=Paper=
{{Paper
|id=Vol-3187/paper2
|storemode=property
|title=The Impact of Awareness Stimulating Activities and Events on Global Islamic Finance Assets: Enhancing Financial Risk Management and Economic Security in Non-Muslim Countries
|pdfUrl=https://ceur-ws.org/Vol-3187/paper2.pdf
|volume=Vol-3187
|authors=Adilia Batorshyna,Volodymyr Tokar,Natalia Kotenko,Serhii Chekhovych,Andrii Homotiuk
|dblpUrl=https://dblp.org/rec/conf/cpits/BatorshynaTKCH21
}}
==The Impact of Awareness Stimulating Activities and Events on Global Islamic Finance Assets: Enhancing Financial Risk Management and Economic Security in Non-Muslim Countries==
https://ceur-ws.org/Vol-3187/paper2.pdf
The Impact of Awareness Stimulating Activities and Events
on Global Islamic Finance Assets: Enhancing Financial Risk
Management and Economic Security in Non-Muslim Countries
Adilia Batorshyna1, Volodymyr Tokar2, Natalia Kotenko2, Serhii Chekhovych3,
and Andrii Homotiuk4
1
Kyiv National Economic University named after Vadym Hetman, 54/1 Peremogy ave., 03057, Kyiv, Ukraine
2
Kyiv National University of Trade and Economics, 19 Kyoto str., 02156, Kyiv, Ukraine
3
Office of the President of Ukraine, 11 Bankova str., Kyiv, 01220, Kyiv, Ukraine
4
West Ukrainian National University, 11 Lvivska str., 46009, Ternopil, Ukraine
Abstract
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.
Keywords1
Economic security, financial risk management, Islamic finance, Islamic finance assets, Islamic
finance conferences, Islamic finance news, Islamic finance seminars
1. Introduction
A lion’s share of people in non-Muslim countries, including European ones, are at least cautious
(if not afraid of) about everything concerning Islam due to their general ignorance and mass media
biased news on whatever involving Muslims, Islam in general and Shariah in particular. Fear and
suspicion caused by the lack of adequate information result in misunderstandings and lost
opportunities in different spheres, especially in economy and finance. Islamic finance has the plentiful
set of attractive tools to offer African, American, Asian, and European clients not familiar with Islam
at all.
Some of Islamic financial instruments have conventional equivalents of some kind, but some, even
invented many centuries ago, still have innovative nature. For example, Islamic mortgage is totally
different from the so-called traditional one. Islam bans the use of interest-bearing loans, therefore,
CPITS-II-2021: Cybersecurity Providing in Information and Telecommunication Systems, October 26, 2021, Kyiv, Ukraine
EMAIL: adilya@ukr.net (A. Batorshyna); v.tokar@knute.edu.ua (V. Tokar); kotenkono@knute.edu.ua (N. Kotenko);
serhii_chekhovych@ukr.net (S. Chekhovych); andrii.homotiuk@gmail.com (A. Homotiuk)
ORCID: 0000-0003-4295-7620 (A. Batorshyna); 0000-0002-1879-5855 (V. Tokar); 0000-0002-2675-6514 (N. Kotenko); 0000-0002-9910-
4074 (S. Chekhovych); 0000-0001-9940-1936 (A. Homotiuk)
©️ 2022 Copyright for this paper by its authors.
Use permitted under Creative Commons License Attribution 4.0 International (CC BY 4.0).
CEUR Workshop Proceedings (CEUR-WS.org)
13
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 [12]. Therefore, even if the bank’s client runs out
of money and goes bankrupt, he or she will not be driven out of his or her home, as at least some part
will still belong to him or her.
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].
2. Literature Review
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
[1] constructed the panel of 101 Islamic and 543 conventional microfinance institutions operating in
Islamic and non-Muslim countries to discover that Islamic microfinance institutions outperform
conventional ones in breadth and depth of operations slightly losing to latter ones in financial results.
Alkhan and Hassan [3] used qualitative methodology and Islamic microfinance window in
Kyrgyzstan to discover that Islamic microfinance tools foster poverty reduction, enhancement of
economy and social conditions, improvement of wealth distribution and circulation as well as
intellectual level of society.
