MALAYSIA - PUBLICATIONS - IMF Working Paper 12-151 - What's in it for me ?

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What’s in It for Me? A Primer on Differences between Islamic and Conventional Finance in Malaysia

Krasicka, Olga ; Nowak, Sylwia 

IMF Working Papers - June 2012 - 12/151

 

Summary: What attracts conventional investors to Islamic financial instruments? We answer this question by comparing Malaysian Islamic and conventional security prices and their response to macrofinancial factors. Our analysis suggests that Islamic and conventional bond and equity prices are driven by common factors. Likewise, especially in recent years, Islamic banks have responded to economic and financial shocks in the same way as conventional banks, suggesting that the gap between Islamic and conventional financial practices is shrinking. (source)

WORLD - PUBLICATIONS - Operative Principles of Islamic Derivatives - Towards a Coherent Theory

Operative Principles of Islamic Derivatives - Towards a Coherent Theory

IMF Working Paper Series

Andreas Jobst and Juan Sole

March 1, 2012

Summary: Derivatives are few and far between in countries where the compatibility of financial transactions with Islamic law requires the development of shari’ah-compliant structures. Islamic finance is governed by the shari’ah, which bans speculation and gambling, and stipulates that income must be derived as profits from the shared generation of goods and services between counterparties rather than interest or a guaranteed return. The paper explains the fundamental legal principles underpinning Islamic finance with a view towards developing a cohesive theory of derivatives subject to shari’ahprinciples. After critically reviewing accepted contracts and the scholastic debate surrounding existing financial innovation in this area, the paper offers an axiomatic perspective on a principle-based permissibility of derivatives under Islamic law. (source)

WORLD - PUBLICATIONS - Do Islamic Banks Employ Less Earnings Management?

Do Islamic Banks Employ Less Earnings Management?

Majdi Anwar Quttainah

Abstract - Oct 2011
In this paper, we examine 1) whether Islamic banks are less likely to manage their earnings, and 2) how the corporate governance system, especially Shari’ah Supervisory Boards (SSBs), impacts the earnings management behaviors within Islamic banks. Using a sample of Islamic Banks and a matched non-Islamic Banks in the ERF region, we find that first; Islamic Banks are less likely to conduct earnings management as measured by both earnings loss avoidance and abnormal loan loss provisions. Second, there is no significant difference between Islamic Banks with and without SSBs in terms of earnings management. Third, several SSB characteristics and board characteristics, such as SSB size, Auditing Organization for Islamic Financial Intuitions (AAOIFI), and outside board members, are important determinants of the earnings management for Islamic Banks with SSBs.  (source)