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Title:	Intertemporal consumption behaviour with shariah compliant investments and social finance
Authors:	Salman Ahmed Shaikh (P77798)
Supervisor:	Mohd Adib Ismail, Dr.
Keywords:	Consumers Investments Shariah Universiti Kebangsaan Malaysia -- Dissertations
Issue Date:	2-Dec-2018
Description:	A consumer's lifecycle encompasses working and non-working periods. Generally, consumers earn income during the working period; whereas, consumption is required in all periods. Thus, the consumer saves and borrows for pursuing intertemporal consumption smoothing. In the conventional financial markets, saving and borrowing involve interest. In contrast, Islam prohibits interest resulting in distinct investment products and operations. Hence, it is crucial to analyse intertemporal consumption behaviour of Muslims under this setup. Furthermore, given high poverty among Muslims in certain countries, it is important to identify and explore useful mechanisms for enhancing the consumption needs of the poor. Therefore, this study sets forth four main objectives; to explore the nature of intertemporal consumption in OIC countries in aggregate analysis; to examine the comparative performance of Islamic and conventional portfolios in a disaggregated analysis for endowment surplus consumers; to analyse the cross section of returns on Shariah compliant stocks for the endowment surplus consumers; and finally to investigate the dynamics of private giving towards its effective mobilization as income support institution for endowment deficient consumers. For the first objective, the study uses Rational Expectations - Permanent Income Hypothesis (RE-PIH) on the annual data for the period 1971-2013 from 32 OIC countries. For the second objective, this study employs disaggregated analysis using daily Net Asset Value (NAV) data from 60 mutual funds in Pakistan for the period 2006-2016 to analyse risk adjusted returns, market timing and selectivity. For the third objective, the study uses daily stock returns data of 217 Shariah compliant stocks listed in Pakistan Stock Exchange from 2001-2016 for estimating CAPM, Fama-French three-factor and Fama-French five-factor asset pricing models. For the final objective, the study collects primary data from 417 respondents through questionnaires to examine the dynamics of private charitable giving in Pakistan. The study finds support for phenomena of loss aversion in OIC countries which contradicts the forward looking consumption behaviour envisaged in RE-PIH. In the disaggregated analysis, the study reveals that Islamic portfolios are as much competitive as conventional portfolios on ex-post risk adjusted returns, market timing and selectivity. The study also establishes that Shariah compliant stocks earn higher returns per unit of risk as compared to the market index and contain size and value premium. Lastly, the study discovers that the social institutions like family and organized charities provide income assistance for contemporaneous consumption needs of the poor in situations where commercial market institutions remain inadequate. Based on these findings, the policy makers need to emphasize on effective income redistribution to enhance consumption since consumption is found to be highly responsive to income in the aggregate analysis. Secondly, the fund managers can also offer services for managing Islamic investments as these investments are found to be as much competitive as conventional investments. Thirdly, the fund managers can use Shariah compliant stocks for portfolio diversification and for offering special investments based on the higher returns and existence of size and value premium respectively. Finally, the Ministry of Religious Affairs needs to reconsider institutionalizing private giving through cash waqf to overcome lack of trust, transparency and privacy in private giving to meet the consumption needs of the endowment deficient consumers.,Ph.D.
Pages:	246
Publisher:	UKM, Bangi
Appears in Collections:	Faculty of Economy and Management / Fakulti Ekonomi dan Pengurusan

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