14
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 [10] discovered strong evidence of stimulation of economic growth in selected MENA
countries by their national Islamic financial systems, but underdeveloped institutional frameworks
hinder this positive effect, therefore, governments need to proactively stimulate the development of
Islamic finance. Azmi, Ng, Dewandaru, and Nagayev [5] argue that combining Islamic and
sustainability investing strategies results in additional profit during economic booms, bullish financial
markets and subprime crisis periods.
Buchari, Rafiki, and Qassab [11] relying on the descriptive analysis of 102 questionnaires of
employees working in Bahrain’s Islamic retail banks in Bahrain claim that gender and level of
education have statistically significant impacts on awareness and attitudes towards Islamic finance
services. More people know about Islamic banking services, more they trust them. It means that
introducing Islamic financial products and services at new markers of non-Muslim countries requires
efforts aimed at education on this issue. Mariatul and Rosidah [23] applied theory of planned behavior
for disclosing predictors of adopting Islamic finance, as well as structural equation modeling to find
that behavioral control and personal subjective norms influence the level of acceptance of Islamic
financial services as possible alternatives for standard financial tools.
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 [9] argue that attractiveness of Islamic finance to
financial institutions and clients has stimulated the growth of Islamic finance education in non-
Muslim countries, for instance, the UK, being the symbol of new global rivalry between national
economies. Belabes, Belouafi, and Daoudi [8] have supported the experiment of the Islamic
Economics Institute (IEI) of King Abdulaziz University, which developed the first Islamic finance
higher educational program at a Saudi Public University using the glocalization approach to shape
graduates’ skills to meet local market needs.
Arsyianti and Kassim [4] declare that knowledge on Islamic finance shapes attitude later
influencing financial behavior of potential low-income clients of Islamic finance institutions
including them into socioeconomic activities aimed at improving their well-being. Akhtyamova,
Panasyuk, and Azitov [2] consider that delivering lectures and seminars on Islamic economy should
cover Islamic law and classical economy for trainees to comprehend the material and acquire
competitive skills. Bayram [7] suggests that to achieve positive impact on financial and economic
situation Islamic finance education must combine university degree programs, training and
workshops, distance learning programs, as well as publications, webinars, and other media.
In our previous publications, we have disclosed the positive impact of development of global
Islamic finance on economic growth of Muslim countries [6], as well as demonstrated potential
benefits of using Islamic credit tools to finance Ukrainian agricultural business entities within the
framework of ensuring food security as the component of economic security of Ukraine [27].
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.
3. Methodology
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,
15
Awareness includes three components: exclusive Islamic finance news – English-language stories on
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 [13].
Table 1 indicates that Islamic finance assets, seminars and conferences grew by 63.3, 201.9 and
88.2 percent in 2012–2019 respectively, while exclusive Islamic finance news decreased by 15.9
percent in 2013–2019.
Table 1
Islamic Finance Assets Growth and Awareness Stimulating Activities and Events in 2012–2019
Period Islamic Finance Exclusive Islamic Islamic Finance Islamic Finance
Assets, $ trillion Finance News Seminars Conferences
2012 1761 n.a. 106 76
2013 2060 14490 124 107
2014 1975 19119 142 122
2015 2201 17795 213 112
2016 2307 18018 294 120
2017 2461 13257 276 141
2018 2513 13095 302 137
2019 2875 12181 320 143
Change, % 63.3 -15.9 201.9 88.2
Source: compiled and calculated based on [13–19]
We apply 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 to estimate the efficiency of Islamic finance
news, seminars and conferences for stimulating Islamic finance assets growth.
We apply the following formulas to calculate:
Sample averages:
∑ 𝑥𝑖 (1)
𝑥=
𝑛
∑ 𝑦𝑖 (2)
𝑦=
𝑛
∑ 𝑥𝑖 𝑦𝑖 (3)
𝑥𝑦 =
𝑛
Sample variances:
2 (𝑥)
∑ 𝑥𝑖2 2 (4)
𝑆 = −𝑥
𝑛
2 (𝑦)
∑ 𝑦𝑖2 2 (5)
𝑆 = −𝑦
𝑛
Standard deviation:
𝑆(𝑥) = √𝑆 2 (𝑥) (6)
𝑆(𝑦) = √𝑆 2 (𝑦) (7)
Regression coefficients a and b:
𝑥∗𝑦−𝑥∗𝑦 (8)
𝑏= 2
𝑆 (𝑥)
𝑎 =𝑦−𝑏∗𝑥 (9)
16
The next step is to calculate the linear pairwise correlation coefficient:
𝑏 ∗ 𝑆(𝑥) (10)
𝑟𝑥,𝑦 =
𝑆(𝑦)
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.
