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Tazkia Islamic Finance and Business Review
Tazkia Islamic Finance and Business Review (TIFBR) is a peer-reviewed journal published by the Institute for Research and Community Empowerment (IRCE), Tazkia University College of Islamic Economics in collaboration with Association of Islamic Economics Lecturers (ADESY). The Journal is semi-annual journal issued in July and December. The aim of the journal is to disseminate Islamic Economics, finance and business researches done by researchers both from Indonesia and overseas.
Articles by issue : Vol 7, No 1 (2012)
7
Articles
Legality of Tawarruq in Islamic Finance

Yuhanis Bt Ismon, Nur ( Selangor, Malaysia )

Tazkia Islamic Finance and Business Review Vol 7, No 1 (2012)
Publisher : Institute for Research and Community Empowerment (LPPM TAZKIA)

Show Abstract | Original Source | Check in Google Scholar | Full PDF (428.047 KB)

Abstract

Objective – Islamic finance has been established as an alternative to the conventional banking system which is made up component not permitted under Shariah. Tawarruq is one of the Islamic finance products which commonly used in Islamic banks. This research assesses two important areas which include the principle of Tawarruq in Fiqh perspective and the practical aspect of such principle in Islamic banks in Malaysia.Method – The method used for this research is comparative analysis.Result – This research begins to explore the different views of the proponent and opponents toward the legality of Tawarruq in Fiqh . Instead of considering the basic condition of the valid sale, the other aspect has to be pondered by the contemporary scholars to render Tawarruq is valid sale according to Shariah. The legality of Tawarruq has been debate by some scholars. Due to that, there are different resolution and rulings from Islamic countries on legality of of Tawarruq . In the practical aspect, Tawarruq has been used in Malaysia by Bursa Malaysia Suq Al Sila as a trading platform and it uses Crude Palm Oil (CPO) as the commodity in Tawarruq transaction. While, in the Middle East, it uses London Metal Exchange (LME) in dealing with commodity transaction through Tawarruq principle.Conclusion – Based on the legal argument on the permissibility of Tawarruq , it can be summarized that Tawarruq is permissible but subject to certain condition. Provided that genuine Tawarruq is permissible than organized Tawarruq in Tawarruq transaction.Keywords: Tawarruq, Murabahah

ZIS Institutions and Inclusive Asset-building Policy Agenda

Hendri, Davy ( Faculty of Sharia The State Islamic Institute Imam Bonjol Padang, Indonesia )

Tazkia Islamic Finance and Business Review Vol 7, No 1 (2012)
Publisher : Institute for Research and Community Empowerment (LPPM TAZKIA)

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Abstract

Objective – This study will try to describe inclusive asset building (further abbreviated as IAB ) concept which proposed by Michael Sherreden and it’s implementation as the main agenda of ZIS institutions activities. Anti-poverty proposals from various parties include government agencies, private and public, generally focusing on income subsidy policy to encourage public demand over the minimum edge (borderline poverty) of live well.Method - Library research is applied since this paper relies on secondary data by thoroughly reviewing the most relevant literature. This will be elaborated starting from the introduction of mechanisms and IAB programs in the main activities of ZIS institutions. In addition, several prerequisites adjustments and strengthening either in terms of institutional, organizational capacity and management needs to be conducted by the ZIS institutions so that this study will achieve as expected.Results -.Combination of income support with the asset accumulation such as subsidise saving for the poor will be more long-term. Which is expected to help out the poor from socio-economic alienation. Through the implementation of this concept, ZIS institutions have a chance to heighten the leverage of their role in poverty alleviation.Conclution – All resources, either internal and external that have been built by LAZ during these days, is a valuable capital to initiate the paradigm shift. Also, the benefits of institutional characteristics and closely relationship with the clients (mustahik) could be additional notes.Keywords: Poverty, Income Subsidy, Inclusive Asset

Improving Sharia Risk Compliance: Proposing Daily Index for Mudharaba Contract in Islamic Banks in Indonesia

Hasahu, Laode ( IT Consultant, Collega Inti Pratama, Ltd ) , Priantina, Anita ( Department of Islamic Economics, Tazkia University College of Islamic Economics ) , Febriani, Dewi ( Department of Islamic Accounting, Tazkia University College of Islamic Economics )

Tazkia Islamic Finance and Business Review Vol 7, No 1 (2012)
Publisher : Institute for Research and Community Empowerment (LPPM TAZKIA)

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Abstract

Objective – The objective of this paper is to analyze the profit distribution method applied in Islamic banks in Indonesia and to propose better method in order to improve sharia risk compliance.Methods – Employing a descriptive quantitative method and literature review. This paper evaluate weaknesses of the current profit distribution method and proposes daily revenue index to solve the problems arising from using current method which is unfairness between bank and customers.Results – By the two current profit distribution methods which use monthly revenue index calculated only at the end of the month, there are potential injustices occur. Therefore, instead of using monthly index, daily index is proposed. There are two steps in calculating profit distribution by using daily revenue index: (1) Accumulating Source of Fund (SoF), Reserve Requirement (RR), and Source of Fund after Reserve Requirement (SoFaRR), and (2) Determining Average Financing (AF), Revenue Index (RI), Cost Index (CI), Revenue Sharing Index (RSI), and Profit Sharing Index (PSI).Conclusion - Daily revenue index will solve the unfairness problems arise from current profit distribution method applied in Islamic banks. Daily revenue index is also applicable if Islamic banks apply profit and loss sharing instead of revenue sharing.

