Toward a comprehensive theoretical framework for Shariah governance in Islamic financial institutions

The purpose of this research is to develop a comprehensive theoretical framework for interpreting Shariah governance mechanism in Islamic financial institutions (IFIs). After reviewing existing theories that were used to explain the phenomenon of corporate governance, three most commonly used theories in the corporate governance and Shariah governance area namely agency theory, stewardship theory and stakeholder theory were used and integrated based on their interrelated concepts and their relationship with Shariah governance. The constructed theoretical framework includes five concepts, namely accountability, disclosure and transparency, competency, confidentiality and independency among the key functionaries in Shariah governance, which are perceived to be the principles of Shariah governance. This research is among the first attempts to build an integrated theoretical foundation for Shariah governance in IFIs and the developed theoretical framework can be used as the basis for interpretations and comparisons on the ideal versus practical situation of Shariah governance in IFIs.     

Capital inflows: Macroeconomic implications and policy responses

This paper examines the macroeconomic implications of and policy responses to surges in private capital inflows across a large group of emerging and advanced economies. In particular, we identify 109 episodes of large net private capital inflows to 52 countries over 1987–2007. Episodes of large capital inflows are often associated with real exchange rate appreciations and deteriorating current account balances. More importantly, such episodes tend to be accompanied by an acceleration of GDP growth, but afterwards growth has often dropped significantly. A comprehensive assessment of various policy responses to the large inflow episodes leads to three major conclusions. First, keeping public expenditure growth steady during episodes can help limit real currency appreciation and foster better growth outcomes in their aftermath. Second, resisting nominal exchange rate appreciation through sterilized intervention is likely to be ineffective when the influx of capital is persistent. Third, tightening capital controls has not in general been associated with better outcomes.     

Finance and poverty: Evidence from fixed effect vector decomposition

In this paper we attempt to distinguish the direct effect of financial development on poverty reduction from its indirect effect through economic growth. Using an efficient estimator called fixed effect vector decomposition (FEVD) we employ a set of panel data from 54 developing countries for the period 1993–2004. Our results indicate that on average financial development is conducive for poverty reduction but the instability accompanying financial development is detrimental to the poor. The major policy recommendations suggested by the paper indicate that financial sector reforms should be directed at easing credit restrictions while taking into consideration the effects of financial instability on the poor.     

Asymmetric impact of oil prices,exchange rate,and inflation on tourism demand in Pakistan: new evidence from nonlinear ARDL

This study scrutinized the asymmetric impact of oil prices, exchange rate, and inflation on tourism demand in Pakistan using [Shin, Y., Yu, B., & Greenwood-Nimmo, M. (2014) Modelling asymmetric cointegration and dynamic multipliers in a nonlinear ARDL framework. In Festschrift in honor of peter schmidt (pp. 281–314). New York, NY: Springer] nonlinear autoregressive distributed lag (NARDL) model. The NARDL bounds test examined the existence of cointegration in study variables, including CO₂ emissions, institutional quality, oil prices, exchange rate, inflation, and tourism demand. The evidence proposes that disregarding the intrinsic nonlinearities may misinform inference. The estimated NARDL model affirmed long-run negative and significant effect of CO₂ emissions on tourism demand, while institutional quality was positively associated with tourism demand. Furthermore, the findings of the study also suggested long-run asymmetric relationship between oil prices, exchange rate, inflation, and tourism demand.     

Emiratisation: determining the factors that influence the recruitment decisions of employers in the UAE

The Arab Gulf's labour market is being overhauled. The private sector is increasingly being ‘obliged’ to more actively support nationalisation programmes. This study seeks to quantitatively determine the recruitment decisions of the employers. We collated the views of just under 250 UAE-based HRM personnel, in order to identify which factors (social, cultural, economic, regulatory, educational and motivational) are most significant as cited in the relevant literature. Not having the necessary educational qualifications and high reservation wage demands were found to have less of a bearing than does the perceived lack of vocationally orientated motivation and the ambiguities over the differing rights afforded to employees.     

Why are IPO investors net buyers through lead underwriters?

In Nasdaq initial public offerings (IPOs) issued between 1997 and 2002, purchases of lead underwriter clients exceed sales by an amount equal to 8.79% of the total issue. We find that lead underwriter clients do not buy to build larger long-term positions, capitalize on superior execution quality, or because of clientele effects. However, characteristics of net buying that are at odds with these explanations and other behaviors (like institutional purchases of cold IPOs) are all consistent with lead underwriters engaging in quid pro quo arrangements with clients. Price contribution analysis shows that such client buying activity contributes significantly to first-day price increases.     

