Housing is considered as the second most important basic necessity for human beings to live an adequate life. On a country scale, governments are responsible to ensure the availability of affordable public housing to underprivileged low- and middle-income households in the society. Nonetheless, acquiring an affordable house has now become increasingly problematic proposition for many low- and middle-income households in Malaysia. Previous studies demonstrate that the lack of financial affordability, poor maintenance and mismanagement are the key issues in affordable public housing schemes. Therefore, this study developed and validated a Shariah-compliant Islamic Public-Private Housing Co-operative Model (IPHCM). The study applied mixed methods of focus group, interviews and questionnaire survey. A focus group was conducted with nine residents of public housing project to validate the identified key issues in public housing schemes. Further, nine interviews were conducted with Shariah scholars and affordable housing experts to validate the IPHCM model. The findings of interviews were positive whereby informants agreed on the Shariah-compliance, suitability and applicability of the IPHCM model as an alternative to affordable public housing schemes in Malaysia. Drawing upon the extended Theory of Planned Behaviour (TPB), the questionnaire survey was distributed to 300 respondents who are the residents of PPR housing projects. The data from questionnaire survey was analysed using Partial Least Squares (PLS) as this method is more suitable for complex modelling and theory development studies. The study finds that perceived affordability (PA), subjective norm (SN), perceived behavioural control (PBC), perceived maintenance and management (PMM) and perceived consumer religiosity (PCR) are instrumental in predicting the behavioural intention to adopt the IPHCM model. It is also reported that the control behaviour, normative beliefs and behavioural beliefs are strong determinants of perceived behavioural control, subjective norm and attitude towards behaviour, respectively. The current study findings offer valuable insights to policy makers to understand the pertaining issues and households’ preferences to adopt a new public housing scheme. Moreover, the implementation of IPHCM model can also contribute in achieving the objectives of National Housing Policy (NHP) that is to ensure that all Malaysians, particularly the low- and middle-income households, have access to adequate and affordable shelter. The study also added new constructs of PA, PMM and PCR that contribute to the existing literature of TPB and provides new perspectives on behavioural intention to adopt affordable public housing scheme.

Poverty is a major economic challenge, and small and medium enterprises (SMEs) play a crucial role in Indonesia's economy, highlighting the potential role of Islamic microfinance institutions (IMFIs) in alleviating poverty in Indonesia. However, IMFIs encounter obstacles, including agency problem, inadequate infrastructure, and unfavorable socioeconomic conditions. Baitul Maal wa Tamwil (BMT), an IMFI in Indonesia, offers unique features and a social development program to enhance its poverty alleviation impact. While there are many studies being conducted on BMT in Indonesia, studies on agency problem specifically related to Sharia-compliance towards achieving operational efficiency in BMT are still lacking and require a thorough comprehension. This study aimed to identify the nature of the agency problem faced by BMT in providing finance to microenterprises in Indonesia, investigate the reasons behind this problem, evaluate BMT's efforts to minimize it, and propose a strategy to overcome this issue in providing finance to microenterprises in Indonesia. This study uses qualitative methods involving 85 participants from active certified Sharia cooperatives, which were part of the oldest BMT established in each province, as well as experts from regulators and academics. Data was collected through interviews, observation, and document analysis. The data was then analyzed using NVivo Qualitative Data Analysis Software (QDAS), and the findings were interpreted. Qualitative reliability techniques were used to assess the reliability of results, with transcripts reviewed to prevent errors and code descriptions, and two independent experts in Islamic microfinance verified the topic's authenticity and obtained feedback. The study reveals agency problem in microenterprise financing at BMT, including adverse selection, ex-ante moral hazard, post-ante moral hazard, and untrustworthy behavior among management staff. The agency problem arises from human Resource (HR) and governance issues, member factors, and inaccurate financing analysis, exacerbated by business conditions that can lead to improper contract selection and BMT's financial stability. BMT addresses these issues through standardizing SOPs, approving staffing and financing SOPs, and regular evaluations. BMT enhances HR capacity through online or offline training, including Sharia finance, bookkeeping, training, and information system facilitation. Despite funding constraints and pandemic conditions, BMT officers conduct member coaching and mentoring activities. BMT is also implementing a strategy to enhance microenterprise financing, focusing on governance, HR capacity, and financial literacy. The plan includes regular staff visits, tightened supervision, recruitment strategies, coaching, mentoring, and training. Special programs and collaborations with universities, Sharia scholars, and policymakers are also being considered. The findings show that BMT's financing performance is negatively impacted by low Islamic financial literacy among staff and poor governance. These findings highlight agency problem in microenterprise financing in BMT, emphasizing the need for regulatory clarity, supervisory structure enhancement, and collaboration between BMT associations and institutions. The significance of research findings can be enhanced through consistent methodologies in different settings or varied methodologies within the same research environment.

