International Financial Ecosystem and Islamic Firms

Submissions open 1st August 2022

Guest Editors:  

M. Kabir Hassan 

Professor of Finance 

University of New Orleans 

New Orleans, LA 70148, USA 

Email: [email protected] 


Mamunur Rashid 

Senior Lecturer of Finance 

Christ Church Business School 

Canterbury Christ Church Business School 

Canterbury, CT1 1QU, Kent, United Kingdom 

Email: [email protected] 


1. Motivation: 

Who are the primary customers of Islamic financing? For the case of conventional finance, the growth and diversity of the large conventional, transnational corporations drive the conventional finance industry. Who drives the Islamic finance industry? The literature does not say much about Islamic non-financial firms. Aside to their screening requirement and presence in top ten systemically important Islamic finance countries, we do not much about their size, corporate finance policies, their financial requirement, and cross-border performance stories.  Islamic banking, being the largest segment (70%), of Islamic finance, has seen considerable decline in its growth since 2016. Is poor growth of Islamic companies partly responsible for the inferior growth and consistency of Islamic finance? Does Islamic finance have a monetary policy to support cross-border transaction, multinational company operation, taxation policy, and foreign exchange operation? How big is the foreign currency exposure of Islamic firms? This special issue is designed to address these questions.   


Islamic finance has seen some uneven growth in the recent past. Islamic financial services board (IFSB, 2021) in its Islamic financial services stability report has presented the declining trend of the Islamic banking industry. Even though Sukuk market is attracting attention, the contraction of the Islamic banking industry is alarming. IFSB identified political crisis in systemically important Islamic finance countries as the primary reason, but serious proponents of this alternative financial system argue otherwise. There is a growing consensus that the declining trend is primarily due to the limited connection of the supply and demand sides of Islamic finance (Ghazali et al., 2019). While there is a record of significant growth of Islamic financing – the supply side, the research on the demand for Islamic finance is interestingly limited. First real attempt of exploring the demand for Islamic finance was demonstrated by Hassan, Rashid and Aliyu (2019). The issue clearly pointed the lack of studies, especially on the theoretical front, on capital structure, dividend policies, corporate performance, short- and long-term operational efficiency of the Islamic non-financial firms, those rely heavily on the Islamic financing. Starting with the distinction between Shari’ah compliant and non-complaint firms, Hassan et al. (2019) indicated need for global studies to bring harmonization to the compliance rating system. While there are numerous studies being conducted on the capital structure of the Islamic banks, research on capital structure of the Islamic non-financial firms, is lacking, except for few, such as the one by Yildirim et al. (2018). While most studies exhibit a tendency of offering empirical evidence, often these evidence lack a truly global experience and quality worthy of further exploration. Several studies explored how Islamic rates comoved with conventional rates (Saeed et al., 2021), but a complete quality study on the cost of capital for Islamic non-financial firms was hard to find. Theoretical explanations are also limited in terms of capital budgeting and trade financing for globally active Islamic non-financial firms. There exists a massive gap in determination of exchange rate from an Islamic finance perspective, which may prove useful for Islamic MNEs while investing across border.  

2. Objective: 

In light of the evidence on these equally missing but useful areas, this special issue is asking for renewed interest on global research on the performance of the Islamic non-financial corporations. The issue will only accept cross-country empirical evidence that trigger new theoretical foundations for Islamic finance. The contents are divided into three broad clusters as follows. We limit the topics to be strictly empirical with evidence from cross-country data that help in exploring theories for Islamic non-financial firms.  


Cluster 1: Islamic monetary system and global supply of Islamic funds 

  • Islamic versus conventional monetary systems 

  • Country-level empirical case study on challenges for Islamic monetary system  

  • The feasibility of a Shariah compliant monetary framework for dual-banking system  

  • Reasons behind global decline of Islamic banking market  

  • The feasibility of regional Islamic capital markets   


Cluster 2: Foreign exchange market for Islamic firms 

  • Cross-country evidence on determinants of Islamic forex rates  

  • Islamic currency derivative markets 

  • The determinants of Islamic currency contracts 

  • The use and benefits of currency derivatives among Islamic non-financial firms 

  • The currency exposure of Islamic firms 


Cluster 3: Performance of Islamic MNCs in a cross-country setting  

  • Empirical cross-country evidence on tax management in Islamic firms 

  • Impact on tax management on Islamic corporate performance  

  • The determinants of international investment in Islamic countries  

  • The framework of political risk in Islamic countries 

  • Impact of political risk on the performance of Islamic non-financial firms  

  • The current asset management of Islamic firms  

  • The management of short-term liabilities by Islamic firms  

  • The working capital policies and performance of Islamic non-financial firms 

  • The cost of capital of Islamic non-financial firms across countries  


3. Deadlines and contacts: 

Submission Open: August 1, 2022  

Submission Close: December 31, 2022.  

Any informal queries should be forwarded to Professor Kabir Hassan at [email protected] or Dr. Mamunur Rashid at [email protected].        


Ghazali, E., Mutum, D.S., Rashid, M., & Ahmed, J.U. (2019). Management of Shari’ah Compliant Businesses: Case studies on creating sustainable value, Springer.  

Hassan M.K., Rashid, M., & Sirajo A. (2019). Islamic corporate finance, Taylor & Francis. 

Hassan, M.K., Rashid, M., Wei, A.S.T., Adedokun, B.O., & Ramachandran, J. (2019). Islamic business scorecard and the screening of Islamic businesses in a cross-country setting, Thunderbird International Business Review, Vol. 61, No. 5, pp. 807-819. 

IFSB. (2021). Islamic Financial Services Industry Financial Stability Report, Islamic Financial Services Board, Kuala Lumpur.   

Saeed, S. M., Abdeljawad, I., Hassan, M. K., & Rashid, M. (2021). Dependency of Islamic bank rates on conventional rates in a dual banking system: A trade-off between religious and economic fundamentals. International Review of Economics & Finance, In press, DOI:  

Yildirim, R., Masih, M., & Bacha, O. I. (2018). Determinants of capital structure: evidence from Shari'ah compliant and non-compliant firms. Pacific-Basin Finance Journal, 51, 198-219.