aijss volume 1 no 1 april 2012

Graduate School (PPs-Unsyiah) Syiah Kuala University, Indonesia

ISSN: 2089-9976

Aceh International Journal of

SOCIAL SCIENCES

AIJSS

A Publication of:

Volume 1, Number 1

April 2012

ACEH INTERNATIONAL JOURNAL OF SOCIAL SCIENCES

Volume 1, Number 1, April 2012 ISSN 2088-9860

Contents Student Engagement at The Higher Learning Institutions: The Case of Malaysia and the United Arab Emirates

Nurahimah Mohd. Yusoff

Linguistic Impoliteness : A Small Corpus Analysis on the Use of Impolite. Languange by Children Sri Minda Murni and Mutsyuhito Solin

Time Varying Integration among ASEAN-5 Economies

Salina H. Kassim, and M. Shabri Abd. Majid Examining Accounting and Accountability Issues in Religious Context : Insights From Literature

Hasan Basri, and Siti Nabiha Abdul Khalid

1 - 10

11 - 15

16 - 23

24 – 30

A Critical Evaluation of the Compatibility between Traditional and Contemporary Applications of Murabahah Transactions Olorogun Lukman Ayinde

31 - 37

Aceh International Journal of Social Sciences, 1 (1): 1-10 April 2012

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Student Engagement at The Higher Learning Institutions: The Case of Malaysia and the United Arab Emirates

Nurahimah Mohd. Yusoff

Associate Professor, School of Education and Modern Languages, College of Arts and Sciences, Universiti Utara Malaysia

E-mail: [email protected]

Abstract - Universities in Malaysia and the United Arab Emirates (UAE), just like other Higher Education Institutions (HEIs), strive to be at the forefront of academic excellence. Towards this end, HEIs endeavour to provide their students, their primary clientele with the most conducive learning environment in order to maximise their potentials and prepare them to the real world of work. Do the students really make the most of the learning experiences in the university? Are the students really actively “engaged” in the teaching programmes and learning activities provided by the university? What might be the implications of student engagement to curriculum, instruction, policy and decision making, and educational administration? This paper focused on the level of academic challenge provided to students. In this study, “academic challenge” was based on study time and course requirements for reading, writing, and application of higher-order thinking skills rather than on student judgments of the difficulty of the coursework (Carini and Kuh, 2003). Specifically, this investigation attempted to ascertain the types of engagement activities at the HEIs of Malaysia and the UAE. Interesting findings are presented, and recommendations are offered in light of student engagement in the context of higher education.

Keywords: Student engagement; Academic challenge; Educational experience; Active and

collaborative learning

Introduction The National Survey of Student Engagement (NSSE) measures student engagement by asking students questions about their campus experiences, such as their classroom activities, their interactions with faculty, their interactions with other students, their study habits, and their university‟s support of their efforts (NSSE, 2001; 2003). The specific objectives of the study were:

1. To ascertain the level of academic challenge provided to students; 2. To identify students‟ experiences on active and collaborative learning; 3. To determine the extent of student-faculty interaction; 4. To find out the extent of enriching educational experiences afforded to students; and 5. To investigate the extent of supportive campus environment provided to the students.

This paper however, focuses on only one of the five constructs of the NSSE survey, which is the level of academic challenge provided to students. In this study, “academic challenge” was based on study time and course requirements for reading, writing, and application of higher-order thinking skills rather than on student judgements of the difficulty of the coursework (Carini and Kuh, 2003).

Findings from the study help to explore and better understand the process of teaching and learning in general. Specifically, the findings of this study serve as a useful assessment instrument for one dimension of the undergraduate educational experience. In other words, "it serves as a tool to improve the undergraduate education by creating pathways to engagement that are clearly marked so that students can easily find their way to become involved in purposeful activities" (NSSE, 2004). It is hoped that findings from the study will also help to promote and enhance the quality of the education program offered by the institutions. The insights gained in the study will help to

streamline the curriculum of the program as a whole in meeting standards for accreditations and benchmarking. Review of The Literature According to Leithwood and Jantzi (2000), student engagement has both behavioural and affective components. The behavioural component refers to the activities that student participates, both inside and outside the classroom while the affective component is the degree to which students identify with the institution and feel they belong. Alvarez (2002) believed that if students are not engaged in work at hand, there is little learning that is taking place. He stresses that engagement should not be equated with busyness; students who are engaged have a personal stake in the activity. In short, they are taking part in personally meaningful and relevant activities. According to Painter and Valentine (1996, quoted in Quinn, 2002), students are being engaged if they participate in authentic project work, cooperative learning, hands-on learning, demonstrations, active research and the use of higher-order thinking skills. Other


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indicators of engagement include making class presentation, having conversations with professors outside of class, writing papers that were at least 20 pages long, and wanting to enrol in the same college or university a second time (Gose, 1999).

Student engagement researches have taken the limelight in colleges and universities in the United Sates. A case in point, which serves as the anchor of the present research, is the national yearly survey on student engagement conducted by Indiana University Bloomington. The measures taken by the university in carrying out empirical investigations on student engagement are rooted from its purpose of finding out whether and how students are actually utilising their institution‟s resources to provide deep and meaningful learning experiences. Undertaken by the university‟s Center for Postsecondary Research and Planning since Spring 2000, the National Survey of Student Engagement (NSSE) aimed at providing data to colleges and universities to use for improving undergraduate education, inform state accountability and accreditation efforts, and facilitate national and sector benchmarking efforts among 470 different four-year colleges and universities and among 155,000 students thus far (NSSE, 2001). NSSE examined certain benchmarks deemed to be effective educational practice, such as level of academic challenge (emphasis on the importance of academic effort and setting high expectations for student performance), active and collaborative learning (intensity of involvement in student‟s education and application of learning in different settings), student-faculty interaction (learning first-hand and solving practical problems by interacting with faculty members inside and outside the classroom), enriching educational experiences (complementary learning opportunities inside and outside classrooms), and supportive campus environment (college/university commitment to students‟ success and working and social relations cultivated among different groups on campus).

The benchmarks examined by NSSE attempted to prove that there are educational practices that promote students‟ active and meaningful learning as well as indicate positive image of the college or university. In other words, the benchmarks seem to refute the traditional way of looking at exemplary institutions through their publicised excellence or public perceptions of high standards.

Researches related to student engagement abound in the West, and the reports are all thought-provoking in terms of improving students‟ experiences in the learning processes. For instance, Zhao and Kuh (2003) did a research on the relationships between participating in learning communities and student engagement in a range of educationally purposeful activities of 80,479 randomly selected first-year and senior students from 365 four-year institutions in the United States. It was shown that learning communities are uniformly and positively linked to engagement as well as student self-reported outcomes and overall satisfaction with college.

In the Asian context, especially in Malaysia, there seems to be a dearth of investigations along this line. One particular study which was conducted by a group of researchers (Norzaini et al., 2003) from Universiti Kebangsaan Malaysia, studied on the extent to which the undergraduate students engage in good educational practices. The survey was administered in a form of random sampling of the final year students whereby the results of the scores are compared across faculty. The focus of the study is to provide information in improving students‟ educational experiences.

Methodology This study employs a survey method. It is a descriptive-exploratory study whereby questionnaires were self-administered to the respondents. Universiti Utara Malaysia (UUM) students were selected from three English language classes, which include English for Higher Education, Public Speaking and Report Writing. These courses, which are required university courses, provide samples of students from different semesters. The questionnaires were given to the coordinator of each course who then distributed them randomly to other instructors teaching the same course.

In the case of the Ajman University of Science and Technology (AUST), United Arab Emirates (UAE), students were given questionnaires in three different classes. They were those taking the General Psychology, Research Methodology, and Educational Technology classes. These courses were selected because they are compulsory subjects for all students to be taken from the list of the University Required Courses. Similar to the UUM situation, the questionnaires were given to instructors teaching the courses, who then distributed them to their students in the respective classes.

Using the stratified random sampling technique, a total of 1,022 was selected from the UUM 5,101 student population of the three courses. However, only a total of 872 (85%) questionnaires were then collected. A total of 358 were selected from the 1,750 AUST student population of the three courses selected but only a total of 259 (72%) questionnaires were then collected. The limitation of the study was dependent on the number of students who attended the class on the day the questionnaires were distributed.

Items for the questionnaire were adapted from the annual National Survey of Student Engagement (NSSE). The questionnaire consists of 87 items, which were categorised using the five benchmarks. Prior to using the questionnaire, a pilot study was conducted to determine the reliability and validity of the instrument for the local context for both groups. For the UUM questionnaire, the overall Cronbach Alpha was 0.93 and 0.69 for the “levels of academic challenge” construct. For the AUST questionnaire, the overall Cronbach Alpha was 0.84 and 0.73 for the “levels of academic challenge” construct.


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Result and Discussion The Respondents’ Profile In terms of UUM demography, most of the respondents were female (80.5%), while the remaining were male students (19.5%). Malays constituted the majority of respondents with almost 64.4%, followed by Chinese (27.7%), Indians (4.6%) and others (3.3%). About 20% of the respondents were from the Faculty of Business Administration (FPP). This is followed by the Faculty of Information Technology or FTM (15.0 %), Faculty of International Affairs or FPA (10.7%), Faculty of Economics or FE (10.4%), Faculty of Accountancy or FPK (8.8%), Faculty of Human and Social Development or FPSM (8.7%), Faculty of Cognitive Sciences and Education or FSKP (6.8%), Faculty of Finance and Banking or FWB (6.4%), Faculty of Public Management and Law or FPAU (4.7%), Faculty of Communication and Modern Languages or FKBM (3.4%), Faculty of Tourism, Hospitality and Environmental Management or FPHA (2.3%), Faculty of Management of Technology or FPT (1.7%), and finally Faculty of Quantitative Sciences or FSK (1.0%).

More than half (56.7%) of the respondents in this study were in their third semester. This is followed by students in their fifth semester (31.2%), seventh semester (4.8%), fourth semester (4.1%), second semester (1.3%), sixth semester (1.1%), and finally the first semester (0.8%). The entrance qualification for most of the respondents was Malaysian Higher Education Certificate or STPM (66.4 %), followed by matriculation (23.6%), diploma holders (9.0%), advanced diploma (0.5%), and other qualifications (0.6%). Respondents seemed to gain relatively high range of CGPA with more than half (51.7%) having between 3.01-3.51 and then followed by 2.52-3.00 (31.7%), 3.52 – 4.00 (8.9%), and 2.00-2.51 (7.0%). Only 4 students (0.6%) have CGPA below 1.99. About half (48.6%) of the respondents‟ father completed their education at the secondary level. This is followed by those at the primary education level (39.1%), diploma holders (6.9%), bachelor‟s (2.7%), master‟s (1.9%), and doctoral degree (0.7%). Similar findings to the father‟s level of education, the level of education of the respondents‟ mothers is also at the secondary level (47.8%). This is followed by 46.1% at the primary education level, diploma holders (3.6%), bachelor‟s (1.8%), master‟s (0.5%), and finally, doctoral degree (0.2%).

With regards to AUST students‟ profile, similar pattern emerged in the gender analysis. Male only constituted 26.9% of the population while majority were female students (73.1%). About half of them were Dentistry students (45.8%), then followed by those taking Educational Technology (20.7%), and Teaching of English as a Second Language or TEFL (17.6%). The remaining were students from the Engineering, Architecture, Pharmacy, Computer Science, Accounting, Business and Management, Communication and Finance. Of the 259 respondents, 92.5% were of Arab origin while the remaining 6.3% and 1.3% were Persians and Indians, respectively. The student population also showed that 32.6% were in the 8th semester, 20.9% in the 6th semester, 18.3% in the 4th semester, 16.5% in the 2nd semester and the remaining were in the 1st, 3rd, 5th and 7th semesters. Both the fathers‟ and mothers‟ education background is similar, with a number of fathers who did not finish high school (27.2%), and 25.9% having a Bachelors‟ degree. More than one-third (38.5%) of the mothers did not finish high school, while 21.3% had a Bachelors‟ degree. Unlike the UUM students‟ parental background however, the parents having a Master‟s and Doctoral degrees were higher than that of the UUM analysis. Data showed that 13.2% of the fathers of the AUST respondents have a Master‟s degree and 11.1% have a Doctoral degree while 7.4% of the mother‟s level of education at Master‟s and 3.3% at Doctoral degree. Respondents who have CGPA between 3.01-3.51 were 22.2%, between 2.52-3.00 (27.6%), between 2.00-2.51 (23.2%) and between 3.52 – 4.00 (18.7%). Only 3.0% of the AUST students have CGPA below 1.99.

Table 1. Levels of Academic Challenge

UUM AUST

Worked harder than you thought you could to meet an instructor‟s standards or expectation.

Never Sometimes

Often Very Often

14 (1.6%)

221 (25.4%) 525 (60.4%) 109 (12.5%)

M=2.84

13 (5.1%)

114 (44.7%) 80 (31.4%) 48 (18.8%) M=2.64

Memorising facts, ideas, or method from your courses and readings so you can repeat them in pretty much the same form.

Very Little Some

Quite a bit Very Much

9 (1.0%)

246 (28.4%) 496 (56.9%) 119 (13.7%)

M=2.83

14 (5.5%) 64 (25.1%) 100 (39.2%) 77 (30.2%) M=2.94

Analysing the basic elements of an idea, experience, or theory, such as examining a particular case of

Very Little Some

20 (2.3%)

19 (7.5%)


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UUM AUST

situation in depth and considering its components. Quite a bit Very Much

288 (33.1%) 454 (52.2%) 108 (12.4%)

M=2.74

75 (29.4%) 93 (36.5%) 68 (26.7%) M=2.82

Synthesising and organising ideas, information, or experiences into new, more complex interpretations and relationships.

Very Little

Some Quite a bit Very Much

18 (2.1%)

293 (33.7%) 477 (54.9%) 81 (9.3%) M=2.71

27 (10.6%) 77 (30.3%) 95 (37.4%) 55 (21.7%) M=2.70

Making judgments about the value of information, arguments, or methods, such as examining how others gathered and interpreted data and assessing the soundness of their conclusions.

Very Little Some


25 (2.9%)

293 (33.7%) 472 (54.3%) 79 (9.1%) M=2.70

25 (9.8%) 82 (32.0%) 83 (32.4%) 66 (25.8%) M=2.74

Applying theories or concepts to practical problems or in new situations.

Very Little Some


20 (2.3%)

264 (30.4%) 470 (54.1%) 113 (13.0%)

M=2.78

25 (9.8%) 86 (33.6%) 76 (29.7%) 67 (26.2%) M=2.82

The extent to which your examinations during the current school year have challenged you to do your best work.

1Very Little 2 3 4 5 6

7 Very Much

4 (0.5%) 7 (0.9%) 28 (3.4%)

207 (25.2%) 311 (37.8%) 182 (22.1%) 84 (10.2%) M=5.06

4 (1.6%) 12 (4.9%) 16 (6.5%) 62 (25.1%) 66 (26.7%) 50 (20.2%) 37 (15.0%)

M=4.91

Number of assigned textbooks, books, or book-length packs of course readings.

None Between 1and 4

Between 5 and 10 Between 11 and 20

More than 20

15 (1.7%) 503 (58.0%) 252 (29.1%) 76 (8.8%) 21 (2.4%) M=2.52

23 (9.1%) 76 (30.0%) 86 (34.0%) 31 (12.3%) 35 (13.8%) M =2.96

Number of books read on your own (not assigned) for personal enjoyment or academic enrichment.

None Between 1and 4


More than 20

44 (5.1%)

445 (51.4%) 231 (26.7%) 96 (11.1%) 50 (5.8%) M=2.61

31 (12.3%) 110 (43.5%) 69 (27.3%) 25 (9.9%) 18 (7.1%) M=2.56

Number of written papers or reports of 20 pages or more.

None Between 1and 4


More than 20

33 (3.8%)

372 (42.9%) 318 (36.7%) 95 (11.0%) 49 (5.7%) M=2.72

50 (19.8%) 65 (25.8%) 47 (18.7%) 47 (18.7%) 43 (17.1%) M=2.87

Number of written papers or reports between 5 and 19 pages.

None Between 1and 4


More than 20

30 (3.5%)

426 (49.4%) 289 (33.5%) 87 (10.1%) 30 (3.5%) M=2.61

28 (11.2%) 81 (32.4%) 62 (24.8%) 46 (18.4%) 33 (13.2%) M=2.90

Number of written papers or reports of fewer than 5 206 (23.7%) 37 (14.7%)


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UUM AUST

pages. None Between 1and 4


More than 20

458 (52.8%) 132 (15.2%) 47 (5.4%) 25 (2.9%) M=2.11

94 (37.5%) 42 (16.7%) 33 (13.1%) 45 (17.9%) M=2.82

Numbers of problem sets that take you more than an hour to complete.

None Between 1 and 2 Between 3 and 4 Between 5 and 6

More than 6

16 (1.8%)

277 (32.0%) 349 (40.3%) 112 (12.9%) 112 (12.9%)

M=3.03

30 (11.8%) 92 (36.1%) 92 (36.1%) 35 (13.7%) 6 (2.4%) M=2.59

Number of problem sets that take you less than an hour to complete.

