Islamic Banking and Finance Review 2024-04-01T09:00:29+00:00 Dr. Mohammad Ayaz Open Journal Systems <div style="text-align: justify;">Islamic Banking and Finance Review (IBFR) is a double-blind peer-reviewed international research journal indexed with well-reputed international indexing agencies (such as EconLit, INDEX ISLAMICUS), and recognized by the Higher Education Commission of Pakistan in Y-Category. The IBFR is an official publication of the Department of Banking and Finance, Dr Hasan Murad School of Management, the University of Management and Technology Lahore, Pakistan.</div> Financing Attitude of Islamic and Conventional Banking Institutions towards Small and Medium-Sized Enterprises (SMEs) in Pakistan 2024-01-26T11:23:15+00:00 Saqib Sharif Mirza Abdul Mateen Baig <p><strong>Purpose: </strong>The current study attempted to investigate the banks’ financing attitude towards Small and Medium-Sized Enterprises (SMEs) in Pakistan. The study further aimed to determine the difference in financing attitude between Islamic and conventional banks.</p> <p><strong>Design/Methodology/Approach</strong>: The quarterly data was collected from the State Bank of Pakistan’s (SBP’s) website (the Central Bank of Pakistan). Moreover, regression analysis was applied to contrast the attitude of Islamic and conventional banking institutions in Pakistan towards SMEs financing.</p> <p><strong>Findings</strong>: The evidence suggested that Islamic banking institutions are more inclined towards financing SMEs as compared to their conventional counterparts. However, overall, the results were weakly significant at 10% level.</p> <p><strong>Research Limitations/Implications</strong>: The current study examined the attitude of the type of banks towards SME financing and compared Islamic financial institutions with conventional ones. However, SMEs outstanding financing data by individual financial institutions was not available, which could, if available, help to understand lending attitudes at a bank level.</p> <p><strong>Originality/Value</strong>: To the best of authors’ knowledge, no study has discussed and compared financing attitudes of Islamic and conventional banking institutions towards SMEs in Pakistan so far. Therefore, the current study attempted to fill this gap by contributing to the extant literature on financing to SMEs. Moreover it also added new dimensions and as per the authors’ knowledge, it was the first research conducted on banking-type level in Pakistani context.</p> 2023-12-15T00:00:00+00:00 Copyright (c) 2023 Saqib Sharif, Mirza Abdul Mateen Baig Integration between ESG Goals and Value-Based Intermediation Approach within the Paradigm of Islamic Finance 2024-01-26T11:25:03+00:00 MUHAMMAD MUSA <p>Environmental, Social, and Governance (ESG) goals is a trending topic for scholarly discussion around the globe because of their emphasis on the social and environmental impact of human activities on the society. They are also linked with the performance of institutions and governance effectiveness. A Shariah-compliant Islamic finance structure or governance framework contributes to achieve sustainability and tackle global issues and challenges. From the ESG perspective, there is no doubt there are many barriers and challenges in implementing these goals, especially in financial institutions. Apart from other approaches, the Value-based Intermediation (VBI) approach is introduced to achieve the common objectives within the Islamic financial system. This research aims to integrate the ESG goals and VBI approach in the Islamic finance paradigm. It is a qualitative research that includes a bibliometric analysis, where the secondary data was extracted from the available literature comprising research papers, books, and institutional and organizational reports. Simulataneously, statistical information extracted from the Scopus database was used for bibliometric analysis. We found that there are a lot of commonalities between these concepts like sustainability is one of them that is linked with ecological footprints and social impacts and governance efficiency. Islamic banking needs to transform from profit-oriented to value-oriented, as it is closer to the fundamental principles of the Shariah and global objectives. In this regard, the implementation of ESG screening with Shariah screening and VBI element in Islamic finance products and services is important.