The article aims at disclosing the direction and strength of linear connection between Islamic finance assets and awareness stimulating activities and events, namely exclusive Islamic finance news, Islamic finance seminars, and Islamic finance conferences. The methodology includes the linear pairwise regression analysis, estimating correlation coefficient and its significance, calculating the elasticity coefficient and approximation error, and determining the statistical significance of regression equation parameters. There are a high and inverse connection between the volume of Islamic finance assets and exclusive Islamic finance news, a very high and direct connection between assets and Islamic finance seminars, as well as a high and direct connection between assets and Islamic finance conferences. Most awareness enhancing measures were held in countries and regions with the widespread use of Islamic finance instruments meaning that non-Islamic countries may have lower values of increase in Islamic finance assets, which can be overcome by introducing special surveys providing information on them in more detail. Financial institutions and governmental bodies can use our results to develop new strategies for enhancing financial risk management and economic security in non-Muslim countries. The study is a pioneer one in determining the efficiency of awareness stimulating measures concerning Islamic finance development.
there are three main halal mortgage alternatives, namely Ijara, diminishing Musharaka, and Murabaha.
To put it in a nutshell, the key idea is that they are no-interest home-buying plans. A bank buys a
real estate asset on behalf of its client and becomes a temporary legal owner. The client’s monthly
payments are equivalents of rent designed to buy out the stake of the property owner. The client
becomes the legal owner after buying the property back or settling the outstanding sum after the end
of negotiated term of halal mortgage alternatives [
In contrast, for example, in Ukraine at the same situation clients are responsible for the loan and interest. If they are not able to cover them, the property is taken away and sold. If money received is not sufficient for covering the debt, clients will be paying the remaining sum from other sources of their income. Even if the bank forgives interest or some part of the loan body, clients will pay 18 percent of the forgiven amount according to income tax regulations. Therefore, Islamic mortgage provides more mercy and social justice for bank clients than its conventional equivalent.
The projects at Abu Halim in Sudan also vividly illustrates the potential of Islamic banking to take advantage of business opportunities and improve the living conditions of low-income people. The Islamic Development Bank, the Khartoum Bank (Sudan) and the Central Bank of Sudan provided funding to 125 graduates of agricultural colleges working with their families to build and manage greenhouses on profit-based contracts applying Mudarab (Islamic capital management). The profit distribution ratio was as follows: 40 percent to project managers (grantees), and 60 percent to investing banks. In addition, banks covered losses if any. However, participating family members received living wages throughout production process regardless of financial results. Therefore, the project provided an effective way to reduce regional poverty; helped low-income households to acquire production capacity and develop human capital. Nowadays, these greenhouses belong to the most important suppliers of vegetables in the Khartoum region [28]. These two examples serve as strong arguments for introducing effective Islamic finance tools into financial systems of EU member-states and other European countries enhancing their financial risk management and economic security [29].
In contrast, for example, in Ukraine at the same situation clients are responsible for the loan and interest. If they are not able to cover them, the property is taken away and sold. If money received is not sufficient for covering the debt, clients will be paying the remaining sum from other sources of their income. Even if the bank forgives interest or some part of the loan body, clients will pay 18 percent of the forgiven amount according to income tax regulations. Therefore, Islamic mortgage provides more mercy and social justice for bank clients than its conventional equivalent.
The first step in stimulating Islamic finance development in non-Muslim countries all over the
world is educating and increasing awareness of general population, bankers, financial officials, and
governmental bodies. There is an extensive body of literature revealing different aspects of Islamic
finance development, including educative and awareness components. For example, Nikonova, Kokh,
and Safina [24] explain the promising business future of Islamic banking and finance by their unique
features, including real value principle of asset pricing, and clear definition of sharing profits and
losses among partners. Sapuan [26] sheds light on Mudabarah (profit sharing) as an alternative
vehicle for financing stressing the existence of asymmetric information creating problems of moral
hazard and negative (adverse) selection. Based on the global survey, Ahmad, Lensinka, and Mueller
[
Considering special financial resilience of Islamic financial institutions, Igonina, Vagizova,
Batorshyna, and Sabirzyanov [20] revealed the optimal level of risk liquidity and measures to enhance
liquidity management at Islamic financial organizations. To avoid financial crises Ozsoy [25]
suggests applying Islamic finance principles to operations, for instance, ban postpones sales of
financial vehicles and keep them in bank’s possession till fully paid by clients. Boukhatem and
Moussa [
Buchari, Rafiki, and Qassab [
Magd and McCoy [22] highlight the essential role of education on Islamic finance in preparing
workforce with relevant knowledge and trained professionals, as well as increasing the awareness of
clients. Ilnytskyy (2015) applying correlation analysis between R&D and economic indicators
confirmed the law of diminishing returns, better results are due to the world -class research
universities. Belouafi, Belabes, and Daoudi [
Arsyianti and Kassim [
In our previous publications, we have disclosed the positive impact of development of global
Islamic finance on economic growth of Muslim countries [
Considering all the above-mentioned, we may conclude that despite the abundant literature on Islamic finance, the interplay between awareness and development of Islamic finance assets needs additional considering due to its potential for enhancing financial risk management and economic security in non-Muslim countries.