None

Between 1 and 2 Between 3 and 4 Between 5 and 6

More than 6

291 (33.7%) 343 (39.7%) 159 (18.4%) 50 (5.8%) 20 (2.3%) M=2.03

30 (11.8%) 101 (39.6%) 56 (22.0%) 38 (14.9%) 29 (11.4%) M=2.76

In a typical week, how many homework problems take you more than 15 minutes each to complete?

None Between 1 and 3 Between 4 and 6 Between 7 and 10

More than 10

127 (14.6%) 328 (37.8%) 296 (34.1%) 68 (7.8%) 48 (5.5%) M=2.51

26(10.2%) 88 (34.5%) 80 (31.4%) 28 (11.0%) 32 (12.5%) M=2.80

Preparing for class (studying, reading, writing, doing homework or lab work, analysing data, rehearsing, and other academic activities).

None Between 1 and 5 Between 6 and 10 Between 11 and 15 Between 16 and 20 Between 21 and 25 Between 26 and 30

More than 30

10 (1.2%)

378 (43.5%) 174 (20.0%) 109 (12.6%) 100 (11.5%) 52 (6.0%) 21 (2.4%) 24 (2.8%) M=3.31

22 (8.7%) 72 (28.3%) 46 (18.1%) 29 (11.4%) 39 (15.4%) 20 (7.9%) 16 (6.3%) 10 (3.9%) M=3.65

Working for pay on campus.


More than 30

737 (84.8%) 61 (7.0%) 26 (3.0%) 18 (2.1%) 14 (1.6%) 9 (1.0%) 1 (0.1%) 3 (0.3%) M=1.34

152 (60.1%) 40 (15.8%) 26 (10.3%) 17 (6.7%) 7 (2.8%) 6 (2.4%) 2 (0.8%) 3 (1.2%) M=1.92

Working for pay off campus.


More than 30

761 (88.0%) 47 (5.4%) 29 (3.4%) 13 (1.5%) 6 (0.7%) 8 (0.9%) 1 (0.1%) 0 (0.0%) M=1.25

158 (62.5%) 34 (13.4%) 25 (9.9%) 11 (4.3%) 11 (4.3%) 6 (2.4%)

0 8 (3.2%) M=1.98

Participating in co-curricular activities (organisations, campus publications, student government, social fraternity or sorority,

None Between 1 and 5 Between 6 and 10

163 (18.8%) 450 (51.8%)

97 (39.1%) 67 (27.0%)


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UUM AUST

intercollegiate or intramural sports, etc). Between 11 and 15 Between 16 and 20 Between 21 and 25 Between 26 and 30

More than 30

126 (14.5%) 57 (6.6%) 33 (3.8%) 19 (2.2%) 7 (0.8%) 13 (1.5%) M=2.42

32 (12.9%) 16 (6.5%) 22 (8.9%) 6 (2.4%) 4 (1.6%) 4 (1.6%) M=2.41

Relaxing and socialising (watching TV, exercising, etc).


More than 30

56 (6.4%)

523 (60.2%) 139 (16.0%) 61 (7.0%) 47 (5.4%) 30 (3.5%) 5 (0.6%) 8 (0.9%) M=2.62

12 (4.7%) 85 (33.6%) 48 (19.0%) 46 (18.2%) 27 (10.7%) 14 (5.5%) 12 (4.7%) 9 (3.6%) M=3.50

Providing care for dependents living with you (parents, children, spouse, etc).

None

Between 1 and 5 Between 6 and 10 Between 11 and 15 Between 16 and 20 Between 21 and 25 Between 26 and 30

More than 30

391 (45.2%) 241 (27.9%) 107 (12.4%) 36 (4.2%) 42 (4.9%) 21 (2.4%) 6 (0.7%) 21 (2.4%) M=2.18

33 (13.3%) 67 (27.0%) 51 (20.6%) 27 (10.9%) 28 (11.3%) 17 (6.9%) 8 (3.2%) 17 (6.9%) M=3.48

Commuting to class (driving, walking, etc).

Between 1 and 5 Between 6 and 10 Between 11 and 15 Between 16 and 20 Between 21 and 25 Between 26 and 30

More than 30

383 (44.0%) 154 (17.7%) 98 (11.3%) 73 (8.4%) 48 (5.5%) 28 (3.2%) 86 (9.9%) M=3.61

123 (48.6%) 57 (22.5%) 34 (13.4%) 19 (7.5%) 9 (3.6%) 6 (2.4%) 5 (2.0%) M=3.00

Respondents’ Responses to their Engagement at the Universities Respondents were asked the question to what extent they worked harder than they thought they could to meet an instructor‟s standards or expectations. As reported in Table 1, responses of the majority seemed to differ between the two institutions. 60.4% of the UUM students gave a very positive answer “often” while 44.7% of the AUST students responded “sometimes”. Across the two institutions however, students ranked similar responses for “never” as the least, i.e. 1.6% for UUM and 5% for AUST.

Many (56.9% of the UUM students and 39.2% of the AUST students) seemed to agree that the coursework emphasised memorising skill. The overall mean score of the institutions was 2.83 and 2.94, respectively. AUST students (30.2%) seemed to respond higher than UUM (13.7%) in terms of the scale “very much”. Pertaining to the analysing skill emphasised in the coursework, more than half of the UUM students (52.2%) responded “quite a bit” while only 36.5% of the AUST students thought so.

The overall mean score of the synthesising skill emphasised in the coursework was the same for UUM (M=2.71) and AUST (M=2.70). However, almost 55% of the UUM students responded “quite a bit” while only 37.4% of the AUST responded so. More AUST students (21.7%) responded “very much” than the UUM students (9.3%) on the same item.

In terms of whether the coursework incorporated the skill of making judgement about the value of information, arguments or methods, it was found that similar pattern of responses emerged between the two institutions. From the highest to the lowest, the responses were: “quite a bit”, “some”, “very much” and “very little”. The AUST students however, seemed to have almost the same response to “quite a bit” (32.4%) and “some” (32%).

More than half of the UUM respondents agreed “quite a bit” (54.1%) that the coursework required them to apply theories or concepts to practical problems or in new situations. The AUST students agreed to “some” (33.6%)


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on the same item. More AUST students (26.2%) responded “very much” than the UUM students (13.0%) on the same item.

When asked whether the examinations during the current school year have challenged the students to do their best work, more than one-third of the UUM students (37.8%) and more than one-fourth of AUST students (26.7%) selected the scale of 5 from the range of 1 (very little) to 7 (very much). The scale 4 and 6 received almost the same score for both institutions, i.e. 25.2% (UUM) and 25.1% (AUST) for scale 4 and 21.1% (UUM) and 20.2% (AUST) for scale 6.

Respondents in both institutions also pointed out that they seemed to read between 1 and 4 books (58.0% for UUM and 30.0% for AUST) during the current school year. However, more AUST students (13.8%) seemed to read the assigned course readings for “more than 20” than the UUM students (2.4%).

In terms of whether the students did their readings on their own for personal enjoyment or academic enrichment, results showed that many students read between 1 and 4 (51.4% for UUM and 43.5% for AUST). Reading books between 5 and 10 received almost similar scores between the two groups i.e. between 26 and 27% respectively.

With regard to whether the students have done 20 pages or more of written papers or reports during the current school year, a majority of them agreed to the scale “between 1 and 4”. The scale “between 5 and 10” received the second highest score and “between 11 and 20” third for both groups. However, the AUST students had the same score for the second and third ranking, i.e. 18.1%. In addition, more AUST students responded to the scale “none” and “more than 20” than the UUM students.

Responding to the question of whether the students have done between 5 and 19 pages or more of written papers or reports during the current school year, the UUM students seemed to show similar scores for “none” and “more than 20” at 3.5%. This score is rather low compared to the percentage of the AUST students for both the scales. The findings also indicated that the majority of students for both universities have written papers or reports between 1 and 4.

The number of written papers or reports of fewer than 5 pages was also assessed. Of the two groups of respondents, only 2.9% of the UUM students reported writing more than 20, while the scale was the second highest rank for the AUST students (17.9%). Results also showed that the AUST students‟ scores were somewhat more spread out between the 5 scales from “none” to “more than 20”. On the other hand, more than half of the UUM students (52.8%) responded to the score between 1 and 4 written papers or reports and more than one-third responded for the AUST students (37.5%) for the same scale.

In terms of whether the homework problem sets that the students take more than an hour to be completed in a typical week of the current school year, the UUM students had the same score for “between 5 and 6” and “more than 6” at 12.9%, while the AUST students had the same score for “between 1 and 2” and “between 3 and 4” at 36.1%. It should also be pointed out that the overall mean score is higher for UUM (M=3.03) than AUST (M=2.59).

As for the number of problem sets that they take less than an hour to complete, both UUM and AUST had almost the same score for the scale between 1 and 2 at 39.7% and 39.6%, respectively. The data also disclosed that the mean score is higher for AUST (M=2.76) than UUM (M=2.03). The data obtained for the UUM respondents showed a wide difference of score from a relatively high percentage (33.7%) for “none” and a relatively low score of “more than 6” (2.3%). The pattern is in contrast for the AUST students. The score is rather similar for the scales “none” (11.8%) and “more than 6” (11.4%).

Respondents of both groups seemed to select the scale of between 1 and 3 and between 4 and 6 as the two top scores for the number of homework problems that take them more than 15 minutes each to complete. Data from the AUST indicated that there were almost as many students who select the scale of “none” and the scale between 7 and 10. In contrast, the UUM data showed that there were more students who had “none” than “between 7 and 10” and “more than 10”.

In terms of the number of hours that students spent in a typical 7-day week preparing for class, the UUM data received higher score than the AUST for the scale between 1 and 5. As a whole, the UUM respondents indicated three scales as the lowest: none (1.2%), between 26 and 30 (2.4%) and more than 30 (2.8%). The AUST had between 21 and 25 (7.9%), between 26 and 30 (6.3%), and more than 30 (3.9%) as the lowest three scales. As high as 8.7% of the AUST students do not come to class prepared.

A majority of the UUM and AUST respondents indicated that they neither work for pay on campus or off campus. Only 13 UUM students (1.4%) work between 21 and 30 and more than 30 hours per week and 11 AUST students (4.4%) work for the same number of hours. No UUM students work for more than 30 hours for pay outside the campus and no AUST students work between 26 and 30 hours. However, about 8 AUST students work for more than 30 hours for pay outside the campus. About the same number of AUST students i.e. 11(4.3%) work between 11 and 15 and between 16 and 20 hours for pay outside the campus. Compared to other items, the mean scores for both groups were low (M=1.34 and M=1.92 for work for pay on campus while M=1.25 and M=1.98 for work for pay off campus).

In terms of whether or not the UUM and AUST students participated in the co-curricular activities, results showed that half of UUM respondents (51.8%) spent between 1 and 5 hours per week while more than one-third of the AUST respondents (39.1%) do not take part in such activities. Only 27.0% of the AUST students spent between 1


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and 5 hours in the activities. Less than 6.0% of both groups of respondents spent more than 21 hours on the co-curricular activities.

Looking at the distribution of the responses for the time spent for relaxing and socialising, the AUST students spent more hours between 6 and 20 per week (a total of 47.9%) compared to the UUM students (a total of 28.4%). Majority of the UUM students (60.2%) spent between 1 and 5 hours per week to relax and socialise.

A high percentage (45.2%) of the UUM respondents did not spend time on providing care for dependents living with them. More AUST students (27.0%), however, did the same for between 1 and 5 hour per week. Results also showed that the AUST students in general had higher scores in terms of the number of hours spent for all the other scales in the item than the UUM group.

As far as the question on whether the students spent time commuting to class, it was found that the majority of the respondents spent between 1 and 5 hours per week on travelling. More UUM students (9.9%) travel more than 30 hours per week compared to the AUST students (2.0%).

All in all, there were significant differences in the mean scores between the UUM and AUST respondents for 15 out of the 22 items. The items in which AUST students‟ mean scores were higher include:

1. Memorising facts, ideas, or method from your courses and readings so you can repeat them in pretty much the same form;

2. Number of assigned textbooks, books, or book-length packs of course readings; 3. Number of written papers or reports of 20 pages or more; 4. Number of written papers or reports between 5 and 19 pages; 5. Number of written papers or reports of fewer than 5 pages; 6. Number of problem sets that take you less than an hour to complete; 7. The number of homework problems take you more than 15 minutes each to complete; 8. Preparing for class (studying, reading, writing, doing homework or lab work, analysing data, rehearsing, and

other academic activities); 9. Working for pay on campus; 10. Working for pay off campus; 11. Relaxing and socialising (watching TV, exercising, etc); and 12. Providing care for dependents living with you (parents, children, spouse, etc).

Only 3 items showed higher mean scores for the UUM respondents. The items were:

1. Worked harder than you thought you could to meet an instructor‟s standards or expectation; 2. Numbers of problem sets that take you more than an hour to complete; and 3. Commuting to class (driving, walking, etc).

Conclusion and Recommendations On the whole, the utilisation of the NSSE instrument was appropriate and helpful in providing explanations between the two HEIs and useful insights about the students‟ educational experience in general, and their levels of academic challenge specifically. Based on the findings, the following conclusions were drawn.

Generally, the respondents were involved in somewhat high levels of academic challenge in their universities. This was rationalised by the data, which showed that the two universities seemed to promote high levels of student achievement by setting high expectations for student performance. Students at both institutions were willing to work harder than they thought they could to meet instructors‟ standards and expectations. This finding supports the findings from the NSSE Annual Report (2001, 2003). Overall, students at UUM responded more positively whereby more than 70% answered “often” and “very often” as compared to about 50% for AUST. The curricula for both institutions also seemed to be on track. Students indicated that there was a blend between theory and practice. Responding to the question on whether the curricula applied theories to practical problems or in new situation, more than 65% of UUM students and around 55% of AUST students responded “quite a bit” or “very much”. Additionally, the examinations at both universities have also managed to challenge students to do their best work. On a scale of 1 to 7, the mean was at 5.01 for UUM and 4.91 for AUST. This finding once again points out that both higher institutions are heading in the right direction with regards to students‟ engagement as noted in Alvarez (2002) and Painter and Valentine (1996).

On a less positive note is the fact that students at both institutions were less involved in higher-order learning. Their responses to the question of how much their coursework emphasised the mental activities of memorising, analysing, synthesising, applying, and making judgments, indicated that memorising seemed to receive the highest mean score for both institutions. For UUM, the mean score was 2.83 while for AUST it was even higher at 2.94. Almost 71% of UUM students and 69% of AUST students responded “quite a bit” and “very much” to the item on memorising so that it can be repeated in pretty much the same form. The other items which were higher in the level of thinking skills received lower mean scores. The lowest mean score for UUM was for making judgements (M=2.70) while for AUST was synthesising and organising ideas (M=2.70). This finding is almost similar to the study by Norzaini et al. (2003).

Another disappointing finding is on the time devoted to preparing for class. According to the NSSE report, students should spend more than 25 hours a week preparing for class in order to be successful. The data of this study


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indicated that students at both institutions spent only minimal hours for this activity. More than 60% of UUM students and 55% of AUST students spent less than 10 hours per week. There were also responses in the “none” category. Almost 9.0% of the AUST students came to class unprepared. Relatively, fewer, only around 1% of the UUM students turned up unprepared for their classes. A similar pattern also emerged from the data on the number of readings of course related materials. Almost 70% of the UUM students and almost 40% of AUST students read four or less books (textbooks, books, book length packs of course readings). However, in terms of books for personal enjoyment and enrichment, the UUM students seemed to read more than the AUST students. In contrast to the NSSE reports, UUM and AUST students in general seem to read less than their counterparts in the United States.

The data on the number of written papers or reports confirmed that students were not particularly involved in activities that require higher order thinking skills. About 43% of UUM students and 25% of AUST students wrote only between 1 to 4 papers or reports of 20 pages or more during the school year that the questionnaires were administered. There were about 20% of AUST students who responded to “none” for the item. Significantly fewer UUM students (3.5%) choose “none”. A similar trend was also observed in the item on the number of problem sets to complete in a typical week.

With regards to co-curricular activities, a majority of AUST students (37.6%) did not participate in any activities at all. This is sharply in contrast to the UUM data which showed that more than half (51.6%) of the student population were involved in “between 1 and 5” co-curricular activities in a typical week.

When asked about the number of hours in a week spent on relaxing and socialising, the mean score of the AUST respondents were much higher. The overall mean score was 3.50 while the UUM mean score was only 2.62. This finding indicated that because the AUST students were not involved in any co-curricular activities, they would spend more time to relax and socialise. This could also be related to the fact that more AUST students live off campus, in an environment which may not be as conducive as staying on campus. Clearly, this finding is consistent with the finding from the first round of NSSE data which states that students living off-campus are less engaged.