A partial equilibrium model of smuggling

Zusammenfassung Ein partielles Gleichgewichtsmodell des Schmuggels. — Es gibt viele Faktoren, die zu einem Markt für Schmuggelwaren führen k?nnen, z.B. Importz?lle und -quoten, Devisenkontrollen und indirekte Steuern. Am Beispiel eines Einfuhrzolls als Mittel der Handelsbeschr?nkung wird in diesem Aufsatz ein partielles Gleichgewichtsmodell des Schmuggels entwickelt. Dieses Modell erm?glicht es, die verschiedenen Eigenschaften des Schmuggel-Gleichgewichts zu demonstrieren. Die Hauptthesen des Aufsatzes sind, da Schmuggeln (a) den Punkt senkt, an welchem ein Zoll überflüssig wird und die heimischen Produzenten nicht mehr schützt, (b) die Gesamt-Importnachfrage bei gegebenem Zollsatz erh?ht, (c) einen gespaltenen Preis für das geschmuggelte Gut auf dem heimischen Markt herbeiführt, (d) den Protektionsgrad für die heimischen Industrien nicht beeinflussen kann, solange es legale Importe gibt, und (e) Einkommen der Regierung zugunsten von Konsumenten und Schmugglern umverteilt. Es ist ungewiβ, ob Schmuggel die Verluste, die mit der Einführung eines Zolls verbunden sind, vergr?\ern oder verringern würde.

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Resumen Un modelo de equilibrio parcial para el contrabando. — Existen muchos factures que pueden establecer un mercado para productos contrabandeados, tales como las tarifas de importatión y las cuotas, controles cambiarios e impuestos indirectes. Usando una tarifa de importatión como medio para restringir el comercio, el presente artículo desarrolla un modelo de equilibrio parcial para el contrabando. Este modelo ayuda a dar información sobre varias propiedades de un equilibrio de contrabando. Los principales argumentos del artículo son, que el contrabando (a) hace bajar el punto en el cual una tarifa se torna superflua y cesa de proteger a los oferentes domésticos, (b) aumenta la demanda total por importatión para una tasa tarifaria dada, (c) establece un sistema de precios paralelo para un mismo producto en el mercado domestico, (d) no puede afectar el grado de protectión otorgado a las industrias domésticas mientras existan importaciones legales y (e) redistribuye el ingreso del gobierno hacia los consumidores y contrabandistas. No es claro si el contrabando haría aumentar o disminuir el lastre de la pérdida asociada con la impositión de una tarifa.

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Résumé Un modèle d’équilibre partiel de fraude. — Il y a beaucoup de facteurs établissant un marché des biens introduits en fraude, comme des tarifs imposés sur les importations et des quotas, les contr?les de change et les taxes indirectes. En utilisant un tarif imposé sur les importations comme moyen des restrictions de commerce extérieur, cet article développe un modèle d’équilibre partiel de fraude. Ce modèle assiste à donner des informations sur les propriétés différentes d'équilibre de fraude. Les arguments principaux du papier sont que la fraude (a) réduit le point auquel un tarif devient redondant et cesse de protéger les offrants locaux, (b) augmente la demande d’importation totale au taux de tarif donné, (c) établit un deuxrang système de prix pour le même produit dans le marché local, (d) ne peut affectuer un dégré de protection pour les industries locales tant que les importations légales existent, et (e) rédistribue le revenu du gouvernement vers les consommateurs et les contrebandiers. Il n’est pas s?r si la fraude augmenterait ou diminuerait la propre perte associée avec l’imposition d’un tarif.

     

Financial stress and economic contractions

This paper examines why some financial stress episodes lead to economic downturns. The paper identifies episodes of financial turmoil in advanced economies using a financial stress index (FSI), and proposes an analytical framework to assess the impact of financial stress – in particular banking distress – on the real economy. It concludes that financial turmoil characterized by banking distress is more likely to be associated with deeper and longer downturns than stress mainly in securities or foreign exchange markets. Economies with more arm's-length financial systems seem to be more exposed to contractions in activity following financial stress, due to the greater procyclicality of leverage in their banking systems.     

An analysis of some possible causes for the absence or presence of the neutrality and homogeneity properties in large macroeconomic models

Using a simple integrated Keynesian-Monetarist model, this paper highlights some of the major factors which hinder the large Canadian macroeconomic models from achieving the neutrality and homogeneity properties. An analysis of these factors reveals that, whereas the large models can be modified to produce the neutrality property, it can not be expected that these models also demonstrate the homogeneity property, i.e. that change in the money supply be fully reflected in changes in nominal GNE.     

Black market for foreign exchange,capital flows and smuggling

The paper develops a geometrical model of the working of a black market for foreign exchange and considers such questions as: Can the black market exchange rate be a guiding instrument to exchange control authorities considering a change in the exchange rate? How does exchange control affect the current and capital account use of foreign exchange in the presence of a foreign exchange black market? What are the implications of changes in trade restrictions (such as import tariffs) for the black market exchange rate, supplies of foreign exchange to exchange control authorities, and current and capital account use of foreign exchange?