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Despite the fact that small and medium enterprises (SMEs) play a crucial role in strengthening the financial sector within developing and emerging economies through providing employment opportunities to the rural and urban population, capacity building in the form of skills training and economic empowerment, they still face a plethora of challenges that continue to threaten their existence, performance and growth. Access to operational and administrative funds needed to execute their activities effectively is a significant challenge and detrimental to the growth of SMEs in Uganda. Conversely, Islamic microfinance has been noted as a panacea to the challenges of financial inaccessibility among SMEs, especially in developing countries. The purpose of this paper is therefore to investigate how the adoption of Islamic microfinance can play a fundamental role in enhancing the sustainability of microfinance institutions (MFIs) while meeting the financing challenges of SMEs in Uganda.

In this study, a review of existing literature was carried out to critically examine relevant information (literature sources) and empirical studies on SMEs, their performance and challenges. The study being conceptual tries to understand how Islamic microfinance could be adopted as an alternative scheme of financing to bridge the gap and mitigate the financial challenges facing SMEs.

The study finds that the existing MFIs have failed to achieve their objectives of providing financial services to the poor and SMEs while remaining sustainable. This has left the majority of SMEs within Uganda's informal sector financially handicapped, thus leading to their failure in meeting their expectations and eventually collapsing even before celebrating their third or fourth birthdays. However, the enactment into law of the Financial Institutions Amendment Act 2016 that paved the way for the introduction of Islamic finance in Uganda, and the Tier 4 Microfinance Institutions and Money Lenders' Act, 2016 that incorporated the aspects of Islamic microfinance within the existing microfinance framework as seen and is perceived as a key factor in addressing the financial challenges faced by MFIs and the SMEs if fully adopted.

This study is conceptual with no empirical investigation and discussion of key theories. On the contrary, it will be imperative and useful when carrying out more extensive hypothetical studies by future researchers, specifically in the area of Islamic microfinance that is relatively new in Uganda.

Practically, this paper will serve as a guide to policymakers and practitioners in the field of microfinance by adding a flair that could enable in bridging the challenges associated with inadequate financing of SMEs in Uganda.

Socially, the social aspects of charity (Zakah and Sadaqah) will help to improve the livelihood of the poorest of the poor who cannot engage in active business through meeting their basic needs of life without begging thereby preventing them from being social outcasts.

The study establishes Islamic microfinance (IMF) as a promising and unexplored viable option potentially needed in intensifying the financing needs of SMEs in Uganda. The paper provides an entirely new dimension in nature and way microfinance products should be structured with a view of ensuring that there is sustainable provision of financial services to SMEs. The paper adds real value to the existing conventional microfinance products and services in Uganda, given the ethical and moral attributes of Islamic microfinancing practices that are assumed to efficiently and effectively motivate SME owners and other small entrepreneurs to thrive.

The purpose of this study is to propose a contemporary human resource management (HRM) framework by zakat institutions, which collect and manage religious alms, both obligatory (zakat) and voluntary (ṣadaqah), in Malaysia.

In doing so, discussions pertaining to the key elements of zakat institutions’ HRM including recruitment, selection, performance appraisal, training and development and compensation are gathered from the existing literature and other sources of information such as zakat institutions’ websites and publications. In addition, zakat officers’ insight on how HRM is practiced at their institutions is gathered through a series of semi-structured interviews and incorporated in the findings of this study.

The paper finds that the state government, by virtue of the State Islamic Religious Council (SIRC), which is the sole trustee of all waqf properties in Malaysia, may have significant influence in formulating the human resource strategies and policies in zakat institutions.

The proposed HRM model can be a useful reference for SIRC in enhancing the current human resource practice in its respective zakat institutions.

The novelty of this study lies in the proposed HRM model applicable to zakat institutions. The model emphasizes the alignment between the zakat institutions’ HRM practice and their zakat collection and distribution goals, as well as zakat management objectives in general.

