Journal of Islamic Monetary Economics and Finance
Published by Bank Indonesia
ISSN : 24606146     EISSN : 24606618
JIMF is an international peer-reviewed and scientific journal which is published quarterly by Bank Indonesia Institute. JIMF is a type of scientific journal (e-journal) in Islamic economics, monetary, and finance. By involving a large research communiy in an innovative public peer-review process, JIMF aims to provide fast access to high quality papers and continual platform for sharing studies of academicians, researchers, and practitioners; disseminate knowledge and research in various fields of Islamic economics, Monetary and Finance; encourage and foster research in the area of Islamic Economics, Monetary, and Finance; and bridge the gap between theory and practice in the area Islamic Economics, Monetary and Finance.
Articles 75 Documents
THE MONEY DEMAND FUNCTIONS IN ISLAMIC ECONOMY: NEW EVIDENCE FROM IRAN-ARDL APPROACH

Sadeghi, Farzaneh, Khadivy Rofougar, Saeed

Journal of Islamic Monetary Economics and Finance Vol 4 No 2 (2018): NOVEMBER
Publisher : Bank Indonesia

Show Abstract | Original Source | Check in Google Scholar | Full PDF (463.757 KB) | DOI: 10.21098/jimf.v4i2.922

Abstract

The demand for money is one of the most fundamental issues of the monetary economy for policy decision. On the other hand, according to the principle of prohibition of Riba, attitudes about the money market conditions in Islamic economics, is quite different from conventional economics. Hence achieving the money demand function in an Islamic country would be necessary. Most studies about the money demand in Islamic economy used the Keynesian approach, while in modern macroeconomics, money demand function derived by using the microeconomics-based approach. Hence in this article investigate some models of the microeconomics-based approach, then, in accordance with Islamic principles, it choose the best among them that is shopping-time model. After that we derive the Islamic money demand function. The results indicate that the demand for money is the function of income and rental rates of sukuk. The marginal product of capital due to an additional unit of income spend for Infaq (spending in Allah's way), depend on the expected inflation rate, depreciation rate and rental rates of Sukuk. In this paper, apply ARDL approach to estimate the money demand function in Islamic republic of Iran in period of 1978-2008 i.e. after Islamic revolution. The results suggested that M1 and M2 money demand are co-integrated with income and rental rate of Sukuk. Incorporating CUSUM and CUSUMSQ tests into co-integration analysis, we conclude that M2 money demand is more stable than M1.

AN INNOVATIVE FINANCING INSTRUMENT TO PROMOTE THE DEVELOPMENT OF ISLAMIC MICROFINANCE THROUGH SOCIALLY RESPONSIBLE INVESTMENT SUKUK

Khouildi, Mohamed Yassine, Hj. Kassim, Salina

Journal of Islamic Monetary Economics and Finance Vol 4 No 2 (2018): NOVEMBER
Publisher : Bank Indonesia

Show Abstract | Original Source | Check in Google Scholar | Full PDF (363.281 KB) | DOI: 10.21098/jimf.v4i2.935

Abstract

Purpose: Socially responsible investment (SRI) sukuk has a high potential to be an innovative financing mechanism for Islamic microfinance. This paper explores the possibility of implementing SRI sukuk for raising funds to support the microfinance industry and to promote financial inclusion. It also aims to identify the associated issues and challenges in implementing the SRI sukuk for microfinance purpose.   Methodology: The paper uses qualitative research method through a thorough review of existing literature, archives, and library research related to the area of social, sustainable and responsible investment sukuk, Islamic microfinance and their related issues.   Findings: The SRI sukuk has a high potential to be developed as innovative shariah-compliant mechanism as shown by Malaysian experience in issuing the SRI sukuk to develop socially-related projects including the educational and green energy sectors. The paper also highlights and learn from the successful experience of the European Bank for Reconstruction and Development in issuing the first microfinance bonds.   Significance/Originality: The findings from this study provide inputs to the relevant stakeholders in implementing new financial tools to develop the social sector, especially Islamic microfinance in helping the poor and assist them to become economically independent. New innovative tools for raising funds in microfinance is highly needed to achieve sustainability of the microfinance industry. Type of paper:  Research paper

