Corporate governance in institutions offering Islamic financial services : issues and options

This paper reviews institutions offering Islamic financial services (IIFS) corporate governance challenges and suggests options to address them. It first points out the importance of corporate governance for IIFS, where it would require a distinct treatment from conventional corporate governance and highlights three cases of distress of IIFS. It then dwells on prevailing corporate governance arrangements addressing IIFS'needs to ensure the consistency of their operations with Islamic finance principles and the protection of the financial interests of a stakeholders'category, namely depositors holding unrestricted investment accounts. It raises the issues of independence, confidentiality, competence, consistency, and disclosure that may bear on pronouncements of consistency with Islamic finance principles. It also discusses the agency problem of depositors holding unrestricted investment accounts. The paper argues for a governance framework that combines internal and external arrangements and relies significantly on transparency and disclosure of market relevant information.Banks&Banking Reform,Corporate Law,Non Bank Financial Institutions,Investment and Investment Climate,Privatization

Strategic interdependence in the East-West gas trade : a hierarchical Stackelberg game approach

The current and potential benefits of the East-West gas trade are enormous for all participants. Realizing those benefits requires significant upfront investments. But the new, more complex structure of the gas transit system that has emerged following changes in Eastern Europe and the former Soviet Union has created uncertainties that bear on the expected benefits from investment. The authors argue for the existence of stable contracts that would create an environment more conducive to investments and allow all participants to benefit from expansion of the gas trade. As a guide to formulating incentive-compatible, transparent, flexible contracts, they propose a framework based on a Stackelberg game, with three players (a supplier, a transiter, and an importer) under Russia's leadership. They use this framework to analyze the contract modifications that would ensue from changes affecting the gas trade. They concluded that: (a) increased competitiveness of the transiter and supplier through cost reductions would improve the payoffs to all players (the transiter's and supplier's profits and the Western importer's welfare). Strategic behavior on the part of the supplier and transiter would ultimately reduce the price to the importer, enlarging gas demand and reducing costs. If increased competitiveness is the outcome of more costly gas from sources other than Russia, both the supplier's and the transiter's payoffs would improve but the importer's welfare would deteriorate. The supplier and transiter would have leeway to strategically raise their price and transit fee, respectively, while gaining market share. But the importer would face rising costs for gas imports and would lose welfare; (b) an increase in the scope for the importer to substitute between alternative sources of gas improves welfare for all three players. The perception by the supplier and transiter of increased threat of competition leads to a preemptive move not to lose market share. The transiter and supplier reduce the transit fee and supply price, respectively, allowing the importer to face a lower gas price. Import demand expands and welfare improves. The expanded trade more than compensates for the reduction in the transit fee an supply price and allows larger payoffs for transiter and suppliers; and (c) the perception of increased reliability of Russian gas supplies expands demand for Russian gas and leads to the expansion of trade. The supplier and transiter can raise their respective charges with expanded volume, improving their payoffs. The importer's welfare deteriorates as the cost of importing gas rises. The predictability of the players'reactions to changes in the environment would build confidence in the reliability of gas trade and allow its expansion benefiting all participants.Water and Industry,Economic Theory&Research,Environmental Economics&Policies,Energy Trade,Markets and Market Access

An improvement of a cellular manufacturing system design using simulation analysis

Cell Formation (CF) problem involves grouping the parts into part families and machines into manufacturing cells, so that parts with similar processing requirements are manufactured within the same cell. Many researches have suggested methods for CF. Few of these methods; have addressed the possible existence of exceptional elements (EE) in the solution and the effect of correspondent intercellular movement, which cause lack of segregation among the cells. This paper presents a simulation-based methodology, which takes into consideration the stochastic aspect in the cellular manufacturing (CM) system, to create better cell configurations. An initial solution is developed using any of the numerous CF procedures. The objective of the proposed method which provides performances ratings and cost-effective consist in determine how best to deal with the remaining EE. It considers and compares two strategies (1) permitting intercellular transfer and (2) exceptional machine duplication. The process is demonstrated with a numerical exampleCell Formation; Exceptional Elements; Simulation; Alternative costs; Improvement

A Taguchi method application for the part routing selection in Generalized Group Technology: A case Study

Cellular manufacturing (CM) is an important application of group technology (GT) that can be used to enhance both flexibility and efficiency in today’s small-to-medium lot production environment. The crucial step in the design of a CM system is the cell formation (CF) problem which involves grouping parts into families and machines into cells. The CF problem are increasingly complicated if parts are assigned with alternative routings (known as generalized Group Technology problem). In most of the previous works, the route selection problem and CF problem were formulated in a single model which is not practical for solving large-scale problems. We suggest that better solution could be obtained by formulating and solving them separately in two different problems. The aim of this case study is to apply Taguchi method for the route selection problem as an optimization technique to get back to the simple CF problem which can be solved by any of the numerous CF procedures. In addition the main effect of each part and analysis of variance (ANOVA) are introduced as a sensitivity analysis aspect that is completely ignored in previous research.Cellular Manufacturing; generalized Group Technology; route selection problem; Taguchi method; ANOVA; sensitivity analysis

Formation of machine groups and part families in cellular manufacturing systems using a correlation analysis approach

