International Journal of Islamic Economics and Governance

Resilience of Islamic Banking in Indonesia: A VECM Analysis of Macroeconomic Shocks and Medium-Term Recovery Dynamics

2025-07-24T08:27:03+00:00

The failure of conventional economics during the 2007/2008 crisis spurred the emergence of Islamic economic alternatives this day. Comparative studies have assessed its resilience. This research comprehensively examines Islamic banking's resilience to economic crises, addressing gaps in previous studies that focused only on specific crisis periods. Monthly data from 2015-2023 from SPS- OJK, BPS, and Monetary Statistics-BI were analyzed using VECM methods. Real GDP was found to have the most significant negative impact on various Indonesian Islamic banking performance variables. Islamic banks can, therefore, utilize an Early Warning System for real GDP. The variables affected by macroeconomic shocks show short- to medium-term dynamics, recovering from periods 3-5, and stabilizing performance. This study fills previous research gaps that indicated instability in Islamic banking by considering only short post-crisis periods. In the medium term, Islamic banking in Indonesia has proven effective in recovering from crises, as shown by the analysis of recurring economic crises.

Creation of Islamic Brand Equity: A Study of Malaysia

2025-07-24T08:33:43+00:00

The study explores the relationship between Islamic Branding and Brand Resonance of an Islamic Brand. This study empirically examines the influence of Islamic Branding Antecedents, i.e., Religiosity, Islamic Brand Knowledge, and Islamic Corporate Social Responsibility (ICSR) on Islamic Branding and its subsequent impact on the Islamic Brand Resonance. The research framework is based on the Customer-Based Brand Equity (C.B.B.E) pyramid and the Theory of Self-Congruity. The empirical study is conducted on the Muslim consumers in Malaysia. Survey research was conducted on a sample of 326 Muslim consumers from the cities of Kuala Lumpur, George Town, and Johor Baru. The results reveal a significant influence of Islamic Branding on the Brand Resonance among Muslim consumers in Malaysia. Furthermore, Religiosity, Brand Knowledge, and ICSR positively influence the perceptions of Malaysian Muslim consumers regarding Islamic Branding. Currently, research in the area of Islamic Branding is limited.

The Role of Islamic Finance in Enhancing Fiscal Space and Debt Sustainability: Evidence from D8 Countries with a Moderating Role of Institutional Quality

2025-07-24T08:46:11+00:00

This study investigates the role of Islamic finance in enhancing fiscal space and debt sustainability in D-8 countries, with a special focus on the moderating effect of institutional quality. Using the Driscoll-Kray estimator, the research analyzes key Islamic finance instruments—Sukuk, Takaful, and Islamic banking assets—along with their interactions with institutional quality. The findings reveal that Sukuk alone has a weak and statistically insignificant impact on both fiscal space and debt sustainability. However, when combined with higher institutional quality, Sukuk’s positive effect on fiscal space becomes significant, highlighting the importance of strong governance. Takaful shows a marginally positive influence on fiscal space, but no significant effect on debt sustainability. Nevertheless, its effectiveness improves when institutional quality is high, demonstrating that stronger institutions can enhance Takaful’s role in fiscal development. In contrast, Islamic banking assets negatively and significantly affect both fiscal space and debt sustainability. This negative impact is intensified by higher institutional quality, suggesting that unchecked growth of Islamic banking assets could undermine fiscal stability, especially in well-governed environments. The study also finds that economic openness significantly reduces both fiscal space and debt sustainability, while institutional quality plays a vital role in strengthening debt sustainability. Overall, the results underscore the critical moderating role of institutional quality in amplifying or mitigating the effects of Islamic finance. The study concludes that D-8 countries should focus on enhancing institutional quality to fully leverage the potential of Islamic finance, particularly Sukuk, for sustainable fiscal growth and improved debt management.

The Islamic Revolutionary Critique of Capitalism: A Study in the Context of Pakistan

2025-07-24T08:59:15+00:00

In Pakistan, most Muslim thinkers view capitalism as just an economic system, overlooking its societal foundations. In contrast, the Islamic revolutionaries assert that capitalism is a totalizing, all-inclusive system and civilization, characterized by a specific conception of individual, society, and the authoritative structures (state), all of which are interconnected and mutually dependent. Islamic revolutionaries are thinkers and activists such as Mawdūdī and Ansari who consider Western ideologies and practices as conflicting with Islamic teachings and call for a complete societal transformation grounded in Islamic values. This study aims to explore the socio-political foundations of capitalism. This critique is crucial in Islamic political and economic thought, as it highlights the competitive relationship between Islam and capitalism by critically analyzing its socio-political foundation. The paper concludes that rather than attempting to Islamize capitalist economics, it is necessary to reject it. An analytical study method with a qualitative approach is employed in this paper. It prefers primary sources; however, secondary sources are also used when they are needed.

Bridging Equity and Excellence: A Comparative Study of Waqf and Performance-Based Research Funding in Academic Library Finance

2025-07-24T09:27:25+00:00

Academic libraries are facing escalating pressures from reduced public funding, rising operational costs, and the growing need for digital innovation. As institutions seek resilient financial models, different countries have adopted varied funding mechanisms shaped by local contexts. This study offers a comparative analysis of two contrasting approaches: Malaysia’s Waqf-based model, rooted in ethical community contributions, and New Zealand’s Performance-Based Research Fund (PBRF), driven by measurable academic outputs. Using a qualitative multi-case study involving two Malaysian universities and one from New Zealand, data were gathered through interviews and document analysis. The findings indicate that Waqf provides inclusive, socially anchored support for targeted projects such as infrastructure upgrades and digital resources. However, its scalability remains limited due to rigid governance structures and its positioning as a complementary funding mechanism rather than a primary institutional source. In contrast, the PBRF enhances institutional research performance and international visibility but tends to deprioritize community engagement and equitable access. This study contributes to the discourse on sustainable library funding by proposing a hybrid framework that balances the ethical stewardship of Waqf with the structured accountability of PBRF. The findings offer practical implications for higher education leaders and policymakers navigating post-pandemic academic finance reforms, particularly in aligning institutional performance with broader societal responsibilities.

Zakat and Waqf as an Islamic Microfinance Tool to Uplift Social and Economic Life of the People in Tajikistan

2025-07-24T09:31:20+00:00

Zakat and waqf as an Islamic tool for Islamic microfinance has become increasingly relevant. Both these practices were historically institutionalized in Muslim communities since the rule of the Prophet (PBUH) himself. These practices develop a culture of shared equality within the community, eventually improving social ties and cohesion as well. The benefit of zakat and waqf as an Islamic microfinance tool is that it not only generates funds for the poor, but also creates sustainable solutions by creating sources of employment and education that effectively treats the problem of poverty. Tajikistan is one of the Muslim countries which is suffering from poverty and huge income gap between poor and rich. It is imperative to bring into consideration the development of constructive policies like zakat and waqf being an Islamic microfinance tool that will not only mitigate the country’s vulnerabilities to external factors but also contribute in the economic growth and development of the country. The paper not only explores the effectiveness of zakat and waqf as an Islamic microfinance tool but also assesses its relevance in the context of Tajikistan in uplifting the social and economic life of the people in the country. This implies that Tajikistan is yet to come up with a tool for poverty alleviation that is safeguarded from these external economic and social factors. The paper will also provide recommendations regarding policy adaptation and how the funds can be utilized for upliftment of poor through multichannel programs.