Al- Ma’alat which has a meaning similar to al-aqibah (mentioned in the Quran more than 30 times) is an authentic Islamic approach rediscovered by Al-Ghazali and Al-Shaṭibi. This does not deny the fact that the concept of al- Ma’alat was not present in the thought and practice of the Islamic jurisprudential discourse throughout Islamic civilisation. Al-Quradaghi in his book ‘Al- Ma’alat as a basis for economic analysis’ expands the concept to connect it within economic terms. The researcher used this book as a basic to expand the concept and connect it to Result Based Management (RBM) and Futurology (FS) to nurture an interdisciplinary approach that connects al- Ma’alat to all aspects of life such as political, economic, social, technological, legal, Shariah, and environmental. Using this methodology, the study presented the more encompassing theory of al- Ma’alat and suggested some actions to be taken to develop Qatar’s Islamic banking sector. The researcher also presents two scenarios for its suggested framework as a road map for IB until the establishing for al- Ma’alat centre. The researcher applied the exploratory qualitative method, and the information used for analytical purposes was derived from primary and secondary sources. The primary data consisted of interviews with stakeholders in Islamic finance such as Shari’ah Scholar, economists, clients, and senior management in Malaysia (due to it is expert country in the field of Islamic finance) and Qatar. The secondary data was sourced from resources in al- Ma’alat, RBM, future Studies, Qatar National Vision 2030, SDGs and ESG. This framework will help banks’ management, Shari’ah scholars and regulators to see the level of input, activities, output, outcomes, and long terms outcomes.

In Zanzibar, 30.4 percent of the populations are living under the poverty line. Despite the fact that Zanzibar has recorded considerable success in ensuring basic needs of its people, persistent poverty remains as a big challenge in the Islands. The prevalence of persistent poverty in Zanzibar may be linked to financial exclusion which undermined the business activities as well as acquisition of adequate sustainable livelihood. Given this issue, this thesis investigates the impact of Islamic social finance on the alleviation of intergenerational transmission of poverty in Zanzibar. Having adopted positivism as its philosophical assumption, the researcher has mainly employed quantitative research approach with appropriate method of analysis for this study. The sample size for this study consists of 287 head of households from the Islands of Pemba and Unguja in Zanzibar, and survey questionnaire was used as data collection instrument. To achieve a credible study, Structural Equation Modeling (SEM), based on maximum likelihood estimation, and relevant analyses are used to analyse the collected data from relevant respondents. The results indicate that both involuntary and voluntary Islamic social finance exclusion barriers exist in the Islands, and they both significantly account for the financial exclusion of the households. Involuntary Islamic social finance exclusion was found to be a barrier to both the development of micro and small enterprises, as well as the acquisition of sustainable livelihood assets by the poor. However, voluntary Islamic social finance exclusion was found to have an impact on the development of micro and small enterprises, but not to the acquisition of sustainable livelihood assets. Finally, the study has offered several recommendations with regard to the means and practices of poverty alleviation in Zanzibar via Islamic social finance.

The promotion of planned and balanced economic development was enjoined on the Federal Government of Nigeria by Section 16(2) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) as one of the fundamental objectives and directive principles of State policy. This objective aligns with the objectives of the Shari’ah and the Sustainable Development Goals (SDGs). The Central Bank of Nigeria (CBN) pursued this objective through the financial inclusion initiative, among others, and in the process utilized its delegated legislative powers to license the operation of Islamic banking in Nigeria in 2011. The CBN aimed to financially include the largely Muslim northern Nigeria and achieve 80% financial inclusion by the year 2020. The access to finance survey report of 2023 reveals that 56% are formally financially included, while 11% are informally financially included. This results in a total of 67% financially included and indicating a shortfall of 13% from the 2020 financial inclusion target. Extensive use of debt-based financing contracts by Islamic banks in Nigeria is said to continue to keep away the conservative northern Nigerians from accessing the available financing products, despite the financial inclusion efforts by the CBN. This situation arises because most northern Nigerians see little or no difference between conventional and Islamic banks in their financing operations. This study thus appraises the regulation and policy development for financial inclusion in the northern states of Nigeria and how Islamic equity financing can deepen the financial inclusion in these states. The study relies on primary data sourced from interviews, and official publications, as well as secondary data from working papers, articles, e-books, websites, and online resources. ATLAS.ti 24 software is used for coding and in analysing interviews’ results. This study adopts qualitative research approaches which consist of content analysis of relevant literature, and qualitative analysis of interview outcomes. The content analysis is used to define the status of financial inclusion in Nigeria, regulation and policy development around financial inclusion in Nigeria, the preference for and suitability of Islamic equity financing contracts as veritable tools for furthering financial inclusion in northern Nigeria. The interviews provide insights on: (i) the effectiveness of the regulations and policies on financial inclusion in northern Nigeria; and (ii) the wider preference for and suitability of Islamic equity financing contracts for financial inclusion in the northern region of Nigeria. The main findings of this study are: (i) due to CBN’s efforts and initiatives there is an appreciable awareness about financial inclusion, but more efforts are still needed to be done in northern Nigeria; (ii) Islamic equity contract is used mostly for deposit mobilization, but sparsely used for financing; and (iii) there is positive perception of, and preference for Islamic equity financing contract in northern Nigeria. Thus, this study recommends that Islamic Banks in Nigeria should increasingly use Islamic equity financing contracts in their financial asset creation. Furthermore, the CBN, as the key regulator of Nigeria’s financial industry, should issue and enforce regulations and guidelines that will facilitate the expansion of the country’s financial inclusion drive, which can be done through Islamic equity financing and contracts.

