Now showing items 21-31 of 31

    • Development of Islamic Finance in Bosnia and Herzegovina

      Smolo, Edib; Seho, Mirzet; Hassan, M. Kabir; External Collaboration; Finance; Smolo, Edib (2020)
      This paper represents the analysis of Islamic finance development in Balkan with a case study of Bosnia and Herzegovina (B&H). In this analysis we will use the data from the local Islamic financial institutions and global reports with regard to the Islamic finance industry. Since Islamic finance has been practiced in B&H for years, its development has seen a remarkable success. Islamic banking, led by Bosnia Bank International (BBI), is the major player in the field. However, the industry faces a number of issues and challenges that impede its further development. Among major issues are a lack of legal and regulatory framework(s), a low level of public awareness about Islamic finance that leads to a low demand for its products, and a lack of government support for its development. Thus, in order for Islamic finance to develop further within the Balkan countries there is a need for a better promotion, legal and regulatory framework that will facilitate this endeavor and new players that will increase competition and add additional value to this market.
    • Bank Concentration and Economic Growth Nexus: Evidence from OIC Countries

      Smolo, Edib; College Collaboration; Finance (2020)
      This paper examines the relationship between bank concentration and economic growth in Organization of Islamic Cooperation (OIC) countries. This is done using the system GMM estimators on a panel data sample consisting of 41 countries and 650 observations. Our analysis reveals that bank concentration has negative impact on economic growth and this relationship is non-linear. Furthermore, the impact of bank concentration on economic growth is found to be dependent on the country’s income and corruption levels. Therefore, it seems reasonable to conclude that bank concentration has negative impact on the economic growth in OIC countries.
    • Impact of Bank Concentration and Financial Development on Growth Volatility: The Case of Selected OIC Countries

      Smolo, Edib; Ibrahim, Mansor H.; Dewandaru, Ginanjar; External Collaboration; Finance; Smolo, Edib (2021)
      This study investigates the impact of bank concentration and financial development on economic volatility for the Organization of Islamic Cooperation (OIC) member countries. Employing dynamic panel models, we find no evidence that bank concentration is significantly related to economic volatility when it is entered independently in the models. Meanwhile, financial development lowers economic volatility. Extending the models to include market structure–financial development interaction, we note that the impact of bank concentration on volatility depends on the level of financial development within OIC countries. More specifically, the volatility-increasing effect of bank concentration tends to be moderated by financial development. Accordingly, in the wake of banking sector consolidation in these countries, policymakers and regulators in OIC countries should focus on further developing their financial markets such that the negative consequences of resulting market concentration can be mitigated.
    • The FDI and Economic Growth in the Western Balkans: The Role of Institutions

      Smolo, Edib; College Collaboration; Finance (SESRIC, 2021)
      This study explores the impact of foreign direct investment (FDI) and institutional quality on the economic growth of the Western Balkan economies – Albania, Bosnia and Herzegovina, Montenegro, North Macedonia, and Serbia. The conventional wisdom says that FDI plays a significant role in economic development and that institutional development may also affect this relationship. Using a panel data analysis for 20 years (2000-2019) and in contrast to this conventional wisdom, the study shows that FDI significantly negatively impacts growth within the sample countries. At the same time, the results indicate that institutional development has a significantly negative or no role on growth directly. The results depend on the proxy used for institutional development. Furthermore, when FDI and institutional development measures interact, both indicators become insignificant, including their interaction terms. This may be because the institutions within the sample countries are at low levels of development to make any significant impact on either growth or FDI-growth relationship.
    • Performances of Islamic and Conventional Equities during the Global Health Crisis: Time-Frequency Analysis of BRICS+T Markets

      Smolo, Edib; Jahangir, Rashed; Nagayev, Ruslan; External Collaboration; Finance; Smolo, Edib (2022)
      This study investigates the dynamic linkages and spillover effect between emerging economies (BRICS and Turkey), focusing on global crises, notably the COVID-19 pandemic. The study uses daily frequency data covering the period from 2002M5 to 2021M03. For the methodology, the paper employs Wavelet Coherence for multiresolution time-frequency analysis in addition to the frameworks of Diebold-Yilmaz Connectedness Index (DY12) and Barunik-Krehlik Frequency Connectedness Index (BK18). The empirical results reveal that the stock market comovements among sample markets are non-monotonous and depend on the time and frequency of returns. Significant correlations among the sample countries and a spike in overall spillover are also evident at the outbreak of the COVID-19 pandemic or the Global Health Crisis (GHC). China, Brazil, Russia, and Turkey with all the other markets, experienced the weakest links during the GHC. Brazil, Russia, and South Africa act consistently (across different horizons) as net transmitters, whereas India, China, and Turkey perform as net receivers. Islamic equities are more likely to “give” and less prone to “receive” than conventional equities. Compared to the Global Financial Crisis (GFC), the GHC effect is more severe but short-lived. The findings of this study are helpful to policymakers and diverse investors when making portfolio diversification decisions.
    • A new model for screening Shariah-compliant firms

      Hassan, M. Kabir; Alhomaidi, Asem; Smolo, Edib; External Collaboration; Finance; Alnamlah, Abdullah (2022)
      In this paper, a new quantitative measure is developed to assess how well a firm complies with Shariah compared to other firms in a particular region. Investors can customize this measure according to their goals, constraints, and beliefs. The following two reasons make the use of this measure preferable to the existing use of ratio thresholds. First, it provides the Shariah-compliant investor with a clear understanding of the relative compliance status of each company he wishes to invest in. Second, it can be incorporated into any portfolio optimization model to ensure Shariah-compliance without compromising investment returns. Finally, the paper makes use of a sample of US publicly traded companies to demonstrate its illustrative results.
    • Bank Concentration and Economic Volatility in the OIC Countries: The Role of Financial Development

