REVISITING TEMPORAL CAUSALITY BETWEEN ISLAMIC FINANCE INSTRUMENTS AND OUTPUT

With the onset of the COVID-19 pandemic, financing would again be the crux of the recovery process. This paper revisits existing literature on how financial development promotes growth by focusing on the role of Islamic finance in Malaysia. Specifically, the role of sukuk and loans by Islamic banks on output is examined in Malaysia. The main objective of this paper is to investigate the causal nexus between sukuk, Islamic banking loan, and output using a bootstrap causality test applied to both full sample and rolling window sub-samples. Data ranges from 2000M1-2021M6 for the sukuk market and 2006M12-2021M6 for Islamic banking loans. We rely on bootstrap rolling windows which allow for time-varying causalities within time-series data. Results indicate evidence that Islamic financing instruments, in this case, sukuk and loans by Islamic banks Granger-cause output in the long run. Even in the long run, non-constancy in the parameters is detected for total sukuk, sukuk for finance, and sukuk for transport. The parameter stability tests indicate parameter non-constancy in the short run for total sukuk, sukuk for finance, sukuk for transport, and sukuk for utility for the output-sukuk equation. In the case of Islamic financing via loans, short-run parameter instability is prevalent for all loan–output equations. We take the analysis further by examining the direction of the lead variables on a multi-time scale using continuous wavelet transforms and wavelet coherence. Results show that causality runs from sukuk output for total sukuk, transport, and utility sukuk whereas construction sukuk seems to exhibit a mixed behaviour. In the case of sukuk for finance, the impact is more pronounced in the very-long run. These findings could be a guide for countries intending to use Islamic financing instruments as one of the tools for fiscal stimulus or post-pandemic economic recovery. © 2023, Universiti Malaysia Sarawak. All rights reserved.

Professional shariah audit training via the e-learning approach during COVID-19: challenges and prospects

PurposeThis study aims to explore and identify potential challenges and prospects for conducting the professional shariah audit training programme via an e-learning approach during coronavirus disease 2019 (COVID-19).Design/methodology/approachQuestionnaires were administered to 296 participants who were enrolled in the professional shariah audit training programme via e-learning during the COVID-19 pandemic outbreak in 2020. These participants were final-year students from selected Malaysian public universities.FindingsFindings show that several main challenges are faced in adopting an e-learning approach for conducting the professional shariah audit training programme such as the inability to do more hands-on, group and physical activities, different understandings based on academic backgrounds, difficulty in learning practical and technical topics, technical issues and problems during e-learning sessions. These lead to the unsuitability of conducting professional training via the e-learning approach. In terms of prospects of knowledge learnt via the e-learning approach, participants showed that they are able to master all six modules covered in the professional shariah audit training programme via the e-learning approach. These include (1) shariah principles;(2) shariah governance;(3) Islamic financial transactions;(4) shariah risk management;(5) shariah audit planning and programme;and (6) shariah audit fieldwork and communication.Practical implicationsBased on the findings, it is suggested to have more time spent and earlier preparation on the learning contents and sessions, more discussion on actual contents and practical exercises and competency of the trainers in delivering e-learning sessions.Originality/valueThis study is believed to be one among the pioneering studies on the potential challenges and prospects in adopting e-learning for conducting the professional shariah audit training programme due to COVID-19.

Variables Affecting Congregation's Trust and Mosque Organizational Performance: Acces la Success

Mosque is a non-profit community organization, where the purpose of its establishment is not to seek profit, so this objective makes it different from commercial organizations. "Takmir" (manager of a mosque)as a manager, has the responsibility and trust of the congregation. This was explanatory research with a quantitative approach. The level of a good trust can be improved by consinously improving the quality of variabels so that the mosque organization managed can run properly and correctly and the congregation's trust can be achived. When the good mosque governance concept with the principles, internal control and services are used properly, it will be able to improve organization performance. Congregation's trust in the takmir to improve the performance of the mosque's organization can be achieved by increasing the ability, kindness and integrity of the takmir. The congregation's trust in the takmir will affect its intensity in participating in activities organized by the mosque, in which it will directly affect the performance of the mosque's organization. For Next research, it is recommended to add a variable of the concept of leadership from organizational managers. The participation variable from the congregation and the community, and professional variables, Professional someone will have a positive and significant impact on the quality of work.