Respondents were also asked to what extent they spent time in a week on providing care for dependents living with them. Since a majority of the AUST students did not live on campus, they spent more time with their extended family members. This explained the fact that a majority of them spent between 1 and 5 hours a week while about half of the UUM students (45%) who stayed in hostels responded “none”.

In light of the findings and discussion of the study, the following recommendations are advanced. Firstly, more effort should be put into getting students to be involved in higher order learning. Activities that require students to brainstorm and solve problems may develop this much needed skills. Additionally the case studies approach will also contribute to the development of higher order thinking skills as students will have to apply, analyse and make judgements. Secondly, as bridging the gap between theory and practice is crucial, both institutions should continue to strengthen their existing curricula to ensure that students are able to apply the theory that they have learned in the classroom to the workplace. These two recommendations above are also listed as the 21st century skills needed for graduates in higher education institutions. Thirdly, both institutions need to devise methods and techniques to ensure that students come to class prepared. One of the ways is to provide students with uninformed tests and pop quizzes. Another more important measure is to shift from a teacher-centred to a more student-centred approach. Instead of relying on the lecture method, instructors should explore methods such as discussion, problem-based learning, discovery and cooperative learning. These student-centred methods will ensure that students come to class prepared. One issue, however, that may hinder the use of such methods is the large class size. Both institutions will have to look into this matter. Finally, if students are given longer and more challenging papers or reports to write as well as more complex problem sets, they will have little choice but to read wider. This will inadvertently lead to students reading more books as well as using their higher order thinking skills.

References Alvarez, D. (2002), “Engaging students in their learning”, Leadership, pp. 12-15. Carini, R. M., & Kuh, G. D. (2003), Tomorrow's teachers: Do they engage in the "Right Things" during college?

Retrieved June 18, 2003, from http://web.epnet.com/delivery.asp?tb=1&_ug=dbs+0%2C2%2C3+1n+en-us+...

Gose, B. (1999), “A new survey of „good practices‟ could be an alternative to rankings”, Chronicle of Higher Education, Vol. 46, No. 9, pp. 65.

Kuh, G. D. (2002), “The national survey of student engagement: Conceptual framework and overview of psychometric properties. Framework & Psychometric Properties”, [On-line] Available: http://www.indiana.edu/~nsse

Leithwood, K., & Jantzi, D. (2000), “The effects of transformational leadership on organizational conditions and student engagement with school”, Journal of Educational Administration, Vol. 38, No. 2, pp. 112-129.

National Survey of Student Engagement (2001), NSSE Facts, NSSE Viewpoint, 6, Blooming, IN: Indiana University Centre for Postsecondary Research and Planning.

National Survey on Student Engagement. (2003), “NSSE 2003 Annual Report: Converting data into action: expanding the boundaries of institutional improvement”, Blooming, IN: Indiana University Centre for Postsecondary Research and Planning. http://www.iub.edu/~nsse/2003_annual_report/pdf/NSSE_2003_Annual_Report.pdf


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National Survey on Student Engagement. (2004), “NSSE 2004 Annual Survey Results: Student Engagement: Pathways to collegiate success”, Blooming, IN: Indiana University Centre for Postsecondary Research and Planning. http://www.iub.edu/~nsse/2004_annual_report/pdf/annual_report.pdf

Norzaini Azman, Manisah Mohd Ali, Mohd Halim Tamuri & Zalizan Mohd Jelas. (2003), “Student Engagement and Effective Higher Educational Practices”, Proceeding of The 4th Comparative Education Society of Asia (CESA) Biennial Conference, Bandung, Indonesia, 21-22 July 2003.

Painter, B., & Valentine, J. (1996), “Instructional practices inventory: Instrument for identification of the level of classroom engagement for students and teachers. In Quinn, D. M. (2002), “The impact of principal leadership behaviors on instructional practice and student engagement”, Journal of Educational Administration, Vol. 40, No. 5, pp. 447-467.

Quinn, D. M. (2002), “The impact of principal leadership behaviors on instructional practice and student engagement”, Journal of Educational Administration, Vol. 40, No. 5, pp. 447-467.

Zhao, C. M., & Kuh, G. D. (2003), “Adding value: Learning communities and student engagement”, Paper presented at the 43rd Annual Association for Institutional Research Forum, Tampa, Florida, USA, 18-21 May 2003.

Zhao, C. M., Kuh, G. D., & Carini (2001), “A comparison of international student and American student engagement in effective educational practices”, [On-line] Available: http://www.indiana.edu/~nsse.


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Linguistic Impoliteness: A Small Corpus Analysis on the Use of Impolite

Languange by Children

Sri Minda Murni1* and Mutsyuhito Solin2 1,2 Universitas Negeri Medan, Indonesia

*Corresponding author: [email protected]

Abstract - Speaking politely is one of the pragmatic competencies of language users. The

fact shows that Indonesian children Muslim writers produce impolite utterances through the characters and conflicts they create in the story books published by the Islamic publishers. The impolite utterances are interpreted as violating the principles of speaking politely as suggested by the Holy Qur‟an. A small corpus analysis used in this study is aimed at finding preliminary data on the impolite language used by children for further research, while at the same time showing how the data present children pragmatic incompetence and violation of the Qur‟anic principles of being polite. The findings show that affective and coercive impoliteness are presented in the stories. In addition, the study finds the following: a) the issues which drive impolite utterances are competition between siblings, schoolmates, and bad teacher-student relationship; b) the lexicon used include animals, physical appearance, and behavioral assessment. In the level of syntax, declarative, interrogative, and imperative moods are used; c) the Qur‟anic principles violated by the impolite utterances are Qaulan Ma‟rufa (speaking nicely), Qaulan Karima (speaking honorably), and Qaulan Layyina (speaking softly); and d) the violation of the Qur‟anic principles is seen as reflecting the pragmatic incompetence of the characters and the authors in the way that they fail to create dialogues

with refinement which reflect principles of Islam in the context of conflict.

Keywords: Impoliteness; Children writers; Children stories; Small corpus analysis; Qur‟anic

principles of politeness

Introduction Speaking politely is one of the pragmatic competences of language users. Recently, speaking politely has been one of the main issues in education specifically when building the national character promoted as the main theme of the Indonesian national education. As the concern toward politeness increases so as the concern toward impoliteness. Recent discussion on negative effects of television on children at the University of Indonesia held in May 2011, for example, raised the issue of children impoliteness as one of the bad effect of the television programs. Impoliteness, as suggested by Locher and Bousfield (2008), is behavior that is face-aggravating in a particular context. Culpeper (2011) classifies impoliteness into three categories: 1) affective impoliteness which is an angry response to frustration and/or provocation; 2) coercive impoliteness which means the use of rudeness to get power; and 3) entertaining impoliteness which has the characteristics that the participants who are entertained are aware of the impoliteness or the probable impoliteness effects for the target.

The facts show that Indonesian children are not merely the consumers or the victims of impoliteness. As observed from story books written by children aged 8-12 years, children writers have been the creators or the producers of impolite utterances through the characters and conflicts they create in the stories. Since the books are written by Muslim students and published by Mizan, one of the most popular Islamic publishers, impolite utterances are judged as violating six rules or principles of speaking politely as suggested by the Qur‟an (Sauri, 2004). They are: a) Qaulan Shadida (speak the truth) (Q.S. an-Nisa: 9); b) Qaulan Ma'rufa (speak nicely) (Q.S. an-Nisa: 8); c) Qaulan Baligha (speak effectively) , (Q.S. 4 An-Nisa: 63),: d) Qaulan Maysura, (Q.S.17 Al-Isra: 28) speak properly: e) Qaulan Karima (speak honorably) (Q.S. al-Isra: 23); and e) Qaulan Layyina (speak softly) (Q.S. Thaha: 44). Violating the Islamic principles of politeness is considered as reflecting the characters as well as the authors‟ pragmatic incompetence as pragmatic competence is defined broadly as the ability to use language appropriately in a social context (Taguchi, 2009). Competence involves both types of knowledge and the skills in processing the knowledge in communication. So pragmatic incompetence means the inability to use language appropriately due to the incompetencies in knowledge and in processing the knowledge in the context of Islam.

Although the characters and the conflicts play important roles, judgement on the impact of the impolite utterances on the quality of the books is not discussed. The problems to discuss in the study are: a) What are the


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driven issues of linguistic impoliteness in story books?; b) How are the impolite utterances realised lexically and syntactically?; c) What Qur‟anic principles are violated by the impolite utterances used by the characters?; And d) How do the violations reflect the pragmatic incompetence of the characters and the authors? Methodology Corpus analysis (Ghadessy, 2001; Ghani and Zaiton, 2001; Wilson, 2006; Adolphs, 2008) will be conducted on impolite utterances used by the characters in story books written by children. Six books of Kecil-Kecil Punya Karya (KKPK) published by the Mizan Media Utama are chosen as they source of data. They are: Roxy! Roxy! (Putri, 2010), Sophaholic (Nabila, 2010), Laboratorium Liliana (Salsabila, 2010), Shekefarellor (Naqiyya, 2010), Special Twins (Izzatunnuha, 2010), and the Eccentric School (Auldina, 2010), with the total size of corpus is 62,063. All impolite utterances are identified and then categorized based on the driven issues. In this step, the types of impoliteness are discussed. Next, the realisations of impoliteness are categorized lexically and syntactically. The data are analysed based on the violation of polite language and on how the violations reflect the pragmatic incompetence of the characters as well as the authors.

Result and Discussion The issues which drive impolite utterances The data shows that there are at least two settings where impolite utterances occured: at home and at school. The issues which drive impoliteness deal with the issue of the two settings. The examples taken from the story books written by children show that the driven issues for impoliteness include competition between siblings, competition between friends, and teacher-student bad relationship.

The driven issue of impoliteness in the home setting includes the competition between siblings, as follows: a) “Mom, aku mau sarapanku dijadikan bekal saja,” kata Laudya (“Mom, I would like to take my breakfast to school”); b) “Biarkan dia pergi, Mom!” Kata Chelsea ketus (“Let her go, Mom!” said Chelsea irritated); and c) “Diam Chelsea! Aku kesal sama tingkah lakumu!” seru Laudya... (Shut up Chelsea! I don‟t like your behavior!” said Lidya (The Special Twins, p. 52)

In example a) Laudya and Chelsea are twin characters. As narrated by the author: “Mereka sangat suka jika punya benda yang sama dan berpenampilan sama. Anehnya, mereka tidak suka bersama-sama. Mereka tidak akan pernah akur kalau bersama-sama,... (p. 23) (They like the same things and styles. However, they do not like to be together. They never get along when being together). It is explicitly shown that the twins are created to be offensive rather than living in harmony with each other. In the exerpt, it is seen that the twins are using impolite utterances and freely exposing their anger toward each other even in front of their parents. They use coercive impoliteness towards each other. On the other hand, parents‟ reaction on the argument is not educative either as the following:

Mrs. Rich:“Ada apa kalian? Berantem lagi?” tanya Mrs. Rich khawatir. Kenapa kalian tidak jawab pertanyaan Mom?” tanya Mrs. Rich dengan suara parau (What is the matter now? Are you fighting again? Why didn‟t you answer me?” asked Mrs. Rich). Dia memukul meja dan berdiri. (She hit the table and got up) Mr. Rich: “Morish! Tenangkan dirimu!” Seru Mr. Rich (Morish! Calm yourself! Mr. Rich exclaimed). Mrs. Rich: “Tidak!...(“No!...) Mr. Rich: “Richie Morish Rich!” Bentak Mr. Rich (Richie Morish Rich! Mr. Rich shouted) Mrs. Rich: “Pollie Mike David! Sekarang kamu urus si kembar. Aku tak mau melihat mereka lagi!!!(“Pollie Mike David! Now you take care of the twins. I do not want to see them again!!!) (The special Twins, pp. 53-54). The above quotation shows that the parents can not control themselves either. They use affective impoliteness

to each other. Instead of helping the twins to solve their problems, the parents are trapped in the problems and shout at each other in front of their twins.

In the school, the driven issue is the competition between schoolmates and the bad relation between teacher and student. The competition between schoolmates is acknowledged through impolite utterance as follows:“Anak yang tak tahu diri yang kau maksud sahabat dekatmu? Sungguh, aku tak menyangka, Patricia. Anak sebaik kau bisa mendapatkan teman sebadung dia,”sambung Alicia dengan tajam. (“Such an ungrateful child you consider as a close friend? I really do not understand Patricia. Such a kind girl like you gets a delinquent girl as a close friend” (The Eccentric School, p. 24).

In the story, it is written that Patricia and Isabel are once close friends but a new student, Alicia, tries to break their good relationship. Alicia tries to put bad image of Isabel in Patricia‟s mind to win Patricia. Clearly, Alicia uses coercive impoliteness.

Impolite utterances also used by the students when they talk about their teachers. The following quotation is one of the evidence: “Li, Kamu Udah Mengerjakan Pe-Er Pelajaran Ibu Guru Yang Menyeramkan Itu? Untung Aku Sudah. Jadi, Bedebar Jantungku. Kan Kamu Tahu, Kalau Marah, Seperti Ratu Singa. Kalau Menjerit Seperti Srigala. Pendengarannya Lebih Dari Aris, Sorot Matanya Tajam Banget. Makanya Aku Bilang „Menyeramkan‟,” Ujar Olivia (“Li, have you done the assignment given by that horrific teacher? Luckily, I have. My heart is pounding. You know that if she is angry, she is like a lion queen. When she screams, she is like a wolf. Her hearing is more than Aris, her eyes are incredibly sharp. That is why I said she is horrific (Laboratorium Liana, p. 72)


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From the quotation, it is very clearly seen that the students do not perceive teachers as honorable persons. They express affective impoliteness towards the teacher through the statement above. It seems that they have good reasons to do so since the teacher is also pictured as „killer‟ and impolite such as,

“Hentikan merapikan rambutmu, Hillary!!” bentak Nona Kathrine. Sudah berapa kali saya ingatkan! Siapa saja yang memasuki kelas Nona Kathrine harus berpakain rapi!!” teriak Nona Kathrine. “Dan kalau sudah beberapa kali melanggar peraturan itu. Sekarang, keluarlah. Rapikan dulu rambut emasmu itu. Jika ingin memasuki kelasku lagi, aku harus melihat rambutmu terikat dengan rapi”, tambahnya. (Stop tidying your hair, Hillary!!! snapped Miss Katherine. I have told you many times! Whoever enters Miss Katherine‟s class has to dress neatly!!! shouted Miss Katherine. “And you have broken the rules many times. Now, go out. Tidy yourgolden hair. When you enter the room, make sure you have tied your hair, she added) (The Eccentric School, p. 15). The above example shows that the teacher has spoken very impolitely to the students even on minor cases

such as students‟ hair style. In this situation, the coercive impoliteness is clearly used by the teacher towards her students.

The Realisation of Impolite Utterances The realisation of linguistic impoliteness are categorized into, i.e. the lexicon and the mood.

The Lexicons The lexicons used are categorized into three, namely: animal, physical appearance, and behavioral assesment. The names of animal of particular characteristics are used in the story to refer to certain character such as: a) Ratu Singa (A lion queen) (Laboratorium Liana, p. 72); b) Srigala (wolf) (Laboratorium Liana, p. 72); c) Monyet aneh (weird monkey) (SheKeFaRellor, p. 15); and d) Kutu kupret (kupret lice) (SheKeFaRellor, p. 51). The animal used to describe human is the indicator of impoliteness. The animal categorization include lion and fox to express wildness, monkey and louse to express teaser and trouble-maker.

Some metaphores which are related to bad judgement on the character‟s physical appearance are used in the stories such as: a) Muka busuk (rotten face) (The Eccentric School, p. 59); b) Mulut ember (bucket mouth) (The Eccentric School, p. 76); c) Mulut pedas (spicy mouth) (The Special Twins, p. 20); d) Suara emas karatan (rusty golden voice) (Roxy! Roxy!, p. 95); e) Keras kepala (stubborn) (Shopaholic Girl, p. 74); f) Metaphors such as „muka busuk‟ (rotten face), „mulut ember‟ (bucket mouth) given to the character‟s physical appearance is also judged as impoliteness.

The character‟s behavior is also judged by using bad terms such as: a) Somse (arrogant) (Laboratorium Liana, p. 10); b) Norak (tacky) (Laboratorium Liana, p. 10); c) Matre (materialistic) (Laboratorium Liana, p. 87); d) Tak tau diri (ungrateful) (The Eccentric School, p. 24); e) Konyol (incompetent) (Roxy! Roxy!, p. 22); f) Cupu (cupu) (Roxy! Roxy!, p. 31); g) Nyebelin (sucks) (Roxy! Roxy!, p. 34); g) Norak banget (very tacky) (Roxy! Roxy!, p. 93); i) Menor banget (too much make-up) (Roxy! Roxy!, p. 93): j) Ge-er genit rakus (flirty and greedy) (Diary Runa, p. 54); k) nggak gaul (having no friends) (Diary Runa, p. 130); l) O‟on (stupid) (SheKeFaRellor, p. 33); m) super jorok (super dirty) (SheKeFaRellor, p. 37); n) Oneng (stupid) (SheKeFaRellor, p. 37); o) Brojol (SheKeFaRellor, p. 48), p) Bloon (stupid) (SheKeFaRellor, p. 59); q) kamu jangan terlalu...lebay... (Don‟t be too excessive); kamu lebay (you are excessive) (The Special Twins, p. 17); r) kata-kata yang ngebosenin! (boring words) (The Special Twins, p. 20); and s) berbuat licik (foxy) (The Special Twins, p. 49).