The Republic of Tajikistan (RT) is strategically positioned to become a leading market for Islamic banking and finance (IBF) in the Central Asia Region (CAR) to serve the national interest. Recognized as one of the fastest-growing markets for IBF, the country has made significant strides toward industry development through regulatory initiatives and legislative reforms. Despite the promising growth potential, the Islamic Banking (IB) industry may face challenges that may hinder its development in the country. This study aims to explore the issues and challenges of the IB industry and solely concentrates on the RT with focus on the post-introductory phase of IBF. Given the limited body of research on this topic, especially from a qualitative perspective, the study aims to fill the gap by drawing practical visions from semi-structured interviews with eleven bankers, experts, and academicians familiar with the local financial market. The obtained data is thematically discussed and analyzed and the findings highlight critical areas for improvement, including; (1) Dealing with influencing factors on adopting IB; (2) Effectively positioning IB in the local financial market; (3) Presenting the unique features of IB; (4) Practicing effective Shari’ah governance (SG); (5) Implementing good corporate governance (CG); (6) Developing the ecosystem of the local financial market; (7) Enhancing legal and regulatory frameworks; and finally, (8) Other challenges, opportunities and the way forward. This study provides valuable insights for stakeholders, offering practical recommendations for better decision-making and fostering a deeper understanding of the unique challenges facing the IB industry in the country. Finally, the findings contribute to the existing literature on IB and serve as a foundation for future research in this emerging field.

Micro-entrepreneurs have contributed significantly to the socio-economic development of low-income households, which ensures long-term economic prosperity. Despite this, financial constraints are one of the primary challenges micro-entrepreneurs face. Formal financial institutions regard them as a high-risk and high-cost market segment. Acknowledging their financial constraints, Islamic microfinance institutions, such as Amanah Ikhtiar Malaysia (AIM), are essential in providing the necessary financial assistance based on the Shari’ah concept for micro-entrepreneurs. As evident from a growing body of research, entrepreneurial success is also dependent on other entrepreneur resources such as social capital, human capital, and ICT usage. Thus, this study aimed to examine the effect of financial capital, social capital, human capital, and ICT usage on micro-entrepreneurs’ performance, focusing on Islamic microfinance institutions in Malaysia. This study also aimed to identify whether a geographical location moderated these factors that may influence micro-entrepreneurs’ performance. A total of 416 micro-entrepreneurs as clients of AIM were involved in this study who were selected from the states of Selangor and Pahang, representing urban and rural regions. The partial least squares – structural equation model (PLS-SEM) investigated the relationship among the variables. The study found that financial capital, social capital, human capital, and ICT usage significantly influenced the micro-entrepreneurs’ performance. The research model explained 38.2% of the substantial amount of variance in the performance of micro-entrepreneurs and a moderate level of predictive relevance. Geographical location only has a moderating effect on ICT usage and the micro-entrepreneurs’ performance. This study can provide a theoretical contribution to the extension of the resource-based view (RBV) as a fundamental theory in predicting performance, particularly in the context of micro-entrepreneurs in an Islamic microfinance institution. In terms of practical contribution, the findings of this study would be beneficial for Islamic microfinance institutions to develop a more effective action plan for achieving their objectives, such as improving infrastructure, increasing knowledge and awareness about ICT usage, and shifting business strategies to the digital economy. This study will also assist the Malaysian government in developing effective policies, infrastructure, and financial assistance for micro-entrepreneurs. Furthermore, this study can assist the government and microfinance institutions to identify the most appropriate techniques for micro-entrepreneurs based on their performance in urban and rural areas. This would reinstate Malaysia's economic viability and assist micro-entrepreneurs to better comprehend the critical elements that should be fostered to improve and maintain their performance. However, this study is limited to the selected respondents, specifically micro-entrepreneurs from AIM. Thus, future research could expand on a different set of data collection.

