Muslim Business and Economics Review

Investigating the CO2 Emissions Convergence and its Nexus with Growth, Renewable Energy, and Energy Intensity in OIC Countries

2025-06-30T07:35:22+00:00

Carbon dioxide (CO₂) emissions pose a significant climate threat, impacting all aspects of human activity and necessitating global collaboration to protect both human and nonhuman species. Transitioning from fossil fuels to renewable energy and enhancing energy efficiency are widely regarded as the most effective strategies for reducing emissions and mitigating global warming. Against this backdrop, we examine CO₂ emissions convergence among 50 Organization of Islamic Countries (OIC) member states, considering the role of economic growth, renewable energy use, and energy intensity. Our analysis employs stochastic, club, and beta convergence methods, alongside system generalized method of moments (GMM) estimation. Four key findings emerge from this analysis. First, accounting for country heterogeneity and cross-sectional dependence, we confirm stochastic convergence in CO₂ emissions among OIC members. Second, there is evidence of club convergence, where emissions cluster into distinct groups. Third, while renewable energy consumption negatively affects emissions pathway, energy intensity positively and directly affects CO₂ emissions’ growth. However, fourth, economic growth increases carbon emissions. These findings have significant policy implications. If emissions do not converge, allocating emission rights through carbon trading could lead to substantial international wealth transfers, influencing global carbon policy. Additionally, countries with similar convergence patterns could adopt common climate policies. At the same time, all nations should prioritize increasing the share of renewable energy in their energy mix to achieve sustainable emission reductions.

Enhancing Muslim SME Sustainability in Malaysia: The Role of Zakat and Financial Literacy

2025-06-30T07:35:22+00:00

Financial literacy issues pose significant challenges for small and medium enterprises (SMEs) in Malaysia, leading to improper financial management practices and poor performance. In response to these challenges, this study explores the potential role of zakat, an Islamic fiscal tool, in addressing financial management issues among Muslim SMEs. Specifically, the study analyses how zakat can serve as a mechanism for distributing assistance to poor Muslim entrepreneurs within the SME sector. Motivated by zakat's potential to mitigate financial management and literacy issues, this research employs semi-structured interviews to gather insights from seven Muslim entrepreneurs. Through qualitative analysis, the study examines the perceptions, experiences, and expectations surrounding zakat as a means of financial support tools for SMEs. The findings shed light on how zakat institutions can contribute to enhancing financial literacy and promoting sound financial management practices among Muslim SMEs, including the formulation of a proposed model of Non-Cash Zakat Distribution for Financial Management Services. The implications of this study extend beyond the immediate context. By effectively leveraging zakat funds, policymakers, financial institutions, and zakat administrators can play a proactive role in supporting Muslim SMEs and promoting grassroots economic development.

Two Different Approaches of Estimating Production Factor Demand: Evidence from Indonesian Large and Medium Enterprises

2025-06-30T08:19:55+00:00

This study measures the elasticity of production factors of manufacturing companies in Indonesia by applying demand model for production inputs. Using survey data of large and medium-sized companies in Indonesia from 1995-2015, this study calculates the elasticity of demand for factors of production through two approaches: first, the transcendental logarithm equations applying unrestricted, homotheticity, and adjustment cost model, and second, a system of equations. We use the variation in the group of industries as a proxy for the market price of inputs. The results show that there is heterogeneity in terms of the magnitude and nature of the cross-price elasticity between production inputs for both complementary and substitute inputs. Meanwhile, the own price elasticity is negative for all production inputs and there are positive effect adjustment costs that must be borne by firms in expanding production inputs.

