Some remarks on the Stolper-Samuelson and Rybczynski theorems

First, this paper provides a necessary and sufficient condition for a weak form of the Stolper-Samuelson criterion in the n×n case. It will be shown that it is a sufficient condition in the uneven case where the number of primary factors is larger than the number of products. Secondly, this paper offers two conditions. Conditions (II) and (III), that are equivalent to Chipman's and Uekawa's weak form of the Stolper-Samuelson criteria, respectively. Our economic interpretations of these conditions are given in the final section by applying a notion of Hicks's imperfect stability.     

Islamic economics and Islamic finance in the world economy

This paper places the articles in this special issue in the contexts of Islamic economics and finance research. It highlights the foundations of Islamic economics, which are in practice manifested in Islamic finance. Then, the paper brings up three key issues in Islamic finance today – the Islamicity of Islamic banking, real contributions of Islamic finance, and Islamic finance in the present monetary framework. While there are some promising theoretical and empirical findings pointing to positive contributions of Islamic finance, there is still a need for Islamic finance to distinguish itself from the conventional finance and to further demonstrate its real effect.     

The global financial crisis: Some suggestions for reform of the global financial architecture in the light of Islamic finance

The article argues that the primary cause of the current subprime mortgage crisis in the United States is the absence of adequate market discipline in the financial system. This tends to promote excessive lending, high leverage, speculation, and an unsustainable rise in asset prices. Unwinding later on gives rise to a vicious cycle of selling that feeds on itself and leads to a steep decline in asset prices followed by financial crisis and economic slowdown. The solution lies in introducing risk sharing along with the availability of credit for primarily the purchase of real goods and services that Islamic finance aims at introducing. This can help inject greater discipline into the system and, thereby, substantially reduce financial instability. Since the introduction of greater discipline into the financial system may deprive the subprime borrowers of credit, the article also discusses the need for finding ways of satisfying their genuine credit needs. © 2011 Wiley Periodicals, Inc.     

Consumer credit from the Islamic viewpoint

In this paper, the author describes — against the background of the general principles of trade in Islam, which are based on the value patterns deeply ingrained in the Islamic faith — the rules regulating consumer credit and debt financing in an Islamic economy. In the exposition of the Islamic viewpoint on these issues, guidelines adopted by Malaysian economists and financial institutions are used as a basis. The author explains which forms of trade and credit are regarded as usurious in nature and hence prohibited. Charging interest on loans is not permissible, but there are several forms of deferred contracts of exchange which can be used in order to enable consumers to make purchases on credit. The most common of these forms are described in some detail. They have in common that consumers have absolute ownership over the object of trade during the period in which they pay their instalments. An inability-to-pay clause, taking into account that a consumer may not always be in a position to fulfil the obligation to pay because of unavoidable or pressing circumstances, is always part of these credit forms. Some proposed solutions to the problems of alleviating the impact of inflation on credit transactions are also briefly described. In the final section, it is pointed out that even within the Islamic ambit, there can exist a multiplicity of approaches to issues such as consumer credit, depending on the various priorities set in a particular Islamic country. Furthermore, in a country such as Malaysia, although much conversion to an Islamic approach has taken place, Islamic and conventional systems exist side by side, and the future will show which of the systems is the more receptive to public needs.

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Zusammenfassung Verbraucherkredite aus islamischer Sicht. Vor dem Hintergrund der generellen Regeln für Handel und Gewerbe des Islam, die aus Wertvorstellungen erwachsen, die tief im islamischen Glauben verwurzelt sind, beschreibt der Autor die Richtlinien, nach denen Verbraucherkredite und Schuldenfinanzierung in einer islamischen Volkswirtschaft geregelt sind. Bei der Darstellung des islamischen Blickwinkels auf diese Themen werden Richtlinen herangezogen, die in Malaysia von ökonomen und Institutionen der Finanzwelt erarbeitet und angenommen wurden. Der Autor erklärt, welche Handels- und Kreditformen als Wucher betrachtet werden und deshalb verboten sind. Zinsforderungen auf Darlehen sind nicht zulässig, aber es gibt verschiedene Formen von Handelsverträgen in Abzahlungsform, die verwendet werden können, um Verbrauchern zu ermöglichen, Käufe auf Kredit zu machen. Die üblichsten dieser Formen werden ziemlich genau beschrieben. Ihnen ist gemeinsam, da\ die Verbraucher während der Zeit ihrer Ratenzahlungen volles Eigentum an der gekauften Ware haben. Eine Zahlungsunfähigkeits-Klausel, die berücksichtigt, da\ Konsumenten wegen äu\erer Umstände nicht immer in der Lage sein können, ihren Zahlungsverpflichtungen nachzukommen, ist immer Bestandteil dieser Kreditverträge. Einige Vorschläge zur Milderung von Inflationsproblemen bei kreditfinanzierten Käufen werden ebenfalls beschrieben. Im letzten Abschnitt wird gezeight, da\ auch innerhalb der islamischen Welt, abhängig von den jeweiligen Prioritäten eines bestimmten islamischen Landes, eine Vielfalt von Positionen zu Themen wie Verbraucherkredit existiert. Hinzu kommt, da\ in einem Land wie Malaysia trotz einer stärkeren Hinwendung zu islamischen Ansätzen, islamische und konventionelle Systeme nebeneinander existieren. Die Zukunft wird zeigen, welches dieser Systeme den Bedürfnissen stärker entgegenkommt.

