...analysis of the performance of conventional and Islamic unit trust companies in Malaysia Norma Md. Saad, M. Shabri Abd. Majid, Salina Kassim, Zarinah Hamid and Rosylin Mohd. Yusof Department of Economics, Kulliyyah of Economics and Management Sciences, International Islamic University Malaysia, Kuala Lumpur, Malaysia Abstract Purpose – The purpose of this paper is to investigate the efficiency of selected conventional and Islamic unit trust companies in Malaysia during the period 2002 to 2005. Design/methodology/approach – The paper adopts Data Envelopment Analysis (DEA) to investigate efficiency, as measured by the Malmquist index, which is decomposed into two components: efficiency change and technical change indexes. Findings – The study indicates that technical efficiency is the main contributor to enhancing the efficiency of the Malaysian unit trust industry. In addition, the larger the size of the unit trust companies, the more inefficient the performance. In comparing the efficiency of unit trust companies, the study finds that some of the Islamic unit trust companies perform better than their conventional counterparts. Research limitations/implications – The study is limited to five Islamic unit trust companies. Thus, the findings of this study are indicative, but inconclusive for the unit trust industry as a whole. Practical implications – The results have two important implications for both conventional and Islamic unit trust companies in Malaysia. First, the deterioration...
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...risks and rewards of investing in schemes which seek to offer attractive returns. Total of 122 respondents were selected for data analysis. The respondents’ profile consists of demographic data namely, age, gender, occupation background, educational background, investment habit and years of investing activities. The gender, monthly income and race of respondent are not relevant for this research since it is basically focused on the investors’ habit in Malaysia. The perception will be taken into consideration as per their views on mutual fund investment. The last and final analysis of hypothesis testing is to complete the proposed theoretical framework for this study. Keywords: Mutual Fund Investment, Expected Return, Perceived Behavior, Unit Trust Scheme, Contents Chapter 1: Introduction 5 1.1 Introduction 5 1.2 Background of the Study 5 1.3 Problem Statement 8 1.4 Research Aims and Objectives 9 1.5 Hypothesis 10...
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...Additional Terms Additional Terms This document sets out the Additional Terms that form part of the Agreement as defined in the Barclays Wealth Terms. If there is any conflict between these Additional Terms and the Barclays Wealth Terms, these Additional Terms will prevail. If words beginning with a capital are not defined in these Additional Terms, they shall have the same definition as in the Barclays Wealth Terms. The following sections of the Barclays Wealth Terms are relevant to the services provided under the Agreement: • Section A, • Section B, • Section D, • Section E, and • Section F. Your classification under the Financial Service Authority (FSA) Rules For the purposes of the FSA Rules, we will treat you as a retail client unless we agree with you otherwise. This does not necessarily mean that you are ‘eligible’ for the purposes of the Financial Services Compensation Scheme or the Financial Ombudsman Service. As a retail client, where you meet the requirements to be recategorised, you have the right to request to be treated as an elective professional client either generally or in respect of a particular service, type of transaction or product. Such request must be made in writing, and we will consider any requests received on a case by case basis against the criteria set out in FSA Rules. We will inform you of any limitations that such a re-categorisation will entail, together with the scope of that re-categorisation. If, following such a request, you are classified...
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...as experienced just before the global financial credit crunch or due to the property’s unique location. This is classified under the short term type of real estate investment. The classification is based on the relative time spent to consolidate worth. The long term type of real estate investment therefore means that the owner has to wait for longer for the property or land to consolidate worth. (Isaac, 1998). The short term type of investments need professional skill, current knowledge and experience in the market. Long term estate investment is generally considered to be the most profitable since the period of the investment is longer and the returns are good. A different classification identifies Real Estate Investment Trusts, land investments, rental properties and vacation rental properties as the different types of Real Estate investments. This is a more narrow and specific classification than the previous one. The history of indirect investment in property can be traced back to the 1950s across the world. A diverse range of property investment vehicles have emerged since then. These exist in the form of both debt and equity. Direct investment has a number of features that form a basis of its attractiveness especially as a means of portfolio diversification. However it has certain adverse features which include heterogeneity of property leading to uncertainty of its value, lumpy property which means that only large financial institutions can only...