An effective internal Shariah audit function in Islamic Financial Institutions (IFIs) is imperative to ensure better management of the Shariah non-compliance risks through a more robust Shariah audit practices. The accountabilities of the Board and Shariah Committee members are also vital to provide effective oversight on the internal Shariah audit function. The primary objective of this research is to evaluate the extent of the effectiveness of the internal Shariah audit function in IFIs in Malaysia. By using contingency theory, the study also examines the antecedents of an effective internal Shariah audit function. Consequently, the impacts of an effective internal Shariah audit function on the extent of Shariah governance and Shariah compliance disclosure in the Statements by Directors and Shariah Committee Report are examined based on the accountability theory. The study adopts a quantitative research method using a survey questionnaire and content analysis of the annual reports of IFIs in Malaysia. The total population of 47 IFIs during the period of data collection, i.e. the year 2016, were observed as the unit of analysis and the targeted sample. Survey questionnaires were distributed to the Heads of Shariah audit who are the key representatives of the internal Shariah audit function in IFIs in Malaysia. The findings indicate that the majority of IFIs have established an effective level of internal Shariah audit function. The internal control system is found to be the dominant contingent factor to contribute positive and significant effects to the effective internal Shariah audit function. There are positive but not significant effects between the Shariah risk management function, management support, and the function of Shariah Committee members on the effective internal Shariah audit function. The study also found that an effective internal Shariah audit function has a positive effect on the Shariah governance and Shariah compliance disclosures in the Statements by Directors and Shariah Committee Report. However, the effects are also not significant. The majority of IFIs have disclosed a minimum level of Shariah governance and Shariah compliance information in the Statements by Directors and the Shariah Committee Report. In conclusion, an effective internal Shariah audit function indicates the robustness of the Shariah audit practices and better management of Shariah non-compliance in the IFIs. The findings contribute to the need of rigorous monitoring and more attention by Bank Negara Malaysia as the regulator on the effectiveness of the internal Shariah audit function performed by the Takaful operators and Islamic windows in commercial and investment banks. This further emphasises the crucial need for a holistic Shariah compliance culture in IFIs to enhance the effective internal Shariah audit function and ultimately, enhance the integrity and accountability of IFIs.

The topic on credit spreads have been one of the major focuses on the scope of finance and investment literature. Theoretical frameworks have shown that credit spreads (or bond spreads) are the risk premium reflecting the additional risks borne by the investors for holding corporate bonds and provide signals for the likelihood of default. With the importance of credit spreads in the pricing of corporate bonds and in reflecting investors` behaviours during the different states of the economy, many empirical studies have explored on the behaviour of the spreads as well as factors determining its changes focusing on the developed bond markets of the United States of America, Europe, Japan and Australia. Despite the fact that sukuk market has been growing rapidly in the past decade, analysis on sukuk spreads is still in scarcity. With the aim to enhance the understanding on sukuk spreads for the purpose of risk management, this study attempts to analyse on the trend, behaviour and influencing factors for the variations of sukuk spreads over the period of 2005 to 2011. Focusing on the Malaysian sukuk market, this study employs the generalised auto-regressive conditional heteroscedasticity (GARCH) method by Bollerslev (1986). Apart from exploring the main determinants for sukuk spreads, this method also allows analysing the volatility of sukuk spreads and whether it is affected by the recent 2007/2008 global financial crisis and the volatility of the Malaysian stock market. For a more robust analysis, this study compares the behaviour and influencing factors of sukuk spreads against bond spreads and takes into account both investment and non-investment grade securities. This study is among the first few to document that the movement of the interest rate and the anticipation on the direction of the short term rate are the most important determinants to influence the variation in sukuk spreads. In line with the pressing demand for more in-depth information on various dimensions of the sukuk market, this study enriches the literature on Islamic finance from the perspective of sukuk spreads analysis. In addition to that, this study is also beneficial to the investors, portfolio managers as well as regulators to better understand the underlying factors influencing the pricing and risk management of sukuk instruments

The Mushārakah concept, an equity-based contract, is believed to promote partnerships, banker-partner relationship, and an investment culture between Islamic banking institutions (IBIs) and corporate or business entities under the banner of Profit-loss-sharing (PLS) concept. However, reports from Bank Negara Malaysia (BNM) have revealed that a majority of the Islamic financing provided by IBIs operating in Malaysia are applying the non-PLS concepts. The fact that there is only a small amount of PLS utilisation in the IBIs and these insignificant applications are riddled with controversies gave us the motivation for this study. The primary objective of this study is therefore to investigate the constraints and challenges in the application of Mushārakah-based financing facilities (MBFF) by examining the following concerns. Firstly, whether PLS financing method serves as a better alternative to debt-based financing or it only constitutes the other varieties of non-PLS financing products. Secondly, the literature advocates that PLS is superior to debt-based financing, as the former is more reflective of the spirit of Shāriʻah and is capable of providing justice to contracting parties. As such, it is interesting to examine how the IBIs in Malaysia implement PLS in the environment that does not support equity-based financing and how far the concept of debt-based financing has influenced the implementation of PLS financing facility. To address these concerns, a questionnaire and semi-structured interviews as well as a critical analysis of the literature were employed to collect the relevant data. The questionnaire and structured interviews were used to assess the users’ perceptions and awareness about MBFF offered by Malaysian IBIs, to investigate customers’ expectations and to analyse the classical theory of MBFF as financing tools within the context of its implementation by IBIs of Malaysia. The questionnaire and structured interviews were also used to examine the bank employees’ and customers’ perceptions on the application of Mushārakah concept and their expectations of MBFF and its prospects in the future. In addition, the critical analysis of the literature helped to develop a clear understanding of MBFF practices from the Islamic banks and the legal and Shāriʻah issues and other related challenges in the implementation of MBFF. The questionnaire data was analysed using the non-parametric tests consisting of the descriptive analysis and mean value calculation in SPSS. Cross-tabulation, Kruskal-Wallis, Man Whitney U Test, Chi-square tests and factor analysis were also employed. The data from semi-structured interviews, on the other hand, were analysed through a coding method based on the thematic analysis. This study opines that Mushārakah financing products passed the three types of risks: Shāriʻah, acceptance and legal. This positive finding therefore contributes towards the existing efforts to improve the perception and awareness of Malaysians on PLS. This study concludes with the recommendations for the proper management of the issues and challenges facing the MBFF products in Malaysia.

