Finance

The institution of Zakah is considered significant by being one of the five pillars of Islam and especially for its multiple references in the Qur’an immediately after Salah. Upon this, great scholars of Islamic jurisprudence either in the past or present have written extensively to demonstrate its religious importance, philosophy, rules and regulations. However, contemporary Muslim scholars who are grounded in Islamic knowledge and economics are now bringing its economic significance to the limelight. Thus, an attempt has been made in this paper to explore and present the fiscal characteristics and dynamics of the institution of Zakah, which makes it a potent fiscal tool, particularly as a source of public revenue, a determinant of expenditure and as an automatic stabilizer in an Islamic economic framework. Therefore, this paper argues that the institution of Zakah has the fiscal potency to stimulate the economic growth of Muslim countries, if and only if it is properly incorporated into the central public economic plan of Muslim economies and given all the necessary legislations and conducive atmosphere to operate.

This part of the book is the summary that highlightsin briefly the overall five chapters of the book. Most previous researchers have concentrated on examining, investigating and describing the behavior of Business Enterprises in practicing financial management.Although they provided much descriptive and empirical evidence on financial management practices, it appears that there are still some gaps in the literature which need to be addressed.Previous researchers focus on investigating and describing financial management practices, but there has been little research examining the effect of financial management practices on business profitability. to achieve this objective this book focused on four variablesby targeting selected SMEs in Mogadishu. These four variablesare; to investigate the effects of working capital management on profitability, to investigate the effects of financial planning management on profitability, to investigate the effects of financial literacy on profitability and to investigate the effects of resource allocation on profitability of small businesses in Mogadishu Somalia. The target population of this study was150 SMEs operating in Mogadishu, howlwdag district in bakaro market. Stratified random sampling technique was used since the population consists of managers, owners and employees. The sample size of this study contained 109 of the owners, managers and employees of SMEs. This study used a questionnaire to collect data.Data was analyzed using Statistical Package for Social Sciences (SPSS) version 22.0, which is a software tool for data analysis.Data collected was purely quantitative and it was analyzed using descriptive analysis. Regression analysis was used to come up with the model. The study used a multiple regression equation. Implementing efficiently and effectively financial management practices through employing financial manager practitioners or training and developing the old ones bring SMEs to be profitable.Most problem faced SMEs was they lack enough financial management practices that could made possible all the financial transactions, investments and financing decisions to line in order to reach financial objectives of the business. The finding of the study reveals that only few owners and managers have proper financial management practices and able their business to be profitable. The study findings established that there was a positive relationship (R= 0.991) between the variables. The study also revealed that 98.2% of profitability in the SMEs could be explained by the variables under study. The recommending SMEs’ owners/managers should employ financial management practices to increase profitability of their business.

This study evaluates the individual and overall performance of commercial banking industry in Pakistan consists of 20 banks contains almost 90% of the share in terms of deposits, advances, total assets, profitability and labor force divided into four group large, medium, small conventional banks and a group of Islamic banks for the period which is characterized by slow economic growth and precarious macro economic indicators started from 2006 till 2010 by using non parametric technique Data Envelopment Analysis. Technical efficiency under CRS and VRS models and scale efficiency in respect of production and intermediation approaches are evaluated. This study earmarks and reason out the most efficient and inefficient banks, overall performance which is seen under slow growth in commensurate with the economic growth. Where as, Islamic banking group is less efficient but flourishing significantly among all groups. Performance of large conventional banks is less affected with economic upheavals.

Financial leverage is an index of how much company uses equity and debt to finance their cash-flow and improving the financial condition of the company. The objective of this study is to empirically investigate the relationship between the leverage and profitability of 13 Automobiles and allied companies listed on Karachi Stock Exchange companies from year 2010 to 2014. A Cross sectional random effect estimation for the dependent and independent variables were carried out in order to understand the direction of the impact between them. The results indicated a negative correlation between the leverage and profitability for automobile and allied companies of Pakistan.

The main objective of the study is to empirically examine the impact of working capital management on Pakistani manufacturing corporate profitability. The study uses a sample of randomly selected companies from three manufacturing sectors i.e. consumer goods, chemical and construction & material for the period of five years ranging from 2006 to 2010. The correlation and panel data regression analysis were used to analyze the impact of working capital management on the corporate profitability. The results indicate that, the average collection period of account receivables, inventory conversion period and cash conversion cycle have strong negative relationship with corporate profitability while the current ratio has positive relationship with operating profit. The study also finds that the firm size and current assets to total assets ratio has significant positive relationship with corporate profitability. Findings indicate that finance manager can improve the firm profitability by focusing on each component of working capital. More specifically they can improve the firm profitability by reducing account receivable period, inventory conversion period and cash conversion cycle. We also find that average collection period is the most crucial component of working capital. So the manger can add value to the firm by fastening the account receivable conversion period.

The purpose of the study is to empirically examine the impact of firm size and its performance on total cash compensation of executives. The study uses a sample of 32 companies from three different sectors listed at Karachi stock exchange for the period ranging from 2006 to 2010. Pearson correlation analysis and regression analysis are used to analyze the impact of firm performance and its size on total cash compensation of executives. We find the firm size and its performance have significant and positives impact on total cash compensation of executives. The firm size is the most significant determinant of total cash compensation of executives as compared to firm performance. Most of the executive pay and performance literature is published with reference to USA, UK and other developed economies but fewer studies are conducted in developing economies like Pakistan. This is the pioneer study of its kind with reference to Pakistan so it can be a useful source of reference.

This study investigates empirically the effect of investment decision on financing decision. To obtain the objectives, the data required, ranging from 2004 through 2013 were collected from the financial statements of all the banking firms listed in Karachi Stock exchange. Investment opportunity and actual investment were used as proxies of investment decision. Profitability and firm size were used as control variables. Multiple regression models were used to estimate the variables of interest. It was concluded that investment opportunity had significant effect on financing decision; however, the effects have no particular pattern. Furthermore, actual investment had no impact on financing decision.

This paper emphasizes on the measurement of mutual fund performance and timing abilities of income fund managers in Pakistan. To analyze the income fund performance Treynor measure is used which assumes that fund managers possess diversified portfolios. Timing abilities are ascertained by using Treynor and Mazuay measure and data for five years ranging from July 2009 to June 2014 is used and it consists of 30 income funds. Results showed that 23 of the total income funds had positive treynor values which indicate good performance and also an indicator of better diversification. Treynor and Mazuay measure also had a better indication of timing abilities as 2/3rd of the managers performed well in this regard.

This study was conducted to check the random walk behavior in the Karachi Stock Exchange. Daily, weekly and monthly stock returns of KSE 100 index for the period from 1st Jan. 1998 to 29th Feb. 2012 was tested by using descriptive statistics, VAR test, RUN test, KS test and unit root tests (ADF test and PP). Results of all the tests indicate that the KSE don’t follow random walk behavior and thus not weak form efficient, and there are chances of abnormal profit for the technical investors.

This study examines the influence of fundamental factors on small equity investor behavior in the context of Pakistan. The fundamental factors considered in this study are social, political, environmental, regulatory, technological, economic and legal, known as SPERTEL factors. Primary data is collected from individual equity investors from all three stock exchanges of Pakistan. Confirmatory factor analysis (CFA) is used to test the validity of the survey instrument, and structural equation modeling (SEM) technique is used to test the hypotheses. The study documents that overall, small equity investor’s decision making is not influenced by fundamental factors. The study found significant influence of social and political factors on small equity investors’ behavior. However, economic, regulatory, technological, environmental and legal factors have no influence on individual equity investor’s decision making behavior in Pakistan.