Islamic Bank Merger and Economic Crisis: Event Study Analysis: Acces la Success

This event study examines the stock price reaction to the merger announcement of three major Islamic banks in Indonesia, namely BNIS, BRIS, and BSM to become Indonesia Islamic Bank (ticker code BRIS). This study analyzes whether there is an abnormal return around the merger announcement on 14 days window period. Using a daily stock price of BRIS, market index, and trading volume we calculated abnormal return and risk using market model Sharpe 's single index model. Analysis of the 14 days window period found that there is an insignificant abnormal return before and after the Islamic banking merger and Indonesia Stock Exchange has been categorized as weak-form efficiency. The results of statistical tests reveal that stock returns and trading volume react positively after the merger announcement and are significant at 5% alpha.

Reevaluating the risk minimization utility of Islamic stocks and bonds (Sukuk) in international financial markets

We examine the risk minimization utility of Islamic stock and Sukuk (bond) indices by studying their linkages against traditional global counterparts. We first employ an asymmetric power ARCH-based ADCC model on an extended dataset employed by Kenourgios et al. (2016). Our sample ranges from July 2007 to June 2021 covering the Global Financial Crisis (GFC), the European Sovereign Debt Crisis (ESDC), and the COVID-19 pandemic. Econometric tests suggest strong evidence of coupling in the bulk of Islamic equity indices. A handful of emerging market indices constitute exceptions. Qualitatively similar results emerge from time–frequency analysis via wavelet tools, revealing pervasive coupling in both returns and volatility series. The linkages are scale-dependent in only a few pairs. In contrast, Sukuk indices are uncoupled from their global fixed income counterparts and relevant risky debt portfolios. In sum, the risk-return characteristics of Islamic equities (especially in developed economies) remain coupled to major global benchmarks and therefore are unlikely to appeal as safe haven candidates. The converse applies to Sukuk, which promises potential portfolio diversification benefits and safe haven status in ‘normal' and crisis periods.

Sukuk and bond dynamics in relation to exchange rate

PurposeThis study aims to contribute by expanding the existing literature on Sukuk return and volatility and exploring the implications of the Sukuk-exchange rate interactions.Design/methodology/approachThis study examines the dynamic interactions of Sukuk with exchange rate in 15 countries, employing the Wavelet approach that considers both time and investment horizons.FindingsThe results reveal significant evolving coherence of Sukuk return and volatility with the underlying exchange rate. The relationship is more potent than what this study witnesses in their counterpart bond market. For Sukuk returns, the coherence is negative, whereas it is positive for volatility. Notably, the coherence is strong in the medium to long term and intensifies during extreme economic episodes, especially during the COVID-19 pandemic. These findings are further validated by comparing firm-level matched data for Sukuk and conventional bond.Originality/valueTo the best of the authors' knowledge, this is the first study that reports the dynamic relationship of Sukuk return and volatility with the underlying exchange rate in 15 countries. Collectively, this study unites valuable insights for faith-based active Islamic investors and cross-border portfolio managers.

Regime specific spillover between Dow Jones Islamic Market World Index, Islamic gold-backed crypto currencies and the blockchain halal index

