Is there any causality between Islamic banks’ return on depositors and conventional banks’ deposit interest: Evidence of causality from Bahrain’s financial market

This article [written by Abdus Samad] – published in Business and Economic Horizons, Volume 14(4), 2018.

Title: Is there any causality between Islamic banks’ return on depositors and conventional banks’ deposit interest: Evidence of causality from Bahrain’s financial market

Abstract: Unlike conventional banks’ interest payment on deposits, Islamic banks do not pay interest to depositors. What they pay to depositors is called the rate of return to depositors. Does the rate of return of Islamic banks on deposits follow conventional banks’ interest rates? This paper empirically investigates the relationship of causality and the causal direction between conventional banks’ interest rate and Islamic banks’ return applying VEC model. The results of the VAR Granger Causality/Block Exogeneity Wald Tests fail to reject the null hypothesis of bidirectional causality between Islamic banks’ rate of return and conventional banks’ interest. The pairwise Granger causality also confirms the same results. This suggests that Islamic banks’ rate of return and the conventional banks’ interest rate are not independent of each other rather they follow each other in the Bahrain financial market.

Keywords: Bahrain, conventional bank, interest rate, Islamic bank, rate of return, Granger causality

Citation: Samad, Abdus (2018). “Is there any causality between Islamic banks’ return on depositors and conventional banks’ deposit interest: Evidence of causality from Bahrain’s financial market”, Business and Economic Horizons, Vol.14, Issue4, pp.894-912. DOI: http://dx.doi.org/10.15208/beh.2018.61

 

Can disclosure practices and stakeholder management influence zakat payers’ trust? A Malaysian evidence

This article [written by Nahla Samargandi, Sakinah Mohamed Tajularifin, Erlane K. Ghani, Asmah Abdul Aziz, Ardi Gunardi] – published in Business and Economic Horizons, Volume 14(4), 2018.

Title: Can disclosure practices and stakeholder management influence zakat payers’ trust? A Malaysian evidence

Abstract: This study examines whether disclosure practices and stakeholder management play an important role in influencing the zakat payers’ trust in the zakat institutions in Malaysia. A regression analysis was performed to examine the relationship between disclosure practices and stakeholder management of the zakat institutions on zakat payers’ trust. Using questionnaire survey on 184 zakat payers, this study shows that the disclosure practices do influence the zakat payers’ trust in the zakat institutions. However, it is revealed that stakeholder management does not influence the zakat payers’ trust in zakat institutions. The findings in this study imply that the zakat institutions should focus on the transparency of disclosure practices. The findings in this research could assist the zakat institutions to increase the trust level of the zakat taxpayers towards them and assist the policy makers in establishing zakat institutions which would be perceived by the public as legitimate.

Keywords: Zakat payers’ trust level, disclosure practices, stakeholder management, zakat institutions

Citation: Samargandi, Nahla; Tajularifin, Sakinah Mohamed; Ghani, Erlane K; Aziz, Asmah Abdul; Gunardi, Ardi, 2018. “Can disclosure practices and stakeholder management influence zakat payers’ trust? A Malaysian evidence”, Business and Economic Horizons, Vol.14, Issue4, pp.882-893. DOI: http://dx.doi.org/10.15208/beh.2018.60

 

Long-term memory in Euronext stock indexes returns: an econophysics approach

This article [written by Luis M. P. Gomes, Vasco J. S. Soares, Silvio M. A. Gama, Jose A. O. Matos] – published in Business and Economic Horizons, Volume 14(4), 2018.

Title: Long-term memory in Euronext stock indexes returns: an econophysics approach

Abstract: The purpose of paper is to assess the long-term memory of stock index returns in the pan-European platform Euronext (CAC-40, AEX, BEL-20 and PSI-20). We find evidence of time dependency in much of the data, suggesting that the series may best be described as fractional Brownian motion. Modified Rescaled-Range Analysis and Detrended Fluctuation Analysis were used to measure the degree of long memory. The global Hurst exponents evidence persistent long memory in the Dutch, Belgian and Portuguese markets. In the French market, evidence of long memory is inconsistent and weak. Fractal structure suggests non-conformity with the Efficient Market Hypothesis, and may compromise the reliability of asset pricing models. Furthermore, time-dependent Hurst exponents show evidence of weakening persistence in these markets, particularly after the international crises of 2000, 2002 and 2010. A possible explanation for those changes is that the markets may have matured over time, becoming more efficient after these severe events.

