries developing Islamic banking systems and policymakers. The study also highlights the role of ṣukūk market determinants in Sharīʿah compliant investment. The findings are valuable for countries developing Islamic banking systems and policymakers endeavoring to expand Islamic financial instruments. The research emphasizes the market's pivotal factor, Sharīʿah Compliance, and its influence over secondary market dynamics and credit ratings. The study, examining the impact during a financial crisis, reveals that the introduction of Sharīʿah compliant securities is likely to draw investors to the advantages of well structured markets, such as yields, liquidity, and balance in ṣukūk instruments. The results offer insights for enhancing market environments and regulatory measures to create an attractive investment landscape.

Determinants of Intention to Adopt Auto Insurance (Takāful) Business Among Vehicle Owners in Nigeria

2023-12-25T20:32:35+00:00

Despite the recent surge in global growth and the increasing role played by the Islamic financial system, particularly Takāful, within the international financial landscape, there has been limited attention directed towards Takāful in Nigeria. This study aims to identify the factors influencing the intention of vehicle owners to adopt Auto Insurance (specifically Takāful) in Nigeria. Employing a survey research design, the study targeted the population of twelve million registered vehicles in Nigeria, with a sample size of four hundred (400) respondents. Data were collected using a questionnaire, and multiple regression analysis was conducted using SPSS version 26 to test the research hypotheses. The regression results revealed that awareness, relative advantage, and social influence significantly influence vehicle owners' intention to adopt Auto Insurance (Takāful) in Nigeria. However, factors such as religiosity, perceived compatibility, perceived complexity, and perceived risk did not exhibit a significant influence on vehicle owners' intention to adopt auto insurance in Nigeria. The study recommends robust public awareness campaigns by each auto Takāful-insurance company to highlight the advantages of Takāful products and services over conventional insurance. Additionally, it suggests that the government formulate supportive laws to encourage the establishment of more Takāful companies in Nigeria, given the limited presence of such entities in the country.

A Book Review on “Economics and Economic Policy: Islamic Perspective”

2024-02-26T16:55:56+00:00

Since its establishment as a formal discipline during the First Makkah Conference in 1976, Islamic Economics has garnered significant attention from scholars around the world. Over more than four past decades, dedicated Islamic economists have strived to produce a textbook of exceptional value, aiming to provide universities with a comprehensive resource that imparts profound insights into the Islamic perspective on economics. However, this undertaking has not been without its challenges, both internal and external. Amidst the pursuit of this noble goal, a growing sense of dissatisfaction has emerged among earlier generations of Islamic economists. They perceive a concerning trend within Islamic Economics, where undue focus has been placed on the discipline's end product, specifically Islamic banking and finance, resulting in a reliance on conventional economic paradigms. This imitation has deviated from the authentic development of Islamic Economics based on its inherent principles. In response to these concerns, the book under review courageously confronts these challenges head-on, seeking to redirect the discipline along its original trajectory. The authors have ambitiously assembled a rich tapestry of perspectives that encompasses not only rigorous legal (fiqh) analysis but also profound insights from Islamic philosophy and from economic analyses into the fabric of their work. As a result, the reviewer considers the book a vital addition to the contemporary Islamic Economics curriculum in numerous universities.