The comparative role of iShares and country funds in internationally diversified portfolios

This paper examines the performance and diversification gains provided by iShares versus closed-end country funds over the period 1996 through 2006. Findings include: (1) iShares reveal weaker effects from U.S. market exposure than do country funds; (2) U.S. investors react similarly to foreign currency risk associated with iShares and country funds; (3) the average risk-adjusted performance of passively managed iShares is better than that of their respective actively managed country funds; and (4) iShares provide U.S. investors greater diversification gains than do country funds, that is, U.S. investors should prefer iShares to country funds when diversifying portfolios internationally.     

The investment nature of income trusts and their role in diversified portfolios

We examine the investment characteristics of income trusts to explore their role within a portfolio as well as to clarify the on‐going political debate surrounding income trusts. Results show that income trusts exhibited risk‐adjusted performance that far outperformed equities and bonds during our sample period. We adopt a multifactor return generating process for ex‐post income trust returns to quantify the degree to which they are influenced by bond‐ and stock‐related effects. The relationship between trust returns and bond returns is very weak, whereas the relationship between trust returns and stock returns is quite strong. We conclude that while income trusts appear indistinct from equities as an asset class, they significantly expand the efficient set. Copyright © 2007 ASAC. Published by John Wiley & Sons, Ltd.     

Efficient use of commodity futures in diversified portfolios

We provide evidence on the role of commodity futures in portfolios comprised of stocks, bonds, T‐bills, and real estate. Over the period investigated (1973–1997), Markowitz optimization over a range of risk levels gives substantial weight to commodity futures, thereby enhancing the portfolios’ returns. We find dramatically different results when we use a simple ex ante measure of monetary stringency to dichotomize the sample into expansive‐versus‐restrictive monetary‐policy periods. In periods characterized by restrictive monetary policy, commodity futures are shown to have substantial weight in the efficient portfolios, with significant return enhancement at all levels of risk. In periods characterized by expansive monetary policy, commodity futures are shown to have little or no weight in the efficient portfolios, with no return enhancement at all levels of risk. © 2000 John Wiley & Sons, Inc. Jrl Fut Mark 20:489–506, 2000     

Choosing an optimal investment strategy: The role of robust pair-copulas based portfolios

This paper is concerned with the efficient allocation of a set of financial assets and its successful management. Efficient diversification of investments is achieved by inputing robust pair-copulas based estimates of the expected return and covariances in the mean-variance analysis of Markowitz. Although the whole point of diversifying a portfolio is to avoid rebalancing, very often one needs to rebalance to restore the portfolio to its original balance or target. But when and why to rebalance is a critical issue, and this paper investigates several managers' strategies to keep the allocations optimal. Findings for an emerging market target return and minimum risk investments are highly significant and convincing. Although the best strategy depends on the investor risk profile, it is empirically shown that the proposed robust portfolios always outperform the classical versions based on the sample estimates, yielding higher gains in the long run and requiring a smaller number of updates. We found that the pair-copulas based robust minimum risk portfolio monitored by a manager which checks its composition twice a year provides the best long run investment.     

The role of spirituality in Islamic business networks: The case of internationalizing Turkish SMEs

This paper sets out to investigate the role of religion and spirituality in a business network context, with an empirical focus on the international business development of Turkish SMEs. By drawing on the concept of homophily and tie strength, we argue that, while religion can act as a bridge and thus create a multitude of weak ties within a business network, spirituality can deepen these ties and make them stronger through increased emotional intensity, intimacy and reciprocal service. The data were collected from participants in two Islamic business associations in Turkey. The results suggest that spirituality indeed drives members’ commitment to the network and the presence of spirituality has a distinctive effect on members’ contributions to and demands on the network. More specifically, members who treat their network membership as an extension of their spiritual practice tend to mainly benefit from intangible resources, while members who view their shared religion as an entry point into the network seem to benefit from both tangible and intangible network resources. The findings have several theoretical and practical implications, including the introduction of the spirituality concept into the discussion of homophily and tie strength in business networks, and the role of home networks in the internationalization of SMEs.     

The role of the stock market in the provision of Islamic development finance: Evidence from Sudan

This paper assesses the impact of stock exchange funding in the Shari'ya compliant Islamic economy of Sudan. Evidence suggests that while Islamic financial instruments have considerable potential in facilitating development finance through their emphasis on partnership this is better achieved by the banking system rather than the Khartoum Stock Exchange. A case study of the Sudan Telecommunications company shows that larger firms able to cross-list elsewhere are likely to choose regional markets in preference to their domestic one thus benefiting from lower costs of equity. However, governance preferences are likely to favour block shareholders following the Islamic finance partnership concept.     