PurposeThe purpose of this paper is to explore the relationship between Dow Jones Islamic Market World Index, Islamic gold-backed cryptocurrencies and halal chain in the presence of state (regime) dynamics.Design/methodology/approachThe authors have used the Markov-switching model to identify bull and bear market regimes. Moreover, the dynamic conditional correlation, the Baba, Engle, Kraft and Kroner- generalized autoregressive conditional heteroskedasticity and the wavelet coherence models are applied to detect the presence of spillover and contagion effects.FindingsThe findings indicate various patterns of spillover between halal chain, Dow Jones Islamic Market World Index and Islamic gold-backed cryptocurrencies in high and low volatility regimes, especially during the COVID-19 pandemic. Indeed, the contagion dynamics depend on the bull or bear periods of markets.Practical implicationsThese present empirical findings are important for current and potential traders in gold-backed cryptocurrencies in that they facilitate a better understanding of this new type of assets. Indeed, halal chain is a safe haven asset that should be combined with Islamic gold-backed cryptocurrencies for better performance in portfolio optimization and hedging, mainly during the COVID-19 period.Originality/valueTo the best of the authors' knowledge, this paper is the first research on the impact of the halal chain on the Dow Jones Islamic Market World Index return, Islamic gold-backed cryptocurrencies returns in the bear and bull markets around the global crisis caused by the COVID-19 pandemic.

The impact of COVID-19 pandemic on the volatility of conventional and Islamic stock indexes: a comparative study on ASEAN and GCC countries

PurposeThe purpose of the study is to adopt Morlet's wavelet method to examine the differences in the level of volatility (i.e. riskiness) between the conventional and Shari'ah indexes during the COVID-19 pandemic (February 4 to June 19, 2020) on selected Association of South East Asian Nation (ASEAN) and Gulf Cooperation Council (GCC) countries. As a comparison, the equivalent time period of relative tranquillity is used;February 4 to June 19, 2019.Design/methodology/approachMorlet's wavelet method is used in analyzing the volatility levels for both the conventional and Shari'ah indexes before and during the COVID-19 pandemic for the selected ASEAN and GCC countries.FindingsThis study has several findings;first, the markets in the ASEAN region appear to be more volatile during the pandemic than in the GCC region. Second, most of the Shari'ah indexes were more volatile during the COVID-19 pandemic than their conventional counterparts. Nevertheless, the GCC index pairs appear to show more similarities between both the Shari'ah and conventional index.Practical implicationsThe findings from this study indicate that investors, government, regulators and all other stakeholders should stay vigilant during a pandemic or health threat period as it has become a pertinent source of volatility spillovers. As such, investors should devise optimal asset allocation strategies, portfolio diversification and portfolio rebalancing measures, taking into consideration not only financial adversity but also public health gravity as a potential source of turbulent markets.Originality/valueThis study uses the wavelet method to examine the volatility level of both the Shari'ah and conventional indexes during the COVID-19 pandemic and its equivalent time frame in 2019. It has further added to the Islamic literature by comparing the volatility between selected ASEAN and GCC countries. The wavelet method is most appropriate for short-duration studies as it captures both the time and frequency domains of the time-series behavior.

The Impact of COVID-19 Pandemic on Islamic and Conventional Banks' Profitability

The banking sector has a significant impact on a nation's financial stability and economic development. As one of the fundamental components of the financial sector, banks offer services that are essential for the expansion of the markets. The stability of the financial system is significantly impacted by the efficiency of the banking sector. COVID-19 has had a tremendous effect on the economy. This pandemic cannot be disregarded, considering how widespread it has been and how many people it has affected globally. Both society and the global economy have undergone profound change. Hence, it is critical to ascertain how severely the outbreak has impacted the banking system. To assess the potential impact of pandemic, the current study examined conventional and Islamic banking. This study also investigates how COVID-19's moderating effect influences the banking system. Financial statements from 10 conventional banks and 5 Islamic banks in Pakistan are the sources of this study's sample data. COVID-19 is a moderator in this study. The empirical estimations by means of the fixed-effects approach suggests that the moderator has a large impact on bank profitability. In addition, COVID-19 appears to have a stronger influence on the Islamic banking system.