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...4.1 Investment Process of FSIBL: Generally a bank takes several steps to deliver its proposed investment to the client. The process takes deep analysis because it invests deposit fund not its own fund. If the bank fails to meet the depositors demand, then it must collapse. So each bank specially Islamic bank should take strong concentration on investment proposal. However, First Security Islami Bank Limited (FSIBL) makes its investment decision through successfully passing the following crucial steps: 4.1.1 Induction of new client: * Only potential and genuine clients having Al-Wadiah Current Account with proper introduction and with satisfactory transaction for a reasonable period (generally six month) should be induced as a investment clients. * Past performance of the client with other Bank/ Branches of the Bank to be looked into. * Satisfy about reputation of the client in the business community. General eligibility criteria for selecting a client as follows: * Bangladeshi Nationality, physical capable and age limit from 18 to 60 years. * Proprietorship/ Partnership/ Private Limited Company. * Valid licenses like Trade Licenses, VAT registration, TIN etc. * Source and capacity of repayment backed by positive cash flow. * Definite market and prospect of future expansion. * Adequate infrastructure facility and manpower with required skill and experience. * Clean CIB report. * The client must have clear idea about the business and...
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...GLOSSARY OF FOREIGN DIRECT INVESTMENT TERMS AND DEFINITIONS This glossary forms part of the 4th Edition of the OECD Benchmark Definition of Foreign Direct Investment and is intended to assist both the compilers and users of direct investment statistics. Acquisition An acquisition is a business transaction between unrelated parties based on terms established by the market where each enterprise acts in its own interest. The acquiring enterprise purchases the assets and liabilities of the target enterprise. In some cases, the target enterprise becomes a subsidiary or part of a subsidiary of the acquiring enterprise. In principle quantitative or qualitative information directly concerning multinational firms could be classified under activity of multinational enterprises. However, within the framework of the OECD Handbook on Economic Globalisation Indicators, data on the activity of multinationals covers all economic and industrial data which are not associated with FDI, portfolio or other financial transactions. Data collected by the OECD within the framework of the surveys on the economic activity of multinationals include 18 variables, notably gross output, turnover, value added, number of people in employment, employee compensation, gross operating surplus, gross fixed capital formation, R&D expenditures, number of researchers, total exports and imports, intra-firm exports and imports, and technological payments and receipts. Affiliated enterprises are enterprises in a direct...
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...performance of Islamic equity unit trust funds’ in CIMB Wealth Advisors Berhad by comparing with the FTSE Bursa Malaysia Composite Index (KLCI) as benchmark. This chapter will discuss the background of the study, historical development of unit trust industry in Malaysia, understanding unit trust, problem statement, research objectives and the significance of the study. 1.1 BACKGROUND OF THE STUDY A plenty of investments alternative can be seen nowadays. But it’s depends on people which alternative they prefer to invest or depend on their skills of investing in such instruments. Most of the people who are lack in financial knowledge or investing skills will prefer to make investments in unit trust funds. There has abundance of benefits in unit trust and also can be advantageous to the small investors. Unit trust is an ideal way for small investors to invest for their future. Small investors are people who earn their living engaged in activities not related to the financial arena. They are aware that investing is important to them, but they lack of know-how to make the right decisions. For people who are unable or unwilling to do research and analyze investment markets and climate on their own, unit trusts is a good way to invest. In order to maintain a portfolio of stocks in the share market, a person has to keep himself up-to-date with market information and climate. For many people, this is difficult, time consuming and expensive. By investing through unit trust, they transfer...
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...In an Islamic capital market (ICM) market transactions are carried out in ways that do not conflict with the conscience of Muslims and the religion of Islam. Here, there is assertion of religious law so that the market is free from activities prohibited by Islam such as usury (riba), gambling (maisir) and ambiguity (gharar). The ICM is a component of the overall capital market in Malaysia. It plays an important role in generating economic growth for the country. The ICM functions as a parallel market to the conventional capital market, and plays a complementary role in the Islamic banking system in broadening and deepening the Islamic financial markets in Malaysia. The Shariah Advisory Council (SAC) was established in May 1996 to advise the...