Portraying ethical reasoning in Islamic banking: Addressing the role of work experience

This study aims to examine the ethical dimensions of Islamic bankers, with a reference to the factors influencing decision-making behavior related to ethical issues based on al-Ghazali's ethical philosophy. The findings reveal the manner in which Islamic banking practitioners brace themselves into situations that warrant the use of reason in making decisions related to ethical issues, where desires tend to dominate human choices. While the guidance of divine knowledge has been found to be ineffective in decision-making, the element of satanic force was found to significantly influence this process. The insignificant heterogeneous effect of work experience suggests that banking authorities should intensify the capacity building in the area of ethical teachings and the foundation of Islamic faith, regardless of the job tenure of employees. This study contributes to the growing literature on the ethical aspects in Islamic banking and organizational behavior by offering important implications for understanding and refining the ethical stance related to Islamic banking practices based on the Islamic perspective.     

Single vs simultaneous equation models in capital asset pricing: The role of firm-related variables

An alternative modeling system that more adequately describes the returns-generating process than the usual single equation CAPM is provided in this paper. Firm-related variables are introduced directly into the model using a simultaneous equation system while avoiding the estimation problems of previous attempts. While not empirically testing this system with the single-equation “multi-beta” models, the relationships between the alternative processes are explored.     

Intrinsic religiosity and counterproductive work behavior: The mediating role of Islamic work ethic

This research aims to examine the impact of intrinsic religiosity on counterproductive work behavior directed toward the organization (CWB-O) and the mediating role of Islamic work ethic in this impact. The data were collected from employees working in the hotel and restaurant industry (n = 684). The findings revealed that intrinsic religiosity had a positive and significant effect on Islamic work ethic. It was found that Islamic work ethic also had a negative and significant effect on CWB-O. Similarly, intrinsic religiosity had a negative and significant effect on CWB-O. In addition, it was identified that the Islamic work ethic had a mediating role in the impact of intrinsic religiosity on CWB-O. Taking into consideration that the relationship between intrinsic religiosity and CWB-O and the role of Islamic work ethic in this relationship has not yet been examined in literature, the theoretical contribution of the current research can be better understood. From the perspective of practical contribution, this research may help and guide managers to understand how intrinsic religiosity affects CWB-O.     

The role of customer satisfaction in enhancing customer loyalty in Malaysian Islamic banks

This study examines the role of customer satisfaction in enhancing the loyalty of Muslim and non-Muslim customers in the Malaysian Islamic banking industry. Respondents are the customers (Muslim and non-Muslim customers) visiting the bank counters and have an account with Islamic banks. A total of 660 questionnaires were distributed, and 440 were returned. The results indicate that customer satisfaction has a statistically significant positive effect on customer loyalty and intentions to switch for Muslim and non-Muslim customers. However, there were significant differences in the effects of customer satisfaction on customer loyalty and intention to switch for Muslim and non-Muslim customers. The effect of customer satisfaction on customer loyalty and intention to switch is greater for the non-Muslim than the Muslim customers.     

Impact of abusive supervision on deviant work behavior: The role of Islamic work ethic

In this article, we examined the relationship between abusive supervision and deviant workplace behavior and the moderating role of an Islamic Work Ethic. Three hundred and thirty‐six employees in different organizations (specializing in software development, medicine, law enforcement, telecommunication, pharmaceutics, and banking) across Pakistan completed our questionnaire. The results revealed that abusive supervision was positively related to deviant workplace behavior. Moreover, the moderation of an Islamic Work Ethic on the relationship between abusive supervision and deviant work behavior was confirmed. The study contributed in many ways. It expanded literature by revealing a weaker relationship between abusive supervision and deviant behavior when Islamic Work Ethic (IWE) was high. It also tested the conservation of resources theory by providing a plausible reasoning of the role of IWE in employee motivation. By integrating IWE as a resource in the workplace, practitioners would learn that the proper use of resources would produce satisfied workers who would not indulge in deviant workplace behaviors.     

Local and international knowledge search and product innovation: The moderating role of technology boundary spanning

Drawing on the external knowledge search literature and the literature on international diversification, this study examined the interactive effect of local and international search for new knowledge on product innovation and the moderating role of a firm's technology boundary spanning activities. Specifically, it proposed that extensive local and international search interact to positively predict product innovation success and this relationship is weaker for firms entering a new technology domain. The results using data on 343 Chinese manufacturing firms across 5 industries indicated the support for the predictions.     

Credit risk in Islamic microfinance institutions: The role of women,groups, and rural borrowers

Using international data, we find that Islamic MFIs experience reduced credit risk by offering more groups loans, serving more women, and serving more borrowers in rural locations. Conventional MFIs benefit from fewer group loans, less loans to rural borrowers, and a greater focus on female borrowers. Our results contribute to microfinance and financial inclusion literature by highlighting the potential of tapping into the social dynamics within Muslim communities. We present encouraging insights for Islamic MFIs donors and managers on the possibility of promoting the financial inclusion of women and rural borrowers without compromising the quality of the credit portfolio.     

Building entrepreneurial tie portfolios through strategic homophily: The role of narrative identity work in venture creation and early growth

In this article, we present the results of a case study of an entrepreneur who successfully founded and grew a venture underpinned by a portfolio of strongly homophilous, dyadic ties. Building on our case, we discuss how the entrepreneur strategically constructed these ties through a form of narrative identity work, explore the shared identity narratives that he used to do so, and highlight the heterogeneous nature of the resulting tie portfolio. We go on to explore the factors that motivated the entrepreneur to purposefully construct an entrepreneurial tie portfolio in this way. Building on our findings, we discuss the nature of narrative identity work and its role in creating homophilous ties, explore the connection between the resulting shared identity narratives and trust, and discuss the central role of values in strategic homophily.     