     

Ethical Foundations of the Islamic Financial Industry

Journal of Business Ethics - This paper examines the ethical foundations of the Islamic financial industry which is strongly criticized for its similarity with conventional finance. In this paper,...     

Islamic business scorecard and the screening of Islamic businesses in a cross‐country setting

Screening of shari'ah compliant firms is incomplete without the inclusion of ethical and social responsibilities. The existing “activity screen” does not directly capture the ethical and social footprints of firms. The purpose of this study is to create and test an Islamic business scorecard that combines activity, ethical, and social responsibilities that Islamic businesses must comply with. This new Islamic business scorecard replaces the existing activity screens and is added to the financial screens to create an integrated business screening mechanism to identify shari'ah compliant firms. This study utilizes data from a sample of 410 shari'ah compliant companies listed with stock exchanges in Malaysia, Pakistan, and Bangladesh. Out of the five newly developed constructs of the Islamic business scorecard, the results indicate Islamic firms are less committed to social responsibilities and tend to push forward economic responsibilities that focus on profitability and growth. Of the three countries, this study reports Malaysian firms have the highest compliance scores, while Bangladesh displays characteristics of the “next‐big shari'ah destination”. Financial screens are more important than the Islamic business scorecard for firms in the construction, industrial, technology, and trading/services sectors. Because of its connection with the economic, ethical, and social dimensions, the scorecard helps to identify the true nature of shari'ah compliance as a useful decision tool for investors and policymakers.     

A general duty to supply only safe goods in the community: Some remarks from a British perspective

On 20 April 1989, the Commission issued COM (89) 162, which is a proposal for a Directive designed to establish a Community legal framework to guarantee product safety. Such a regime would have the dual aim of securing free trade while also maintaining effective consumer protection. This paper demonstrates the vital role which would be played by standards in such a framework and explains how Community law can prevent a Member State adopting a purely domestic approach to standards of safety and quality. The paper investigates the extent to which the United Kingdom's statutory general requirement to supply only safe goods, introduced in 1987, constitutes a model for a parallel Community initiative. The paper concludes by emphasising that the twin goals of free trade and consumer protection can only be achieved through a proper resource commitment to effective standards-making.

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Die generelle Pflicht, in der EG ausschließlich sichere Produkte anzubieten: einige Anmerkungen aus britischer Sicht

Zusammenfassung Am 20. April 1989 veröffentlichte die EG-Kommission die Mitteilung KOM 89/162, bei der es sich um einen Vorschlag für eine Richtlinie handelt, die die gesetzlichen Rahmenbedingungen für Produktsicherheit in der EG garantieren soll und gleichzeitig zwei Ziele verfolgt: zum einen die Gewährleistung von freiem Handelsverkehr, zum anderen die Stärkung des Verbraucherschutzes.Der Beitrag beschreibt die zentrale Rolle, die in diesem Zusammenhang den Standards zukommt, und erläutert, wie EG-Recht einen Mitgliedstaat davon abhalten kann, einen rein nationalen Ansatz zur Etablierung von Sicherheits- und Qualitätsstandards zu verfolgen. Er untersucht ferner das Ausmaß, in welchem die im Jahre 1987 in England eingeführte allgemeine gesetzliche Verpflichtung, nur sichere Güter anzubieten, ein Modell für eine enstprechende EG-Initiative darstellen kann. Der Beitrag stellt abschließend fest, daß das Doppelziel von Freihandel und Verbraucherschutz nur erreicht werden kann, wenn ausreichende Mittel bereitgestellt werden, um wirkungsvolle Standards ausarbeiten zu können.

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Stephen Weatherill is Lecturer in Law at the University of Manchester, Faculty of Law, Oxford Road, Manchester M13 9PL, U.K.     