In view of the continuing episodes of financial crisis involving fiat money systems around the globe, this thesis aims to describe the author`s analysis of the Grondona system of conditional currency convertibility from theoretical, Shariah and economic perspectives. The first part evaluates the theoretical soundness of the Grondona system in comparison to fiat money systems by using library research. The second part examines the Grondona system’s structure and operations from the Shariah point of view by using library research. It also applies the principle of siyasah shariyyah to evaluate the Grondona system as a possible policy initiative for the OIC countries. Simulations of the Grondona system in four selected OIC countries, namely Malaysia, Turkey, Pakistan and Indonesia are also provided in order to analyse the potential impact of each country’s CRD (Commodity Reserve Department) on macro-economic indicators. The simulations are performed by using a program developed in C++ and the results of the simulation are analyzed by using Eviews. The theoretical evaluation of the Grondona system shows that it contains essential attributes of a system for preserving sound and stable money. From the Shariah analysis of the Grondona system, it has been found that the fundamental principle of economic planning of Prophet Yusuf (A.S) was found in the Grondona system. The system accumulates reserves of primary commodities during times of abundance and releases those reserves during periods of scarcity, thereby helping to stabilise the "business cycle" through its counter-cyclical influence. Thus, in the light of such benefits, it may be inferred that implementation of the Grondona system is in accord with siyasah shariyyah since it helps to secure the maslahah (collective benefit) and prevent mafsadah (harm). The simulation results for the Grondona system shows an inverse relation between the prices of primary commodities and the quantity of reserves stockpiled by each country`s CRD. Further, the simulation has shown how the national money supply of each country changes with the change in the levels of reserves of the different primary commodities stockpiled by the CRDs. Finally, correlation analysis of the simulation results shows the CRD’s possible effects on several economic indicators, namely exchange rate, inflation, money supply and interest rate. The results show that the exchange rate was significantly correlated with the changes in money supply caused by the CRD operations in all four OIC countries. Besides that, the correlation with inflation was found to be significant only for Malaysia. In addition, correlations with changes in the national money supply (M0) were found to be statistically significant for Pakistan and Indonesia, while money supply correlation using M1 was significant only for Turkey. However, the CRD operations did not affect the interest rate in all four OIC countries. Due to limitations of data, these simulations and correlation analyses could be performed only for the past five years: it will be valuable to repeat them as longer data series become available.

Security or collateral plays a pivotal role in mitigating credit risk in banking, functioning as a safeguard against customer default. While its application is widespread in both conventional and Islamic banking systems, there remain persistent questions concerning the Shari’ah compliance of various security instruments and the underlying assets used. The absence of a standardized framework for Islamic security arrangements has led to inconsistent practices across jurisdictions, resulting in legal uncertainties and a heightened risk of Shari’ah non-compliance, particularly in Islamic project finance. This study aims to fill this critical gap by evaluating the Shari’ah compatibility of security instruments and asset classes commonly employed in project financing. Employing a qualitative comparative methodology, the study undertakes doctrinal legal analysis of statutory provisions, case law, and secondary literature, while complementing it with Shari’ah analysis grounded in classical and contemporary juristic discourse. Particular emphasis is placed on rahn and ʿuqud al-tawthiqat (security contracts). Field interviews with industry practitioners, legal experts, and Shari’ah officers provide practical insights and validation of theoretical interpretations. Findings reveal that the rahn shares some resemblance with charge, mortgage, pledge, and lien in terms of providing security to the creditor, but it differs in key characteristics. The rahn closely parallels the collateral instrument of a charge, meeting flexible rahn requirements of possession and asset diversification. Unlike a mortgage, which transfers ownership of the asset to the creditor, rahn does not require such a transfer. Similarly, pledge and lien require delivery and possession of the asset by the creditor, which is not mandatory in rahn. Furthermore, common law quasi-security arrangements, such as guarantee contracts, and assignments, have comparable Islamic counterparts in kafālah/ḍamān and ḥawalah contracts, despite some differences. The study also evaluates the Shari’ah permissibility of various asset classes used as collateral in project financing. Real estate, Islamic cash-based assets (e.g., deposits, reserves), and Islamic financial assets (e.g., sukuk, Islamic unit trusts) are fully Shari’ah -compliant and acceptable as collateral. Conventional assets like fixed deposits and bonds are only allowed up to the principal, excluding any interest (riba). For conventional insurance, only the premium paid is permissible. Shares of companies engaged in non-compliant core activities are strictly impermissible. However, shares that breach Shari’ah benchmarks due to non-compliant income may be accepted as collateral, limited strictly to the ḥalal portion of their value. Book debts are permitted due to constructive possession. Future assets under floating charges are conditionally accepted based on the Maliki view if safeguards against gharar are in place. Intellectual property is also allowed, being recognized as ḥaqq mall with tradeable and lasting value. This research contributes a clearer understanding of Shari’ah -compliant security instruments and assets for Islamic project financing stakeholders and regulators.