</p> 2023-12-21T00:00:00+00:00 Copyright (c) 2023 MUHAMMAD MUSA Macroeconomic Conditions as Determinants of Profitability and Risk: A Comparison of Islamic and Conventional Banks in Pakistan 2024-04-01T09:00:29+00:00 Khalid Hussain Rafiullah Sheikh Abdul Qayyum Sana Naseer Abbasi <p>The current study aims to investigate the association between macroeconomic factors and Islamic and conventional banks’ profitability, technical efficiency, and credit risk in the context of Pakistan. The sample size comprised four (4) Islamic banks and four (4) conventional banks in Pakistan. Data was collected for a period of ten (10) years (2009-2018). To calculate technical efficiency, Data Envelopment Analysis (DEA) method was employed. Profitability was measured through Return on Assets (ROA) and credit risk through Debt to Asset Ratio (DAR). The results of regression estimation showed that generally, all economic variables had the same impact on both Islamic and conventional banks’ profitability, efficiency, and credit risk. However, interest rate showed an opposite impact on both bank types. It was found that interest rate improves the profitability of conventional banks, while it has an adverse impact on Islamic banks’ profitability. Moreover, interest rate improves the efficiency and increases the risk incurred by conventional banks, whereas its impact on the efficiency and risk of Islamic banks is not significant. The current study reveals certain differences in how these institutions respond to macroeconomic conditions. It helps to highlight the resilience or vulnerability of each banking system to economic fluctuations, providing practical implications for policymakers and practitioners both in Pakistan and in other Islamic finance markets.</p> 2023-12-22T00:00:00+00:00 Copyright (c) 2023 Khalid Hussain Managerial Entrenchment through Earnings Management: A Critical Analysis in the Light of Shariah and Ethics 2024-01-26T11:31:19+00:00 Dr. Qazi Yasir Arafat Qazi Waseem Jan <p>The managers of commercial organizations often seek to obtain the shares of their organizations in order to benefit both monetarily and non-monetarily, a phenomenon known as managerial entrenchment. This involves possessing both shareholding and employment positions simultaneously within the organization. It may be achieved through various means and techniques; one of these is known as earnings management (EM). This study aims to critically examine the practice of managerial entrenchment through EM in light of Islamic jurisprudence and ethics. The current evaluation is based on the primary sources of the Shariah and contemporary fiqh. It was found that this practice often violates Shariah law and ethical principles. Employment and shareholding within an organization are permissible according to some interpretations of Hanbali and contemporary Hanafi fiqh but only with certain prerequisites. Managerial entrenchment through EM often fails to meet these prerequisites. It may result in lying, misrepresentation, and unjust acquisition of wealth. Therefore, it is necessary to control the trend of EM and managerial entrenchment in order to prevent ethical violations and maintain ethical business practices.</p> 2023-12-26T00:00:00+00:00 Copyright (c) 2023 Dr. Qazi Yasir Arafat, Qazi Waseem Jan Futures’ Trading Practices in Pakistan: A Shariah-based Evaluation 2024-01-26T11:29:46+00:00 ANEES TAHIR <p>In Pakistan, stock and commodity futures are frequently traded on the Pakistan Stock Exchange (PSX) and Pakistan Mercantile Exchange (PMX). Futures contract is an agreement between two parties, namely the seller and the buyer, to deliver an asset at a future date against a particular price. It is a contract which comes into effect at a future point of time. A futures contract allows the buying and selling of underlying stocks or commodities at a certain date in the future, at future prices. It is generally settled in cash without delivering or receiving the subject matter or contract. <em>Shariah </em>scholars have divergent opinions about the validity and permissibility of such types of contract. This study aims to explain the <em>Shariah</em> position of these contracts. In particular, this article examines the divergent opinions of <em>Shariah </em>scholars, finance experts and economists on the issue. The prevailing view in modern Islamic jurisprudence is that futures are merely a form of speculation and gambling. Besides, there is no productive economic activity involved in futures trading. It is suggested that, while examining the validity or invalidity of futures a distinction should be made between the purpose of futures trading, as to whether it is for making speculative gains or for a genuine hedging purpose. The distinction should also be made between deliverable futures and cash-settled futures. Futures can be structured on two independent promises as well as <em>wakalah</em> contract.</p> 2023-12-27T00:00:00+00:00 Copyright (c) 2023 ANEES TAHIR