Islamic Ethics and the Implications for Business

As global business operations expand, managers need more knowledge of foreign cultures, in particular, information on the ethics of doing business across borders. The purpose of this paper is twofold: (1) to share the Islamic perspective on business ethics, little known in the west, which may stimulate further thinking and debate on the relationships between ethics and business, and (2) to provide some knowledge of Islamic philosophy in order to help managers do business in Muslim cultures. The case of Egypt illustrates some divergence between Islamic philosophy and practice in economic life. The paper concludes with managerial implications and suggestions for further research.     

Economic Effects of the Syrian War and the Spread of the Islamic State on the Levant

This paper uses a global computable general equilibrium framework with new detail on six Levant countries – the Arab Republic of Egypt, Iraq, Jordan, Lebanon, the Syrian Arab Republic and Turkey – to quantify the direct and indirect economic effects of the Syrian war and the advance of the Islamic State on the Levant. Syria and Iraq bear the brunt of the direct economic costs, while the other Levant countries lose in per capita but not in aggregate terms as the inflows of refugees increase the size of their populations. The war has undermined progress towards deeper regional trade integration, thus adding to varying degrees to the direct costs sustained by the Levant economies and, in the cases of Syria and Iraq, doubling their welfare losses. All Levant countries are foregoing opportunities to expand intra‐Levant trade and the associated gains in economic efficiency. The average welfare effects are not indicative of the distributional effects of war within countries.     

The Impact of Subprime Crisis on Asia-Pacific Islamic Stock Markets

This article looks at the link between the need for the pursuit of cost advantages via labor arbitrage on one hand, and the need for continued learning and sustainable competitive advantage on the other. We first define outsourcing and off-shoring and then provide a review of the primary elements of the first wave of outsourcing. We then turn to discussing some proactive mechanisms that national governments should consider to counter the short-term impacts concomitant with the first wave of outsourcing of jobs offshore. Finally, we discuss the next steps that firms need to consider in the ever-changing landscape of international competition.     

Sources of TFP growth in the Malaysian Islamic banking sector

This paper attempts to empirically analyse productivity changes of the Malaysian Islamic banking sector during the period of 2001–2004 by applying the non-parametric Malmquist productivity index method. During the period of study, the empirical findings suggest that the Malaysian Islamic banking sector has exhibited productivity progress during the earlier years before declining during the latter years. The results suggest that foreign banks have exhibited higher productivity levels compared with their domestic counterparts during the earlier years, while the domestic banks’ productivity levels were relatively higher compared with the foreign banks during the latter years.     

The determinants of Islamic bank capital decisions

We report new evidence on the bank and institutional determinants of Islamic bank capital ratios in 28 countries between 1999 and 2013. Overall, we find that smaller, more profitable, and highly liquid Islamic banks are more highly capitalized. Additionally, improvements in the economic and financial environments and market discipline within a country correspond with higher Islamic bank capitalization. The results shed light on the impact that Sharia'a law restrictions have on Islamic banking capitalization. Our findings are most robust to banks that choose to hold capital well in excess of that required by regulators, consistent with traditional capital structure theory. Our results highlight the role that stable economic and political systems play in improving bank capitalization and reducing financial sector risk. By reducing political instability and corruption, improving legal systems, and encouraging access to capital markets, policymakers may incentivize managers to make financing decisions that increase the capitalization of the Islamic banking industry in developing countries.     

The effects of Shariah board composition on Islamic equity indices' performance

Based on a sample of 54 Islamic indices over the period 2007–2014, we investigate the effect of Shariah board members' educational background on Islamic indices' risk and return characteristics via the screening criteria. Using a capital asset pricing model benchmark analysis, we assess the sensitivity of Islamic indices to their conventional peers in terms of beta and derive a measure of return (Jensen's alpha). First, we observe that the higher the number of members in common among the boards, the higher the risk–return profile of Islamic indices. Second, commonalities among board members lead to standardization of the screening criteria and to similar Islamic indices' performance. Third, we show that different betas across providers depend on the screening criteria, while the economic educational background of board members affects performance in terms of Jensen's alpha. Our study aims at contributing to the governance literature related to board composition and its importance as a possible driver of performance. In addition, given the impressive growth that Islamic finance has experienced during the last decade, this topic is of great interest to the asset management industry.     

中国回族伊斯兰消费思想及其现代价值

回族是我国信仰伊斯兰教的十个少数民族中人口最多的一个民族,考察回族传统文化,揭示回族文化中折射出的伊斯兰消费思想,指出"适度从俭"、"崇尚自然"等消费思想的现实意义,对于我国构建"资源节约型社会"和"环境友好型社会"有着借鉴作用。