Bad terms used to assess the behavior of the character are considered as impolite since they are all aimed at humiliating the characters. Based on the data, it is found out that there are 94 lexicons used by children writers to express impoliteness. Some of the impolite lexicons are used by particular writer such as „silly‟ which is used seven times by an individual writer. However, there are also some impolite utterances shared by two or more writers such as „diam‟ (shut up).

The types of impolite language used by children writers are affective and coercive impoliteness. By affective impoliteness, the characters express their angry responses to frustration and/or provocation. By coercive impoliteness, the characters use rudeness to get power. The lexicons used in expressing impoliteness are categorized into: 1) „mouth‟ and its varieties; 2) negative adjectives such as „arrogant‟ and „tacky‟, and 3) animals such as „lice‟ and „monkey‟. The „mouth‟ and its varieties cover 24% of the lexicons used and they have both coercive and affective purposes. The negative adjectives cover 68% and the animal lexicons cover 6% of the total use of impolite lexicons. The purpose of the use of the negative adjectives as well as the animals is to mock, ridicule, make fun of, and express anger, so it is coercive and affective.

The Moods The moods that are used to express impoliteness include declarative, interrogative, and imperative moods. They are regarded as impolite since they directly express anger. There is no refinement in the ways the characters speak to each other. The types of impoliteness are both coercive or affective.

Some examples of declarative mood to express impoliteness are: a)“Aku tak akan pernah mau memaafkanmu!” kata Isabel (“I will never forgive you,” said Isabel) (The Eccentric School/40); b)“Nggak gaul, deh lho…maksudnya mana kutahu!” (You are outdated... How could I know (Diary Runa/130); c) “Mulutmu kayak si Felix, kucing-ku. Kalau belum


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makan, mulutnya nyerocos melulu!” imbuh Kevin. (Your mouth is like Felix‟s, my cat. If he has not eaten, he talks a lot) (SheKeFaRellor/49); and d) “Kau memang pembawa kehancuran, Hillary!” teriakku. (“You bring disaster, Hillary!!! I shouted (The Eccentric School/70).

The utterances used in declarative mood are affective impoliteness. Example a) shows „I‟ declares something on the hearer due to her anger and/or frustration, while examples b), c), and d) are labelling the hearer due to the same reasons.

Some examples of interrogative mood to express impoliteness are: a)“Apakah kau bisa, sekali saja, tidak mencampuri urusan orang lain?!” bentakku dengan suara lantang. (Can you for once not to bother other‟s business? I snapped him (The Eccentric School, p. 32); b)“Apa,lihat-lihat?” balas Reechery tidak menyenangkan (What are you looking at? Eplied Reechery unhappily (Shopaholic Girl, p. 79); c) “Kamu punya otak, enggak? Kalau punya, letaknya di mana?” ejek Farhan lagi (Do you have brains? If yes, where is it?, mocked Frahan) (SheKeFaRellor, p. 59); d) “Bisakah kau tutup mulutmu, Jean?” kataku membentaknya (Will you shut up, Jean? I snapped her (The Eccentric School, p. 31).

The interrogative utterances used are coercive and affective. They are not meant to ask questions but to order the hearer to do something (example a and d), not to do something (example b), and to label the hearer (example c). Utterances a, b, and d are are coercive since the characters express rudeness to get power. Utterance c is affective because they show angry response.

The imperative mood used in the stories are: a)“Tutup mulutmu, Patricia! Jika kau hanya ingin membuat gara-gara di sini, keluarlah dari ranjangku!”katanya dengan kasar. (Shut up, Patricia! If you are just causing a mess, get off my bed! (The Eccentric School, p. 26); b)“Buang muka busukmu itu, Hillary. Jangan pernah kau perlihatkan lagi di hadapanku!!!” jawab Jean (Throw away your rotten face. Don‟t ever show it to me again!!!, answered Jean).

The lexicon „tutup mulutmu‟ or „buang muka busukmu‟ are clearly not only intended to command or to order the other characters to do so. They aslo explicitly expresses power over the addressee. They are the expression of coercive impoliteness. Thus, three types of mood were used by children writers to create conflict in the stories. The data show that the use of the moods are to express coercive and affective type of impoliteness.

The Violation of the Qur’anic Principles of Politeness The violation of the Qur‟anic principles of linguistic politeness in the story books written by children are categorized into three types, namely: a) The violation of Qaulan Ma‟rufa (speaking nicely); b) Qaulan Karima (speaking honorably); and c) Qaulan Layyina (speaking softly).

The data show that the characters violate the principle of Qaulan Ma‟rufa which means speaking nicely. The examples found in the stories show that the characters emphasize rudeness in the utterance, such as: a)“Udah, deh...kamu jangan terlalu...lebay...! jawab Chelsea sinis (Stop... don‟t be too excessive) (The Special Twins, p. 17); b)“Hoooiii! Laras-e! Laras-e matre-e jerawat-e sini!!! Hoii!! Pesan es jeruk satuuuuu!!! Jangan pakai lama yaaaa…Ngerti? Heh! Jangan terlalu dingin! Dan ingat, bayarnya sekarang dan jangan kebanyakan gula!” bentak Kayla kepada kak Laras. Hal itu membuat Laras sakit Hati. (Hooooiiii! Laras-e! Laras-e materialistic pimple come here!!! Orange juice one!!!! Quickly ....understand? Hey, not too cold! I will pay now and not too much sugar! Kayla snapped Laras. Laras was very sad (Laboratorium Liana, p. 87); c)“Mau pergi kemana pun, itu bukan urusanmu! Kata Gabriella kepada Elssy (It is not your business where I go, said Gabriella to Elssy (Shopaholic Girl, p. 77); d) “Alaaaaah…bilang aja rumahmu, tuh, jelek! (Just tell us the truth that you have a poor house) (Diary Runa, p. 123); e) “Huuu…! Kamu juga dari zaman purba sudah o‟on kayak gitu,” sanggah Farhan (You are also from the primitive era, stupid, argued Farhan) (SheKeFaRellor, p. 33); f)“Capek,deh…kenapa harus daftar sama si Kutu Kupret itu, sih!” sesal Sherina (Very boring ... why should we register with this kupret lice, said Sherina irritatedly (SheKeFaRellor, p. 51); g)“Biarin!Terserah aku! Aku,kan, anak orang terkaya disini. Bukan salah satu dari kalian ya,ya! Semua perintahku harus ditaati. Enggak boleh ada yang membentakku! teriak Lutfi (It‟s up to me. I am the richest girl. Not any of you. My words must be obeyed. Nobody can snap me! (Me and Mermaid, p. 26); h) Waktu aku naik ke panggung, disebelahku ada..ada.. SILLY ALLY! Alias Ally Royalen. Dia memakai rok tiga perempat bertingkat warna pink dengan ikat pinggang pita emas, bando pita warna pink emas, sejenis high heels pink emas, pokoknya…semuanya serba pink dan emas. Dan dia, aku jujur lho…NORAK BANGET! Rambutnya, sengaja dibikin keriting. Benar-benar berlebihan. Menor banget! Kosmetiknya juga benar-benar tebal, jadi membuatnya kelihatan seperti badut! Hahahaa…(When I got on the stage, I saw SILLY ALLY! Ally Royalen. She was wearing a pink medium skirt with a golden belt, ribbon golden headband, pink golden high heels, all is just in gold and pink. And she is, to tell you the truth is so tacky! Her hair is made curly. Too excessive. Very excessive. Her make-up is also excessive like a clown! Hahaha... (Roxy! Roxy!, p. 93)

The data also show that the characters violate the principle of Qaulan Karima which means speaking honorably. The examples found show that the characters use impolite utterances when they talk about their teachers without honor, such as: a) “Li, Kamu Udah Mengerjakan Pe-Er Pelajaran Ibu Guru Yang Menyeramkan Itu? Untung Aku Sudah. Jadi, Bedebar Jantungku. Kan Kamu Tahu, Kalau Marah, Seperti Ratu Singa. Kalau Menjerit Seperti Srigala. Pendengarannya Lebih Dari Aris, Sorot Matanya Tajam Banget. Makanya Aku Bilang “Menyeramkan”, Ujar Olivia (“Li, have you done the assignment given by that horrific teacher? Luckily, I have. My heart is pounding. You know that if she is angry, she is like a lion queen. When she screams, she is like a wolf. Her hearing is more than Aris, her eyes are incredibly sharp. That is why I said she is horrific (Laboratorium Liana, p. 72); b) “Aku tidak menyangka, Mister Baron yang begitu pintar bisa ku bohongi dengan mudah. Aku bilang, seragam sekolah ku basah. Padahal, tidak. Aku memang sengaja mengenakan kaus ini kesekolah agar semua orang tahu bahwa akulah si Shopaholic itu”, cerita Reechery kepada Rachel (I have never thought that smart Mr. Baron


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can be easily cheated. I said, my uniform was wet. The truth is it is not. I am wearing this t-shirt just to let everybody knows that I am the Shopaholic girl, said Reechery to Rachel (Shopaholic Girl, p. 47).

The violation of Qaulan Layyina (speaking softly) is characterised by speaking rudely mostly to snap other characters such as the following: a) “Udah, deh, mending kamu minum soft drink aja. Daripada mulutmu makin pedas ngeluarin kata-kata yang ngebosenin!” (It is better for you to have some soft drink than saying boring things (Special Twins, p. 20); b) “Diam kamu, Laudya!” teriak Chelsea” (Shut up, Laudya! Shouted Chelsea) (The Special Twins, p. 69); c) “Pagi-pagi sudah norak, somse banget sih, kamu! Apa enggak ada model lain, Princess Ariel?” celetuk Sheza (It is still early and you have been so tucky, you are very arogant! Don‟t you have another model, Princess Ariel? Sheza interrupted (Laboratorium Liana, p. 10); d) “Buang muka busukmu itu, Hillary. Jangan pernah kau perlihatkan lagi di hadapanku!!!”jawab Jean (Throw your rotten face Hillary. Do not ever show it to me anymore!!! Answered Jean (The Eccentric School, p. 59); h) “Kau memang pembawa kehancuran, Hillary!” teriakku. (You are bringing disaster, Hllary!” (The Eccentric School, p. 70); i) Heh, kau tuh nyebelin banget, sih? Asal tahu saja,ya…aku ini ratu! And itu bakal jadi selamanya, tahu? jangan coba-coba menyingkirkanku. KAMU yang bakal tersingkir! Aku bakal menang terus dan bukan kamu. Ya, AKU PASTI MENANG. Karena aku RATU. (Hey, you are a suck. You have to know that I am the queen! Forever a queen. Do not ever think of getting rid of me. I will be the one who get rid of you. I will win, not you, since I am the queen (Roxy! Roxy!, p. 34); j) “Kamu punya otak, enggak? Kalau punya, letaknya di mana?” ejek Farhan lagi (Ou you have brain? If yes, where is it?” mocked Frahan) (SheKeFaRellor, p. 59)

Conclusion Home and school settings are considered as the two most responsible settings where building children good character is of the first priority. This simply means that children are expected to have good perception on the institutions where loving, caring, and protecting are values they believe to find in them. Since life is not merely about agreement which implies that disagreement is also available at homes and schools, the pragmatic competence to deal with the conflicting situation in these particular settings are highly expected. As the fact shows that Islam is the religion of the children writers and Mizan is the Islamic publisher, it is expected that the principles of the Holy Quran should be the mindset in designing the conflict in their stories. Rather than expressing anger coarsely for example, the children are expected to be creative in composing dialogues with refinement. In addition, they are expected to show respect to the elders such as parents and teachers and talk to and about them with respect too (Qaulan Karima). Siblings and friends should be perceived as loving character and when conflict occurs between them, it is expected that they are competent in polishing the utterances in such away based on the principles of Qaulan Ma‟rufa and Qaulan Layyina.

The increasing number of Muslim children writers in writing and publishing their books are higly appreciated. However, the guidance in creating conflicts in the stories to follow the principles of the Holy Quran is seen to be more important. Building Indonesian character involves building the pragmatic competence of using the Indonesian language. As pragmatic competence include knowledge and skill, so as the writing process. Designing the conflict in the stories does not merely requires knowledge of how to create conflicting dialogues, but also skill on how to express the conflict which shows pragmatic competence. The mindset, the values, the beliefs in the mind of the writers is as the result of the character building process they are through and at the same time will be reflected in the way they write about the characters in the story.

For further corpus analysis, the finding on the realisation of impoliteness found in the study such as „mulutmu‟ , „singa‟, etc can be referred as to see which words are commonly used together with them, which words are used more frequently than others, and which meanings of a word are most frequently invoked, etc.

References Adolphs, Svenja. (2008), Corpus and Context, John Benjamin Publishing Company, Amsterdam. Auldina, Riza Dwita. (2010), The Eccentric School, Bandung: Mizan Media Utama. Bousfield, Derek. (2008), Impoliteness in Interaction. Philadelphia: John Benjamins Publishing Company. Bousfield, Derek and Miriam A. Locher. (2008), Impoliteness in Language, Berlin: Mouton de Gruyter. Culpeper, Jonathan. (2011), Impoliteness. Using Language to Cause Offence, UK: Cambridge University Press. Ghadessy, Mohsen. et al. (2001), Small Corpus Studies and ELT, Amsterdam: John Benjamins Publishing Company. Ghani, Rusli Abdul dan Zaiton Darois. (2001), “Soal Hati: Suatu Kajian Korpus”, Paper Presented at Konvensyen Bahasa

Kebangsaan, 2-4 Mei 2001, Hotel Nikko, Kuala Lumpur. Izzatunnuha, Salma. (2010), The Special Twins, Bandung: Mizan Media Utama. Nabila, Alya. (2010). Shopaholic, Bandung: Mizan Media Utama. Naqiyya, Maryam. (2010), Shekefarellor, Bandung: Mizan Media Utama. Salsabila, Fatimah. (2010), Laboratorium Liliana, Bandung: Mizan Media Utama. Putri, Ghizadhia Amira. (2010), Roxi! Roxy!, Bandung: Mizan Media Utama. Sauri, H. Sofyan, (2004), “Ingin Mabrur Berbicaralah dengan Santun”, Gema Haji 2004/2005. Pikiran Rakyat Cyber

Media. Taguchi, Naoko (Ed.). (2009), Pragmatic Competence, Berlin: Mouton de Gruyter. Wilson, Andrew. (2006). Corpus Linguistic Around the World, Amsterdam: Rodopi.


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Time-Varying Integration among Asean-5 Economies

Salina H. Kassim1*, and M. Shabri Abd. Majid2 1Associate Professor, Kulliyyah of Economics and Management Sciences,

International Islamic University Malaysia, Kuala Lumpur, Malaysia, 2Faculty of Economics, Syiah Kuala University, Banda Aceh, Indonesia.


Abstract - This study explores the economic integration among the ASEAN-5 economies over two sample periods; the pre-crisis period (1990 to 1996) and post-crisis period (2000 to 2006). Using the output-price approach, it attempts to determine if the nature of integration among these economies has changed due to the Asian financial crisis in 1997. In methodology, the study adopts the Autoregressive Distributed Lag (ARDL) approach and Vector Error Correction Model (VECM). The results show that the crisis has a deep imprint on the degree of economic integration among these countries. The results provide important inputs for macroeconomic

policy formulation at the regional level.

Keywords : Economic integration; ASEAN; Financial crisis; ARDL; VECM

Introduction The commitment of the Association of Southeast Asian Nation (ASEAN) to achieve greater economic integration is well-reflected by the various efforts aimed towards this direction. Of particular importance is the establishment of the ASEAN Vision 2020 which intends to achieve a holistic growth of ASEAN in general. By 2020, ASEAN is envisioned to achieve a greater degree of economic integration where member countries would be able to share synergistic relationships in order to create an outward- and forward-looking ASEAN. In realizing this vision, in December 1998, member nations concluded the Hanoi Plan of Action (HPA) which outlined several major initiatives to promote economic integration within the region. Subsequently in October 2003 at the Ninth ASEAN Summit in Bali, the member nations decided to form the ASEAN Economic Community (AEC) by 2020. The realization of the AEC would bring the ASEAN economic integration to greater heights with the AEC to be a single market and production base that would facilitate free flow of goods, services, investments, capital and skilled labor.