This study assesses the impact of Islamic microfinancing on clients’ income and poverty status with reference to the clients’ spirituality and religiosity. To achieve these objectives, this study collected information from 400 micro entrepreneurs, in which 360 of them were clients of Islamic Microfinance Institutions (Islamic MFIs) in Jakarta, Indonesia. The rests of them were micro entrepreneurs who shared similar characteristics with the clients who were used as control group for comparison of the impact. This study used the Multiple and Logistic Regressions to prove the hypotheses. Overall, this study found that Islamic microfinancing, as reflected by length of having Islamic microfinancing and size of financing, is able to generate positive impact on clients’ income and poverty status. However, the impact cannot be obtained in the short-term, and is only significant if the poverty status is measured by using local poverty standards; the country’s formal poverty standards issued by Government Agency. The impact is relatively minimum if poverty status is measured by using international poverty standards such as extreme and moderate poverty standards, or earning US$1 and US$2 per capita per day as adopted by the World Bank and other international organizations. This study also found that the cost of financing provides no significant impact on clients’ income and poverty status. Moreover, having a better economic condition is the reason why clients who obtain Mudharabah and Musharakah financing live a better life compared to those who receive Murabahah financing. Another significant finding is clients who have higher spirituality level in general are found to be wealthier than those who have lower spirituality level. Religiosity level is also found as having a significant influence on clients’ income and poverty status. These findings indicate that both spirituality and religiosity should be used by the Islamic MFIs in capacity building that they provide to their clients. For this purpose, the Islamic MFIs can enhance clients’ knowledge on Islamic teachings particularly in terms of aqidah, ibadah, akhlaq and muammalah, and enlighten them why these matters are not only important for the akhirah, but also for the dunya purposes, including for the improvement of their business performance. With strong aqidah and proper ibadah, they will have higher spirituality level which may enhance their passion and patience. Furthermore, with proper ibadah, good akhlaq and knowledge on muammalah, they will have higher religiosity level which may improve good characteristics that are important for their business such as discipline, hard work and human relationship management.

The development of sukuk market as the alternative to the existing conventional bond market has risen the issue of sukuk issuance’s rating. These credit ratings fulfil a key function of information transmission in capital market. Issuers seek ratings for a number of reasons, including to improve the trust of their business counterparties or because they wish to sell securities to investors with preferences over ratings. Moreover, Basel Committee for Banking Supervision has now instituted capital charges for credit risk based on credit ratings. Basel II framework allows the bank to establish capital adequacy requirements based on ratings provided by external credit rating agencies or determine rating of its investment internally for more advance approach. For these reasons, ratings are considered important by issuers, investors, and regulators alike. Focusing on Malaysian outstanding long-term corporate sukuk from the period of 2001 to 2012, this study tries to test the efficacy and accuracy of sukuk rating model compared to the actual rating assigned by Malaysian rating agencies using statistical and data mining method, namely: Multinomial Logistic Regression, Decision Tree and Neural Network. To address the limited study on sukuk rating prediction, this research provides an empirical foundation for the investors to estimate the sukuk ratings assigned. The study examines variables from past researches on bond ratings, corporate ratings and financial distress prediction model taking into account on the various sukuk structure, credit enhancement facilities, industrial sector and macroeconomics variables. Interestingly, both statistical and data mining methods strongly indicate that share price, sukuk structure and guarantee status are empirically proven as key factors to predict sukuk rating. In addition, neural network method obtains the highest accuracy rate to predict the actual rating in the market as compared to the other two methods. Therefore, it is expected that the proposed models are beneficial to the rating agencies, sukuk issuer companies, corporate managers, private and institutional investors to support their investment decision making. The regulatory agencies may also take advantage to consider this model as benchmark for Internal Rating Based (IRB) approach as required in Basel II. In line with those practical implications, this study is also aimed to contribute the novelty aspects in the body of Islamic finance.

A robust and comprehensive measure of bank stability is crucial to identify healthy banks and save troubled banks from deteriorating in order to avoid banking crises. Potential crises in the banking sector should be detected early and prevented as they risk having a systemic effect on the overall financial system of the country. The aim of this study, therefore, is to develop a comprehensive measure of bank stability for selected Organization of Islamic Cooperation countries that have dual banking systems, namely, Bahrain, Bangladesh, Egypt, Kuwait, Indonesia, Malaysia, Pakistan, United Arab Emirates, Saudi Arabia, Turkey and Qatar. The measure is in the form of a composite index, comprehensively adopts relevant indicators from the existing literatures from central bank’s stability reports, International Monetary Fund’s (IMF) practice, Islamic Financial Services Board (IFSB) and journal articles. Annual data from 1999 to 2015 are obtained from the Bankscope database, and the World Bank Indicators’ country macroeconomic database. The study then, extends to compare the bank stability index of Islamic and conventional banks, including introducing the conventional banks with Islamic subsidiary banks and subsidiary Islamic banks. Next, the differences between these bank models are analyzed to determine the impact of crisis indicators on their stability. The factor analysis method used by the Organization of Economic Co-operation and Development is adopted to develop the index. Nonparametric multiple comparison is then performed to compare the Bank Stability Index for different bank models. The study also employed the dynamic panel data of generalized method of moments (GMM) in analyzing the impact of crisis indicators on the stability of each bank models. The study finds that bank stability index is the comprehensive measure of bank stability for all bank models for selected countries in the dual banking system. The study also reveals that the Islamic banks are relatively less stable than the conventional banks, in general. However, there are mixed results given different crisis periods and for different bank models. The impact of crisis indicators on bank stability also produced mixed results. The findings from the study have the implication for the regulatory to use similar measure of bank stability to monitor and report the stability of different bank models. The policymakers need to ensure strong macroeconomics fundamental to mitigate the impact of crisis on the stability of the banks.