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...The Malaysian Financial System CCP-FSPC 1-1 Chapter 1 – The Malaysian Financial System Content Outline 1. The Banking System ............................................................................. 1-2 2. The Functions and Responsibilities of Monetary and Non-Monetary Institutions ............................................................................................. 1-6 3. The Functions and Responsibilities of Non-Bank Financial Intermediaries...................................................................................... 1-16 4. Other Institutions / Bodies.................................................................. 1-30 5. Summary and Conclusion .................................................................. 1-34 Practice Questions ...................................................................................... 1-35 Learning Objectives What you should achieve after completing this chapter: • Understand the importance of the Malaysian financial system; • Be able to apply the relevant statutory and regulatory provisions governing the Malaysian banking system; • Appreciate the functions and responsibilities of monetary and non-monetary institutions, together with non-bank financial intermediaries; • Gain knowledge of the role of Bank Negara Malaysia; and • Understand the scope of the regulatory framework within the Malaysian financial system. © Institut Bank-Bank Malaysia 1-2 CCP-FSPC The Malaysian Financial System 1...
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...Critical assessment of four financial instruments in the Islamic financial markets Raja Shahridatul Dewa Binti Raja Musa C070187 This project paper is a partial fulfillment of Module IB2001of Part 2 of Certified Islamic Finance Professional (CIFP) INCEIF September 2008 Critical assessment of four financial instruments in the Islamic financial markets Raja Shahridatul Dewa Binti Raja Musa Abstract There has been remarkable growth in the Islamic finance industry and seen double-digit growth in recent years. Increasing numbers of Islamic financial institutions are attempting to penetrate the international markets in meeting the global demands for Islamic finance. This calls for the development of innovative Islamic financial instruments which are shariah compliant that represent as alternatives to conventional instruments covering areas of Islamic banking, Islamic insurance, Islamic equities and Islamic bonds/sukuk. A parallel development of Islamic financial markets should also take place that look into the aspect of liquidity and cash flow management. At the same time legal and regulatory requirements are needed to ensure the smooth functioning of Islamic financial institutions. Given the uniqueness of the operations and transactions comprising contractual arrangements and instruments, it is critical for Islamic financial institutions to identify specific risks...
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...What is Islamic financial capital market? Islamic Capital Market (ICM) is one of the Islamic financial market in the framework of Islamic financial system. The Islamic Capital Market is a market in which the transactions are take place in the way that do not interfere with the principles of Islam such as religion of Islam and principles of Muslim. Thus, Islamic Capital Market is prohibited and free from the activities or elements which against the rules of Shariah principles such as prohibition of riba (usury), gahrar (ambiguity) and maisir (gambling). Moreover, Islamic Capital Market works parallel with the conventional capital market but Islamic capital market is compliance with the rulings of shariah. Most of the shariah compliant assets is carry out in Islamic Capital Market which provide opportunities to various investors who seek to invest in the shariah compliant investments. In fact, Islamic Capital Market help to enhance the economy growth of country. This market also do not deny for non-Muslims to take part in the market. Furthermore, Islamic Capital Market is financial market which can be classify into equity and debt capital market. This capital market facilitates the ability of channeling funds from the surplus to deficit among the borrowers which lacks of fund and investors which has excess of fund. Basically, government and business organizations raise fund through the capital market. The examples of equity market shariah compliant securities in Malaysia are...
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...has impacts on international trade and how it does happen. To do so, researches about the topic will be covered and some worldwide statistics are gathered together. Empirical Studies There are few empirical studies about impacts of religion on international trade or its relationship with international trade. In shared research of Emilia Justyna Powell, University Alabama, and Stephanie J. Rickard, London School of Economics, impacts of Islamic law on international trade is examined. Two models which are monadic and dyadic techniques are used in this study. The main purpose of them to demonstrate whether or not countries governed by Islamic law are effected regarding their international trade although they believe that “the importance of countries’ legal systems for trade has declined over time, possibly due to the increased role of international arbitration bodies and/or the standardization of international sales contracts (Powell & and Rickard, 2010). This research is important as being the first direct test of the effect of Islamic law on countries’ trade relations. The researched draws our attention to the situation that trade can be conceptualized as the aggregate flow of goods and services between countries but in fact that flows are a series of contracts between buyer and seller countries. Enforcement of contract is really important to reduce risk and cost of business. In case of occurrence of a problem in the contract courts become important player due to their...