Ever since, the intention to create the AEC was announced, extensive research has been embarked to study the various aspects of the AEC including its viability as well as the possibility of policy harmonization such as exchange rate and monetary policy management within the region. Most of the existing studies on the ASEAN economic integration focus on the trade and investment aspects of integration. For instance, Rana (2006) finds increased integration among the ASEAN countries as reflected by the higher trade among the countries. In particular, trade integration among the ASEAN countries has increased from 17.9 percent in 1980 to 24.0 percent in 2005, indicating that these countries have become increasingly dependent on each other for trade. Kawai (2005) arrives at similar findings that the integration among the ASEAN economies has increased as reflected by the increased intra-regional trade from 35 percent of total East Asian trade in 1980 to 54 percent in 2003. Meanwhile, several other studies analyze the integration among the ASEAN economies based on the financial integration aspect. For example, by analyzing the stock market integration among the ASEAN economies, Click and Plummer (2009) document that the financial integration among the ASEAN economies has weakened due to the Asian financial 1997/1998.

An area which is currently lacking in the ASEAN economic integration literature is the determination of economic integration at the macro-level based on major economic indicators such as output and price. The output-price approach in assessing economic integration has been commonly adopted in the case of the developed economies. For instance, in the case of the G7 countries, Den Haan and Sumner (2001) study the short-run and long-run co-movements between output and price in Canada, France, Germany, Italy, Japan, United Kingdom and the United States using VAR forecast errors and frequency domain filters. The study finds several patterns of correlation between output and price across all the countries. In particular, the output-price relationship is found to be significantly negative in the long run and significantly higher in the short run. Similar approach is adopted by Fiorito and Kollintzas (1994) for the G7 countries and Backus and Kehoe (1992) for ten OECD countries. These studies provide the support that prices were pro-cyclical in the pre-war period but turned counter-cyclical in the post-war period.

Clear understanding on the relationship between real activity and price is highly relevant in the context of economic grouping since it has important implications for the strategic formulation of possible harmonization of macroeconomic policy. Understanding the degree of output and price integration enables policymakers to evaluate the extent of integration among these economies and formulate suitable policy to achieve the intended degree of


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economic integration. Subsequently, policies to facilitate greater degree of economic integration can be implemented so that policy harmonization in the context of the “economic community” can be realized.

This study aims to assess the economic integration among the ASEAN-5 economies, namely Malaysia, Indonesia, the Philippines, Singapore and Thailand in two sample periods: the pre-crisis period (1990 to 1996) and post-crisis period (2000 to 2006). The study attempts to determine if the nature of integration among these economies has changed due to the financial crisis in 1997. Using output and price as the economic indicators, the study adopts the Autoregressive Distributed Lag approach and Vector Error Correction Model to arrive at the empirical evidence. A major point of departure of this study from the existing ones is that it explores the inter-relationship between output and price across the selected countries in the economic grouping. The findings of the study would provide important inputs for the policymakers to evaluate the possibility of macroeconomic policy harmonization in the ASEAN context.

The rest of the study is organized as follows: Section 2 highlights the data preliminaries and methodology of the study. Section 3 discusses the empirical findings. Finally, Section 4 summarizes the major findings and draws the policy implications.

Data and Methodology In efforts to investigate the degree of integration of output and price among the ASEAN-5 economies, we use the Industrial Production Index (IPI) to represent output and Consumer Price Index (CPI) to represent price. While the data for the CPI are consistently available for all the countries in the study during the period under review, this is not the case for the IPI. In cases where data on IPI are not available, we use the manufacturing index instead. For the case of Thailand where both the data on IPI and manufacturing index data are not available for the period under review, we use the export data as a proxy for real sector output. Price level is defined as inflation which is calculated by changes in CPI, while real output is derived by taking the logarithm of industrial output divided by inflation. For consistency, all data are gathered from the International Financial Statistics 2007 database published by the International Monetary Fund.

To determine if the degree of economic integration among these economies has changed since the region was hit by the financial crisis in 1997, the study period which spans from 1990.Q1 to 2006.Q4 is divided into the pre-crisis period (1990.Q1-1996.Q4) and post-crisis period (2000.Q1-2006.Q4). Based on this, we have an even length period of observation of seven years before the crisis and seven years after the crisis. Moreover, the study purposely ends at end-2006 so as not to include the 2007 US sub-prime crisis so as to only account for the crisis which originates from within the region.

Autoregressive Distributed Lag (ARDL) Bound Testing Approach The ARDL model is employed to empirically examine the existence of dynamic relationships of outputs and prices among the ASEAN-5 countries. The approach was initially introduced by Pesaran et al. (1996) and has numerous advantages. Firstly, unlike the most widely used method for testing cointegration, the ARDL approach can be applied irrespective of whether the series are I(0), I(1), or fractionally integrated (Pesaran and Pesaran 1997; and Bahmani-Oskooee and Ng, 2002), thus avoids the problems resulting from non-stationary time series data (Laurenceson and Chai, 2003). Secondly, the ARDL model takes sufficient numbers of lags to capture the data generating process in a general-to-specific modeling framework (Laurenceson and Chai, 2003). Finally, the ARDL approach provides robust results for a smaller sample size of cointegration analysis. Since the sample size of our study is 24 for each period, this provides further motivation to adopt the ARDL model in the analysis.

In this study, the ARDL models used for testing the long-run relationship between outputs and prices across the ASEAN-5 countries can be written as in Equations (1) and (2), respectively:

Yit = α0 + α1YASEANt + et (1) INFit = α0 + α1INFASEANt + et (2)

where Yit and INFit are real output and inflation for country i (i.e., Indonesia, Malaysia, the Philippines, Singapore and Thailand) at time t, YASEAN and INFASEAN are the real output and inflation for ASEAN-5 countries, respectively and et is an error term.

The error-correction version of the ARDL framework pertaining to the variables in the Equations (1 and 2) can be reproduced as follows:

p

0iit

ASEANiiit

p

1ii0

it YYY t11tASEAN

21it1uYY

(3)

p

0iit

ASEANiiit

p

1ii0

it INFINFINF t11tASEAN

21it1uINFINF

(4)


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The terms with the summation signs in the Equations (3 and 4) represent the error-correction dynamic, while the second part (terms with λs) correspond to the long-run relationship. The null of no cointegration in the long run relationship is defined by H0: λ1 = λ2 = 0 is tested against the alternative of H1: λ1 ≠ λ2 ≠ 0, by the means of familiar F-test. For a small sample size study which is lesser than 80 observations, Narayan (2004) has tabulated two sets of appropriate critical values. Thus this study uses Narayan (2004) critical values instead of that of Pesaran et al. (1996). One set assumes all variables are I(1) and another assumes that they are all I(0). This provides a bound covering all possible classifications of the variables into I(1) and I(0) or even fractionally integrated. Finally, to determine the optimal lag-length and select the ARDL model, the study employs the Schwartz Bayesian Criteria (SBC).

Vector Error Correction Model (VECM) Framework The study employs the VECM framework to examine the short- and long-run dynamic relationships of the variables among the ASEAN countries. The VECM can therefore be formulated as follows:

Zt = + i Zt-1 + …….+ k Zt-k + Zt-k + εt (5)

where Zt is an n x 1 vector of variables and is an n x 1 vector of constant, respectively. In our case, Zt = (Y, INF).

is an n x n matrix (coefficients of the short run dynamics), = ′ where is an n x 1 column vector (the matrix of

loadings) represents the speed of short run adjustment to disequilibrium and ′ is an 1 x n cointegrating row vector (the matrix of cointegrating vectors) indicates the matrix of long run coefficients such that Zt converge in their long run equilibrium. Finally, εt is an n x 1 vector of white noise error term and k is the order of autoregression.

Results and Discussions Cointegration Test based on ARDL The results of the cointegration test based on the ARDL model is presented in Table 1. By assessing the cointegration property of outputs and prices between the individual country and the rest of the selected countries as a group, we are able to show if the individual countries’ output or price is cointegrated with that of the other countries. For the pre-crisis period, the results show that the F-statistics for Malaysia, Singapore and Thailand are significant at lag-length equals to 1 at least at the 10 percent significance level, suggesting that the outputs of these countries have cointegrating relationships with the outputs of the rest of the ASEAN-5 countries. Since the results indicate that the outputs of these countries have long-run equilibrium relationships with the ASEAN-5 countries as a whole, it can be implied that the outputs of Malaysia, Singapore and Thailand is significant in predicting the output of ASEAN-5. However, in the post-crisis period, the results show that only the output of Singapore has cointegrating relationship with that of ASEAN-5, indicating that the output integration among the ASEAN-5 countries has changed and weakened following the 1997 financial crisis.

Table 1. F-statistics for ARDL Cointegration Test of Output and Price among ASEAN-5

Lag-Length

Pre-Crisis Period

Real Output

Indonesia Malaysia Philippines Singapore Thailand

1 3.0394 6.6842* 3.2787 4.4022** 6.0795*

2 0.2285 1.2826 0.9001 1.6416 0.9127

Inflation

1 3.4352 2.5922 1.5405 0.5701 1.6728

2 2.4685 0.6902 1.3724 1.7711 1.2561

Post-Crisis Period

Real Output

1 0.4676 1.0992 1.5494 1.1666 1.2273

2 0.6743 1.7631 3.0277 5.0319** 2.7209

Inflation


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1 1.8103 5.2803** 3.4056 2.7783 1.0630

2 2.6454 0.8367 1.6461 0.5171 2.6280

Notes: The relevant critical value bounds are taken from Case II with a restricted intercept and no trend and number of regressors = 4 (Narayan, 2004). They are 4.280 – 5.840 at the 99 percent; 3.058 – 4.223 at the 95 percent; and 2.525 – 3.560 at the 90 percent significance levels respectively. *, **, and *** denotes that F-statistics falls above the 90 percent, 95 percent and 99 percent upper bound, respectively.

As for prices, the results of the ARDL test show that there is an increased degree of price integration among

the ASEAN-5 after the 1997 crisis. While none of the countries’ price level is cointegrated with that of the ASEAN-5 in the pre-crisis period, in the post-crisis period, the price level of Malaysia is shown to be significantly cointegrated with the rest of the ASEAN-5 countries. In essence, this result suggests that the price level of Malaysia is significant is predicting the price level of ASEAN-5 as a group. Learning from the experience during the crisis on how damaging high inflation can be on the real economy, the ASEAN-5 economies seem to be more careful in managing inflation in the post-crisis period, resulting in a stable inflation environment in the region. This is one positive effect that the crisis has on the macroeconomic management of the ASEAN countries.

Long-Run ARDL Estimates Next, we estimate the long-run ARDL model among the outputs and prices of the countries which are shown to be cointegrated with the rest of the ASEAN-5 (Table 2). In the pre-crisis period, there is indication that Malaysia’s output is significant in affecting Singapore’s output, vice versa. In other words, there is a bi-directional causation in the outputs of Malaysia and Singapore, mainly due to close trade linkages between these countries. The results also show that Indonesia’s output is significant in affecting Thailand’s output, that an increase in Indonesia’s output has a positive association with Thailand’s output.

Table 2. Long Run ARDL Model Estimates among Real Outputs of ASEAN-5

Country

Pre-Crisis Period Post-Crisis Period

Malaysia [1,1,0,0,0]

Singapore [0,0,0,0,0]

Thailand [1,0,1,0,0]

Singapore [1,0,0,1,0]

Constant -1.5295

(-1.0251) -1.0111*** (-1.8592)

4.2737*

(6.8295) -3.2628*** (-1.8707)

Indonesia 0.0927

(.31836) -0.0720

(-0.6386) 1.1263*** (1.8098)

-0.3771*** (-2.0484)

Malaysia - 0.4587*

(3.4735) -0.9084

(-1.2389) -0.0668

(-0.0936)

Philippines -0.0407

(-0.0778) 0.2589

(1.1467) 0.8543

(1.1860) 0.1056

(0.2062)

Singapore 0.6556*** (1.6900)

- 1.2295

(1.5507) -

Thailand 0.2825

(0.9635) 0.1757

(1.6940) -

0.6108* (1.7815)

Adj-R2 = 0.904 D-W = 2.4573

Adj-R2 = 0.886 D-W = 1.8910

Adj-R2 = 0.970 D-W = 2.6885

Adj-R2 = 0.930 D-W = 1.9413

Notes: Figures inside the parentheses are the values of t-ratios. *** and * denotes significance levels at the 1 percent and 10 percent, respectively. Adjusted R2 is the adjusted R squared and D-W is the Durbin-Watson d-test for autocorrelation.

In the post-crisis period, there is an indication that Indonesia’s output shows significant negative association

to Singapore’s output, while Thailand’s output has significant positive association to that of Singapore. These results imply that the weak economic performance of Indonesia is detrimental to the ASEAN-5 economies as a whole and could frustrate the efforts towards business cycle synchronization in the region. There is no association between the outputs of Malaysia and Singapore as was being the case in the pre-crisis period.

In the case of price, the long-run ARDL estimates suggest that Indonesia’s and Thailand’s price levels are significant in affecting Malaysia’s price level (Table 3). Since the earlier results have indicated that the Malaysian price


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level is reflective of that of ASEAN-5, it can be implied that the price levels in Indonesia and Thailand are significant in influencing the price level in the ASEAN-5 as a whole. Apart from providing further support for the increased price integration among the ASEAN countries in the post-crisis period, this study documents the increased sensitivity of the neighboring countries to the changes in the price levels in the Indonesian and Thai economies. Perhaps, coordinated efforts to contain inflation at the regional level will prove to be beneficial for the ASEAN-5 in general.

Table 3. Long Run ARDL Model Estimates of Inflation among ASEAN-5 (Post-Crisis Period)

Country Malaysia [0,1,0,0,0]

Constant

-0.0003 (-0.1608)

Indonesia

0.1087** (2.2971)

Philippines

0.1161 (1.1907)

Singapore

-0.1267 (-0.6342)

Thailand

0.2255**

(2.4257)

Adj-R2 = 0.280 D-W = 1.8302

Notes: Figures inside the parentheses are the values of t-ratios. *** and * denotes significance levels at the 1 percent and 10 percent, respectively. Adjusted R2 is the adjusted R squared and D-W is the Durbin-Watson d-test for autocorrelation.

Multivariate VECM Causality For further inferences, we adopt the multivariate causality analysis based on the VECM which enable us to explore both the short- and long-run dynamics of the outputs and prices among the countries. Here, we regress the changes in both the dependent and independent variables on the lagged deviations as in Equation 5. The estimates of the error correction representations are presented in Table 4. The long-run coefficients reported for all the models are employed to generate the error correction terms. The adjusted-R2 values of more than 0.8 for all the models suggest that such error correction models fit the data reasonably well. In addition, the computed F-statistics clearly reject the null hypothesis that all regressors have zero coefficients for both cases.

Based on this test, the long-run relationship is measured by the error-correction terms (ECTs). The statistically significant ECTs for Indonesia, the Philippines and Singapore in the pre-crisis period suggest that the outputs of all the ASEAN-5 countries are important in affecting these countries’ outputs in the long run. However, for Malaysia and Thailand, the outputs of the ASEAN-5 countries are not influential on their outputs in the long run. In the post-crisis period however, the VECM results suggest that the outputs of the ASEAN-5 countries are significant in affecting the output of only two countries, namely Singapore and the Philippines, implying a lesser degree of outputs cointegration of the ASEAN-5 countries in the long run in the post-crisis period. It is important to note that the VECM results are supportive of those of the ARDL model that there is lesser degree of output integration among the ASEAN-5 countries following the crisis in 1997.

Table 4. Multivariate VECM Causality of Output among ASEAN-5

Dependent Variables

Independent Variables

ΔMay ΔIndo ΔPhil ΔSing ΔThai ECTt-1

Pre

-Cri

sis

Per

iod

ΔMay -

0.2037 [0.8181]

0.8432 [0.4510]

0.1272 [0.8816]

0.9584 [0.4073]

-0.0025 (-0.7173)

ΔIndo 0.8634

[0.4430] -

1.8158 [0.1990]

2.5820 [0.1110]

8.1833*** [0.0044]

-0.0214*** (-4.9628)


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ΔPhil 1.8666

[0.1912] 0.5384

[0.5953] -

2.5414 [0.1144]

2.3645 [0.1304]

-0.0239*** (-4.8415)

ΔSing 0.8076

[0.4656] 0.4252

[0.6618] 2.0315

[0.1680] -

2.7862* [0.0958]

-0.0039*** (-3.1945)

ΔThai 3.5505* [0.0566]

0.6558 [0.5342]

0.4555 [0.6432]

2.7410* [0.0990]

- -0.3107* (-1.7946)

Po

st-C

risi

s P

erio

d

ΔSing 0.4071

[0.7522] 0.2545

[0.8561] 0.4435

[0.7284] -

1.5346 [0.2788]

-0.0827** (-2.4291)

ΔIndo 0.3492

[0.7910] -

0.1046 [0.9951]

1.1098 [0.4003]

0.3565 [0.7861]

-0.1782 (-1.4441)

ΔMay - 0.2621

[0.8508] 2.4551* [0.0978]

0.3077 [0.8194]

1.1719 [0.3792]

-0.1378 (-0.2753)

ΔPhil 0.7022

[0.5768] 0.2576

[0.8540] -

0.1556 [0.9232]

0.5582 [0.6573]

-0.3352* (-2.0384)

ΔThai 1.4431

[0.3008] 0.9252

[0.4716] 0.8423

[0.5081] 0.7914

[0.5320] -

0.2081 (0.3499)

Notes: ***, ** and * represent significance at the 1 per cent, 5 percent and 10 percent levels, respectively. ECTt-1 is derived by normalizing the cointegrating vectors on the dependent variables, producing residual r. By imposing restriction on the coefficients of each variable and conducting Wald test, we obtain F-statistics for each coefficient in all equations. Figures in the parentheses and squared parentheses represent t-statistics and probabilities for F-statistics, respectively.