The observed error and critical value are determined:
𝑟𝑥,𝑦 ∗ √𝑛 − 2 (11)
𝑡𝑜𝑏𝑠𝑒𝑟𝑣𝑒𝑑 =
2
√1 − 𝑟𝑥𝑦
𝛼 (12)
𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 (𝑛 − 𝑚 − 1; )
2
If |tobserved| > tcritical, then the correlation coefficient is statistically significant.
The elasticity coefficient is:
𝑏 ∗ Ә𝑦 (𝑥) (13)
𝐸=
Ә𝑥 (𝑦)
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:
∑|𝑦𝑖 − 𝑦𝑥 |: 𝑦𝑖 (14)
𝐴= ∗ 100%
𝑛
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).
The formula for estimation is:
∑(𝑦𝑖 − 𝑦𝑥 )2 (15)
𝑆2 =
𝑛−𝑚−1
The standard error of estimate:
∑(𝑦𝑖 − 𝑦𝑥 )2 (16)
𝑆 = √𝑆 2 =
𝑛−𝑚−1
Sa is the standard deviation of the random variable a.
𝑆 ∗ √∑ 𝑥 2 (17)
𝑆𝑎 =
𝑛𝑆(𝑥)
Sb is the standard deviation of the random variable b.
𝑆 (18)
𝑆𝑏 =
√𝑛𝑆(𝑥)
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:
𝑏 (19)
𝑡𝑏 =
𝑆𝑏
𝑎 (20)
𝑡𝑎 =
𝑆𝑎
If |tb| > tcritical, then the correlation parameter b is statistically significant.
If |ta| > tcritical, then the correlation parameter a is statistically significant.
Finally, we determine the confidence intervals of the regression coefficients with a reliability of
95%:
(𝑏 − 𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 ∗ 𝑆𝑏 ; 𝑏 + 𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 ∗ 𝑆𝑏 ) (21)
(𝑎 − 𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 ∗ 𝑆𝑎 ; 𝑎 + 𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 ∗ 𝑆𝑎 ) (22)
17
4. Results
4.1. The Interplay between Islamic Finance Assets and Exclusive Islamic
Finance News
We develop Table to calculate the regression parameters for evaluating the interplay between
Islamic finance assets and exclusive Islamic finance news.
Table 2
Calculation table to determine regression parameters for Islamic finance assets and exclusive Islamic
finance news in 2013–2019
Period x (exclusive y (Islamic x2 y2 x*y
Islamic finance
finance news) assets)
2013 14490 2060 209960100 4243600 29849400
2014 19119 1975 365536161 3900625 37760025
2015 17795 2201 316662025 4844401 39166795
2016 18018 2307 324648324 5322249 41567526
2017 13257 2461 175748049 6056521 32625477
2018 13095 2513 171479025 6315169 32907735
2019 12181 2875 148376761 8265625 35020375
Total 107955 16392 1712410445 38948190 248897333
Source: authors’ own elaboration.
We receive the following parameters of the regression: Sample averages:
∑ 𝑥𝑖 107955
𝑥= = = 15422.143
𝑛 7
∑ 𝑦𝑖 16392
𝑦= = = 2341.714
𝑛 7
∑ 𝑥𝑖 𝑦𝑖 248897333
𝑥𝑦 = = = 35556761.857
𝑛 7
Sample variances:
∑ 𝑥𝑖2 2 1712410445
𝑆 2 (𝑥) = −𝑥 = − 15422.1432 = 6787573.27
𝑛 7
∑ 𝑦𝑖2 2 38948190
𝑆 2 (𝑦) = −𝑦 = − 2341.7142 = 80401.35
𝑛 7
Standard deviation:
𝑆(𝑥) = √𝑆 2 (𝑥) = √6787573.27 = 2605.297
𝑆(𝑦) = √𝑆 2 (𝑦) = √80401.35 = 283.551
Regression coefficients a and b:
𝑥 ∗ 𝑦 − 𝑥 ∗ 𝑦 35556761.857 − 15422.143 ∗ 2341.714
𝑏= = = −0.08213
𝑆 2 (𝑥) 6787573.27
𝑎 = 𝑦 − 𝑏 ∗ 𝑥 = 2341.714 − (−0.08213) ∗ 15422.143 = 3608.3962
The next step is to calculate the linear pairwise correlation coefficient:
𝑏 ∗ 𝑆(𝑥) −0.08213 ∗ 2605.297
𝑟𝑥,𝑦 = = = −0.755
𝑆(𝑦) 283.551
Thus, the connection between attribute y (Islamic finance assets) and factor x (exclusive Islamic
finance news) is inverse and high.
