The latter started operations in March Everyone in Mauritius, Muslims and non-Muslims, could benefit from the development of Islamic banking and finance in the island. An Islamic retail bank could serve the local retail market by providing savings and investment products, consumer financing, business funding and housing finance.
Mauritius has the potential of becoming an active player in the global Islamic finance industry. Indeed, a combination of fiscal and non-fiscal factors has made Mauritius particularly attractive as a jurisdiction for structuring Islamic financial products Rassool, Mauritius generally imposes a flat income tax rate of 15 per cent. The evolving nature of global banking is a serious challenge to Islamic banking.
According to the governor of the Bank of Mauritius, the increasing integration of economic activities across national borders, along with the phenomenal progress in banking technology, has made banking systems across the world increasingly vulnerable. Banks have been losing some of their traditional businesses to other intermediaries, both non-bank financial institutions and other commercial enterprises, which are now offering an endless array of financial instruments Roi, b. The governor, in his speech at the MIFC in July , mentioned that the very fact that Islamic banking differs from conventional banking in important ways poses regulatory and supervisory problems.
The risks taken by Islamic financial institutions are not directly comparable to those of their conventional counterparts. In most countries, including Mauritius, where conventional banks operate alongside Islamic banks, the same regulatory and supervisory standard is being applied to the extent possible. So far, the tendency has been to apply the standard set by the Basel Committee on Banking Supervision. It is, however, recognized that the same standard applied to conventional banking cannot be rigorously applied to an Islamic banking framework Roi, a.
The most comprehensive work on the challenges that an Islamic bank may face in Mauritius was carried out by Lallmahamood According to him, Islamic banks face the risks of surplus liquidity and also run the risks of being unable to fund their financing commitments and to meet demand for withdrawal of deposits. There is also a shortage of professionals in the Islamic finance industry. Education and training are lacking, and no university in Mauritius offers a course or module in this discipline. On the legal aspects, the enforceability of terms and conditions of Islamic finance contracts depends on the governing law of the country.
In Mauritius, there is no precedent how a specific case or default will be handled. This adds to the legal risks of an Islamic bank operating in Mauritius as the contracts are new, not well understood and not yet tested in courts. A new Islamic bank would further have to face heightened competition from well-established conventional banks that have over time built a good reputation and a pool of established clientele. These will act as a barrier to entry for a newly established Islamic bank. Moreover, Islamic banking windows of conventional banks have several advantages over full-fledged Islamic banks as they have less operating expenses and capital expenditure Lallmahamood, This is very relevant to the Mauritius context, and Islamic banks would have to face this challenge and at the same time be competitive in the market.
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Technology start-ups challenge financial institutions by promising their customers faster, cheaper, more convenient and innovative financial services. Currently, only a few start-ups that claim to offer Islamic financial services have become operational, but their number and size are expected to grow IFSB, Conventional banks and Islamic banks in Mauritius will have to address the fintech challenge for their growth and survival.
This study has tried to fill the gap in the empirical literature on the setting up of an Islamic retail bank in a Muslim-minority country. The research aims to identify the main prospects and challenges in setting up an Islamic retail bank in Mauritius. The preliminary findings of the research have unveiled many prospects and challenges that will be put to test through an on-line survey questionnaire and semi-structured interviews. Preliminary findings suggest that an Islamic retail bank in Mauritius would be beneficial for Muslims and non-Muslims.
However, it faces many issues and challenges. Besides, innovation in fintech will surely disrupt the way business is done, and the new Islamic banking institution would have to adapt accordingly.
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You can start or join in a discussion here. This excludes poorer agents from entrepreneurship, increasing the profits of the remaining entrepreneurs. The main determinants of investor protection policy preferences are the agent's net worth and the expected return from entrepreneurship. When the policy is chosen by the simple majority rule, the model generates several implications consistent with the observed variation of investor protection over time and across countries.
In this paper we demonstrate that during a crisis these institutions may actually become complements. Specifically, we find that the decline in companies?
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We propose a theoretical model that reconciles our findings with the results in the literature. In our model, during? During a crisis, however, investment opportunities decline even in countries with strong investor protection, and, as a result, relative importance of firm-level governance increases in such places. Slovin, Marie E. Sushka Journal : Journal of Financial Economics Abstract : We examine board structure in France, which since has allowed firms the freedom to choose between unitary and two-tier boards.
We analyze how this choice relates to characteristics of the firm and its environment. Firms with severe asymmetric information tend to opt for unitary boards; firms with a potential for private benefits extraction tend to adopt two-tier boards. Chief executive officer turnover is more sensitive to performance at firms with two-tier boards, indicating greater monitoring.
Our results are broadly consistent with the Adams and Ferreira model and suggest that gains result from allowing freedom of contract about board structure. Institutions and financial frictions: estimating with structural restrictions on firm value and investment Author s : Stijn Claessens, Kenichi Ueda, Yishay Yafeh Journal : Journal of Development Economics Abstract : Using an enhanced version of the standard investment model, we estimate how institutions affect financial frictions at the firm micro level and, through the required rate of return, at the country macro level.