The short-run analysis reveals several interesting findings (Table 4). The significance of the individual

countries’ output in causing the output of the dependent country in the short run is being reflected by the F-statistics stated under the variables’ coefficients. The short-run causalities shed some lights on the directions of causation as to which country’s output are significant in affecting the output of the other country. In the pre-crisis period, there is a significant short-run causation running from the outputs of Malaysia to Thailand, Singapore to Thailand, Thailand to Indonesia, and Thailand to Singapore. This reflects some degree of economic inter-connection between these ASEAN-5 economies. In the post-crisis period, however, there is only a weak causation running from the Philippines to Malaysia. The earlier short-run causations have been non-existence due to the crisis in 1997.

Table 5. Multivariate VECM Causality of Inflation among ASEAN-5 (Post-Crisis Period)

Dependent Variables

Independent Variables

ΔIndo

ΔMay

ΔPhil

ΔSing

ΔThai

ECTt-1

ΔMay 0.4059

[0.6740] -

1.1087 [0.3573]

2.2143 [0.1460]

4.9239** [0.0240]

-0.1172*** (-4.3870)

ΔIndo - 1.7490

[0.2099] 1.2682

[0.3118] 0.0627

[0.9395] 4.5789** [0.0295]

-0.0106** (-2.6288)

ΔPhil 1.6878

[0.2205] 3.1304* [0.0752]

- 0.9139

[0.4236] 3.7923** [0.0483]

-0.1203** (-2.6106)

ΔSing 1.3916

[0.2810] 0.6014

[0.5616] 1.4421

[0.2695] -

3.5998* [0.0548]

-0.1107* (-1.9053)


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ΔThai 3.1723* [0.0731]

0.8999 [0.4289]

0.6413 [0.5414]

2.9748* [0.0838]

- -0.1814** (-2.3822)

Notes: ***, ** and * represent significance at the 1 per cent, 5 percent and 10 percent levels, respectively. ECTt-1 is derived by normalizing the cointegrating vectors on the dependent variables, producing residual r. By imposing restriction on the coefficients of each variable and conducting Wald test, we obtain F-statistics for each coefficient in all equations. Figures in the parentheses and squared parentheses represent t-statistics and probabilities for F-statistics, respectively.

With regard to prices, it is encouraging to note that the ECTs for all the ASEAN-5 countries are significant,

suggesting that the price levels of all ASEAN-5 countries are important in affecting these countries’ price levels in the long run (Table 5). This finding is supportive of the earlier results that there is greater degree of price integration among the ASEAN-5 following the crisis in 1997.

Conclusion and Policy Implications The results of this study show that the crisis has a deep imprint on the degree of economic integration among the ASEAN-5 countries. In particular, during the post-crisis period, the degree of co-movement in real output is shown to be weaker compared to the pre-crisis period. This implies that the ASEAN-5 countries would have to expedite on the economic integration efforts so as to make up for the damages done by the 1997 crisis. The finding that output integration between the ASEAN nations has weakened after the crisis suggests that increased efforts need to be done in achieving business cycles synchronization in these countries. This result implies that macroeconomic policy harmonization in the spirit of the AEC could be cumbersome unless serious efforts are put in place to increase the degree of economic integration such as increased trade linkages, intra-ASEAN investment flow as well as greater degree of macroeconomic policy alignment. ASEAN needs to increase in efforts in all possible economic and social aspect in efforts to bring the ASEAN Vision 2020 into a reality.

On the other hand, there is evidence pointing towards higher degree of price integration among the ASEAN-5 countries in the post crisis period compared to the pre-crisis period. It is important to note that the increased price integration among the ASEAN-5 countries in the post-crisis period as indicated by the results of the study could facilitate the efforts of more coordinated monetary policy implementation across these countries. The greater degree of price integration among these countries not only provides a conducive environment for macroeconomic harmonization but also facilitate greater degree of economic integration to take place. Macroeconomic policy harmonization among these countries would be made possible if the governments through the central banks are committed to maintain a low and stable price environment in the region. The policymakers could take the price level in Malaysia as an indication of the price level environment for the ASEAN countries in general since the results of this study suggest that the Malaysian price level is reflective of the overall price level of the ASEAN-5 countries. Furthermore, since the study documents the increased sensitivity of the neighboring countries to the changes in the price levels in the Indonesian and Thai economies, coordinated efforts to contain inflation at the regional level will be beneficial for the ASEAN-5 in general.

There are several potential avenues for extension of this study. First, future research could focus on the economic integration among these countries in the post-crisis period by incorporating longer and more updated data after the 1997 crisis. The inclusion of more member nations in the study would definitely increase the credibility of the study. Second, it would be interesting to explore the impact of the 2007 US sub-prime crisis on the economic integration. Since the recent crisis originates from outside the region, it could have an emphasizing impact on the integration nature of the ASEAN countries. This would expedite the process of economic integration among the ASEAN nations.

References Backus, D. K. and Kehoe, P. J. (1992), “International evidence on the historical properties of business cycles”,

American Economic Review, Vol. 82, pp. 864-885. Bahmani-Oskooee, M., and Ng, R.C.W. (2002), “Long-run demand for money in Hong Kong: an application of the

ARDL model”, International Journal of Business and Economics, Vol. 1, No. 2, pp. 147-155. Den Haan, W.J. and Sumner, S. (2001), “The co-movements between real activity and prices in the G7”, NBER

Working Paper Series 8195, National Bureau of Economic Research. Fiorito, R. and Kollintzas, T. (1994), “Stylized facts of business cycles in the G7 from a real business cycles

perspective”, European Economic Review, Vol. 38, pp. 253-269. Kawai, M. (2002), “Exchange Rate Arrangements in East Asia: Lessons from the 1997-98 Currency Crisis”, Monetary

and Economic Studies, Vol. 20, No. 1, pp. 167-204. Institute for Monetary and Economic Studies, Bank of Japan.

Laurenceson, J and Chai, J. C. H. (2003), Financial Reform and Economic Development in China, Cheltenham, UK: Edward Elgar.

Narayan, P.K. (2004), “Reformulating critical values for the bounds F-statistics approach to cointegration: an application to the tourism demand model for Fiji”, Discussion Paper No. 02/04, Department of Economics, Monash University.


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Pesaran, M.H., Shin, Y., and Smith, R. J. (1996), “Testing for the existence of a long-run relationship”, DAE Working Paper No. 9622, Department of Applied Economics, University of Cambridge.

Pesaran, M.H., and Pesaran, B. (1997), Working with Microfit 4.0: Interactive Econometrics Analysis, Oxford University Press.


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Governance In Religious Context: Analysing Accountability Issues

Hasan Basri1*, and Siti Nabiha Abdul Khalid

1Faculty of Economics, Syiah Kuala University, Banda Aceh, Indonesia. 2Associate Professor, Graduate School of Business, Universiti Sains Malaysia, 11800 Penang, Malaysia.


Abstract - Religious organizations play an important role in delivering social services in society and tend to control a sizeable proportion of human, financial and other resources of society. However, various financial scandals and lawsuits involving them have raised questions regarding the governance and accountability of these organizations. As such, the insights from the literature on the issues of accounting and accountability in the religious based organizations, especially the Islamic religious organisations are discussed. In so doing, the nature of religious based organizations, and the practices of philanthropy institutions in an Islamic context are elaborated. In addition, the scale of accountability in and insights from previous researches on accounting and accountability practices of religious organizations are presented in this paper

Keywords: Accountability; Accounting; Religious organizations

Introduction Religious based organization plays a very important role in society, especially in Muslim world and tends to manage a sizeable proportion of human and financial resource. Their activities focus not only on traditional domain of charity, but also include other services such as community and economic development, refugee placement and many others (Berger, 2003, Alterman et al., 2005). Major sources of these religious-based organizations funding come from membership dues, grant from government and private donors as well as society at large. Therefore, they are accountable to society for the resources they receive and benefit they provide.

However, the literature on accounting and accountability practices in non profit organizations indicates that accounting and accountability in religious organization are less developed and lacking of financial accountability (see for example, Siino, 2004; Hamilton, 2006). Thus, not surprisingly, questions about financial improprieties, self dealing, conflict of interest, public disclosure are as likely to be raised about religious organizations as about secular ones (Hall, 2002). The purpose of this paper is to gain understanding of the accounting and accountability of religious organizations by evaluating the accounting and accountability researches literature on non-profit organizations, particularly religious institutions. Various aspects of accounting and accountability and its related topics will be discussed in this paper. The paper begins by looking at the nature of religious-based organizations, and then followed by the review of the practices of philanthropic institutions in an Islamic context and discussion of accountability in Islam. The final part of the paper will elaborate the insights gained from previous researches on accounting and accountability aspects of religious organizations The Nature Of Religious Based Organizations Literature on religious studies indicates that religious organizations are among the oldest of human institutions. These kinds of organizations or communities have been providing assistance to those afflicted by natural disaster, persecution, uprooting and war long before international humanitarian law was formalized in treaty law (Elizabeth, 2005). However, there is no single accepted definition of what constitutes a religious-faith based organization. Martens (2002), as quoted by Berger (2003, p. 1), defined religious organizations as:

“formal organizations whose entity and mission are self-consciously derived from the teachings of one or more religious or spiritual traditions and which operates on a non-profit, independent, voluntary basis to promote and realize collectively articulated ideas about the public good at the national or international level”. Kramer et al. (2002, p. 2) define a religious based organization as “an organization that holds religious or

worship services, or is affiliated with a religious denomination or house of worship”. They claim that these organizations include congregations or houses of worship, and non-profit organizations affiliated with religion.

Although, there is no generally accepted definition of religious based organizations, they are characterized by having one or more of the following:

mailto:[email protected]


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“affiliation with religious body; a mission statement with explicit reference to religious values; financial support from religious sources; and/or a governance structure where selection of board members or staff is based on religious beliefs or affiliation and/or decision-making processes based on religious values” (Ellizabeth, 2005, p. 312).

The World Conference on Religion and Peace (2001) claimed that religious organizations are the largest and

best organized civil institutions in the world today, due to the allegiance of billions of believers and bridging the divides of race, class and nationality (Berger, 2003).Furthermore, religious based organizations have a long history of transforming individual lives and helping to raise people out of poverty and despair. They provide services to tackle issues ranging from hunger to education with or without support from government.

Religion has been a primary motivator and shaper of many efforts to improve the life of human kind. Islam, for example, contributes to the welfare of one‟s community through the giving of alms and doing works of mercy, which is essential to the practice of Islam. Buddhism teaches that acts of compassion are steps along the path to enlightenment, and Christianity promotes providing charity to the poor, medical care to the sick, and education for children. Since a society will be judged by the way it treats its weakest members, it is argued that the most important contribution of a religious organization is the commitment to act in the interest of others (see Ellizabeth, 2005; Jeavons, 2003). This means that religious organizations exist for the benefit of others, not for the management or stockholders.

However, there are two characteristics that set religious organizations apart from secular non-profit organizations: “they are motivated by their faith and they have a constituency which is broader than humanitarian concerns. For believers, to be a Jew or a Muslim or a Christian implies a duty to respond to the needs of the poor and marginalized” (Ellizabeth, 2005, p. 316). This means that religious-faith based organizations are more focussed on social services, volunteer management and fund raising. Thus, religious-faith based organizations are not simply another type of organization; they are a link to God, moral, faith, and have the absence of ownership.

This absence of ownership and the lack of a profit motive have caused these organizations to become more dependent upon the external environment for resources to operate. In addition, the broader public interest missions of religious organizations also contrast with the narrower focus of profit making organizations, as they are not established in order to make profit. Certain phenomena, such as donations are likely to occur in the religious faith based sector, something that rarely occurs among business organizations. These phenomena very frequently involve a significant contribution to the financial support of the organization that serves to guarantee the continuance of their activities. These donations are usually in cash, but they can also take other forms such as goods. Clearly, faith based organizations have some particular characteristics that distinguish them from business organizations. In spite of this, they also share some common features with profit organizations. For example, these kinds of organizations buy goods and services. They provide services and sometimes sell goods and services. This means that religious based organizations have to manage their resources just like any other non-profit organization.

The Practices Of Philanthropy Institutions In An Islamic Context The Islamic principle of property suggests that the poor have a right to the wealth of a rich person because everything belongs to God and He has gracefully bestowed some property on some so that they can be grateful and help others. The believers are advised to be proactive in philanthropy by using their wisdom to ascertain needs and provide charity to the needy instead of waiting for them to ask for it.

It is not surprising that the Islamic world has a long tradition of philanthropic institutions. As noted by Bremer (2004, p. 5), “Islamic societies have a rich heritage of philanthropic institutions, a heritage that reflects the central place of philanthropy within Islam”. Civil society, particularly philanthropic institutions, is not a new phenomenon in the Islamic world. These institutions play an immeasurably important role in delivering social services. Philanthropy is defined as “the voluntary transfer of resources for charitable, civic and social purposes” (Saidi, 2001, p. 1).

Waqaf or Islamic endowment has been identified as the oldest form of charitable institutions in Islam. According to Bremer (2004, p. 5), “the waqaf is the most important charitable institutions, taking the span of Islamic history as a whole, but it is by no means the only in Islamic world”. As the scope for civil society broadens, old forms of institutions are being reinvented to meet society‟s new requirements. Therefore, many other Islamic charitable institutions emerge as a new form of Islamic philanthropic organizations such as Islamic boarding schools, and institutions that collect and channel zakat (alms).

The Islamic charitable institutions including waqaf and zakat have been instrumental in promoting social welfare in Muslim society throughout the ages. As part of their religious duty, Muslims are required to give a proportion of their incomes for the society‟s welfare and for the economically disadvantaged in society. Some recent estimates indicate that in Muslim society the sums of money involved amount to one trillion dollars annually (Alterman et al., 2005).

In Indonesia, for example, the Muslim community constitutes almost 90 percent of the Indonesian population and the giving tradition is formally practiced through the mobilization of zakat, infaq and sadaqah (Saidi, 2001). Based on the Islamic teachings, a Muslim who has reached a certain level of income (nisab) must pay the zakat, excluding, for example, jewellery that is worn and zakat fitrah, which is paid at the end of the month of Ramadhan. There are rules for


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calculating zakat obligation. In addition, Muslims are encouraged to voluntarily donate other forms of zakat, infaq and sadaqah, irrespective of their level of income.

In connection with individual giving, Saidi (2001) notes that the government of Indonesia has been mobilizing resources through official arrangements since the 1960s. The government encourages and controls a quasi-state institution for zakat, infaq and sadaqah mobilization called Badan Amil Zakat, Infaq dan Sadaqah (BAZIS). Indonesian society has enjoyed a long tradition of philanthropic giving, especially motivated by religious causes, mainly Islam, since the population of Indonesia is principally Muslims.

The Scale Of Accountability In Islam The Islamic view of accountability is based on two main themes. These are the concept of Tawhid and the concept of ownership (Maali and Napier, 2007). The first main theme is the concept of Tawhid, which implies total submission to God‟s will, and adherence to the religious requirements in all aspects of life. Muslims have to devote themselves to God as the fundamental aspect of their behaviour. A Muslim is required to believe in the things mentioned in the Hadith of the Prophet and in the Holy Qur‟an (see Al Safi, 1992).

According to Hameed (2001, p. 9), “the concept of Tawhid (Unity and Oneness of God) implies that since there is only one God who is the Creator and Sovereign of all (human and non humans). Islam (literally meaning submission) requires total submission to him in all aspects of life”. It is argued that the concept of Tawhid has a broader concept of accountability than the one which exists in Western societies. This is understandable as the Muslim‟s belief in God‟s judgment implies that every act in this world will have to be accounted for to Allah. In the Islamic framework, human beings are accountable to God on the Day of Judgment for their actions during their lives as stated in the Holy Qur‟an:

“…Certainly, Allah is ever a careful account taker of all things (an-Nisa: 86)

(Taqi-ud-din and Muhsin 1984, p. 122).

The second main theme is the concept of ownership in Islam. God is the ultimate Owner of everything. “God has appointed man, His vicegerent on earth and entrusted him with stewardship of God‟s possessions” (Lewis, 2001, p. 110). This does not imply that Islam does not recognize private ownership. Everyone has the right to own property, but ownership is not absolute. Ownership of property is a trust (amanah) to be enjoyed conditionally so long as man follows the shari’ah and remains worthy of the trust. Therefore, a person holds property in trust for God, and should use this property according to the God‟s will. Individuals are seen as trustees for that which they have been given by God in the form of goods, property and tangible assets (Lewis, 2001, p.110).