This study aims at two objectives, i.e. first, to identify the core elements of the Islamic fintech ecosystem, and second, to use the identified core elements to analyse the development of such an ecosystem in Indonesia.

This work combines data analytics of text mining with qualitative analysis of human intelligence in two steps. First, knowledge discovery of the Islamic fintech ecosystem’s core elements using a sample of eight academic articles totalling 102 pages and 75,082 words. Second, using the identified core elements from step one to explore such ecosystem development in Indonesia. This stage employs a sample of 11 documents totalling 371 pages and 143,032 words from cyberspace.

The core elements of the Islamic fintech ecosystem identified are financial customers, fintech startups, government, technology developers, traditional financial institutions and fatwa (Islamic legal opinion). Furthermore, the development of the Islamic fintech ecosystem in Indonesia is examined under these identified core elements, providing critical insights into the Islamic fintech ecosystem currently established in the country's industry.

This study primarily used semi-structured data from cyberspace. Traditional approaches to qualitative data collection, e.g. focused group discussions and interviews, may be beneficial for future studies in addressing the Islamic fintech ecosystem issues.

Academia worldwide may benefit from this work in incorporating knowledge of Islamic fintech ecosystem’s core elements into Islamic finance literature. Specifically, fintech stakeholders in Indonesia may be advantaged to understand how far the Islamic fintech ecosystem has grown in the country.

The rise of unethical fintech peer-to-peer lending shows social problems in Indonesia’s fintech industry. The finding derives social implications that elucidate the current state of the country’s Islamic fintech ecosystem.

Using a kind of big data (i.e. semi-structured text data) from cyberspace and applying steps of text mining combined with qualitative analysis, may contribute to the creation of novelties for qualitative research on financial issues.

This study aims to investigate the relationship between audit committee (AC) attributes and the risk-taking behavior of Islamic banks.

The study used data generated from the annual reports of 43 full-fledged Islamic banks operating in 15 countries between 2010 and 2020.

The findings indicate that AC size, AC independence and the proportion of AC members from foreign countries have a significant negative relationship with the risk-taking of Islamic banks. However, AC meetings, AC gender diversity and the proportion of AC members with doctorate degrees have insignificantly influenced the risk-taking of Islamic banks.

The study used only six AC attributes out of corporate governance mechanisms likely to affect the insolvency risk of full-fledged Islamic banks between 2010 and 2020.

The study sheds light on the effects of AC attributes on the risk-taking of Islamic banks. The findings could allow policymakers and regulators to provide policies and regulations that could improve AC’s oversight role in constraining Islamic banks from excessive risk-taking. Besides, this study can guide the board of directors in appointing AC members who can prevent Islamic banks from taking excessive risks.

This study provides clear and adequate empirical evidence showing how key audit committee attributes influence the risk-taking behavior of full-fledged Islamic banks.

This study aims to investigate the volatility of conventional and Islamic indices and to explore the impact of the global financial crisis toward the volatility of both markets in Malaysia.

The data consist of financial times stock exchange group (FTSE) Bursa Malaysia Kuala Lumpur Composite Index and FTSE Bursa Malaysia Hijrah-Shari‘ah Index covering the period January 2008-October 2014. Generalized autoregressive conditional heteroskedasticity is used to find the volatility of the two markets and an ordinary least square model is then used to investigate the impact of the crisis toward the volatility of those markets.

Interestingly, the result shows that Islamic index is less volatile during the crisis compared to the conventional index. Furthermore, the crisis is proven to significantly affect the volatility of conventional index in the short run and Islamic index in the long run.

This study explores the volatility–financial crisis nexus, especially for the Islamic financial markets, which to the best of the author’s knowledge, is still lacking empirical research which may improve the understanding upon this issue.

The purpose of this paper is to examine factors influencing the level of satisfaction of Islamic microfinance customers and their loyalty toward their patronized institution in Central Java, Indonesia.