An Analysis of the COVID-19 Impact on Business and Social Performance of Islamic Micro-Financial Institutions

Islamic micro-financial institutions (LKMS) provide services for micro businesses in the form of deposits, financing, and social assistance as the main activities. The COVID-19 pandemic engenders an adverse impact, breeding members' inabilities to measure up to their duties. The inabilities are regretted as LKMS should have also been able to assist its members in sustaining as a form of social responsibility. The research aims to prove paradoxes in business and social performance. We applied a descriptive quantitative approach to a secondary data analysis of business and social performance reports during the COVID-19 pandemic until 2021. The research population covered 154 members of the Islamic cooperative parent, and the samples were 51 LKMS in the Islamic cooperative center. Conclusions were drawn from data analysis using stakeholder and stewardship theories. The results demonstrated that the COVID-19 pandemic incurred negative impacts, i.e., a decreased business performance of LKMS of 8.4% on average for two years. Meanwhile, another finding exhibited an increase in social performance by 27%. Based on the data, we could argue that a decrease in LKMS business performance bred an increase in social performance.

Covid-19 and informational efficiency in Asian emerging markets: a comparative study of conventional and Shariah-compliant stocks

PurposeThis study aims to provide a comparative insight into the level of informational efficiency and irregularities of Shariah-compliant stocks and conventional stocks in three emerging markets, namely, China, Malaysia and Pakistan. The empirical evidence is provided for pre-crisis and crisis periods caused by the Covid-19 pandemic.Design/methodology/approachInformational efficiency is measured using the variance ratio (VR) Test developed by Kim (2006). The Approximate Entropy (ApEn) Metrics is used to investigate the level of irregularities in stock prices caused by the pandemic.FindingsAll the three emerging markets in the sample are not immune to the crisis caused by Covid-19 pandemic. The level of informational efficiency of both the Shariah-compliant and conventional stock is affected by the crisis. However, the former exhibits relatively high level of informational efficiency and stability in returns as compared to more volatility of conventional stocks.Practical implicationsThis study provides market agents and policy makers with a robust assessment of the impact of the Covid-19 pandemic on informational efficiency of Shariah-compliant and conventional stocks. Relatively high informational efficiency of Shariah-compliant stocks indicates that they are more transparent and that investors can trust the Shariah-compliant stocks more. This higher level of transparency and trust leads to more steady returns and lower levels of risk even during turbulent time like Covid-19. Investors can gain superior returns by conducting fundamental analysis and investing in index funds.Originality/valueTo the best of the authors' knowledge, this is the first study that highlights the difference in informational efficiency of conventional stocks and Shariah-compliant stocks in the crisis period caused by Covid-19. Unlike previous studies, this study uses firm level data which enables firm-wise assessment of informational efficiency.

The intention of small and medium enterprises' owners to participate in waqf: the case of Malaysia and Indonesia

PurposeThe purpose of this study is to assess small and medium-sized enterprises (SMEs) owners' intentions to participate in waqf, involving two countries, which are Malaysia and Indonesia, using the theory of planned behavior. SMEs are the backbone of many economies, representing 95% of all companies worldwide and accounting for 60% of employment. Based on this fact, this paper analyzes the influence of religiosity, knowledge and attitude to predict the intentions of SMEs' owners in waqf participation in Malaysia and Indonesia.Design/methodology/approachData were randomly obtained from 175 SMEs owners from Malaysia and Indonesia with the Statistical Package for the Social Sciences (SPSS) used for analysis.FindingsThe empirical analysis data suggest that knowledge and attitude show a significant impact on the intentions of SMEs' owners to participate in waqf, while religiosity does not have a significant impact on the intentions of Malaysian and Indonesian SMEs' owners to participate in waqf.Practical implicationsThis study aims to assist SMEs in Malaysia and Indonesia to formulate appropriate strategies and marketing using waqf for the sustainability of SMEs which represent more than 90% of business establishments in both countries. The strategy is a necessity, especially because the government is targeting to promote a sustainable Islamic financial system, improve governance policy and halal industry for SMEs, strengthen the development of Malay Reserve land, providing as financial independence to higher learning institutions and invest in digitalization and advanced technology through waqf funds. Therefore, both countries should take the initiative to provide training to equip SMEs with extensive knowledge through multiple platforms to further encourage their participation in waqf.Originality/valueBecause of the increasing interest in waqf participation both in Malaysia and Indonesia, this study claims three essential contributions. First, it aims to examine the intention of SMEs in waqf participation among the business owners in Malaysia and Indonesia. Second, the study findings are expected to benefit the development of literature in accordance with Islamic social finance, particularly waqf. Third, this study provides an insight into the inclusive knowledge and attitude of SME owners and their intention to participate in waqf.