Seen in this light, the concept of accountability in Islam is parallel with the concept of trustworthiness in which man, in his or her judgment of his or her actions, is influenced by the fear that he will be held to account by Allah. This concept of trustworthiness is one of the highly regarded virtues in Islam. The Holy Prophet says “a truthful merchant will be raised on the day of Judgment together with the truthful and the martyrs” (Hadith narrated by Hakeem and Turmidhi) (Asri and Fahmi, 2004, p. 5). Therefore, every individual within an organization is required to subscribe to ethical and moral practices while carrying out their activities and they are seen as trustees.

Good governance, the whole system of rights, process and controls established internally and externally over the management of an entity with the objective of protecting the interests of all stakeholders (see Hameed, 2007), is a necessary pre condition for accountability in Islam. An organization committed to the highest standard of accountability also needs to foster practices that create an environment of transparency, accountability and integrity. An effective system of good governance requires an effective system of financial reporting, and an effective system of financial reporting requires good accounting and accountability practices, as at the institution level good governance is essentially about how the organization is managed and controlled, and the manner of ensuring proper accountability for those in charge (Aziz, 2005). As far as Islam is concerned, the management of the organization should perform their duties with the objective of satisfying the needs of the stakeholders and to Allah as well. There should be no fraud, materials misstatement or other malaise in the organization.

There is no doubt that control mechanisms play a very important role in achieving an appropriate level of accountability practice. However, these control mechanisms alone cannot make such improvement, as explained by Parvez (2004, p. 9):

“From Islamic perspective, control and laws that are to be employed for guiding personal and business conduct should be enacted to protect minimums of standards or deterrents to wrongdoing. More than this there is a need to cultivate a higher consciousness, morals, and a sense of accountability as a prerequisite since they develop an inner respect for societal values and laws”.

Seen from this point of view, accountability in Islam is broader than what is generally understood in the traditional view of accountability. In Islam, accountability is designed not only to the stakeholders, but it also to Allah. This clearly differentiates the Islamic accounting model from that of the western model, where accountability to stakeholders such as owners is given priority.


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Insights On Accounting And Accountability Practices Of Religiou Organizations Research on accounting and accountability in religious organizations is challenging since it is necessary to understand and classify the various activities undertaken by religious organizations. Religious organizations are unusual in their variety and complexity. These kinds of organizations are usually founded by charismatic individuals who feel some sort of divine purpose that they believe is more important than following man made rules or regulations.

Another challenge to better accountability is that much of the work and output of such organizations deals with issues concerning the soul, which is not easily measured. The mission statements of religious organizations usually emphasize worthy goals such as spreading the gospel, saving souls and ministering the poor. It is difficult to fully measure the results of these activities. Furthermore, one of the major products of religious organizations and their activities is religion itself. How is it measured? It is very difficult to measure the true result of religious activities. However, it is argued that religious organizations face the same demand for accountability as other secular organizations. Consequently, the need for regulations concerning their accountability has intensified.

The majority of the researches on religious organizations, particularly those published in academic journals, relate mainly to Christian organizations, especially the Western churches. Only a small number of studies deal with other religious organizations. To date, the existing researches have been dominated by issues such as the authority, structure, size, and other administrative components of such organizations. However, recently, other issues concerning the accounting and accountability aspects in religious organizations have emerged (See, Rahim and Goddard, 1998; Lewis, 2001, 2006; Booth, 1993; Jeavons, 2003; Maali et al., 2003; Murtuza, 2003; Siino, 2004; Laughlin 1988, 1990; Hall, 2002; Jacobs and Walker, 2004; Carmona and Ezzamel, 2006). An extensive study conducted in this area, especially concerning Islamic organizations, was undertaken by Rahim and Goddard (1998). Similar researches into Christian organizations, such as churches, were conducted by Laughlin, (1988, 1990). To gain some insights into accounting and accountability in religious organizations, the following will review the studies conducted on Islamic religious organizations, and Christian organizations, specifically the western churches.

Concerning the investigation of accounting practices in Islamic religious organizations, Rahim and Goddard (1998) conducted case studies on two State Religious Councils (SRC) in Malaysia, namely, ASRC and BSRC. The objective of their study was to examine accounting practices in these two organizations by using an interpretive methodology.

Unlike the Christian church organizations, the dichotomy of the sacred and secular world is not applicable to the cultural mechanisms of Islamic religious organizations. This is because Islam does not concede to such a dichotomy (Rahim and Goddard, 1998). They argue that the worldview of Islam encompasses both worldly and religious activities. The worldly must be related in a profound and inseparable way to the religious aspect, but the religious aspect has ultimate and final significance. The worldly activities are seen as preparatory to the religious aspect. Everything in Islam ultimately focuses on the religious aspect without thereby implying any attitude of neglect or heedlessness of the worldly aspect.

In this perspective, the practices considered as secular in Christianity are part of the sacred domain in Islam. Accountability in Islam encompasses both the vertical accountability to Allah, and the horizontal accountability to other individuals and the community. Both accountabilities are essential to a Muslim‟s faith (see Sulaiman, 2005, p. 31; Lewis, 2006).

The findings of Rahim and Goddard‟s (1998) study indicate that the use of sophisticated accounting techniques is minimal in the two aforementioned Islamic religious organizations. The role of accountants in these organizations is meaningful only as an organizational practice but does not enhance accountability. Thus, accounting is regarded as no more than a technology to record accounting and financial information and the role of the accountant has been reduced to the role of bookkeeper.

Rahim and Goddard (1998) note that there is no separation between accounting works and other religious activities in both organizations because the organizations need accounting to function properly to financially organize the activities, which could not otherwise be properly carried out. Such studies of Islamic religious organizations have indicated the existence of the interaction between religious belief systems and accounting practices. Similar to the findings of other research on religious organizations, religious belief systems have a dominant role in organizational practices within Islamic religious organizations. Lewis (2001) highlights the differences between Islamic and Western business practices. He claims that the Islamic accounting and financial perspective is based on the strict enforcement of the Holy Qur‟an. The examples for that are “the payment of riba and taking of interest as occurs in a conventional banking system” (Lewis, 2001, p. 117). This is also stated by Karim (1990, p. 34) in his study of the independence of religious and external auditors in Islamic banks “the distinctive feature of Islamic banks is that Islamic precepts govern their financial transactions”. Clearly, the studies demonstrate that the belief systems have a strong influence over all aspects of organizational practices within the religious organization, including accounting and accountability practice.

Similar studies on Christian institutions have also been carried out by Booth, 1993); Laughlin (1988, 1990); Jacobs and Walker (2004); and Siino (2004) just to name a few. Booth (1993), in his review of accounting literature on churches, found that it was mainly concerned with the accounting practices in churches. However, he notes that those studies mainly focused on “prescribing „good‟ accounting practices” based on the criteria of accounting practices set in commercial organizations.


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Booth (1993) then develops a skeletal framework of further research on accounting in churches. He identifies three main groups of research in this area. The first group belongs to those concerned with the inferiority of accounting practices in the churches. The researchers in this group assert that churches have primitive accounting systems, poor internal control, and lacking of expertise in financial administration.

The second group, in contrast to the first, finds that there are good accounting practices in some churches even though this is not the case for the majority. Both groups utilize a similar measurement in judging the fairness of accounting practices in the churches, i.e., those of the commercial accounting standards. The third group, utilizing a more prescriptive approach, recognizes the role of the so-called “secular” and “non-secular” aspects in the practice of accounting in churches. Such aspects are considered to play an important role in the design of any accounting system in the church. Both find that accounting belongs to the secular world and has to serve the spiritual or divine goals of the organizations. Therefore, this group questions the appropriateness of „commercial practices‟ that are translated into and adopted by the churches as their accounting systems.

Another detailed case study investigating accounting practices in relation to the particular nature of religious belief systems was undertaken by Laughlin (1988, 1990). His study demonstrates how accounting practices interact with religious belief systems held by the participants of the Church of England. In Laughlin's view, accounting practices are closely related to the financial elements of the organization. He says “current accounting practices in the Church of England (as with other institutions) are related to and located with the financial elements of the organization” (Laughlin, 1988, p. 21). Four major units of the organization, which are financially interrelated, are identified in his study. First, the parishes and dioceses, which are considered as the primary units of the church – both are geographically based and cover the whole of England. The other two units are the Church Commissioners who are responsible for managing past endowments of the church and the central board, which, primarily, involves the ongoing governance of the Church of England.

Laughlin (1988) found that accounting systems in the four major units of the church are unique. The design of the accounting systems in each unit is partly determined by the financial arrangements in the unit in which the accounting systems are located. Laughlin (1988) notes that parish accounting systems, in general, are highly rudimentary and are deemed largely irrelevant to the ongoing life of a parish. Where they do intrude into evaluating and determining parochial behaviour, they are seen as an unhealthy intrusion. Budgets are occasionally produced, but are not usually seen as binding on future parochial activities. Annual accounts are always produced, but are invariably simple receipt and payment accounts that are largely ignored, and rarely used to evaluate past actions. The Diocesan accounting systems are considerably more elaborate. However, they are not used to determine and rationalize expenditure, which is made up of a number of clearly defined items over which little control is permitted. Instead, the accounting systems are primarily aimed at ensuring that the income required to meet a largely fixed expenditure is generated. The accounting system of the Church Commissioners is more concerned with accountability and decision-making. It does not have to generate the required resources to meet these demands. It does not need to sell its budget, but needs to make itself accountable for its actions. Laughlin (1988) viewed the financial accounts used to discharge this accountability concern by the Church Commissioners, as highly sophisticated and a dominant element in the accounting systems, while the accounting systems of the central board are indicated as being less constrained. The traditional function of the accounting systems in the central board is to make the activities manageable by ensuring that they are set in clearly defined responsibility centres. However, the influence of the accounting system is also restricted, and is not seen as an appropriate vehicle for actually formulating what the particular responsibility centres should be doing.

Laughlin (1990) also presented an analysis of the accounting practices of the Church of England. He argues that the underlying structure of financial accountability in the main Church-based units was dominated by the sacred-secular divide. In this context, he argues that all Church organizations are dominated by this perception. Laughlin (1990) notes that accounting and accountability matters are seen as secular and secondary to the organizations.

However, the findings of Laughlin (1990) and Booth (1993), concerning the sacred-secular division of accounting in church, are opposed by Jacobs and Walker (2000). The findings of their study show that the sacred-secular divide is not supported in the research of accounting and accountability practices in this community. According to Jacob and Walker (2000) the findings indicate that within the Iona community “accounting served to support the sacred practices and spirituality of individual members through a process of socialising accountability”. Thus, accounting and accountability in this community are regarded as part of the observance by its members of the rules and as an integral component of their Christian practices.

Another research on Churches was conducted by Siino (2004) who surveyed 548 Southern Baptist Churches. This survey found that Churches lacked basic control against mismanagement or abuse of their funds. More than 70 percent of the Churches surveyed did not have written financial procedures. Twenty percent of the Churches did not require any written documentation before funds were disbursed. Only 22 percent required written explanation for budget variances, and only 52 percent reported monthly the budgeted versus actual spending.

Furthermore, Carmona and Ezzamel (2006) presented an analysis on the relationship between accounting and religion or religious institutions. They show some historical-based studies and contemporary research that have been conducted relate to religion or religious institutions. One of the papers is that by Quattrone (2004) who examined the accounting and accountability practices in the society of Jesus, Italy during the sixteenth centuries. Quattrone (2004) notes that “the emergence of accounting and accountability practices was tightly linked to the absolute ideology of


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Roman Catholic doctrine of the Counter-Reformation” (Carmona and Ezzamel, 2006, p. 119). It is argued that such doctrine was the site of compromises involving theological, religious, political, institutional and social dimension.

Conclusion

The literature suggests that there is no generally accepted definition of religious based organizations. The best way to recognize organizations as religious-based organizations may be by identifying the characteristics of such organizations, because these kinds of organizations are unique and distinct from other Non-Profit Organizations (NPOs). As other NPOs, these religious-based organizations are not established in order to make profit. This phenomenon very frequently involves a significant contribution to the financial support of the organizations, which serves to guarantee the sustainability of their activities. This means that religious based organizations have to manage their resources the same as any other NPOs.

In the context of Islamic religious organizations, it is well documented in the literature that Islamic societies have a rich heritage of philanthropic institutions, a heritage that reflects the central place of philanthropy within Islam. Waqaf or Islamic endowment has been identified as the oldest of charitable institutions in the Islamic history. However, as the scope for civil society broadens, old forms of institutions are being reinvented to meet society‟s new requirements. Therefore, many other Islamic charitable institutions have emerged as a new form of Islamic philanthropic organization.

As far as Islam is concerned, the management of the organization should perform their duties with the objective of satisfying the needs of the stakeholders as well as accounting to the God, because from the Islamic point of view, accountability encompasses both the vertical accountability to the God and the horizontal accountability to other individuals and the community. This means that organizations should comply with all the applicable laws and ethical standards, adhere to the organizations mission, be ethical and protect the rights of their members. Therefore, those in charge of economic resources are obligated to present an account of the execution of their stewardship, irrespective of whether the transactions and resources in question are those of government, business or NPOs.

Even though research into these organizations is relatively limited, along with the growth of this sector academic interest in religious-based organizations has increased as well. During the past few years there has been a growing number of studies in this sector, particularly relatingto the issues of accounting and accountability, including those conducted by Laughlin (1988, 1990), Booth (1993), Rahim and Goddard (1998), Lewis (2001, 2006). However, the research, particularly those published in academic journals, relate mainly to Christian organizations, especially the Western churches and only a small number of studies deal with other religious organization. In the studies of Laughlin (1988, 1990) and Booth (1993), it is argued that accounting belongs to the secular world and is subservient to sacred needs. Consequently, resistance to the use of accounting is very strong in the church domain. Whereas, the findings of Rahim and Goddard (1998) indicate that in Islamic religious organizations the interaction between accounting and religious belief systems exist because there is no separation between accounting works and other religious activities.

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centuries)”, Accounting, Organizations and Society, Vol. 29, No. 7, pp. 647-683. Rahim, A. and Goddard, A. (1998), “An Interpretive Inquiry of Accounting Practices in Religious Organizations”,

Financial Accountability and Management, Vol. 14, No. 3, pp. 183-201. Saidi, Z. (2001), Strengthening Philanthropy in the Asia Pacific: An Agenda for Action, Jakarta: Asia Pacific Philanthropy

Consortium. Siino, R. M. (2004), “Playing Loose with God‟s Money”, Stanford Social Innovation Review, Vol. 2, No. 1, pp. 14-15. Sulaiman, M. (2005), Islamic Corporate Reporting, Between the Desirable and the Desired, Kuala Lumpur, International Islamic

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A Critical Evaluation of the Compatibility Between Traditional and Contemporary Applications of Murabahah Transactions

Olorogun Lukman Ayinde

Department of Insurance School of Business and Management Sciences The Federal Polytechnic Offa, Kwara State Nigeria,

and Postgraduate Student, IIUM Institute of Islamic Banking and Finance (IIiBF) International Islamic University Malaysia (IIUM)

E-mail: [email protected]

Abstract - The present study explores the extent of conceptual resemblance between traditional and contemporary murabahah contracts. In order to assess the discrepancies, qualitative and quantitative content analyses are applied as research methodology. In particular, discrepancies of the conceptual basis of the two contracts are evaluated by content analysis through graphical presentation. The results of this study affirm that the critique raised against contemporary contracts is indeed justified. The comparative analysis of the conceptual differences between traditional and contemporary murabahah contracts leads to the conclusion that the contemporary murabahah contract is in inverse relation to the traditional murabahah contract. Keywords: Promise; Traditional murabahah; Contemporary murabahah; Compatibility; Islamic finance

Introduction Wa’d murabahah is defined as “a unilateral promise from the purchase ordering party to the institution that upon the institution making available a commodity he/she will fulfill the agreed conditions” (Fiqh Academy Resolution 5, Vol. 2). Muwa’dah is the bilateral promise of the institution and the customer. Islamic finance introduced both contracts in order to allow for modern trade financing in accordance with Islamic injunctions. A financial institution runned by Muslims and providing services to its Muslim customers which limits itself to conventional finance fails to fulfill its role as an Islamic institution if it does not offer legally permissible forms of transactions. Given the predominance of the Western financial system in the global economy, Muslims are committed to create new financial institutions in accordance with Islamic law. In addition to the creation of Islamic financial institutions (IFIs) in order to ensure permissible financial transactions, the present inequalities of distribution of wealth grounded in the capitalist system are to be minimized if not entirely eradicated.