The target population is all customers of Islamic microfinance institutions in Central Java, Indonesia. A sample of 300 respondents is selected for this study using purposive sampling and only 246 data are used in the analysis. The data are then analyzed using structural equation model with cost of loan, risk of loan, loan repayment, family welfare and Shariah issues as exogenous variables and satisfaction and loyalty as endogenous variables tested in the model.

The findings have shown that there is a significant effect of cost of loan, risk of loan and loan repayment upon the customers’ satisfaction and from the customers’ satisfaction toward the customers’ loyalty. The Shariah issues and family welfare were statistically insignificant to predict the customers’ satisfaction, which imply a big homework of Islamic finance academics and practitioners in Indonesia to educate people about Islamic finance and to show the real positive impact of Islamic finance models toward poverty.

Central Java is the province with a large number of SME and microfinance institutions, both conventional and Islamic, in Indonesia. This study provides a good insight for researchers seeking updated information about microfinance in Indonesia.

Zakat (Islamic almsgiving) plays a considerable role in dealing with the socioeconomic issues in times of COVID-19 pandemic, and such roles have been widely discussed in virtual events. This paper aims to discover knowledge of the current global zakat administration from virtual events of zakat (e.g. webinars) on YouTube and Zoom via text mining approach.

The authors purposefully sampled 12 experts from four different virtual zakat events on YouTube and Zoom. The automated text transcription software is used to pull the information from the sampled videos into text documents. A qualitative analysis is operated using text mining approach via machine learning tool (i.e. Orange Data Mining). Four research questions are developed under the Word Cloud visualisation, hierarchal clustering, topic modelling and graph and network theory.

The machine learning identifies the most important words, the relationship between the experts and their top words and discovers hidden themes from the sample. This finding is practically substantial for zakat stakeholders to understand the current issues of global zakat administration and to learn the applicable lessons from the current issues of zakat management worldwide.

This study does not establish a positivist generalisation from the findings because of the nature and objective of the study.

A policy implication is drawn pertaining to the legislation of zakat as an Islamic financial policy instrument for combating poverty in Muslim society.

This work supports the notion of “socioeconomic zakat”, implying that zakat as a religious obligation is important in shaping the social and economic processes of a Muslim community.

This work marks the novelty in making sense of the unstructured data from virtual events on YouTube and Zoom in the Islamic social finance research.

The purpose of this study is to empirically study firm-specific and economic factors affecting solvency of family takaful companies in Malaysia.

Data are extracted from the annual reports of six family takaful companies and Bloomberg for the period from 2008 to 2012. Equity-to-asset and equity-to-technical reserve ratio are used to measure solvency and thus become the dependent variables. Meanwhile, profit rate, Islamic index, company size, risk retention, contribution growth, investment income, takaful leverage, liquidity and expenses are the independent variables.

The determinants that are positively related to equity-to-asset ratio (EAR) of family takaful include contribution growth, investment income, takaful leverage, liquidity and Islamic equity index. Meanwhile, company size, risk retention, expenses and profit rate are negatively related to EAR of takaful. Equity-to-technical reserves ratio (ETR) of takaful are positively related to risk retention, contribution growth, investment income, takaful leverage, profit rate and Islamic equity index. The other variables including company size, liquidity, and expenses are negatively related to ETR of takaful.

This study explores factors affecting the solvency of family takaful, which to the best of the authors’ knowledge is still lacking empirical research which may improve the understanding of this issue.

The purpose of this paper is to examine the competitive conditions and market power of Islamic banks in Indonesia for the period of 2006-2013.

Using samples of 27 Islamic banks, the study uses a variety of structural and non-structural measures related to the traditional approach and the new empirical approach of the industrial organization. The methodology is based on a set of measures of the competition and market power. The first measures, concentration ratios and Herfindahl–Hirschman index, are to determine the competitiveness level, while the second measures of Panzar–Rosse H-statistic and Lerner index are to examine the market power of Islamic banks in Indonesia.