Based on some 78, firm?
However, creditor rights generally do not affect financial frictions. It thus appears that in explaining cross-country differences in firm investment, frictions related to shareholder rights e. Investor protection and corporate valuation Author s : Rafael La porta , Florencio Lopez-De-Silanes , Andrei Shleifer, Robert Vishny Journal : The Journal of Finance, Volume 57 Issue 3,Pages, Abstract : We present a model of the effects of legal protection of minority shareholders and of cash-flow ownership by a controlling shareholder on the valuation of firms.
We then test this model using a sample of large firms from 27 wealthy economies. Consistent with the model, we find evidence of higher valuation of firms in countries with better protection of minority shareholders and in firms with higher cash-flow ownership by the controlling shareholder. Investor protection and the coasian view Author s : Nittai K.
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Bergman and Daniel Nicolaievsky Journal : Journal of Financial Economics, Volume 84, Issue 3, June , Pages Abstract : The corporate charters of a sample of Mexican firms show that private firms often significantly enhance the legal protection offered to investors, but public firms rarely do so. We construct a model that endogenizes the degree of investor protection that firms provide, using as a springboard the assumption that legal regimes differ in their ability to enforce precisely filtering contracts that provide protection only in those cases where expropriation can occur.
Our model generates predictions about the types of contracts that would be employed and the levels of investor protection that would prevail across different legal regimes in both private and public firms. The effects of legal reforms on the ownership structure of listed companies Author s : Cuomo, Francesca; Zattoni, Alessandro; Valentini, Giovanni Journal : Industrial and Corporate Change, Volume 22, Issue 2, Pages , April Abstract : A general view in the corporate governance literature is that corporate ownership structures are rather stable in time and change slowly.
However, even if changes in ownership structures are difficult due to path dependence, anecdotal evidence indicates that some sort of transition towards the US style corporate ownership could be occurring in civil-law countries. The aim of this article is to test the so-called "law and finance" view, which predicts that this convergence will only happen if the appropriate regulatory framework is in place. We test this prediction using longitudinal data from Italian listed companies, assessing the effects of recent legal reforms. Our results show that an increase in the protection of investors' rights is associated with a lower use of control enhancing mechanisms and a lower separation of control and cash flow rights, while it is less evident if it is associated with a more dispersed ownership.
These findings carry important implications for theory and practice.
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The evolution of corporate ownership after ipo: the impact of investor protection Author s : C. Fritz Foley and Robin Greenwood Journal : Review of Financial Studies 23 3 Abstract : Panel data on corporate ownership in thirty-four countries between and reveal that newly public firms have concentrated ownership regardless of the level of investor protection. After listing, firms in countries with strong investor protection are more likely to experience decreases in ownership concentration; these decreases occur in response to growth opportunities, and they are associated with new share issuance.
We conclude that ownership concentration falls after listing in countries with strong investor protection, because firms in these countries continue to raise capital and grow, diluting blockholders as a consequence. In line with groups? At the margin, controlling shareholders have higher cash-flow rights in borrowing firms than in lending firms. However, there is no robust evidence of minority shareholders losing out from intra-group loans as tunneling predicts.
Our evidence is consistent with the idea that strict regulation and disclosure requirements for intra-group loans, which are features of the Chilean market, reduce the risk of expropriation in pyramids. Wagner Journal : Review of Financial Studies,Volume 25, Issue 6, Pages , Abstract : We show that in countries with strong investor protection, developed financial markets, and active markets for corporate control, family firms evolve into widely held companies as they age.
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In countries with weak investor protection, less developed financial markets, and inactive markets for corporate control, family control is very persistent over time. What do firms disclose and why? Abstract : While specific corporate-governance rules are often controversial, most observers agree on the need to disclose who owns and controls a firm and what governance arrangements are in place. This paper examines such disclosure in a sample of companies listed on stock exchanges in Central and Eastern Europe.
The data show widespread non-disclosure of even the most basic elements of corporate-governance arrangements, despite existing regulation. The level of disclosure varies substantially across firms, and there is a strong country effect in what companies disclose.
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Overall, what is disclosed depends on the legal framework and practice in a given country, but it does not correlate with firms? On the other hand, financial performance is strongly related with how easily available the information is to the public. In particular, information is more available in larger firms, firms with lower leverage, higher market-to-book ratios, and more concentrated ownership. Why do countries matter so much for corporate governance? Author s : Craig Doidge, G. Andrew Karolyi and Ren Journal : Journal of Financial Economics, Volume 86, Issue 1, October , Pages Abstract : This paper develops and tests a model of how country characteristics, such as legal protections for minority investors and the level of economic and financial development, influence firms?