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...OCP REPORT A COMPARATRIVE STUDY ON UTILIZATION OF FUNDS BETWEEN A CONVENTIONAL BANK AND AN ISLAMIC BANK: A STUDY BASED ON TRUST BANK LIMITED AND ISLAMI BANK BANGLADESH LIMITED (TBL & IBBL) (This OCP report has been prepared for the partial fulfillment of the degree of Bachelor of Business Administration with a major in Finance & Banking) Supervised by: Mr. Serajul Islam Assistant Professor Department of Business Administration International Islamic University Chittagong Prepared by: Md. Kamrul Hasan ID: B081030 Major: Finance & Banking Program: BBA OCP Duration: March-April 2012 Submission Date: _______________________________ Signature of the Supervisor Department of Business Administration Faculty of Business Studies [pic] Letter of Submission Date: To The Dean Faculty of Business Studies International Islamic University Chittagong Subject: Submission of OCP report Dear Sir, With due respect, I have the honor to submit the OCP report prepared on “A comparative study on utilization of funds between a Conventional bank and an Islami bank (A study based on TBL and IBBL)” as per the requirement of my Bachelor of Business Administration (BBA) program which may kindly be accepted favorably. It is to be mentioned that I have been working on the credit management and fund management of Trust Bank Limited and Islamic Bank Bangladesh Limited through collecting data from books, record and internet. It would...
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...Major Differences in Equity-financing and Debt-financing In Islamic Finance And Conventional Finance In equity financing, there are practically no major differences. The contract of al-Musharakah (Joint-Venture ProfitSharing) is, in essence, similar to the conventional concept of joint-stock company. Therefore - except for some minor to finance projects through equity participation, to float a company on the stock exchange, to organise a venture capital company, or to form an equity unit trust, would be generally the same under the Islamic equity-financing as under the conventional equity-financing. The contract of Al-Mudharabah (Trustee Profit-Sharing) - whereby one party (the owner of capital) provides fund for the other party (the entrepreneur) to invest or trade and generate profit and both share in the profit in pre-agreed proportions - while not widely practised is actually not totally unknown in the conventional financial system. A clear example is the occurrence of this type of contract sometimes in portfolio management business. However, major differences between the Islamic financial system and the conventional financial system prevail in debt financing. Debt financing in the conventional financial system is almost totally based on interest-based lending, while this contract is forbidden (that is, Haram) in the Islamic financial system. Conversely, the Islamic debt-financing instruments of Deferred Contracts of Exchange are not generally known in the conventional...
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...I. History of Islamic Banking in Malaysia Malaysia started Islamic banking in early 1980’s. Islamic Banking is especially true for Muslim world where currently Islamic banking strides at two separate fronts. At one side, efforts are also underway to convert the entire financial systems in accordance to Islamic laws (Shariah). At the other side, separate Islamic banks are allowed to operate in parallel to conventional interest based banks. Malaysia opted for the alternative gradual way of developing and implementing Islamic banking system. 1.1 Origin of Islamic Banking in Malaysia The roots of Islamic Banking in Malaysia should go back to 1963 when the government established Tabung Haji or Pilgrims Management and Fund Board. The organisatio was established to invest the savings of the local Muslims in interest free places, who want to carry out pilgrim (Haji). Tabung Haji utilizes Mudarabah (profit and loss sharing), Musharikah (joint venture) and Ijara (leasing) modes of financing for investment under the guidance of National Fatawah Committee of Malaysia. The first call for separate Islamic bank was made in 1980, in a seminar held in the National University of Malaysia. The members who attend had passed a decision requesting the government to create a special law to setup an Islamic bank in the country. Thereafter, the government had set up a National Steering Committee in 1981 to study legal, religious and operational aspects of organized an Islamic bank. The committee...
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