Modeling the Demand for Family and General Takaful in Malaysia (A Comparative Study): ARDL Approach to Cointegration

Hawariyuni, Weni ( Department of Economics, Kulliyyah of Economics and Management Science International Islamic University of Malaysia ) , Mohd Salleh, Marhanum Che ( Department of Economics, Kulliyyah of Economics and Management Science International Islamic University of Malaysia )

Tazkia Islamic Finance and Business Review Vol 7, No 1 (2012)
Publisher : Institute for Research and Community Empowerment (LPPM TAZKIA)

Show Abstract | Original Source | Check in Google Scholar | Full PDF (250.168 KB)

Abstract

Objective- Nowadays, numerous studies focus on the determinant of the demand for takaful, either family or general takaful in Malaysia. In this respect, these studies employ economic and socio-demographic variables to examine the determinants of takaful. They found that income, interest rates, financial development, pensions, stocks, price of insurance, life expectancy, dependency ratio, education, and age have positive on determinants of takaful. However, previous tudies have found that inflation, savings, and unemployment rate have negative relationship with the determinant of takaful in Malaysia. This study attempts to examine the determinants of the demand for family takaful and general takaful for comparative study in Malaysia for the period of 1988 to 2010. It employs economic and socio-demographic variables to measure these determinants.Methods-Using time series data, this study applies the Autoregressive Distributive Lag (ARDL) approach to cointegration to examine the determinants of the demand for family takaful and general takaful in the short and long run.Result-The findings indicate that the economic and socio-demographic variables such as income, and education have positive relationship with the demand for family takaful in the short run, but not in the long run.Conclusion-Meanwhile, it also indicates that income and education have no relationship with demand for general takaful in Malaysia in the short run and long run. It indicates that if there is an increase in income, people tend to buy more family takaful of STMB. At the same time, the educated people already aware of the takaful products, they may necessarily purchase family takaful than life insurance.

Could Regulator Materialize Potential Demand for Islamic Securities? Evidence from Indonesia

Kariastanto, Bayu ( Indonesian Authority of Financial Services ) , Ihsanin, Aulia ( Indonesian Ministry of Financial )

Tazkia Islamic Finance and Business Review Vol 7, No 1 (2012)
Publisher : Institute for Research and Community Empowerment (LPPM TAZKIA)

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Abstract

Objective – The objective of this paper is to provide a discussion whether Islamic securities enjoy larger demands than conventional securities. This paper also investigate whether regulator could effectively take a role in materializing demands for Islamic securities and whether regulator declaration is more convincing than sharia compliance declaration by another institution.Methods - We employ differences in differences (DID) regression to see the immediate, medium, and long term market response to this announcement. We also estimate cumulative abnormal returns by employing the standard market model for the robustness test.Results - We find that market reacts to sharia compliance declaration by regulator in the long-run, hence potential demands are realized and the Islamic securities will enjoy greater market power. We also provide evidence that Islamic investors are not too strict in screening Islamic securities and are willing to accept different opinions regarding sharia compliance.Conclusion - This finding could explain why Islamic finance is still growing rapidly even though there are critiques in the genuineness of sharia compliance of the current Islamic financial products/services.Keywords: Regulator, Islamic securities, sharia compliance, demand, investor confidence

Index of Real Sector Returns as Price Benchmarking for Islamic Banking Products

Islamic Banking Department, Researchers of ( Central Bank, Republic of Indonesia )

Tazkia Islamic Finance and Business Review Vol 7, No 1 (2012)
Publisher : Institute for Research and Community Empowerment (LPPM TAZKIA)

Show Abstract | Original Source | Check in Google Scholar | Full PDF (371.853 KB)

Abstract

Objective – Islamic Banking is closely related to the real sector. Then, its operation should reflect the real sector which is expected to contribute to the sustainable economic growth. Nevertheless, Islamic banks are still benchmarking the price of their products (profit sharing and sales) on interest rate. This is as an implication of the implementation of the dual banking system. Moreover, the small portion of Islamic banking compared to the total national banks causes the competitiveness of Islamic banking product in terms of pricing has a high correlation with the interest rate of conventional counterpart. This phenomenon indicates the need to find.Method – This research employed library research method since this paper relies on secondary data by thoroughly reviewing the most relevant literature. The paper attempt to propose a pricing indicator which is based on the real sector activities as the root of Islamic banking operations.Result – Theoretically, this indicator can reflect the real rate of return of every industry sector. In addition, it can help Bank Indonesia to monitor the real sector performance and analyze the possible gap between real sector activities and financial sector. Furthermore, when the benchmark of real rate of real sector return is available, the return index of Islamic banking reflecting the profit sharing performance of the whole Islamic banking industry can be formulated. This concept is different with other indexes which are corresponding to the price of financial assets.Conclusion – In general, return index of real sector as a reference for Islamic banking product pricing is expected to define the way of non-interest return analysis, to calculate the non-interest return of selected sectors that becomes the focus of analysis using Cash Recovery Rates (CRR), forming an index of industry by sector in the second stage, by doing a certain weighting of those companies, to analyze the relationship between macro factors and CRR by sector and to forecast.

The Need of Standardization of Individual Zakat Calculation in Indonesia

Siswantoro, Dodik ( Universitas Indonesia )

Tazkia Islamic Finance and Business Review Vol 7, No 1 (2012)
Publisher : Institute for Research and Community Empowerment (LPPM TAZKIA)

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Abstract

Objective – This research aimed to analyze zakat calculation practices from online providers. There are some differences in the calculation method, for example different treatment in zakatable deduction, types of income and zakat for business.Methods - Twenty-three zakat online calculators are analyzed and then grouped into a main category. A simulation model is employed by inputting several common assumptions.Results - The results showed that generally three zakat calculator become main providers and differences are still occur.Conclusion – This research showed that the calculation of zakat should be simpler, standardized, and may not cause double zakat counting for profession-zakat. Government should intervene to provide a single zakat calculation method that must be refereed by all zakat institutions and link it to tax system.Keywords: Zakat, accounting, calculation, online