Relative financial deprivation, financial anxiety and financial satisfaction: the role of access to Islamic financing among MSME owners amidst COVID-19

PurposeThe purpose of this paper is to augment the present literature on the relationship between relative financial deprivation (RFD), financial anxiety (FA), access to Islamic financing (AIF) and financial satisfaction (FS) of micro, small and medium enterprise (MSME) owners. Principally, the study examines the moderating role of AIF on the RFD–FS and FA–FS relationships.Design/methodology/approachQuantitative survey approach was used to collect data through self-administered questionnaires from MSME owners. Partial least square (PLS) structural equation modelling (SEM) version 3.2.7 was used to analyse 208 retrieved questionnaires.FindingsThe results confirm that the RFD–FS relationship is negatively significant, but the FA–FS relationship is not significant. However, the direct relationship between AIF and FS is positively significant. Conversely, AIF failed to moderate the RFD–FS and FA–FS relationships.Practical implicationsThe study specifies that the existence of RFD will decrease the FS of MSME owners, and therefore, RFD should be eliminated at all costs. However, the greater the AIF, the stronger will be the FS of MSME owners. Thus, policymakers and owners of MSMEs should emphasize on AIF to foster FS. Nevertheless, AIF could not redirect the negative impact of RFD and FA on MSME owners' FS.Originality/valueThis study, to the best of the authors' knowledge, is the first to examine the moderating role of AIF on the RFD–FS and FA–FS relationships among MSME owners. Notwithstanding the importance of small business owners for economic development, the literature on MSME entrepreneurs FS has been neglected. This study also uncovers new theoretical knowledge by revealing the inability of AIF to alter the RFD–FS and FA–FS relationships.

Factors Affecting the Financial Performance of Islamic Banks in Pakistan

This research aims to evaluate the internal factors influencing the performance of Islamic banks in Pakistan. There are currently five Islamic banks in operation, and data from all five have been used to analyze their performance from 2008 to 2021. The data was collected from the State Bank of Pakistan. To examine financial performance, this study used return on assets (ROA) and returns on equity (ROE) as proxies, and considered both internal attributes (such as liquidity, bank size, asset quality, capital adequacy ratio, operational efficiency, and assets management) and external factors (such as macroeconomic indicators like GDP growth and inflation rate). Ordinary least squares (OLS) estimation is employed to examine the relationship among variables. The estimation findings suggest that all of the internal factors have a strong association with banks' performance. Bank size and asset quality were found to have a positive and significant association with ROA, while asset quality and assets management were associated positively with ROE. Additionally, during the Covid-19 pandemic period, banks' size and liquidity were found to adversely affect ROA of Islamic banks, while operational efficiency had a positive impact.