The transformation to the Islamic banking system is one of the most challenging and critical issues faced by the Libyan conventional banking sector. Nevertheless, for the process to be successful, bank employees would have to play a prominent role in achieving this goal. This study investigates the behavioural intention of Libyan bank employees towards supporting the transformation to a full-fledged Islamic banking system in Libya. In particular, this research adopts the theory of planned behavioural (TPB) to understand the behavioural intention of Libyan bank employees towards the transformation process by testing the effects of attitude, subjective norms (social influence) and perceived behavioural control on employees’ behavioural intention as well as, religiosity, government support, and knowledge of Islamic banking products in the model of study. Furthermore, the role of training was examined to understand its moderating effect on the relationship between knowledge of Islamic banking products and behavioural intention. Moreover, this study employed a survey questionnaire of 323 employees of 10 conventional Libyan banks. To analyse this relationship, the study adopts a quantitative approach using Structural Equation Modelling (SEM). The findings of this research revealed that attitude, religiosity and subjective norms have a significant positive influence on the behavioural intention of Libyan bank employees. Also, the findings revealed that the attitude towards transformation is the most important factor that determines behavioural intention among bank employees, which clearly indicates that they are likely willing to support the transformation process and adopt Islamic banking. In the same context, the study suggested that religiosity or (religious influence) and subjective norms (social influence) play the determining role of behavioural intention towards the transformation process of shifting to a full-fledged Islamic banking system in Libya. The findings also indicated that the theory of planned behavioural (TPB model) is a valid model in predicting banking employee’s behavioural intention to transform into Islamic banking in Libya. On the other hand, the findings revealed that perceived behavioural control, government support and knowledge of Islamic banking products were found to have an insignificant influence on employees’ behavioural intention. This indicates the lack of technical infrastructure regarding the adoption of Islamic banking within the Libyan banking sector. In addition, the findings revealed that training is not statistically significant as a moderator between knowledge of Islamic banking and behavioural intention. Therefore, the lack of training and technical infrastructure will be the subject of further research to assist policymakers in designing a smooth transformation process. These findings help decision-makers to develop a strategy for the transformation process by utilizing the factors that contribute to a smooth transformation effectively. This research provides insights and guidance for banks’ managers to manage employees’ readiness to support the transformation process and avoid resistance during the time of transformation.

As new comers to the market, Islamic Banks (IBs) are facing a trade-off. They can either employ high capital ratios which increase the soundness and safety of the bank and lowers the required return (risk) by investors, or depend on deposits and Islamic bonds which are considered cheaper sources of funds due to their tax deductibility. IBs’ management must carefully decide upon the appropriate mix of debt and equity, namely, capital structure, in order to maximize the value of the bank. This study examines the effect of capital structure on IBs’ performance in an attempt to provide guidance to managers in the issue of raising capital. The study also examines whether regulatory capital requirements are the first-order determinants of IBs’ capital decisions. Furthermore, the study calculates the optimal capital structure for the sample IBs and uses it as guidance for capital structure decisions. Using a sample of 85 IBs covering 19 banking systems, the study uses a Two-Stage Least Squares (2SLS) method to examine the performance determinants of IBs’ in order to control for the reverse causality from performance to capital structure and uses the Ordinary Least Squares (OLS) method to examine the determinants of IBs’ capital structure. After controlling for macroeconomic environment, financial market structure and taxation, results indicate that IBs’ performance (profitability) measures respond positively to increases in equity (capital ratio). The result is consistent with the signaling theory which predicts that banks expected to have better performance credibly transmit this information through higher capital. As for the reverse causation from performance to capital structure, results indicate that more profitable IBs employ higher leverage. This is consistent with the efficiency-risk hypothesis which predicts that more profitable firms choose lower equity ratios (higher leverage). Risk is found to be an insignificant factor in determining leverage, which indicates that minimum capital requirements are not first-order determinants of IBs’ capital structure and that standard determinants of capital structure can explain variation in IBs’ book capital. Results of optimal capital structure finds that the capital-asset ratio has an increasing effect on IBs’ profitability. The optimal capital ratio is found to be 37.41%. At capital ratios below 37.41% equity is expensive and has a negative effect on return on equity (ROE) due to the higher required return by investors. Beyond 37.41% equity starts to have a positive effect on ROE and becomes a cheap source of financing. As a general guide, IBs should have minimum capital ratios of 37.41% to be viewed as safe and sound by investors and to lower the cost of issuing additional equity.