The finding of this study has confirmed the situation of Islamic banking industry in Indonesia which is operated in a higher degree of market power which leads to a less competitive market. Islamic banks earn their revenues under monopolistic competition over the tested period. This study has also found a negative but insignificant relationship between concentration and competition which shows that in the past few years, the market power for leading firms in Indonesia Islamic banking industry has reduced.

The paper is a very useful source of information that may provide relevant guidelines in guiding the future development of competition of Islamic Banking industry. In addition, the paper provides relevant guidelines for improving competitiveness of Islamic banks.

This study combines two approaches for bank competition measurement and bank market powers measurement which can provide more robust findings. To the best of the authors’ knowledge, the study on Islamic banking competitiveness level and market power is very limited, especially in the case of Indonesia. Therefore, this study could contribute significantly toward the literature of the related field.

Islamic banks, despite being Shariah-compliant, have long been criticized for mimicking conventional banks in terms of their products and processes (Khan, 2010; Kuran, 1996). However, several Islamic banks do engage in philanthropy (zakat and charity) and risk-sharing financing (mudarabah and musharakah) instruments that better meet their raison d'etre, the fulfillment of Maqasid al-Shariah (Jatmiko et al., 2023). These contracts, however, are more susceptible to moral hazard and adverse selection problems than traditional debt-based finance (Azmat et al., 2015) and may impair Islamic bank stability. This paper explores the relationship between social finance and the stability of Islamic banks, and whether institutional quality moderates this relationship.

Using hand-collected annual data on social finance from 12 Islamic banks in four countries: Bangladesh, Bahrain, Indonesia and Malaysia, between 2006 and 2019, the authors employ the feasible generalized least squares and the panel-corrected standard errors methods for the analysis. The Stata version 16 software was used to analyze the data for the study.

The results indicate that mudarabah and musharakah financing raises the stability of Islamic banks. The authors also found that mudarabah and musharakah expose Islamic banks to more risk-taking behavior amidst the conditioning effect of institutional quality. On the other hand, charity induces the stability of Islamic banks, while zakat increases the risk-taking behavior of the banks. Further, when the quality of institutions was used as a moderator, both zakat and charity induced the stability of Islamic banks. The results were robust when liquidity risk was used and partially robust when portfolio risks were employed as measures of stability.

One concern regarding the application of Islamic social finance is that it might be a risky strategy for Islamic banks. In terms of research implications, the available evidence suggests that the use of Islamic social finance instruments is not detrimental to the stability of Islamic banks. Hence, regulators and policymakers should not penalize Islamic banks for using Islamic social finance instruments that help provide financial solutions to the underserved and unserved. In terms of research limitations, the study could not include other relevant Islamic social finance instruments such as waqf and qard al-hassan. Furthermore, data availability restricts the analysis to only 12 Islamic banks in fourcountries. As more Islamic banks in different countries venture into Islamic social finance, and the quantity and quality of information improve, future studies could explore the issue further.

The available evidence suggests that the use of Islamic social finance instruments does not worsen the stability of Islamic banks. Given the dominance of sale- and lease-based contracts in Islamic financing (Aggarwal and Yousef, 2000; Šeho et al., 2020), these findings should encourage other Islamic banks to provide financial solutions using other Shariah-compliant contracts including those based on risk-sharing and philanthropy. This would be a better reflection of the Islamic banks’ value proposition as it helps boost social activities that have a high impact on the activities of small businesses, contributing to the real economy and promoting well-being in society.

Previous studies mainly relied on mudarabah, mushakarah and zakat separately as they relate to the performance of Islamic banks. This study explores the impact of social finance which includes charity and zakat to examine their impact on Islamic banks’ stability. Further, the authors use institutional quality as a moderating variable in the relationship between Islamic social finance instruments and the stability of Islamic banks.

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-06-2022-0441