Muslim Business and Economics Review

Global Economic Landscape: From 5 ‘G’ To Polycrisis, and the Outlook Scenarios

Iwan J Azis — 2023-12-28

Learning from ‘Great Moderation’ to the ongoing ‘Geoeconomic Fragmentation,’ past episodes of capital flows can explain the evolution of global economy and the associated vulnerabilities. The events in all episodes are related to one another, and the corresponding vulnerabilities are interrelated. Together with the expected and unexpected contemporary shocks (pandemic, wars, geopolitical tensions) the built-up vulnerabilities contribute indirectly to the current sorry-state of global economy. As uncertainties abound, and the world is in polycrisis, it is difficult to forecast what is going to happen. Any estimate, including those made by the international organizations are subject to change. The outlook scenarios mapped out in this paper is intended to help us just to frame thinking about the potential paths ahead.

Low Equality for Women, Slower Economic Growth for All? Evidence from D-8 Countries

Sri Juli Asdiyanti Samuda — 2023-12-28

Gender equality promotes economic improvement and reduces income inequality. Considering the goal of all countries to achieve faster and stronger economic growth, improving gender equality may represent a promising solution. This paper examines the link between gender equality and economic growth in the ‘Developing Eight’ (D-8) countries from 1998 to 2021. This study provides estimation using a system GMM and panel causality test to determine the effect of gender equality on economic growth. The results indicate a positive and significant effect of gender equality on economic output in D-8 countries. Heterogenous panel non-causality findings suggest that gender equality and economic output have a bidirectional relationship in D-8 countries, indicating that economic output also affects gender equality.

Efficiency of SDG Achievement in Muslim Countries

Irni Nuraini — 2023-12-28

The United Nations adopted the 2030 Agenda for Sustainable Development and its Sustainable Development Goals (SDGs) to ensure that by 2030, the world addresses the numerous issues confronting humanity to promote well-being, economic prosperity, and environmental protection. Muslim countries, under the Organization of Islamic Cooperation (OIC), also actively participate in implementing the 2030 Agenda. This study aims to examine how efficient Muslim countries have been in achieving the SDGs between 2010 and 2017. The information indicates which countries have the highest and lowest SDG achievement rates, using the Data Envelopment Analysis (DEA) method to determine the relative efficiency level. According to the findings, four countries – Kuwait, Qatar, Malaysia, and Türkiye – achieved the maximum efficiency level across the period assessed. The country with the lowest efficiency is Comoros. The analysis also found regional variations of efficiency in SDG achievement, with the region with the highest efficacy value is Central Asia, while East Africa has the lowest.

The Solution for Unstable Bubble Assets: Reflection from an Islamic Finance Perspective

Muhamad Nagib Alatas — 2023-12-28

In the fast-paced world of technology, there exist popular investment instruments that have no intrinsic value (non-asset-based). As a result, their prices are highly volatile and prone to bubbles. However, from an Islamic perspective, investment vehicles must have a fundamental value (asset-based) to ensure price stability. This research aims to compare the behaviour of asset prices between non-asset-based and asset-based types by utilizing a system dynamics model. Furthermore, this study investigates the impact of two types of market sentiment: relatively stable good market and very good market sentiment, follows by very bad market sentiment. The findings of this study suggest that non-asset-based asset prices tend to bubble in response to good market sentiment and then rapidly decline when significant bad market sentiment arises. In contrast, asset-based assets tend to have more stable prices because investors have benchmarks and do not rely solely on intuition. This research highlights the importance of the fundamental value or asset base in investment instruments, as required by Islamic finance. However, asset-based assets can also be prone to high volatility when irrational investors dominate, and speculation prevails. In such cases, government intervention or regulation may be necessary to mitigate risks and stabilise the market.

The Relevance of The Human Development Index from An Islamic Perspective to Macroeconomics and Zakat: A Measure of The Development of The World's Muslim Community

M. Zidny Nafi’ Hasbi — 2023-12-28

This paper analyses the core concepts and indicators of the Human Development Index (HDI) from a religious and theological perspective, particularly from an Islamic perspective (termed I-HDI). By using the theory of maqāṣid al-sharīʿah (the goals or objectives of Islamic law), this study looks at how I-HDI, macroeconomics, and zakat (alms) are interrelated. The study then tests the HDI and IHDI calculations and analyses for differences and similarities between them. This research uses the dynamic panel regression method with generalised method of moments (GMM) analysis in two steps. The author found that HDI and I-HDI provide very different results. The results of the HDI calculation are in the middle to lower ranking on the scale, while I-HDI sits on the upper middle scale. There is a large disparity between the results of HDI and I-HDI calculations. Hypothesis testing shows a positive macroeconomic relationship and influence on I-HDI, while the zakat variable is detrimental to I-HDI. This condition occurs because the strategy and management of zakat by the government is not optimal.

Efficiency Comparison between Conventional and Islamic Rural Banks in Sumatra during the COVID-19 Pandemic

Nashr Akbar — 2023-12-28

This study aims to examine and compare the efficiency of conventional rural banks and Islamic rural banks in their roles as intermediary institutions during the COVID-19 pandemic in Sumatra, Indonesia. Furthermore, the efficiency determinants were further analysed to find some variables that affect rural banks’ efficiency. Non-Parametric approach, Data Envelopment Analysis (DEA), and Tobit Regression are employed in this study. The results show that Islamic rural banks have better efficiency performance compared to conventional rural banks, but that there is a fluctuating efficiency trend experienced by both types of rural banks during the observation period. In addition, the potential improvement result indicates that financing and operating revenue variables are the main causes of rural bank inefficiency. Furthermore, the Tobit Regression result finds that capital and bank size significantly improve the efficiency level, but that risk significantly reduces bank efficiency.

The Role of Customer Intention Regarding Environmentally Sustainable Islamic Banking in Indonesia: Examining the Structural Model

Fajar Sodik — 2023-12-28

Environmental degradation is a global concern for businesses, requiring consistent effort to maintain sustainable environmental practices. Environmental sustainability is a crucial issue of concern to everyone, an increasing proportion of people are paying attention to various environmental issues in all parts of their lives, including in the context of Islamic banking. This research aims to develop and test a contextual framework for studying customer intentions in adopting sustainability Islamic banking activities and services. The study uses the Theory of Planned Behavior (TPB) model, adding new constructs to the main variables, such as trust, environmental consciousness, and perceived environmental outcomes. The survey collected data from 198 customers of Islamic banks in Indonesia, with the PLS-SEM modeling technique used to test the research model. The results show that perceived behavioral control is a significant influence on behavioral intentions, while attitude and subjective norms have no significant effect on behavioural intentions. Environmental consciousness significantly affects perceived environmental outcomes, which, in turn, significantly affect trust as well as behavioural intentions. Other statistical results find that environmental consciousness can affect behavioral intentions when mediated by perceived environmental outcomes. Overall, this study has theoretical and managerial implications and offers directions for future research on environmentally sustainable Islamic banking.