Islamic finance assets consist of Islamic banking assets, Takaful, OIFI, Sukuk and Islamic funds. We use the Islamic Finance Development Indicator (IFDI) to achieve our research goals. It is a composite weighted index consisting of 10 key metrics including Knowledge (Education and Research sub-indices), Governance, Corporate Social Responsibility, and Awareness [19]. In turn, sharia-compliant equity, capital and sukuk
market, banking services and products, regulation,
innovation and education, standards, etc.; Islamic finance seminars – a gathering of less than 100
individuals discussing new issues concerning Islamic finance; and Islamic finance conferences – a
meeting of more than 100 attendants debating over matters related to Islamic finance [
The observed error and critical value are determined: If |tobserved| > tcritical, then the correlation coefficient is statistically significant.
The elasticity coefficient is:
Finally, we determine the confidence intervals of the regression coefficients with a reliability of 95%: The formula for estimation is:
The standard error of estimate: Sa is the standard deviation of the random variable a.
Sb is the standard deviation of the random variable b.
We advance the following hypotheses: H0: a = 0, b = 0, there is no linear relationship between variables; H1: a ≠ 0, b ≠ 0, there is a linear relationship between variables.
The observed error and critical value (formula 11) are determined: =
If the elasticity coefficient is less than 1, it means that the 1 percent change of x causes the change of y that is less than 1 percent, in other words, the impact of x on y is not essential.
We estimate the quality of the regression equation using the absolute approximation error: If the error is less than 7%, then the equation can be used as a regression.
The next step is to determine the accuracy of regression coefficients estimates.
The unbiased estimate of the variance of disturbances is the unexplained variance or variance of the regression error (a measure of the spread of the dependent variable around the regression line). = =
We develop Table to calculate the regression parameters for evaluating the interplay between Islamic finance assets and exclusive Islamic finance news.
We receive the following parameters of the regression: Sample averages: The next step is to calculate the linear pairwise correlation coefficient: H0: rxy = 0, there is no linear relationship between variables; Sample variances: Standard deviation: Regression coefficients a and b: = = = = =
Our calculations of the observed error give us the following value:
As |tobserved| < tcritical, then the correlation coefficient is statistically not significant. It means that there is no linear connection between Islamic finance assets and exclusive Islamic finance news. Therefore, we are not able to determine the interplay between them and estimate the efficiency of investing in creating and broadcasting news on Islamic finance to increase the volume of Islamic 4.2.
We design Table to calculate the regression parameters for evaluating the interplay between Islamic finance assets and Islamic finance seminars.
Calculation table to determine regression parameters for Islamic finance assets and Islamic finance 2
We receive the following parameters of the regression: Sample averages: = = Standard deviation: −
2 = ∑ 2 ( ) = √ 2( ) = √6705.61 = 81.888 Regression coefficients a and b: = The next step is to calculate the linear pairwise correlation coefficient:
Thus, the connection between attribute y (Islamic finance assets) and factor x (Islamic finance seminars) is direct and very high.
We put forward the following hypotheses: H0: rxy = 0, there is no linear relationship between variables; H1: rxy ≠ 0, there is a linear relationship between variables.
Our calculations of the observed error give us the following value:
Considering the degree of freedom k = n – 2 = 6 and the level of significance α = 0.05, the critical point value according to the Student distribution is:
As |tobserved| > tcritical, then the correlation coefficient is statistically significant. It means that there is a linear connection between Islamic finance assets and Islamic finance seminars.
The elasticity coefficient is: = finance assets) equaling 0.357 percent in average.
We estimate the quality of the regression equation using the absolute approximation error: = this equation can be used as a regression.
The calculated values deviate from the actual ones by 4.27%. Since the error is less than 7%, then We estimate the quality of the regression parameters developing Table for calculations. The unexplained variance is: 2 = The standard error of estimate: Sa is the standard deviation of the random variable a.
Sb is the standard deviation of the random variable b.
The observed error and critical value are determined as follows: y(x) Calculation table to determine regression parameters for Islamic finance assets and Islamic finance Finally, we determine the confidence intervals of the regression coefficients with a reliability of
We develop Table to calculate the regression parameters for evaluating the interplay between Islamic finance assets and Islamic finance conferences.
We receive the following parameters of the regression: Sample averages: = =
Regression coefficients a and b:
( ) = √ 2( ) = √428.94 = 20.711 The next step is to calculate the linear pairwise correlation coefficient:
Thus, the connection between attribute y (Islamic finance assets) and factor x (Islamic finance conferences) is direct and very high.