The Eligibility of Green Bonds as Safe Haven Assets: A Systematic Review

This study follows Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) to examine the existing literature on the connectedness of green bonds with other markets as an attempt to highlight the effectiveness of green bonds in risk management and the benefits associated with incorporating green bonds in investment portfolios. An extensive search of relevant research papers to the scope of the review led to the identification of 31 articles published by February 2022. Our analysis traces the evolution of studies on green bonds' interactions with other markets, the methodologies and data frequencies used for cross-market relations analysis, and the role of green bonds in portfolio risk management (diversifier, hedge, and safe-haven) in normal and extreme market conditions. The study reports several interesting findings. First, green bonds can be a strategic safe-haven avenue for investors in stocks, dirty energy stocks, and the foreign exchange market in the US and China in extreme market downturns. Second, green bonds demonstrated hedging properties against spillovers from Bitcoin, forex, soft commodities, and CO2 emission allowance. Third, the role of green bonds in the markets of natural gas, industrial metals, and crude oil is limited to a portfolio diversifier in different investment horizons. Fourth, green bonds had no diversification or hedge benefits for investors in conventional bonds. Fifth, the interrelationships between green bonds and most markets' understudy were influenced by macroeconomic and global factors such as the COVID-19 pandemic, economic policy uncertainty, OVX, and VIX. Our review of the literature also facilitated identification of future research topics. The outcome of the review offers insightful information to investors in green bonds in risk management and assets allocation. Policy makers can benefit from this review in effective policy legislation for the advancement of the green bonds market and acceleration of a smooth transition to a net zero emission economy.

Corporate Governance Research in Asian Countries: A Bibliometric and Content Analysis (2001–2021)

Corporate failure suggests that weak corporate governance leads to frail institutions and exposes them to severe crises. Asian countries have faced financial crises in three different periods, most recently due to the COVID-19 pandemic. A crisis will trigger structural changes in corporate governance to enable firms to either respond to, or prevent, the reoccurrence of potentially similar events. The characteristic of corporate governance practice in Asian countries are also unique due to some institutional and informal factors. These will alter direction and future trend of research in corporate governance in Asian region. The objective of this study is to utilize a bibliometric analysis which focuses on research trends and themes, and citations (with additional inclusive visualization) and perform in-depth content analysis to trace the evolution and identify knowledge of corporate governance in Asian countries from 2001 to 2021. Following bibliometric analysis, a sample of 656 articles on corporate governance in Asian countries has been extracted and analyzed from the Scopus database. The results indicate that there is a growing of interest in corporate governance in Asian countries from 2001 to 2021. Eight major themes have been recognized: corporate governance, corporate social responsibility and financial performance, corporate strategy and performance, agency theory, corporate sustainability, audit and agency problems, firm size, and business ethics. Major findings, shortcomings, and directions for future research are also discussed in this study. In general, most cited articles related to corporate governance theme explain the importance of corporate governance in companies with the focus on preventing financial fraud, impact on earnings management, and cost of equity capital in the market and reporting methods.

Islamic Law, Islamic Finance, and Sustainable Development Goals: A Systematic Literature Review

In essence, Islamic law (Maqasid al-Shariah) and the sustainable development goals (SDGs) initiated by the United Nations have the same goal: to achieve the perfection of a sustainable human life. Meanwhile, Islamic finance is regarded as an implementation of Islamic law, as many Islamic finance products and instruments are derived from Islamic law. Prior studies on Islamic law, Islamic finance, and SDGs tend to be scattered, and the role of Islamic finance in SDGs is still questionable. This paper uses a systematic literature review to investigate the intersection of Islamic finance, Islamic law, and SDGs. We selected papers that focused on Islamic finance as an inclusion criterion and excluded papers that only discussed Islamic countries as an exclusion criterion. We retrieved 65 papers and book chapters published from 2008 to 2022 from the Scopus database to analyze which parts of Islamic finance and law can contribute to the SDGs. We use thematic analysis for data synthesis by grouping findings into their relation to Islamic law using Al-Ghazali's Framework of Maqashid Al-Shariah and SDGs from the UN, and then explaining the research results using a narrative method. Through this study, we found that Islamic finance supports the SDGs with the most significant contribution to humanity. In addition, it is essential to know that the support of the government, regulators, and related institutions is much needed to improve Islamic finance for the achievement of SDGs.