PROCYCLICALITY AND BANK LENDING BEHAVIOR IN INDONESIA: THE CASE OF DUAL BANKING SYSTEM

Sakti, Muhammad Rizky Prima, Zulkhibri, Mohamed

Journal of Islamic Monetary Economics and Finance Vol 4 No 1 (2018): AUGUST
Publisher : Bank Indonesia

Show Abstract | Original Source | Check in Google Scholar | Full PDF (439.861 KB) | DOI: 10.21098/jimf.v4i1.921

Abstract

It is widely suggested in the literature that procyclicality of bank lending behavior may lead to financial instability. This study examines bank-lending channel over the business cycle for Indonesian dual banking system by ascertaining to what extent Islamic banks have a role in the credit smoothing. In this context, we utilize Indonesian dual banking system unbalanced panel data for the period 2001-2015. By employing two-step dynamic GMM estimators, the study shows that the bank lending behaviour are procyclical. However, when we categorize the lending behaviour into conventional and Islamic banks, the cyclicality of bank lending affects only for conventional banks. As for the Islamic banks, the business cycle does not affect their financing decision. Specifically, large Islamic banks are more counter-cyclical in their financing behavior than small and medium size Islamic banks. Robustness tests using different measures of loans and model specifications confirm the results that Islamic bank is more stable and less procyclical in the case of Indonesia banking system.

EVOLUTION IN WAQF JURISPRUDENCE AND ISLAMIC FINANCIAL INNOVATION

Abdullah, Mohammad

Journal of Islamic Monetary Economics and Finance Vol 4 No 1 (2018): AUGUST
Publisher : Bank Indonesia

Show Abstract | Original Source | Check in Google Scholar | Full PDF (737.825 KB) | DOI: 10.21098/jimf.v4i1.920

Abstract

This paper aims to analyse the evolutionary process in the jurisprudential structure of modern waqf (Islamic endowment) and underlines the scope of Islamic financial innovation through the mechanism of waqf. The paper proposes the innovative models of parallel waqf, waqf-based social and financial instruments, waqf-based ṣukūk, micro-takāful, and waqf-based commodity bank. The research adopts the qualitative approach and employs socio-legal research methodology for the analysis. The paper relies on desk-based research. Compared to the classical structure of waqf which was confined within the domain of a perpetual charitable institution, this paper finds that modern waqf has ushered in several new dimensions into its fold. Modern waqf is in the process of re-evolution. Waqf, in the current scenario, has evolved into a financial product, a property-conveyance tool, an instrument of contract, an investment tool, a risk mitigation mechanism and an incorporated entity. The scope of this paper is limited to analysing the jurisprudential evolution of waqf and its impact on the Islamic finance industry. It does not seek to discuss the overall role or impact of waqf on the society as a whole. This paper also does not endeavor to compare and contrast the mechanism and modalities of other philanthropic institutions vis-ā-vis waqf. This paper examines the jurisprudential underpinnings of waqf and their implications and applicability to the Islamic finance industry. The paper draws on the process of how the mechanism of waqf has already been employed to develop various innovative Islamic financial products and how this process can be a catalyst for further innovation in the Islamic finance industry. The main contribution of the paper is encapsulated in the analysis of how the jurisprudential structure of the modern waqf has been evolving in the last few decades to accommodate the modern needs of Islamic finance. It further enumerates a few innovative Islamic financial products which can be developed by exploiting the available flexibility in the evolved version of modern waqf.

LINKING ISLAMIC COMMERCIAL AND SOCIAL FINANCE WITH SPECIAL REFERENCE TO CASH-WAQF AS NEW STRATEGY OF INTEREST-FREE MICRO-CREDIT FOR FAMILY EMPOWERMENT OF THE POOR TOWARDS ESTABLISHING WORLD SOCIAL BANK: A CASE STUDY APPROACH

Mannan, Muhammad Abdul

Journal of Islamic Monetary Economics and Finance Vol 3 (2018): SPECIAL ISSUE
Publisher : Bank Indonesia

Show Abstract | Original Source | Check in Google Scholar | Full PDF (8684.109 KB) | DOI: 10.21098/jimf.v3i0.913

