Journal of Islamic Finance 2019-11-29T16:49:26+08:00 Assoc. Prof. Dr Razali Haron Open Journal Systems <p><em>Journal of Islamic Finance </em>(JIF) is an official publication of IIUM Institute of Islamic Banking and Finance (II<em>i</em>BF), International Islamic University Malaysia (IIUM).</p> <p><br>The journal is designed to provide a platform for researchers, academicians and practitioners who are interested in new knowledge and discussing ideas, issues and challenges in the field of Islamic finance, banking, accounting, business and economics.</p> <p><br>The scope the journal includes, but is not limited to, Islamic banking, Islamic capital markets, Islamic wealth management, issues on <em>Shari’ah</em> implementation and practices of Islamic banking, <em>zakat</em>, <em>waqf</em>, <em>takaful</em> and comparative analysis of Islamic and conventional financial institutions. The journal is published biannually in June and December and all articles are in English.</p> <p>&nbsp;</p> <p><strong>Currently Indexed by</strong></p> <p>Malaysian Citation Index (MyCite)&nbsp;<a href=""><img src="/iiibf-journal/public/site/images/admin/mcclogo.jpg" alt="" width="48" height="9"></a></p> <p>Islamic World Science Citation Database (ISC)&nbsp;<a href=";SrchTxt=journal%20of%20islamic%20finance"><img src="/iiibf-journal/public/site/images/admin/isc_logo.jpg" alt="" width="48" height="12"></a></p> <p>Index Islamicus&nbsp;<img src="/iiibf-journal/public/site/images/admin/Islamicus.jpg" alt="" width="30" height="12"></p> <p>Almanhal&nbsp;<a href=""><img src="/iiibf-journal/public/site/images/abduh/1464267_20120111142256.png" alt="" width="55" height="11"></a></p> <p>&nbsp;</p> <p><strong>Privacy Statement:</strong></p> <p>The names and email addresses entered in this journal site will be used exclusively for the stated purposes of this journal and will not be made available for any other purpose or to any other party.</p> <p><strong>&nbsp;</strong></p> <p><strong>Disclaimer:</strong></p> <p>Opinions expressed in articles and creative pieces published in this Journal are those of the authors and do not necessarily reflect the views of the editors, the e</p> Analysis of Sukuk Cross-Default Clause: A Fiqh Perspective 2019-11-29T16:47:45+08:00 Habeebullah Zakariyah Saheed Abdullahi Busari <p>In recent time, there have been incessant <em>Sukuk</em> default cases which are posing a severe challenge to the growth of the nascent Islamic finance Industry. Institutions and principal officers in the industry are often concern about appropriate mechanisms that can protect the right and interest of the <em>Sukuk</em>-holders without violating <em>Shari’ah</em>-compliant risk. It is significant to note that there is a difference between <em>Sukuk</em> default and default event. <em>Sukuk</em> defaults happen when the obligor fails in fulfilling their financial obligations as indicated in the contractual agreement. Default event is various circumstances that can trigger <em>Sukuk</em> default. Default event can be in the form of credit risk and moral risk. Cross-default is an example of a default event that has attracted the attention of legal and <em>Shari’ah</em> scholars. Scholars and experts are considering the juristic status of cross-default mechanism that can be used to protect the right and interest of creditors by juxtaposing it with the principles of justice and equity in Islamic law. This paper aims to explore the legality and fairness of cross-default in Islamic jurisprudence. This study explains the concept of cross-default, how it works, review of what constitutes legality and morality of cross-default in Islamic legal theory. The study also employs the juristic analysis method to examine the opinions of contemporary scholars and expert of Islamic finance on the fairness of <em>Sukuk</em> cross-default.</p> 2019-11-28T17:38:43+08:00 Copyright (c) 2019 IIUM Press Islamic Business Ethics Disclosure and Earnings Management – Evidence from Islamic Banks in Indonesia 2019-11-29T16:35:26+08:00 Hasan Mukhibad Ahmad Nurkhin <p>This research is conducted to prove empirically the influence of Islamic business ethics disclosure, corporate governance, debt ratio, <em>syirkah</em> fund ratio and the profile of the Shariah Supervisory Board (SSB) towards earnings management. The samples are collected from Islamic commercial banks in Indonesia. Multiple regression analyses are employed in analyzing the data. From this research, it is found that (i) corporate governance, (ii) temporary <em>syirkah</em> funds, (iii) the size and educational level of the SSB, (iv) the <em>syirkah</em> fund ratio, and (v) the Islamic Ethics Disclosure Index or IEDI have negative impacts towards earnings management. The debt ratio, educational background of the members of SSB, and double membership of SSB do not have an impact on earnings management. Thus, the SSB should oversee the implementation of Islamic business ethics and avoid earnings management. Earnings management creates a false view of the performance of the Islamic bank, with respect to its profit and loss sharing system.