Journal of Economics, Law, and Society

The Institutions-Finance-Growth Nexus

Edib Smolo — 2024-06-30

This paper empirically investigates the impact of finance and institutions on economic growth using a panel data analysis covering the 2002-2019 period and focusing on three country groups: European Union (EU) member countries, European transition economies, and the overall sample taking all countries together. In contrast to the prevailing view that suggests a positive impact of finance on growth, our findings indicate that finance either decreases growth or is insignificant without evidence of non-linearity. Another finding that comes as a surprise is that institutions play no role in growth either directly or indirectly via finance in all our samples. Our findings, however, support the claim that the finance-growth nexus depends on financial development proxies and the financial and institutional development levels within sample countries.

The Role of Demographics in Green Purchase Intentions

Hamza Smajic — 2024-06-30

This study investigates the role that demographic factors (country of origin, age, gender, and education) play in green purchase intentions (GPIs) among consumers in Jordan, the United Arab Emirates, and the Kingdom of Saudi Arabia (KSA). It is based on primary, quantitative, cross-sectional data collected using the questionnaire. The final sample included 680 consumers from the three countries. Hypotheses are tested using the independent samples t-test and one-way ANOVA. Results of the study show that age, gender, and education are not significant differentiators in GPI, while partial support was found regarding the role of country of origin. The study points out the relevance of GPIs and indicates the theoretical and practical implications. It enriches the scarce literature on green consumer behavior in the Middle East region and presents future research suggestions for its further development.

Enhancing Financial Inclusion through Financial Literacy

Admir Meskovic — 2024-06-30

This paper aims to examine the awareness and perceptions of depositors in Bosnia and Herzegovina regarding the features of investment deposits in Islamic finance. It evaluates the contribution of mudarabah-based deposits to the financial inclusion of Muslims and identifies factors influencing clients' decisions to place their funds in Islamic banks. The study employs a quantitative research methodology, utilizing an online survey distributed via LimeSurvey to collect primary data. The survey targeted bank clients in Bosnia and Herzegovina, and a non-random convenience sample was obtained by promoting the survey link on a Facebook page aimed at users in the region. Paid advertising was used to enhance visibility, and direct outreach was conducted in cities with Islamic bank branches to ensure a representative sample. The survey included questions on demographic information, awareness of investment deposits, understanding of Islamic finance, and attitudes towards banking risks and returns. The structured nature of the survey allowed for effective data collection and analysis to identify knowledge gaps and depositor attitudes. The findings reveal that a significant portion of respondents lack adequate knowledge about investment deposits, posing a critical barrier to their effective use for mobilizing savings and enhancing financial inclusion. Muslim clients identify interest as a significant hurdle to saving in conventional banks, with similar expectations and risk aversion observed in Islamic banking investment accounts. This research underscores the potential role of investment deposits in advancing financial inclusion by addressing knowledge gaps and examining factors influencing clients' decision-making processes. It highlights the need for increased awareness and education about investment deposits to facilitate their wider adoption among depositors, enhancing the understanding of leveraging Islamic finance principles to promote financial inclusion and meet the unique needs of Islamic savers and investors in Bosnia and Herzegovina.

The Rise of Green Bonds

Muhamed Ibrić — 2024-06-30

This paper analyzes the global and European green bond markets from different perspectives. The paper uses data on green bond issues on the global and European green bond market, in the period from 2013 to 2023. Research results show that the issuance of green and other sustainability-related revenue use bonds has increased in recent years. Europe remains the largest issuance region, accounting for more than half of global issuance. Green bond issuance globally and in Europe has experienced a tumultuous couple of years after reaching record highs of USD 575 billion and USD 326 billion in 2021, respectively. In 2023, Europe's green bond issuance recovered 11% year on year to USD 341 billion. It slightly outperformed the global markets, which recorded 10% growth to reach USD 581 billion. In line with 2022, the corporate sector fueled 2023 green volume, contributing 57% of issuance. Corporate issuers in Europe are mostly dominated by the energy, utilities, automotive, transport, and building sectors, all of which have hystorically been dependent on fossil fuels. Analysis of the capital markets in Bosnia and Herzegovina (BiH) indicates that the green bond market exists, and it started in 2023 when the first issue of green bonds was announced by a commercial bank on the local capital market (Banja Luka Stock Exchange). The key barriers to the development of the green bond market are the lack of appropriate institutional arrangements for green bond management, the issue of minimum size, and the high transaction costs associated with issuing green bonds.

Are Islamic bonds a safe choice for portfolio diversification in time of crisis?

Widad Metadjer — 2024-06-30

Despite the popularity and uniqueness of Sukuk as an alternative tradable financing tool, the effectiveness of these products in portfolio allocation and diversity is still under constant scrutiny. This paper employs the multivariate BEKK-GARCH (1,1) model to analyse shocks and volatility based on the daily prices of the Dubai Islamic Capital Market (Sukuk Index) and the conventional stock market (DFM Index). Additionally, it applies Johansen co-integration and Granger causality to investigate the persistence of shocks and volatility in long-term relationships, as well as the leading relationship between Islamic and conventional markets. The results validate the impact of their respective news feeds on both Sukuk and stock market indices and demonstrate the persistence of volatility throughout the studied period from April 2009 to December 2020. The causality test reveals a multidirectional relationship effect between Sukuk and stocks, where each is contributing to the other's growth. The study confirms that Sukuk is not a safe haven for portfolio diversification in the Dubai financial market.