Abstract

The floating of Cash-waqf Certificate as a financial instrument by Social Islami Bank Ltd (SIBL) in Bangladesh in 1997 (formerly known as Social Investment Bank Ltd) is an innovation in the history of Islamic Finance. The issuance of Cash-waqf Certificate has settled the age-old controversy among scholars concerning the concept of perpetuity and inalienability associated with waqf property since its implementation during the Ottoman Empire in the early 15th century. This study has put forward three proposals to establish a World Social Bank that includes (i) Giving Institutional Leadership by Bank Indonesia (ii) Forming International Taskforce (iii) Connecting Initiatives of Muslim- Minorities in Non-Muslim Countries for initial establishment of Commonwealth of Human Communities. Since the aforementioned Cash Waqf is managed by the Bank, it has its transparency and accountability, it is a perpetual deposit and its profit can be invested in a wide spectrum of social investment. Bank shall manage Cash-Waqf on behalf of the Waqif. It can help monetizing Islamic Voluntary Sector, accumulation of Social Capital and National wealth, implementing strategic social investmentprogram that reinforces family values, family heritage empower people at grass roots and stimulates economic, social and moral foundation of a caring society. Cash-Waqf Certificate provides new opportunities to transfer liquid asset and make connection with one another on a global scale leading to establishment of World Social Bank a new strategy of interest-free micro-credit for empowering the poor to irrespective of caste,creed and religion.

MEASURING NATIONAL ZAKAT INDEX (NZI) ON ZAKAT PERFORMANCE IN BOGOR REGENCY

Hilmiyah, Ulfah Laelatul, Beik, Irfan Syauqi, Tsabita, Khonsa

Journal of Islamic Monetary Economics and Finance Vol 3 (2018): SPECIAL ISSUE
Publisher : Bank Indonesia

Show Abstract | Original Source | Check in Google Scholar | Full PDF (424.406 KB) | DOI: 10.21098/jimf.v3i0.912

Abstract

Poverty is the most crucial problem in many countries including Indonesia. As a predominantly Muslim countries, there are several Islamic instruments to combat poverty, such as zakat. It is an act of worship that combines economic, social, moral and religious components to improve the welfare of Muslims, as well as reducing poverty. Bogor Regency, a region in Indonesia, targeted 10 billion rupiah as its zakat collection for 2016. However, the actual zakat collection was only 5 billion rupiahs, which signals the ineffectiveness of zakat management from either collection, distribution, or utilization. The purpose of this research is to analyse zakat performance in BAZNAS (Badan Amil Zakat Nasional; National Board of Zakat) in Bogor Regency. Data were collected through interviews and questionnaires completed by 100 mustahik household in Bogor Regency. The National Zakat Index was used with a calculation method called the Multi-Stage Weighted Index. The findings indicate that the implementation of zakat performance in BAZNAS Bogor Regency is fairly good.

THE ROLE OF ISLAMIC SOCIAL FINANCE IN EMPOWERING YOUTH AND WOMEN IN SOKOTO STATE OF NIGERIA

Muhammad, Aliyu Dahiru, Maidoki, Muhammad Lawal, Sani, Usman Buhari

Journal of Islamic Monetary Economics and Finance Vol 3 (2018): SPECIAL ISSUE
Publisher : Bank Indonesia

Show Abstract | Original Source | Check in Google Scholar | Full PDF (266.257 KB) | DOI: 10.21098/jimf.v3i0.911

Abstract

Islamic Social finance is an emerging area of study and practice, different from commercial finance. It concerns about financing members of the community or country for socio-economic development. However, it faces the challenge of sustainability either due to legal or regulatory framework or due to lack of awareness among members of the society. The history of Islamic social finance in Nigeria connects back to the revivalism of Islam through Shehu Uthman Bin Fodio in 1804. Recently, with the establishment of Zakat and Endowment Committee in Sokoto in 2007, there was an increasing awareness and practice in the contemporary Islamic Social Finance, especially when the Government converts the Committee into Commission in 2016 which makes it independence to initiate and execute its policies. The objective of this paper is to examine two of its recently executed projects vis-à-vis Youth and Women Empowerment programs. The study uses qualitative technique for data collection and analysis. Two focus group sessions were conducted with the Youth and Women entrepreneurs who benefitted from the empowerment programs by the SZEC. The study finds that the Youth have been able to harness their potentials by expanding their businesses and upgrading the quality of their products and services such as shoe repair due the skills acquired in the training. Moreover, the women have improved their welfare and that of their children to an unprecedented level. They were able to maintain their chosen business as livelihood of income. However, they reveal that, marketing of their finished products is the major challenge they face.