We put forward the following hypotheses:
H0: rxy = 0, there is no linear relationship between variables;
18
H1: rxy ≠ 0, there is a linear relationship between variables.
Our calculations of the observed error give us the following value:
𝑟𝑥,𝑦 ∗ √𝑛 − 2 −0.755 ∗ √5
𝑡𝑜𝑏𝑠𝑒𝑟𝑣𝑒𝑑 = = = −2.572
√1 − 0.755 2
2
√1 − 𝑟𝑥𝑦
Considering the degree of freedom k = n – 2 = 5 and the level of significance α = 0.05, the critical
point value according to the Student distribution is:
𝛼
𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 (𝑛 − 𝑚 − 1; ) = 𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 (5.0; 0.025) = 3.163
2
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
finance assets.
4.2. The Interplay between Islamic Finance Assets and Islamic Finance
Seminars
We design Table to calculate the regression parameters for evaluating the interplay between
Islamic finance assets and Islamic finance seminars.
Table 3
Calculation table to determine regression parameters for Islamic finance assets and Islamic finance
seminars in 2012–2019
Period x (exclusive y (Islamic x2 y2 x*y
Islamic finance
finance assets)
seminars)
2012 106 1761 11236 3101121 186666
2013 124 2060 15376 4243600 255440
2014 142 1975 20164 3900625 280450
2015 213 2201 45369 4844401 468813
2016 294 2307 86436 5322249 678258
2017 276 2461 76176 6056521 679236
2018 302 2513 91204 6315169 758926
2019 320 2875 102400 8265625 920000
Total 1777 18153 448361 42049311 4227789
Source: authors’ own elaboration
We receive the following parameters of the regression: Sample averages:
∑ 𝑥𝑖 1777
𝑥= = = 222.125
𝑛 8
∑ 𝑦𝑖 18153
𝑦= = = 2269.125
𝑛 8
∑ 𝑥𝑖 𝑦𝑖 4227789
𝑥𝑦 = = = 528473.625
𝑛 8
Sample variances:
∑ 𝑥𝑖2 2 448361
𝑆 2 (𝑥) = −𝑥 = − 222.1252 = 6705.61
𝑛 8
19
∑ 𝑦𝑖2 2 42049311
𝑆 2 (𝑦) = −𝑦 = − 2269.1252 = 107235.61
𝑛 8
Standard deviation:
𝑆(𝑥) = √𝑆 2 (𝑥) = √6705.61 = 81.888
𝑆(𝑦) = √𝑆 2 (𝑦) = √107235.61 = 327.468
Regression coefficients a and b:
𝑥 ∗ 𝑦 − 𝑥 ∗ 𝑦 528473.625 − 222.125 ∗ 2269.125
𝑏= = = 3.6453
𝑆 2 (𝑥) 6705.61
𝑎 = 𝑦 − 𝑏 ∗ 𝑥 = 2269.125 − 3.6453 ∗ 222.125 = 1459.4036
The next step is to calculate the linear pairwise correlation coefficient:
𝑏 ∗ 𝑆(𝑥) 3.645 ∗ 81.888
𝑟𝑥,𝑦 = = = 0.912
𝑆(𝑦) 327.468
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:
𝑟𝑥,𝑦 ∗ √𝑛 − 2 0.912 ∗ √6
𝑡𝑜𝑏𝑠𝑒𝑟𝑣𝑒𝑑 = = = 5.431
2 √1 − 0.9122
√1 − 𝑟𝑥𝑦
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:
𝛼
𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 (𝑛 − 𝑚 − 1; ) = 𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 (6.0; 0.025) = 2.969
2
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:
𝑏 ∗ Ә𝑦 (𝑥) 3.645 ∗ 222.125
𝐸= = = 0.357
Ә𝑥 (𝑦) 2269.125
It means that the 1 percent change of x (Islamic finance seminars) causes the change of y (Islamic
finance assets) equaling 0.357 percent in average.