We put forward the following hypotheses: H0: rxy = 0, there is no linear relationship between variables; H1: rxy ≠ 0, there is a linear relationship between variables.
Our calculations of the observed error give us the following value:
Considering the degree of freedom k = n – 2 = 6 and the level of significance α = 0.05, the critical point value according to the Student distribution is: ( − − 1; ) = (6.0; 0.025) = 2.969
As |tobserved| > tcritical, then the correlation coefficient is statistically significant. It means that there is a linear connection between Islamic finance assets and Islamic finance seminars.
The elasticity coefficient is: 2 (Islamic finance assets) equaling 0.725 percent in average.
We estimate the quality of the regression equation using the absolute approximation error: = this equation can be used as a regression.
The calculated values deviate from the actual ones by 5.12%. Since the error is less than 7%, then We estimate the quality of the regression parameters developing Table for calculations.
The unexplained variance is: The standard error of estimate: Sa is the standard deviation of the random variable a. Sb is the standard deviation of the random variable b.
We advance the following hypotheses: H0: a = 0, b = 0, there is no linear relationship between variables; H1: a ≠ 0, b ≠ 0, there is a linear relationship between variables.
The observed error and critical value are determined as follows: ( − − 1; ) =
(6.0; 0.025) = 2.969
As |tb| > tcritical (4.3 > 2.969) and |ta| < tcritical (1.61 < 2.969), then the correlation parameter b is statistically significant and parameter a is not significant.
Finally, we determine the confidence intervals of the regression coefficients with a reliability of 95% only for parameter b:
The key well-known constituents of Islamic finance are the ban of interest; fair distribution of risks, profits and losses between partners; ban of speculation and uncertainty; inadmissibility of financing prohibited types of business (including production of weapons, alcohol, tobacco, pork and gambling); and asset support principle. To put it in a nutshell, Islamic financing aims at linking finance and real economic activities. The devotion to common prosperity results in adherence to Islamic principles: risk-sharing, not debt transferring; ban of socioeconomic exploitation; encouragement of following ethical standards, moral and social values; combination of risk and return in business.
Nowadays, many Islamic and non-Muslim countries choose to move from debt-based to equitybased financing, therefore, there is a growing interest in studying fundamentals of Islamic finance and economics. Even though educational programs and projects are of great importance in disseminating Islamic finance principles and vehicles, the lack of reliable statistical information limits the study of interplay between education on Islamic finance and development of global Islamic financial assets. Researchers of Islamic finance and economics still wait for improvement of collecting and processing statistical information on educational programs and project on Islamic finance, including the number of graduates, gender and geography, demand for professionals in Islamic finance and Islamic financial tools, etc.
Due to the lack of appropriate information campaign and educative programs, effective Islamic financial tools are mostly concentrated in countries with predominant Muslim population, but it is important to expand Islamic finance in countries where the tools and principles of Islamic finance are weak or non-existent, as well as in countries where there is a need to improve socioeconomic situation and ethical components of financial business. However, the Islamic finance industry has several global challenges. Institutional, technical and resource requirements of Islamic financial institutions are unique. Therefore, Islamic financial institutions require specialists with a combination of competencies in accounting, finance, and Sharia. On the one hand, the constantly increasing global demand for Islamic financial instruments and services cannot be satisfied without appropriate amount of specially trained workforce. On the other hand, clients also need special courses and trainings to understand the essence and possible competitive advantages of Islamic financial assets, such awareness stimulating activities include news, seminars, and conferences on Islamic finance.
There is no linear connection between Islamic finance assets and exclusive Islamic finance news. Therefore, we are not able to determine the interplay between them and estimate the efficiency of investing in creating and broadcasting news on Islamic finance to increase the volume of Islamic finance assets. It can be explained by the unpredictable reaction on news, and prevalence of negative or biased news reducing the desire to invest and develop new financial products. In contrast, there is a very high and direct connection between assets and Islamic finance seminars, as well as a high and direct connection between assets and Islamic finance conferences. The growth of number of seminars and conferences by one causes the average increase of the volume of Islamic finance assets by $1.652–5.638 billion and $4.252–23.225 billion, respectively.
Therefore, Islamic finance seminars and conference are the effective tools of improving the awareness and increasing the volume of operations applying Islamic finance assets. Exclusive Islamic finance news may cause unexpected effects due to the incorrect reporting of information, its distortion in the process of transmission and use. It is worth mentioning that most Islamic finance seminars and conferences were held in those countries and regions where Islamic finance is already widespread and there are specialized Islamic finance ecosystems, thus, non-Islamic countries may have lower values of increase in Islamic finance assets especially at the initial stages while overcoming bias towards Islam and Muslims in general and the deficit of information on Islamic financial tools. Nevertheless, our findings show the potential efficiency of awareness stimulating activities and events for enhancing financial risk management and economic security in non-Muslim countries by introducing new for them and proved to be competitive component of Islamic finance assets.
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