AN INTEGRATION OF WAQF AND VENTURA CAPITAL: A PROPOSED MODEL FOR INDONESIA

Tanjung, Hendri

Journal of Islamic Monetary Economics and Finance Vol 3 (2018): SPECIAL ISSUE
Publisher : Bank Indonesia

Show Abstract | Original Source | Check in Google Scholar | Full PDF (448.146 KB) | DOI: 10.21098/jimf.v3i0.910

Abstract

This study aims to find the appropriate model for the modus operandi of a financial institution called Waqf-Ventura Capital Syariah (WVCS). WVCS is integration between social finance (waqf) and commercial finance (Ventura capital). This WVCS has been adopted in Indonesia but the right form of operation is still yet to be found. In addition, this study also looks for appropriate contracts able to be practiced within the WVCS itself. WVCS is conceptualized based on the content analysis of cash waqf operations, profit and loss sharing modes and venture capital strategies.  It has been found that there are at least 3 alternative models of operation for this WVCS. Firstly, the waqf fund is pooled into the capital; secondly, the waqf fund is pooled into a third-party fund; and thirdly, the waqf fund is pooled into both the capital and third party-fund.  These unique operandi of WVCS could be adopted, as long as there are mudharabah dan musharakah contracts for development of the Indonesian Economy.

MEASURING THE PERFORMANCE OF ISLAMIC BANKING IN INDONESIA: AN APPLICATION OF MASLAHAH-EFFICIENCY QUADRANT (MEQ)

Rusydiana, Aam Slamet, Sanrego, Yulizar Djamaluddin

Journal of Islamic Monetary Economics and Finance Vol 3 (2018): SPECIAL ISSUE
Publisher : Bank Indonesia

Show Abstract | Original Source | Check in Google Scholar | Full PDF (552.594 KB) | DOI: 10.21098/jimf.v3i0.909

Abstract

Despite of market condition under perfect or unperfect competition, Islamic banking has to reach their level of efficiency in order to succeed and make a profit; those who do not will fail and be forced to exit the market. However apart of having a sound performance, Islamic banking also has to comply with the sharia principles. This paper aims to have efficiency and maslahah measurement in one assessment framework that is maslahah-efficiency quadrant (MEQ). The study from 2011-2014 revealed that Bank Muamalat Indonesia (BMI) and Sharia Panin Bank are excellent since both are within the first quadrant. Whereas Bank Sharia Mandiri (BSM), Sharia Maybank, and Sharia Bukopin Bank are considered good at the second quadrant; Bank Rakyak Indonesia Sharia (BRI) and BCA Sharia are fair at the third; and Bank Mega Sharia, Victoria Sharia, Bank Negara Indonesia Sharia (BNI), and Bank Jabar Banten Sharia (BJB) are poor at the fourth sequentially. It is urge for Islamic bank that are in low level of MSI to have a critical policy to keep in line with the five factor of maqashid sharia apart of having efficiency in order to reach maslahah.

DESIGNING FITRAH MONEY: A MAQASIDIC DISCOURSE

Sifat, Imtiaz Mohammad, Mohamad, Azhar

Journal of Islamic Monetary Economics and Finance Vol 3 No 2 (2018): FEBRUARY
Publisher : Bank Indonesia

Show Abstract | Original Source | Check in Google Scholar | Full PDF (849.232 KB) | DOI: 10.21098/jimf.v3i2.896

Abstract

Academic efforts in concocting a plausible alternative to fiat regime often staggers given inherent constrictions of Islamic jurisprudence and economic technicalities. Despite passionate advocacy of Muslim scholars, the campaign for gold dinar and silver dirham runs into allegations of being simplistic, anachronistic, regressive, unnecessary, and sub-optimal. Shunning the popular Maqasidic and historical approaches in debunking these claims, this paper highlights the need for a return to basics, the default factory settings as designed by God, and trowels a fitrah approach in evaluating gold and silver. As such, we proffer an open-minded approach in formulating an Islamically congruent currency and decry obstinate fixation with gold and silver, which hardly serve the best interests of ummah.