The role of customer online brand experience in customers' intention to forward online company-generated content: The case of the Islamic online banking sector in Palestine

The purpose of this study is twofold: Firstly, to assess the impact of customer online brand experience (COBE) with online banking on customer's intention to forward online company-generated content (CGC). Secondly, to explore the role of online brand community engagement (OBCE) and the perceived trust of brand community page (BCP) as mediating variables between COBE and the intention to forward online CGC. This research conducted an online survey among various Islamic bank customers in Palestine who were members of online brand communities (fan pages) on Facebook. 375 valid responses were collected and results revealed that COBE exerts a dual influence on intention to forward CGC. This study is a pioneering empirical research on the role of OBCE in customers' intention to forward online CGC within the fast-growing Islamic banking industry. This study contributes to fill this research gap by assessing the effect of COBE on OBCE and intention to forward online CGC within the context of the Islamic online banking sector in Palestine. In this sense, this study is a first-of-its-kind research on the role of experience on customer engagement with regard to online brand communities of Islamic banks.     

The future of swiss asset management: A look in the crystal ball

Until recently, Switzerland had an unmatched reputation for the quality of its banking services. Based on a secular tradition of security and a strict banking secrecy enforced by law, Swiss banks have established themselves as leaders in discretionary asset management. Recent studies estimate that about 35 percent of the private off-shore wealth is managed in Switzerland. At the end of 1996, asset management in Switzerland represented about 2.5 trillion Swiss francs (about $2 trillion), provided 3.5 percent of the total added value in the country, and contributed 4.44 billion Swiss francs in taxes, making it one of Switzerland's major sector of activity. But the traditional paradigm on which asset management is based in Switzerland–confidentiality, conservatism, and safety–is undergoing rapid change. Have the profound changes which transformed the banking industry and its production structures over the past several years ended? This is the subject of a large study we carried out with the Institute of Banking and Financial Management at HEC-University of Lausanne. This survey provides an unbiased global reference and a neutral benchmark describing the current state of the Swiss asset management industry. It should help the assessment of specific strategies before considering implementations issues. This interview article contains part of the survey results and identifies a few factors that could prolong the industrial revolution underway. © 1999 John Wiley & Sons, Inc.     

An empirical analysis and extension of internalization theory in emerging markets: The role of firm-specific assets and asset dispersion in the multinationality-performance relationship

This study examines the relationship between firm multinationality and financial performance with a focus on firm-specific assets and dispersion of these assets for MNCs from emerging markets. Drawing upon internalization theory, the authors reveal that while the financial performance of manufacturing MNCs depends on technological assets, service MNCs are more dependent on marketing assets to succeed in international markets. Study findings further emphasize the critical role of the industry context in emerging markets as the authors demonstrate that international asset dispersion weakens the effects of internationalization on financial performance more for MNCs in manufacturing industries than for MNCs in services.     

The role of frequent short exams in improving student performance in hybrid global business classes

The authors investigate whether frequent in class exams can improve the performance of students in hybrid global business courses. An experiment was conducted in three hybrid sections of a global business course exposing students to short in class exams. The expectation of a short exam forces students to watch the online lectures and study the course material. By having more prepared students, the professor can devote class time to discussing international business issues. This results in significantly higher student performance. The performance of 182 students was examined and the results show significant improvements for all groups.     

The role of pleasant music in servicescapes: A test of the dual model of environmental perception

This article explores the psychological processes by which background music in servicescapes influences service evaluation and purchase intention. Drawing on the dual model of environmental perception, it is hypothesized that: (1) servicescape is perceived in an ambient holistic manner and serves as the background for perceptions of the provider and thereby has direct and provider-mediated effects on outcomes; (2) the presence of music influences outcomes because it reinforces the holistic quality of the servicescape, makes the provider stand out, and moderates the contribution of provider-mediated servicescape effects; (3) when pleasant music is present, a double-mediating process fully accounts for the impact of variations in the music valence, such that music valence gets transferred into servicescape attitude, which then exercises direct and provider-mediated effects on service outcomes. Two experimental studies in real and online environments support the above research hypotheses.     

Islamic financing and bank risks: The case of Malaysia

We examine whether Islamic financing can explain three important bank risks in a country with a dual banking system: credit risk, interest‐rate risk, and liquidity risk. Using Malaysian data, we find that commercial banks with Islamic financing have significantly lower credit and liquidity risks but significantly higher interest‐rate risk than banks without Islamic financing. There is also evidence that bank size is significantly related to credit risk; the proportion of loan sales to total liabilities and bank size are significant determinants of interest‐rate risk; and off‐balance‐sheet financing, the extent of securitization, loan volatility, bank capital, and bank size are statistically significantly related to liquidity risk. © 2005 Wiley Periodicals, Inc.