We estimate the quality of the regression equation using the absolute approximation error:
∑|𝑦𝑖 − 𝑦𝑥 |: 𝑦𝑖 0.342
𝐴= ∗ 100% = ∗ 100% = 4.27%
𝑛 8
The calculated values deviate from the actual ones by 4.27%. Since the error is less than 7%, then
this equation can be used as a regression.
We estimate the quality of the regression parameters developing Table for calculations.
The unexplained variance is:
∑(𝑦𝑖 − 𝑦𝑥 )2 145024.27
𝑆2 = = = 24170.712
𝑛−𝑚−1 6
The standard error of estimate:
𝑆 = √𝑆 2 = √24170.712 = 155.47
Sa is the standard deviation of the random variable a.
𝑆 ∗ √∑ 𝑥 2 155.47 ∗ √448361
𝑆𝑎 = = = 158.909
𝑛𝑆(𝑥) 8 ∗ 81.888
Sb is the standard deviation of the random variable b.
𝑆 155.47
𝑆𝑏 = = = 0.671
√𝑛𝑆(𝑥) √8 ∗ 81.888
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.
20
Table 4
Calculation table to determine regression parameters for Islamic finance assets and Islamic finance
seminars in 2012–2019
Period x (Islamic y (Islamic y(x) (yj – yaverage)2 (y – y(x))2 |y – yx|:y
finance finance
seminars) assets)
2012 106 1761 1845.81 258191.016 7192.693 0.0482
2013 124 2060 1911.426 43733.266 22074.266 0.0721
2014 142 1975 1977.042 86509.516 4.17 0.00103
2015 213 2201 2235.861 4641.016 1215.308 0.0158
2016 294 2307 2531.134 1434.516 50236.006 0.0972
2017 276 2461 2465.518 36816.016 20.41 0.00184
2018 302 2513 2560.297 59475.016 2236.971 0.0188
2019 320 2875 2625.913 367084.516 62044.446 0.0866
Total 1777 18153 18153 857884.875 145024.27 0.342
Source: authors’ own elaboration
The observed error and critical value are determined as follows:
𝑏 3.645
𝑡𝑏 = = = 5.43
𝑆𝑏 0.671
𝑎 14509.404
𝑡𝑎 = = = 9.18
𝑆𝑎 158.909
𝛼
𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 (𝑛 − 𝑚 − 1; ) = 𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 (6.0; 0.025) = 2.969
2
As |tb| > tcritical (5.43 > 2.969) and |t a| > tcritical (9.18 > 2.969), then the correlation parameters are
statistically significant.
Finally, we determine the confidence intervals of the regression coefficients with a reliability of
95%:
(𝑏 − 𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 ∗ 𝑆𝑏 ; 𝑏 + 𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 ∗ 𝑆𝑏 ) = (3.65 − 2.969 ∗ 0.671; 3.65 + 2.969 ∗ 0.671)
= (1.652; 5.638)
(𝑎 − 𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 ∗ 𝑆𝑎 ; 𝑎 + 𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 ∗ 𝑆𝑎 )
= (1459.404 − 2.969 ∗ 158.909; 1459.404 + 2.969 ∗ 158.909) =
= (987.602;1931.206)
4.3. The Interplay between Islamic Finance Assets and Islamic Finance
Conferences
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:
∑ 𝑥𝑖 958
𝑥= = = 119.75
𝑛 8
∑ 𝑦𝑖 18153
𝑦= = = 2269.125
𝑛 8
∑ 𝑥𝑖 𝑦𝑖 2220965
𝑥𝑦 = = = 277620.625
𝑛 8
21
Table 5
Calculation table to determine regression parameters for Islamic finance assets and Islamic finance
conferences in 2012–2019
Period x (exclusive y (Islamic x2 y2 x*y
Islamic finance
finance assets)
conferences)
2012 76 1761 5776 3101121 133836
2013 107 2060 11449 4243600 220420
2014 122 1975 14884 3900625 240950
2015 112 2201 12544 4844401 246512
2016 120 2307 14400 5322249 276840
2017 141 2461 19881 6056521 347001
2018 137 2513 18769 6315169 344281
2019 143 2875 20449 8265625 411125
Total 958 18153 118152 42049311 2220965
Source: authors’ own elaboration
Sample variances:
∑ 𝑥𝑖2 2 118152
