Journal of Emerging Economies and Islamic Research

Defining Islamic guidelines for extended warranties: Fatwa analysis and practical applications

2024-08-21T11:25:47+08:00

This study addresses the challenge of defining comprehensive Islamic guidelines for extended warranties, a topic marked by inconsistent practices and conflicting scholarly opinions. Focusing on fatwa analysis and practical applications, the research bridges the gap between Islamic principles and modern market needs. The study employs a qualitative methodology, conducting extensive library research on academic literature and analyzing 28 fatwa rulings from 1999 to 2024. Findings reveal a spectrum of scholarly opinions, with consensus on standard warranties included in original sales, but divergence on separately purchased extended warranties. The research identifies key parameters for Shariah compliance, including integration with the original sale contract, transparency of terms, and avoidance of excessive uncertainty (gharar) and gambling-like elements (maysir). Practical applications are proposed, including takaful-based models and service-oriented warranties focusing on periodic maintenance. These align with Islamic principles of cooperation (ta'awun) and consumer protection while addressing market demands. The study emphasizes the importance of purchase timing and suggests integrating extended warranties into initial product pricing as a viable approach in Islamic finance. Additionally, it explores the potential of sustainability-focused warranty structures to align with Islamic ethics and contemporary environmental concerns, offering a framework for the practical implementation of Shariah-compliant extended warranties in various market contexts.

Stress Test of Credit Risk using Montecarlo Simulation : Indonesian Sharia Rural Banks

2024-07-17T19:08:10+08:00

This study examines the influence of macroeconomic shocks on credit risk within Indonesian sharia rural banks for a period of January 2010 to March 2020. This study employs Monte Carlo simulations and the Error Correction Model (ECM). The results indicate that GDP growth, inflation, and exchange rate are significantly influence the Non-performing financing (NPF) in the long term, while interest rate have a considerable impact on the NPF in the short term. Meanwhile, financing or credit growth has no substantial impact on the NPF in either the long term or short term. The stress test results indicate that Indonesian Islamic rural banks have a high probability of default with a forecasted NPF rate of 10.91%, a differential maximum NPF of 0.33 % at a confidence level of 95%. Therefore, it is suggested that the banks should note that the exchange rate has a strong effect on NPF, and anticipate the high probability of default with sufficient capital to cover losses.

Innovation in Islamic finance: Integrating blockchain with Maqāṣid al Sharī῾ah & Ḥifẓ al Māl

2024-12-05T03:08:38+08:00

Innovation in Islamic finance has a close linkage with the new technology. The blockchain technology carries unlimited opportunities for Islamic finance to enable it to meet the Maqāṣid al Sharī῾ah. However, this aspect is not visible in the literature due to the tendency to connect blockchain with the cryptocurrencies. This study combined an insightful review of Maqāṣid al Sharī῾ah and ḥifẓ al māl along with technical analysis of blockchain to cater to the Islamic finance ethical innovation. This was a qualitative analytical research paper. It addressed the questions related to integrating the theories of Maqāṣid Al Sharī῾ah and Ḥifẓ al māl with the blockchain. The result was a futuristic vision for innovation in Islamic finance with the theme of preserving wealth using a combination of the salient features of blockchain technology and characteristics of Ibn ‘Ashur’s theory of ḥifẓ al māl for wealth and money. The study found that it is possible to create a matrix with the collaboration between the ḥifẓ al māl objectives, namely wealth circulation, justice, ownership protection, creating easiness, robustness and transparency, and the technical characteristics of blockchain, namely decentralization, immutability, transparency, and cryptographic hashing. Together, this approach has the potential for producing ethical, secure, and innovative Islamic finance solutions. This study falls under the contemporary literature that discusses Maqāṣid al Sharī῾ah and Ibn ‘Ashur’s theory of ḥifẓ al māl beyond its theoretical nature in combination with blockchain technology to cater to the growing requirements of innovation in Islamic finance as a part of Maqāṣid al Sharī῾ah’s sustainable ecosystem.

Key Audit Matter and Audit Report Lag: A Preliminary Evidence from Indonesia

2025-01-02T08:12:29+08:00

The purpose of this study is to explore the potential influence of key audit matter on audit report lag. The authors analyzed data from key audit matter reporting in Indonesia for Indonesian public companies to test the relationship between the number of key audit matters and audit report lag. Data obtained from annual reports and multivariate linear regressions were employed to test the hypotheses. We find that key audit matters disclosure does not affect audit report lag. This suggests that audit firms in Indonesia may be treating key audit matters reporting superficially, as the selection of reported key audit matters does not appear to be closely linked to the audit efforts required to address these matters. The article focuses only on the Indonesian context, which limits generalizability. The results of this research will be informative for assessing the economic impact of key audit matter disclosures, which should be important for regulators, auditors, and accounting researchers. To the best of the authors’ knowledge, no prior study has examined key audit matters and audit report lag in Indonesia. This research contributes to the limited body of work exploring the consequences of key audit matters in developing country markets, particularly in Indonesia. It is also the first study to demonstrate that key audit matters are associated with delays in audit reports in Indonesia following the implementation of key audit matters in 2022.

Goal vs. gold? Unveiling the business performance of Malaysian family takaful operators

2024-12-31T12:52:15+08:00

This paper aims to assess the business performance of family takaful operators in Malaysia. The study examines the impacts of the operator’s specifics and economic predictors on the relationship with the operator’s performance captured by Return on Asset (ROA). The operator’s specifics include fee and commission income, zakat payments, underwriting risk, liquidity, and firm size, while the economic predictors include Gross Domestic Products (GDP) and inflation rate. Using four regression estimations, which are the Ordinary Least Squares (OLS) model, the Robust OLS model, the Cluster Robust OLS model and the Feasible Generalised Least Squares (GLS) model, this study employed a balanced panel data approach to nine Malaysian family takaful operators for ten years, 2013-2022. The findings for the four estimation models affirmed that fee and commission income, underwriting risk, and liquidity significantly impact the ROA but not firm size and GDP. The findings also exhibit a significant relationship between zakat payment and the inflation rate on ROA in the different estimation models. Several works of literature are very interested in Malaysian takaful business performance without specifying the scope of family takaful business. Thus, this study aims to unveil the performance of family takaful businesses on Malaysian family takaful operators. This paper brought its novelty by conceptualising the fee and commission income and zakat payment as new proxies for measuring performance. The study’s implications admonish the family takaful operators’ recommendation to increase the operators’ performance.