Maqasid al-Shariah and Sustainable Finance: Analyzing the Impact of Green Sukuk Allocation in Indonesia

2025-06-30T07:35:22+00:00

This research paper examines the application of Maqasid al-Shariah principles in the context of sustainable finance, focusing on the impact of Green Sukuk Allocation in Indonesia. As an Islamic financial instrument, Green Sukuk aims to raise funds for environmentally friendly projects while adhering to shariah principles. This study analyzes the 2023 Green Sukuk Allocation and Impact Report from the Indonesian Ministry of Finance to assess the impact of Green Sukuk in achieving both financial and sustainable development goals. Using a qualitative approach, this paper evaluates how the allocation of green sukuk funds aligns with the objectives of Maqasid al-Shariah, particularly in the preservation of the environment and the promotion of social welfare. The analysis also considers the challenges and opportunities faced in implementing green sukuk as a sustainable financing mechanism. This research finds that the implementation of green sukuk financing in Indonesia aligns with the five essential principles of Maqasid al-Shariah, namely hifz al-deen (preservation of religion), hifz al-nafs (preservation of life), hifz al-aql (preservation of intellect), hifz al-maal (preservation of wealth), and hifz al-nasl (preservation of lineage). Moreover, the implementation of green sukuk financing has also positively impacted multiple sectors in Indonesia. The findings of this study have important implications for policymakers, financial institutions, and investors seeking to promote sustainable development through Islamic finance instruments. The study's insights can inform the design of future green finance policies and strategies, highlighting the role of Islamic finance in achieving both financial and sustainability goals.

The Nexus of Environmental Performance and Economic Growth: A Panel Analysis from Organization of Islamic Cooperation Countries

2025-06-30T07:35:23+00:00

The climate is changing and the earth is getting hotter. Cutting down rainforests, burning fossil fuels, and farming livestock all contribute to greenhouse gas emissions. Human economy and the natural world are closely connected. This study evaluates the relationship between environmental performance and economic growth using panel data for Asian member states of the Organization of Islamic Cooperation (OIC) for the years 2020 to 2022. Data on Environmental Performance Index and Gross Domestic Product growth were collected from the Yale Center for Environmental Law & Policy and the World Bank. Panel data regression was used by selecting the best parameter estimates from three panel data regression models: Common Effect Model (CEM), Fixed Effect Model (FEM), and Random Effect Model (REM). The study findings are anticipated to enhance nations' consciousness regarding environmental concerns and to enhance their focus on ecologically sustainable economic growth and development trajectories.

Does Halal Certification Matter? The Influence of Polarity in Religious Understanding on Attachment to Halal Certification in Indonesia

2025-06-30T07:35:23+00:00

This article examines the influence of polarity in religious understanding on attachment to halal certification in Indonesia. In 2024, there were 3,237,167 products that have been certified halal, with 58.5% being self-declared as halal and the remaining 41.5% being regular halal certificates. This number has more than tripled since 2019, when there were just 963,411 halal-certified products. The high increase in the number of halal-certified products is directly proportional to the high halal awareness of Indonesian Muslims. Previous studies have not explicitly addressed the concept of halal as understood by the Indonesian Muslim community, which possesses a diverse range of religious interpretations. This article reveals the typology of Indonesian Muslim religious understanding and its influence on attachment to halal certification. This research used quantitative methods by distributing questionnaires to Indonesian Muslim respondents with conservative, moderate, and progressive religious categorizations. Respondents in this study were aged 18-60 years, and included both men and women. Data were analyzed using the ANOVA technique using SPSS 29.0.1. The results show a significant value (0.008), indicating a difference in attachment to halal certification between conservative, moderate, and progressive groups, with the highest attachment average amongst conservative Muslims (33.46).

Cash Waqf and Crowdfunding: A Study of Online-Based Cash Waqf in The Passive Charity of The Indonesian Waqf Education Foundation

2025-06-30T07:35:23+00:00

This research examines the effectiveness of crowdfunding for online-based cash waqf by analysing the cash waqf turnover practice of the Indonesian Waqf Education Foundation's Pasif Amal (Passive Charity) website. Two topics are explored in this research. First, how the Indonesian Waqf Education Fund practices cash waqf crowdfunding strategies for passive charity. Second, the effectiveness of the cash waqf crowdfunding strategy and the implications for the legalization of cash waqf. This research uses a qualitative method with the approach of Soerjono Soekanto's legal effectiveness. This research concludes through its passive crowdfunding strategy, the Indonesian Waqf Education Foundation has changed the previously-dominant view that waqf is limited to land; instead, the Foundation’s experience illustrates that waqf can also represent goods in the form of money. The findings confirm that passive charitable institutions are effective and can even become a new approach in the world of waqf, especially in countries where cash waqf is already a legal practice.