</p> 2019-11-28T00:00:00+08:00 Copyright (c) 2019 IIUM Press Gala (Ar-Rahnu) as Micro Financing Instruments in Islamic Financial Institution in Aceh 2019-11-29T16:49:26+08:00 Ikhsan Fajri Muksal Eddy Gunawan Teuku Meldi Kesuma <p>Gala is a traditional financing model that practiced among Aceh society starting from the 18<sup>th</sup> century until now. The presence of Gala as an alternative solution to poverty alleviation through Islamic microfinance products should be accommodated by the government either at the provincial or district/municipal. The involvement of local Islamic financial institutions that operate in the region is necessary in order to make Gala as one of recognised Islamic financing instruments. By doing so, the lower and middle-income groups of Aceh society can have an easy access to Gala. They can also conduct business transactions by using Gala as an Islamic financing product at each of Islamic financial institutions. In this research, the researchers made a direct observation in Manggeng and Kuala Batee sub-districts of Aceh Barat Daya district, Indonesia, by adopting the field research approach. Significantly, this research motivates to place traditional Gala as an instrument which is based on <em>Shari’ah</em> as one of Islamic financing products and to bring local wisdom or value to Aceh’s Lembaga Keuangan Syariah or LKS by recognising Gala.</p> <p>Gala, Financing, Islamic microfinance, Islamic Financial Institutions</p> 2019-11-28T00:00:00+08:00 Copyright (c) 2019 IIUM Press Transparency Problems in Cash Flow Transformation and Reserves Management in Islamic Investment Accounts 2019-11-29T16:24:04+08:00 Ahmed Badreldin <p><span class="fontstyle0">Islamic banks must comply with the interest rate prohibition to maintain </span><span class="fontstyle2">Shari’ah </span><span class="fontstyle0">compliance. This means that depositors cannot be offered fixed guaranteed returns on their investments. As an alternative, Islamic banks offer profit sharing investment accounts that depend on underlying investments to generate their cash flows. These cash flows are then transformed by the management before they are finally paid out to the investment account holders. The objective of these cash flow transformations is to transform the stochastic returns of the underlying investment to more stable (to an extent non-stochastic) returns for investment account holders. This is required or recommended by regulatory authorities and aims to mitigate system-wide mass withdrawals by investors (Withdrawal Risk). However, managing such reserves comes at a price, and this is the focus of this paper. These reserves create a veil of intransparent practices while hiding the actual performance of the investment accounts. Furthermore, they may end up defrauding some depositors from their deserved profits (inter-generational reserves ownership problem). Finally, mitigating withdrawal risk by matching the returns of competing riskless deposits while ignores the risks of Islamic investment accounts that associated with investing in the real economy. Some of these issues have gone relatively unnoticed in the literature or at least not combined in a structured manner. Therefore, it is highlighted in this paper the problematic nature from an ethical and </span><span class="fontstyle2">Shari’ah </span><span class="fontstyle0">compliance perspective and if not from a pure financial regulatory one.</span></p> 2019-11-28T00:00:00+08:00 Copyright (c) Encouraging Islamic Financing to Achieve SDGs through Poverty Alleviation 2019-11-29T16:27:49+08:00 Achmad Rifa'i Putri Ayu Listiono <p>Poverty is a challenge that must be encountered by every country in the world. Therefore, it is not surprising that poverty issues occupy the first goal out of the seventeen (17) goals in the Sustainable Development Goals or SDGs framework. Although, in general, the trend of poverty in Indonesia continues to decline, it turns out that the indication of a more acute poverty level is still difficult to be alleviated. The poverty index is reflected by the poverty severity index and poverty gap index. In this case, Islamic financing provides a more inclusive concept of poverty alleviation. The results of estimation by using panel data from 32 provinces from 2014 to 2018 in Indonesia reveal empirically that Islamic financing contributes to poverty alleviation programs through the financing of productive working capital. Hence, the financing made by Islamic banks are greatly supporting in achieving the SDGs’ Goal 1 i.e. towards having no poverty. However, the achievement of Islamic banks needs to be expanded to reach the lowest point of people that are experiencing poverty through financing and productive economic activities.</p> 2019-11-28T00:00:00+08:00 Copyright (c) 2019 IIUM Press