This study proposes a sustainable personal financing model, the Qarḍ Ḥasan via Cash Waqf (QHCW) model, as a proactive solution to mitigate future economic crises. Grounded in the Theory of Planned Behavior (TPB), it assesses the model’s acceptance by examining respondents’ knowledge, objectives, and perception within the B40 and M40 income groups, who are often excluded from conventional financial services during downturns. The model establishes a structured, interest-free fund sustained through Shari’ah-compliant investments, incorporating standard operating procedures (SOPs) from the Prophetic tradition to encourage reciprocal contributions upon repayment. Following the Dinc Framework, the QHCW fund relies on initial contributions from unaffected individuals, permitting withdrawals only after securing these deposits. Public donations remain open, with all funds allocated to low-risk, Shari’ah -compliant ventures to ensure sustainability and cover administrative costs. A mixed-method research design integrates quantitative survey data from snowball sampling with qualitative insights from open-ended respondent feedback and practitioner interviews, offering a comprehensive evaluation of feasibility, acceptance, and implementation readiness. Empirical findings confirm the QHCW model’s viability, with no Shari’ah compliance concerns identified. As an ethical alternative to interest-based banking, the model provides a sustainable financial safety net, particularly in times of crisis. The study also raises an urgent ethical concern: financial institutions, despite their mandate for economic stability, continue to impose interest during crises, deepening financial hardship. This contradiction underscores the necessity of ethical, interest-free mechanisms. The QHCW model is ready for implementation, presenting a viable, Shari’ah -compliant intervention to strengthen Malaysia’s financial resilience, enhance social welfare, and ensure economic stability in future crises. It offers actionable insights for policymakers, industry stakeholders, and Islamic financial institutions.

Waqf has played a significant role throughout Islamic history. This has been possible through proper management, investment and financing of various Waqf assets to enhance the socioeconomic development of Muslim societies. In particular, it has contributed significantly to the encouragement of religious practices, improvement of education, health and helping the poor and the needy, creating employment and supporting other socio-economic activities. However, nowadays most of Waqf assets have become idle and no longer serves the needs of the Ummah due to problems, such as poor governance structure and human resource. Few studies have tried to address challenges facing Waqf but unfortunately these studies have been conducted in countries where the governance structure is robust and the quality of human resource is very good. Such models may not be suitable in contexts such as Yemen where Waqf assets are mostly in the form of physical assets such as lands and buildings and the quality of human resource and governance structure are poor. Therefore, the current study has proposed a model to address these challenges in terms of management, investment and finance in Yemen. The study has used semi-structured interviews with experts to explore the acceptability of the model in Yemen. The experts interviewed are mainly policy makers, Waqf directors and academicians specialized in the areas of Waqf and Islamic banking. The findings of the study indicate that Islamic banking model could play a significant role for development of Waqf assets. Further, according to the findings of the current study, the applicability of the proposed model to the Yemeni context is supported.

Diverse attempts have been made to analyse the impact of financial disclosure on the stock returns volatility of banking sector. In light of theoretical and empirical results available in this domain, two contradictory views have emerged. Some researchers are of the opinion that financial disclosure will enhance the banking stock returns stability since it will increase the trust between the shareholders, while others have opposite viewpoint and they argue that enhancing the financial disclosure will lead to inject more data into the market which will be misunderstood by the investors and therefore it will increase the stock return volatility. This thesis provides empirical evidence of a linear relationship between financial disclosure and stock returns volatility, which shed light on the conflicting results of previous theoretical and experimental studies. In our study, we are exploring the financial disclosure levels of Islamic and conventional banks in five Gulf Cooperation Council (GCC) countries which have dual banking system with a significant share of Islamic banking for the period of 2005 until 2015 and find which banks is more transparent to the market. Furthermore, we are studying the disclosure – stock return volatility relationship and we are exploring whether or not bank types affect this relationship and which banks have higher stock return volatility effects. Using fixed or random effect technique on panel data covering the GCC countries with dual banking system, this thesis finds and affirms that the disclosure levels in conventional banks were better than Islamic banks in GCC region during the studied period, but interestingly at the same time we find that the gap between the financial disclosure levels in these two banking system was decreased from 13.96% in 2005 to become 5.51% in 2015, and this indicate the efforts and enhancement done to improve Islamic banking system during the last few years. Additionally, the empirical finding confirms that increasing the financial disclosure level will lead to increase the stock returns volatility for both banking system in a different ratio. Analysis of the differences among Islamic and conventional banks verified that the effect of the financial disclosure will be higher for stock returns volatility of Islamic banks. These results have significant policy implications, as it suggests that policymakers should encourage the banks to have clear guidance on the required information to be disclosed on multiple criteria. Instead of recommending for injecting more information in the market, the focus should be made on the dissemination of reliable, adequate, relevant, and timely information. Furthermore, results derived in this thesis have direct implications for managers and policymakers in GCC banking system, who can use this information to design better disclosure policies to influence investors.