Religion vs ethics: hedge and safe haven properties of Sukuk and green bonds for stock markets pre- and during COVID-19

PurposeThis study aims to examine the hedge and safe-haven properties of the Sukuk and green bond for the stock markets pre- and during the COVID-19 pandemic period.Design/methodology/approachTo test the hedge and safe-haven characteristics of Sukuk and green bonds for stock markets, the study first uses the methodology proposed by Ratner and Chiu (2013). Next, the authors estimate the hedge ratios and hedge effectiveness of using Sukuk and green bonds in a portfolio with stock markets.FindingsStrong safe-haven features of ethical (green) bonds reveal that adding green bonds into the investment portfolios brings considerable diversification avenues for the investors who tend to take fewer risks in periods of economic stress and turbulence. The hedge ratio and hedge effectiveness estimates reveal that green bonds provide sufficient evidence of the hedge effectiveness for various international stocks.Practical implicationsThe study has significant implications for faith-based investors, ethical investors, policymakers and regulatory bodies. Religious investors can invest in Sukuk to relish low-risk and interest-free investments, whereas green investors can satisfy their socially responsible motives by investing in these investment streams. Policymakers can direct the businesses to include these diversifiers for portfolio and risk management.Originality/valueThe study provides novel insights in the testing hedge and safe-haven attributes of green bonds and Sukuk while using unique methodologies to identify multiple low-risk investors for investors following the uncertain COVID-19 pandemic.

Guest editorial: Islamic finance in South Asia

Islamic financial institutions have a significant role to play in the post-COVID world, as they have shielded market participants from a full-scale meltdown (Hassan et al., 2022, 2021;Naeem et al., 2021). [...]there is a pressing need to research the successful management of Islamic financial institutions and clarify what stakeholders can learn from them. Many international financial institutions and other multilateral organizations in Asia, especially small and medium organizations, are currently using Islamic Finance to promote economic development by encouraging individuals to participate in financial markets through Islamic saving and lending instruments (Abdul-Rahim et al., 2022), or on a macro level by providing Islamic approaches into the monetary system (Mojahedi Moakhar et al., 2022), or to simply hedge risk (Afzal et al., 2023;Yoon et al., 2022). [...]Islamic Finance has proven to be a dependable alternative to initial public offerings (Hanieh, 2023) and public–private partnership financing and entrepreneurship (Anggadwita et al., 2021), more specifically technological entrepreneurship (Motiei, 2022). [...]this study calculates the accuracy of the pre-IPO reports to be 61% and views the high precision as related to DDM. [...]Saeed Akbar and Shehzad Khan et al. evaluate capital construction determinants' impact on the influence levels of SC and non-compliant firms in Pakistan.

Islamic Finance an alternative mode for short term financing – working capital management

PurposeThis paper aims to review and compare the conventional and Islamic perspectives of working capital management (WCM) to devise the best option of financing for managing working capital (WC) in South Asia. The paper also aims to help the business world for running its operations more smoothly by devising an alternative source of financing especially during crises such as the global financial crisis 2008 and the COVID-19 pandemic.Design/methodology/approachThe divergence approach is used for a critical analysis of existing literature to derive the best possible alternative to the conventional system of financing.FindingsThis paper identifies that Islamic financing is an appropriate mode of financing as compared to conventional financing for meeting WC requirements in South Asia. Furthermore, under Islamic financing, the best available alternative way for managing WC needs is the Mudarabah Islamic mode of financing.Research limitations/implicationsThis is a theoretical paper and thus does not include empirical results.Practical implicationsThis paper provides conventional and Islamic perspectives of WCM. The Islamic banks in South Asia may devise policies to encourage and convenience firms for using Mudarabah mode for meeting their WC needs instead of conventional sources. This paper also identifies that small and medium enterprises may be targeted by Islamic banks in Asian markets for providing funds for their smooth operations especially during a financial crisis when conventional banks refuse to lend. This will help managers to run businesses more efficiently and effectively especially during any kind of financial crisis in the future.Originality/valueTo the best of the author's knowledge, this is the first study that studies the relationship between WCM and Islamic financing in comparison to conventional financing. Although prior studies identify an alternative to conventional financing as Islamic financing, no one studied while considering the WC as the main variable. This paper informs practitioners and researchers about a "state of the art” Islamic perspective of WCM.