𝑆 2 (𝑥) = −𝑥 = − 119.752 = 428.94
𝑛 8
∑ 𝑦𝑖2 2 42049311
𝑆 2 (𝑦) = −𝑦 = − 2269.1252 = 107235.61
𝑛 8
Standard deviation:
𝑆(𝑥) = √𝑆 2 (𝑥) = √428.94 = 20.711
𝑆(𝑦) = √𝑆 2 (𝑦) = √107235.61 = 327.468
Regression coefficients a and b:
𝑥 ∗ 𝑦 − 𝑥 ∗ 𝑦 277620.625 − 119.75 ∗ 2269.125
𝑏= = = 13.7384
𝑆 2 (𝑥) 428.94
𝑎 = 𝑦 − 𝑏 ∗ 𝑥 = 2269.125 − 13.7384 ∗ 119.75 = 623.954
The next step is to calculate the linear pairwise correlation coefficient:
𝑏 ∗ 𝑆(𝑥) 13.738 ∗ 20.711
𝑟𝑥,𝑦 = = = 0.869
𝑆(𝑦) 327.468
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:
𝑟𝑥,𝑦 ∗ √𝑛 − 2 0.869 ∗ √6
𝑡𝑜𝑏𝑠𝑒𝑟𝑣𝑒𝑑 = = = 4.3
2 √1 − 0.8692
√1 − 𝑟𝑥𝑦
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:
𝛼
𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 (𝑛 − 𝑚 − 1; ) = 𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 (6.0; 0.025) = 2.969
2
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:
22
𝑏 ∗ Ә𝑦 (𝑥) 13.738 ∗ 119.75
𝐸= = = 0.725
Ә𝑥 (𝑦) 2269.125
It means that the 1 percent change of x (Islamic finance conferences) causes the change of y
(Islamic finance assets) equaling 0.725 percent in average.
We estimate the quality of the regression equation using the absolute approximation error:
∑|𝑦𝑖 − 𝑦𝑥 |: 𝑦𝑖 0.409
𝐴= ∗ 100% = ∗ 100% = 5.12%
𝑛 8
The calculated values deviate from the actual ones by 5.12%. Since the error is less than 7%, then
this equation can be used as a regression.
We estimate the quality of the regression parameters developing Table for calculations.
Table 6
Calculation table to determine regression parameters for Islamic finance assets and Islamic finance
seminars in 2012–2019
Period x (Islamic y (Islamic y(x) (yj – yaverage)2 (y – y(x))2 |y – yx|:y
finance finance
conferences) assets)
2012 76 1761 1668.071 258191.016 8635.82 0.0528
2013 107 2060 2093.961 43733.266 1153.326 0.0165
2014 122 1975 2300.036 86509.516 105648.632 0.165
2015 112 2201 2162.653 4641.016 1470.526 0.0174
2016 120 2307 2272.56 1434.516 1186.142 0.0149
2017 141 2461 2561.066 36816.016 10013.118 0.0407
2018 137 2513 2506.112 59475.016 47.444 0.00274
2019 143 2875 2588.542 367084.516 82057.998 0.0996
Total 958 18153 18153 857884.875 210213.005 0.409
Source: authors’ own elaboration
The unexplained variance is:
∑(𝑦𝑖 − 𝑦𝑥 )2 210213.005
𝑆2 = = = 35035.501
𝑛−𝑚−1 6
The standard error of estimate:
𝑆 = √𝑆 2 = √35035.501 = 187.18
Sa is the standard deviation of the random variable a.
𝑆 ∗ √∑ 𝑥 2 187.18 ∗ √118152
𝑆𝑎 = = = 388.318
𝑛𝑆(𝑥) 8 ∗ 20.711
Sb is the standard deviation of the random variable b.
𝑆 187.18
𝑆𝑏 = = = 3.195
√𝑛𝑆(𝑥) √8 ∗ 20.711
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:
𝑏 13.738
𝑡𝑏 = = = 4.3
𝑆𝑏 3.195
𝑎 623.954
𝑡𝑎 = = = 1.61
𝑆𝑎 388.318
𝛼
𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 (𝑛 − 𝑚 − 1; ) = 𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 (6.0; 0.025) = 2.969
2
23
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:
(𝑏 − 𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 ∗ 𝑆𝑏 ; 𝑏 + 𝑡𝑐𝑟𝑖𝑡𝑖𝑐𝑎𝑙 ∗ 𝑆𝑏 ) = (13.738 − 2.969 ∗ 3.195; 13.738 + 2.969 ∗ 3.195)
= (4.252;23.225)
5. Discussion and Conclusions
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 equity-
based 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
24
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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