Keywords: Long-term memory, rescaled-range analysis, detrended fluctuation analysis, Hurst exponent, Euronext, efficient market hypothesis

Citation: M. P. Gomes, Luis; J. S. Soares, Vasco; M. A. Gama, Silvio; A. O. Matos, Jose, 2018.  “Long-term memory in Euronext stock indexes returns: an econophysics approach”,
Business and Economic Horizons, Vol.14, Issue4, pp.862-881. DOI: http://dx.doi.org/10.15208/beh.2018.59

 

The analysis of capital structure for property-liability insurers: a quantile regression approach

This article [written by Jessica Hung, Vincent Y. L. Chang] – published in Business and Economic Horizons, Volume 14(4), 2018.

Title: The analysis of capital structure for property-liability insurers: a quantile regression approach

Abstract: By using a two-stage quantile regression approach (2SQR), this study demonstrates how the insurer’s leverage is determined across various quantiles. The evidence shows that the influence of the business concentration and marketing channel at the lower leverage quantiles is opposite to that at the higher leverage quantiles, which proposes that the mean effects of the two-stage ordinary least squares method are insufficient to capture the effects of business strategies on the insurer’s capital structure determination. Moreover, the 2SQR evidence also shows that the magnitude of the impacts for some determinations varies among the different leverage quantiles. In sum, the evidence suggests that these two competing approaches should be viewed as complementary functions when discussing the insurer’s capital structure.

Keywords: Capital structure, leverage, two-stage quantile regression, two-stage least squares regression

Citation: Hung, Jessica; Chang, Vincent Y. L., 2018. “The analysis of capital structure for property-liability insurers: a quantile regression approach”, Business and Economic Horizons, Vol.14, Issue4, pp.829-850. DOI: http://dx.doi.org/10.15208/beh.2018.57

 

The influence of “offer for sale” by existing shareholders on investors’ reaction in the IPO immediate aftermarket

This article [written by Norliza Che-Yahya, Ruzita Abdul-Rahim, Rasidah Mohd Rashid] – published in Business and Economic Horizons, Volume 14(4), 2018.

Title: The influence of “offer for sale” by existing shareholders on investors’ reaction in the IPO immediate aftermarket

Abstract: This study investigates the influence of “offer for sale” by existing shareholders on investors’ reaction in the IPO immediate aftermarket. The “offer for sale” is measured by the proportion of shares offered to public from the sale of the existing shareholdings prior to IPO against the total number of shares offered during IPO. The “offer for sale” activity suggests that proceed from the shares sold at an IPO would go into the pocket of the existing shareholders. That is, the proceed does not actually meet the primary goals of the IPO to raise funds for business expansion. IPO firms that go public mainly through “offer for sale” activity are expected to receive less demand during IPO from potential investors as the investors are less optimistic in firms which their shares are offered mostly through “offer for sale” activity relative to firms which their shares are newly issued. Thus, firms which their shares are offered through “offer for sale” activity are predicted to produce poor initial aftermarket return and trading. Using a final sample of 419 Malaysian IPOs issued from January 2000 to December 2015, regression results of this study reveal that firms which their shares are offered highly through “offer for sale” report poor and lower initial aftermarket return and trading volume. The results support the proposition of this study that investors are less optimistic in firms which their shares are offered mostly through “offer for sale” activity.

Keywords: Offer for sale, investors’ reaction, IPO immediate aftermarket, Malaysia

Citation: Che-Yahya, Norliza; Abdul-Rahim, Ruzita; Mohd Rashid, Rasidah, 2018. “The influence of “offer for sale” by existing shareholders on investors’ reaction in the IPO immediate aftermarket”, Business and Economic Horizons, Vol.14, Issue4, pp.818-828. DOI: http://dx.doi.org/10.15208/beh.2018.56