The important step in the design of a cellular manufacturing (CM) system is to identify the part families and machine groups and consequently to form manufacturing cells. The scope of this article is to formulate a multivariate approach based on a correlation analysis for solving cell formation problem. The proposed approach is carried out in three phases. In the first phase, the correlation matrix is used as similarity coefficient matrix. In the second phase, Principal Component Analysis (PCA) is applied to find the eigenvalues and eigenvectors on the correlation similarity matrix. A scatter plot analysis as a cluster analysis is applied to make simultaneously machine groups and part families while maximizing correlation between elements. In the third stage, an algorithm is improved to assign exceptional machines and exceptional parts using respectively angle measure and Euclidian distance. The proposed approach is also applied to the general Group Technology (GT) problem in which exceptional machines and part are considered. Furthermore, the proposed approach has the flexibility to consider the number of cells as a dependent or independent variable. Two numerical examples for the design of cell structures are provided in order to illustrate the three phases of proposed approach. The results of a comparative study based on multiple performance criteria show that the present approach is very effective, efficient and practical.cellular manufacturing; cell formation; correlation matrix; Principal Component Analysis; exceptional machines and parts

Corporate governance and Shariah compliance in institutions offering Islamic financial services

The structures and processes established within an institution offering Islamic financial Services (IIFS) for monitoring and evaluating Shariah compliance rely essentially on arrangements internal to the firm. By being incorporated in the institutional structure, a Shariah supervisory board (SSB) has the advantage of being close to the market. Competent, independent, and empowered to approve new Shariah-conforming instruments, an SSB can enable innovation likely to emerge within the institution. The paper reviews the issues and options facing current arrangements for ensuring Shariah compliance by IIFS. It suggests a framework that draws on internal and external arrangements to the firm and emphasizes market discipline. In issuing its fatwas, an SSB could be guided by standardized contracts and practices that could be harmonized by a self-regulatory professionals'association. A framework with the suggested internal and external features could ensure adequate consistency of interpretation and enhance the enforceability of contracts before civil courts. The review of transactions would mainly be entrusted to internal review units, which would collaborate with external auditors responsible for issuing an annual opinion on whether the institution's activities has met its Shariah requirements. This process would be sustained by reputable entities such as rating agencies, stock markets, financial media, and researchers who would channel signals to market players. This framework would enhance public understanding of the requirements of Shariah and lead to more effective options available to stakeholders to achieve improvements in Islamic financial services.Banks&Banking Reform,Corporate Law,National Governance,Non Bank Financial Institutions,Governance Indicators

Corporate governance and stakeholders'financial interests in institutions offering Islamic financial services

This paper focuses on the corporate governance arrangements of institutions offering Islamic financial services (IIFS) aimed at protecting stakeholders'financial interests. Many IIFS corporate governance issues are common with those of their conventional counterparts. Others are distinctive. In particular they offer unrestricted investment accounts that share risks with shareholders but without a voting right. This paper first reviews internal and external arrangements put in place by IIFS to protect stakeholders'financial interests. It discusses shortcomings notably in terms of potential conflict of interest between shareholders and holders of unrestricted investment accounts. It then suggests a corporate governance framework that combines internal and external arrangements to provide safeguards to unrestricted investment account holders without overburdening IIFS'financial performance. The paper uses a review of 13 IIFS and regulatory information from countries where IIFS have developed the most.Banks&Banking Reform,Financial Intermediation,Corporate Law,Non Bank Financial Institutions,Investment and Investment Climate

Regulating islamic financial institutions : The nature of the regulated

More than 200 Islamic financial institutions (IFIs) operate in 48 countries. Their combined assets exceed $200 billion, with an annual growth rate between 12 percent and 15 percent. The regulatory regime governing IFIs varies significantly across countries. A number of international organizations have been established with the mandate to set standards that would strengthen and harmonize prudential regulations as they apply to IFIs. The authors contribute to the discussion on the nature of prudential standards to be developed. They clarify the risks that IFIs are exposed to and the type of regulations that are needed to systematically manage them. They consider that the industry is still in a development process whose eventual outcome is the convergence of the practice of Islamic financial intermediation with its conceptual foundations. The authors contrast the risks and regulations needed in the case of Islamic financial intermediation operating according to core principles and current practice. They outline implications for approaches to capital adequacy, licensing requirements, and reliance on market discipline. They then propose an organization of the industry that wouldallow it to develop in compliance with its principles and prudent risk management, and facilitate its regulation.Labor Policies,Payment Systems&Infrastructure,International Terrorism&Counterterrorism,Financial Intermediation,Banks&Banking Reform,Financial Intermediation,Banks&Banking Reform,Environmental Economics&Policies,Economic Theory&Research,Banking Law

A New Combined Framework for the Cellular Manufacturing Systems Design

Cellular Manufacturing (CM) system has been recognized as an efficient and effective way to improve productivity in a factory. In recent years, there have been continuous research efforts to study different facet of CM system. The literature does not contain much published research on CM design which includes all design aspects. In this paper we provide a framework for the complete CM system design. It combines Axiomatic Design (AD) and Experimental Design (ED) to generate several feasible and potentially profitable designs. The AD approach is used as the basis for establishing a systematic CM systems design structure. ED has been a very useful tool to design and analyze complicated industrial design problems. AD helps secure valid input-factors to the ED. An element of the proposed framework is desmontrate through a numerical example for cell formation with alternative process.Cellular manufacturing; Design methodology Axiomatic Design; Experimental Design.

Digitized Image Data Compression and Transfer

Information represented in a digitized image format (such as remote sensing, satellite, or photographic images) is becoming more readily available. These image files contain massive amounts of information requiring more efficient storage and transfer methods. The large size of these image files requires investigation of quality issues, transfer methods, and storage mechanisms. Digitized image data compression allows for faster file transfer over networks and requires less storage space for large image files. While moving over networks, compressed files are less affected by network errors because of the reduced transfer time. With data compression, however, the quality of the image is sometimes sacrificed for the sake of size and speed. This report discusses our research of digitized image data compression and transfer, including storage mechanisms used, compression techniques currently available for Macintosh and UNIX platforms, and the methods used to transfer image files over networks.http://deepblue.lib.umich.edu/bitstream/2027.42/107960/1/citi-tr-92-5.pd