      Smolo, Edib; College Collaboration; Finance (2022)
      This study examines the effect of bank concentration and financial development on economic volatility in member countries of the Organization of Islamic Cooperation (OIC). Using the GMM estimator, we cover the 2000–2017 period. Based on both linear and non-linear estimations, we find no significant impact of bank concentration on economic volatility. By contrast, financial development reduces economic volatility. Moreover, the relationship between concentration and volatility is influenced by financial development. Considering this, policymakers should put more emphasis on developing the financial sector than controlling bank concentrations. We find that our findings remain robust in the face of different specifications and proxies used to measure bank concentration and financial development.
    • Islamic approach to corporate social responsibility: an international model for Islamic banks

      Hanic, Aida; Smolo, Edib; External Collaboration; Finance; Hanic, Aida (25/1/2023)
      Purpose This study aims to present a corporate social responsibility (CSR) model that would apply to Islamic banks, considering the international aspect of social responsibility because CSR is not applicable in the same way in all types of societies. Design/methodology/approach Based on the extensive review of the existing literature, the authors aim to present an Islamic CSR model applicable to Islamic banks. This study is based on the international approach to CSR developed by Masoud (2017). Each responsibility has an equal share but with specific changes regarding the order of priorities between them and the type of responsibility. Findings The findings show that the existing literature provides several Islamic CSR models. Most of these models are general and offer guidelines to Islamic financial institutions, but no model applies exclusively to Islamic banks. Using these models for Islamic banks is challenging because of their specific business activities, especially in non-Muslim countries. This study proposes a model that could act as the main guideline for Islamic banks with enough flexibility to meet different market and stakeholders’ requirements. Practical implications The model was not tested on a sample, and not all Islamic principles were considered. However, it is applicable for Islamic banks, especially considering internationalization in their businesses and the further development of Islamic banking. At the same time, this model puts ethical norms in the spotlight. This is particularly emphasized in the case of non-Muslim countries or in societies where a particular law does not regulate Islamic bank activities. Originality/value Although there is a growing literature on this topic, existing studies primarily discuss the Islamic approach to CSR from the overall perspective, not in a specific industry. While some authors developed their own Islamic CSR models relying on the primary Shariah sources, others base their proposals on other classical CSR ideas. To the best of the authors’ knowledge, this is the first study based on the CSR model developed by Masoud (2017), considering the relationship between economics and religion and the implications of the Islamic moral economy.
    • The linkage between Bitcoin and foreign exchanges in developed and emerging markets

      BenSaïda, Ahmed; No Collaboration; Finance (Springer, 2023-01)
      This study investigates the connectedness between Bitcoin and fiat currencies in two groups of countries: the developed G7 and the emerging BRICS. The methodology adopts the regular (R)-vine copula and compares it with two benchmark models: the multivariate t copula and the dynamic conditional correlation (DCC) GARCH model. Moreover, this study examines whether the Bitcoin meltdown of 2013, selloff of 2018, COVID-19 pandemic, 2021 crash, and the Russia-Ukraine conflict impact the linkage with conventional currencies. The results indicate that for both currency baskets, R-vine beats the benchmark models. Hence, the dependence is better modeled by providing sufficient information on the shock transmission path. Furthermore, the cross-market linkage slightly increases during the Bitcoin crashes, and reaches significant levels during the 2021 and 2022 crises, which may indicate the end of market isolation of the virtual currency.
    • Modeling SMEs Credit Default Risk: The Case of Saudi Arabia

      Senan, Nermean; Tayachi, Tahar; BenSaïda, Ahmed; External Collaboration; 1; Finance; 1; Senan, Nermean (2022-11)
      This study assesses the credit risk of small and medium-sized enterprises (SMEs) to minimize unexpected risk events. We construct a hybrid statistical model based on factor analysis and logistic regression to predict enterprise default on loans and determine the factors predicting SMEs default. We assess the credit risk of SMEs listed on the Saudi stock market. The results indicate that the SMEs acid-test ratios are the most influential factors in predicting SMEs credit risk. Therefore, the designed logistic model can be used by financial institutions during the decision-making process of granting loans to SMEs. This study sheds light on challenging access to bank credits due to the lack of financial transparency of most Saudi SMEs.
    • Hedge and safe haven properties during COVID-19: Evidence from Bitcoin and gold

      BenSaïda, Ahmed; Tayachi, Tahar; Chemkha, Rahma; ghorbel, ahmed; Finance (Elsevier B.V., 2021)
      The COVID-19 pandemic has caused an unprecedented human and health crisis. The measures taken to contain the damage caused a global economic slowdown. Investors face liquidity pressures resulting from the general downturn in the financial markets, and might change their risk appetite. This paper reassesses the safe haven property of gold as a traditional asset, and Bitcoin which is gradually imposing itself as a new class of asset with unique characteristics. The empirical results, applied on major world stock market indices and currencies, and based on the multivariate asymmetric dynamic conditional correlation model, show the effectiveness of Bitcoin and gold as hedging assets in reducing the risk of international portfolios. Moreover, the analysis provides evidence that during the COVID-19 pandemic, gold is a weak safe haven for the considered assets, while Bitcoin cannot provide shelter due to its increased variability