The conventional banking system generates profit from both rich and poor populations. However, the distribution of wealth is favouring the rich who have collateral securities to guarantee repayment in case projects financed by the loan do not yield profits or are not executed. Loans are based on high interest rates which perpetuate or even increase debt and can end in bankruptcy. Since interest (riba) is prohibited in Islam, IFIs established new loaning systems which were interest-free. The fair redistribution of wealth and introduction of interest-free transactions is exercised by financing projects by way of murabahah transactions which account for 70% of current IFI financing projects. Hegazy (2007), Masood (2010), Wiryono et al. (2011) reported the domination of Murabahah in Islamic banks‟ financing in Indonesia. Murabahah transactions give customers the opportunity to acquire capital, such as industrial machinery, buildings, etc. on loan and pay back the cost in installments plus mark-up. The contract is made on the basis of a promise.

This study aims to discuss the degree of variance between promise and its application in both classical and modern Islamic financial institutions. The objective is to verify the degree of resemblance and difference of the contemporary and traditional modes of murabahah contracts by plotting the conceptual features of each contract on graph. Assigning quantities to the graph with assumption that other economic determinants remain constant. Finally, provides a recommendation to rectify the anomalies. The research is arranged in the sequence of discussion of legal principles derived from original sources of Islamic law, its application in the traditional literature on Islamic transactions, the juristic views on promise and current applications in the IFIs, followed by graphical plot of the conceptual features, explanations and conclusion. This study adopts both qualitative and quantitative methods of analysis. The qualitative approach is based on the existing literature on the same topic area. The quantitative part of the analysis is based on content analysis, specifically the conceptual analysis of the principles underlying the traditional and the contemporary murabahah contracts. The design of a histogram graph is based on the assumed data, the actual measure being the percentage of risk exposure the customer bears in both contracts, while the curve justifies the type of the existing relationship between traditional and contemporary murabahah contracts.


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Wa’d (Promise) in the Original Sources of Islamic Law Historically, trading is the most predominant feature of Arab nomadic culture and economy. Makkah was the commercial capital of pagan Arabia, a center for pilgrimage and annual trade fairs where all major commercial transactions took place. Traditionally, the fulfillment of trading responsibilities and promises was regarded a moral obligation and reflected in the honour and reputation of the tribesmen. Islamic tradition contains accounts of Prophet Muhammad (peace be upon him) – before his call to prophethood – making a trade agreement in the form of mudarabah with the wealthy widow Khadijah who would later become his wife. After the establishment of Islam as religion and law, some of the traditional characteristics of transactions practiced at the time were retained since they did not contradict with the Islamic principles.

Promise (Wa’d) in Qur’an and Sunnah Exchanges of goods and services are recognized and permitted in the original sources of Islamic law. No individual or community can live completely autonomous, and humans rely on one another to cover their material needs. The geographical limitation of resources necessitates the exchange of goods, and mutual dependence upon the reliability of trade agreements foster and encourage trade which benefits both sides. Allah the Lawgiver knows human weakness and greed, and the constant temptation of breaking a made agreement for short-term gain. He admonishes mankind to fulfill such promises: “Oh you who believe! Fulfill your trade promises …” (Al-Ma‟idah: 1). In another verse Allah says “… do not eat one another‟s wealth unlawfully except on trade which is out of wishful of the person …” (Al-Nisa‟: 29).

Muslims are under absolute obligation to fulfill their promises, either as the promisor or the promisee, in actions and words. The Prophet (peace be upon him) said that “Muslims are on their precondition or proviso (on transactions)” (Hadith Narrated by al-Bukhari, Vol. 8/2112). However, in many transactions, one party usually has an advantage over the other party, especially in agency or representative transactions. In modern terms this is known as “information asymmetry”. For this reason there are restrictions imposed by the Prophet in the case of murabahah. The Prophet (peace be upon him) said “He who purchases something in absence among you reserves the right to accept or reject it when it is finally presented to him” (al-Darqatni, Vol. 3/8). This last tradition complies with this purchase ordering party‟s promise to buy the article in absence when advance payment is made and the customer only sees his purchase after delivery. Al-Islambuli (2003) reported al-Jassas to have said “Promise is permissible in transactions”.

The traditional practice of the early murabahah Amir bil-shira’ “murabahah to the purchase orderer” is based on trust. If a consumer lives in a remote area where a product is not available, he requests a trusted and experienced merchant to purchase it on his behalf. Also, the potential buyer relies on the merchant‟s relay of information regarding the original price of the requested article, the transportation costs for delivery, and the margin of profit charged. The classical murabahah is classified as one of the forms of sales of trust. On his side, the potential buyer gives a revocable promise to buy the ordered product upon delivery, and no deposit is required. The merchant is responsible for purchasing, transporting and delivering the product, including the risks associated (ownership risk). The ordering party‟s promise is not binding, i.e. he or she reserves the right to decline to proceed with the transaction (cancellation risk). Such a form of revocable promise is accepted as legally permissible according to most recognized schools of fiqh. Upon delivery, the ordering party inspects the article and either accepts or rejects it (Al-Masri, 970H; Al-Qurtubi 2000; Hegazy, 2007).

Classical Juristic Views on Promise on Ordering Contract (Murabahah) In order to properly understand the legal details surrounding the traditional practice of promise in murabahah contract, it is compulsory to study the classical juristic views on murabahah and its conditions. According to all four Sunnite schools of fiqh, a promise of purchase is irrevocable for the promising party. The Malikite School stipulates that hoarding an article in order to sell it at a later date is not permissible in murabaha -- save if the distance between two markets that is the distance between where it is produced and the consumers‟ market results in the delay of the sale (al-Zarqani 1936; al-Qarafi, 1994). Also, mark-up or additional profit without reasonable specification in marabahah is not permissible (Al-Qurtubi, 2000). Ibn „Abidin (2000) concluded that hoarding of a commodity with the ultimate aim of selling (murabahah) it without informing the buyer and making the deferred payment time equal to the initial procurement is preferable. Abu Thawri ascertained the permissibility of murabahah based on total truth. However, where there was fault with the article of sale, Malikite jurists conceded to the buyer the right to accept or decline the purchase (al-Tabari, 310 A.H.; al-Qurtubi, 2003 A.H.). Thus, the Malikite School was not opposed to murabahah contracts, contrary to the findings of Hegazy (2007). Similarly, the Hanafite, Hanbalite, and Shafi‟ite schools ruled in favour of the permissibility of murabahah and the profits gained thereof, on the condition that the selling party sincerely disclosed all facts surrounding the purchase beforehand (al-Tabari, 310 A.H.). Their ruling was founded on a tradition related back to Ibn Mas‟ud who had reportedly expressed his dislike of taking profit on expenses. In agreement with the latter, Ibn Musayb was reported to consent to buying an article “at ten” and selling it “at twelve” (Al-Qurtubi, 671 A.H.).


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Contemporary Jurists on Promise on Ordering Contract (Murabahah) Given the legal permissibility of murabahah in classical Islamic jurisprudence, contemporary Muslim scholars involved in developing Shari’ah compliant banking products have introduced a modern form of murabahah transaction which has been approved by all Islamic financial institutions and has served as a mechanism for financing projects accounting for 70% of IFIs dealings (Hegazy, (2007; Masood 2010; Wiryono et al., 2011). The Bank Negara Malaysia‟s (Malaysia‟s Central Bank) Shari’ah Advisory Council resolved on its 13th meeting held on 10th April 2000 / 5th Muharram 1421 that promise (wa’d) in sale and buy-back agreements is permissible – provided that it is not stipulated as a condition for the sale and purchase of assets. In that case, a unilateral promise should be concluded which is binding to the promising party (BNM, 2007). Likewise, the AAOIFI Shari’ah Standard of 2003-2004 No. 8 2/3, 2/3/1-2/3/5 acknowledged the difference between revocable and irrevocable promises. In a revocable promise, the promising party is under no legal obligation to fulfill the promise, but his or her moral obligation to do so requires the payment of compensation. On the other hand, in an irrevocable promise the promising party is legally bound to fulfill the promise (AAOIFI, 2003-4). In short, modern jurists have agreed on the permissibility of the modern application of murabahah, yet have retained a feature close to the traditional murabahah which is the buyer‟s option to revoke the promise.

Contemporary Practices of Promise (Wa’d) Fulfillment of Murabahah Despite the shared basic principles of the classical and contemporary promise of murabahah, there are differences between both practices. In the traditional practice, the ordering party asked the merchant to purchase on his behalf and promised to buy the article upon arrival (Al-Masri, 970H; Al-Qurtubi, 2000; Wiryono et al., 2011). In the present practice the buyer has full knowledge of the different components of the mark-up price, that is, the original price, shipping cost, mark-up margin, and the like. Moreover, the ordering party is considered the ultimate buyer, not the financial institution which spends the time and effort locating the desired goods and negotiating the price with the original seller (Hegazy, 2007; Masood 2010; Wiryono et al., 2011). However, it is also common practice for an IFI to appoint the murabahah customer as the agent to negotiate and purchase from the supplier (Hegazy, 2007).

Since it is the buyer who decides the supplier and chooses the goods him or herself, the IFIs are able to circumvent or shift any involved risks to the murabahah buyer. IFIs are thus able to minimize the ownership risk "by restricting the time period between the two sales [the sale from original supplier or merchant to the IFI and the sale from the IFI to the customer] to minutes, if not seconds (Hegazy, 2007; Wiryono et al., 2011). Some IFIs require their customers to provide a third-party guaranty for the customer's performance of its obligations under the murababab arrangement. Furthermore, IFIs usually add to the mark-up margin the cost of insuring the goods during transportation between the two sales, even though in practice this period typically is limited to a few minutes or even seconds. Furthermore, IFIs succeeded in completely eliminating the cancellation risk by stipulating in their murabaha contracts that the promise (wa’d) of the buyer is irrevocable (Hegazy, 2007).

Critical Comparison of the Contemporary and Traditional Promise (Wa’d) on Murabahah A critical evaluation of the similarities and differences of the classical and contemporary usage of promise (wa‟d) on murabahah which includes both qualitative features is shown below:

Table 1. List of Salient Features of the Both Traditional and Contemporary Murabahah

Traditional Murabahah Contemporary Murabahah

1. The customer orders a product unavailable in his or her locality.

2. The product is not in his or her capacity. 3. The customer does not know the original cost. 4. Only the merchant knows the original supplier. 5. The merchant searches for the product in

question. 6. The merchant locates, negotiates, and orders the

product. 7. Transactions take days or months to complete –

depending on the distance, availability of product, mode of transportation, etc.

8. The customer does not act as agent 9. The merchant bears all the risks of purchase and

transport.

10 The customer has the right to cancel the contract upon inspection of the article

1. The customer knows where the product is available.

2. The product is in his or her capacity but exceeds his or her financial capacity.

3. The customer knows the original cost. 4. The customer knows the original supplier. 5. The customer himself searches for the

product. 6. The customer locates, negotiates, and

orders the product. 7. Transactions take only a few minutes. 8. The customer can be appointed as agent on

behalf of the IFI to purchase the article. 9. The customer bears all the risks of purchase

and transport. 10.The customer is the ultimate buyer of the

product and cannot revoke the contract.


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Figure 1. Graphical Conceptual Features of the Traditional and Contemporary Murabahah at 100%

The histogram depicts the inverse relationship between the merchant and customer‟s position in traditional and contemporary murabahah contracts. The traditional murabahah contract curve displays the characteristics of a demand curve while the contemporary murabahah contract curve displays the characteristics of a supply curve.

In the traditional murabahah contract the risk of the customer is minimal to the waiting period at 100%. The waiting period covers the cost incurred until delivery of the ordered article by the merchant which only cost RM10. Ibn „Abidin (2000) affirmed that – according to custom – time can be translated into monetary value. Therefore, the potential loss incurred by the customer is minimal because the merchant bears all financial burdens and risks from the beginning to the end of the transaction. The merchant‟s minimum risk exposure amounts to RM100 with a minimum time investment of 10%. This means that even though the merchant can acquire the article of sale in minimum time his potential financial loss (exposure) stands at RM100 because the customer may ultimately reject the contract. The demand curve represents the obligations imposed on the merchant in the authentic murabahah contract. In Figure 2, the Traditional Murabahah Contract Demand (TMCD) curve supports the conventional principle of demand that says “The higher the demand, the higher the price, and the higher the price, the lower the quantity demanded”. The TMCD is low, and the price changes in proportion to it.

Figure 2. Traditional Murabahah Contract Demand Curve (TMDC)

100%

Risk Murabahah customer’s risk Exposure curve

TICD

0 Financial cost of murabahah

In contrast to the traditional contract, in the contemporary murabahah contract the risk undertaken by an IFI is minimal to the waiting period (minutes or seconds) at 10%. If an IFI is to incur any loss, it would be at a minimum level since it is the customer who bears all costs and risks from the beginning to the end of the transaction. The customer‟s financial risk exposure minimum is RM100 while the minimum time invested is 100%. If the customer can acquire the article of sale at a minimum time, it still amounts to 100% which is ten times more than what the customer

0

10

20

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40

50

60

70

80

90

100

10 30 50 70 90

valu

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%)

Contract time Frame quantified in Amount (RM)

contemp

traditional

Customer„s Risk Exposure

Customer‟s Risk Exposure


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bears in the traditional system. However, his exposure or financial risk stands at RM100 as the ultimate purchaser of the article. The supply curve movement is the imposed or supply-oriented transfer of responsibilities on the customer. In Figure 3, the Contemporary Murabahah Contract Supply (CMCS) curve does not support the conventional law of supply which states “The higher the supply, the lower the price” as it is expected to be but the reverse is the case here. If the CMCS curve shows the price is higher in proportion to the supply.

Figure 3.

Contemporary Murabahah Contract Supply Curve (CMCS)

100% CICS

Risk Murabahah customer’s risk exposure 0 Financial cost of murabahah

Figure 3 is graphical representation of inverse conceptual relationship between contemporary and traditional murabahah contracts. The proponents of the contemporary murabahah contract argue that the protection of the investors and the IFIs is of paramount importance, while the traditional murabahah contract is customer oriented because it protects the interests of the customers. Contemporary murabahah contracts make up 70% of the IFIs‟ financing modes which is percentage that certainly speaks for its success. On the other hand, the popularity of the contemporary model of murabahah contracts does not constitute the focal point of this research. The question is whether contemporary murabahah contracts qualify to be offered to customers under the term murabahah contracts or not. As the researcher have demonstrated above, contemporary murabahah contracts are not based on the same principles and do not offer terms similar to the traditional murabahah contracts.

The present promise (wa’d) on murabahah does not qualify as a sale of trust because the potential buyer no longer relies on the professional judgment or expertise of the seller. Also, there is no need to rely on the trustworthiness of the seller since the buyer has full knowledge of the different components of the mark-up price, that is, the original price, shipping cost, mark-up margin, and the like.

Moreover, unlike traditional murabahah where the potential buyer acts as the promising party, it is the ultimate buyer, not the IFI, who spends the time and effort identifying and locating the desired goods and negotiating the price with the original seller. It is common practice for an IFI to appoint the murabahah customer as the agent to negotiate and purchase the goods from the supplier on behalf of the IFI. IFIs have eliminated exposure to ownership and cancellation risks to which a seller in traditional murabahah was exposed. They are able to circumvent or shift such risks to the murabahah buyer. Hegazy (2007) states:

“IFIs are able to minimize the ownership risk by restricting the time period between the two sales [the sale from original supplier or merchant to the IFI and the sale from the IFI to the customer] to minutes, if not seconds." As an additional form of security, some IFIs require their customers to provide a third-party guaranty for the customer's performance of its obligations under the murabahah arrangement. Furthermore, IFIs tend to build into the mark-up margin the cost of insuring the goods during transportation and during the time period between the two sales, even though in practice this period typically is limited to a few minutes or even seconds”. Ownership lasting only a few seconds legalized the contemporary promise of buy-back sale agreement. In the

traditional practice of promise, the merchant and the customer know nothing concerning the good or commodity in question, and no third party acts as the agent of the merchant in the purchase of the commodity. The traditional practice of murabahah promise as developed and approved by Muslim jurists of the past has not been replaced by an equal form of contemporary practice. The contemporary model violates these basic principles and features of the traditional model. Thus, modern Shari’ah advisors appointed by the IFIs have – undoubtedly with full knowledge and deliberation – sanctioned a model of murabahah promise and declared it permissible according to Islamic law which actually bears no resemblance to the original murabahah promise. The fact that both models bear the same name thus leads the unassuming average Muslim customer to the wrong assumption that contemporary murabahah promise constitutes a modern equivalent to the traditional model. Critics like Hegazy (2007) further add that the IFIs‟ decision


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to make the promise irrevocable has been vehemently objected by a number of outspoken Muslim jurists in the form of official legal rulings (fatwas) who did not hesitate to accuse the proponents of the contemporary murabahah promise of performing a controversial juristic stratagem known in Islamic jurisprudence as amalgamation (talfiq).

The main point of argument is that the murabahah with its components of binding promise is not legally permissible in any of the schools of fiqh. According to Hanafite, Shafi'ite, and Hanbalite law, the contract would be enforceable but the purchasing party still owned the right to revoke the order and the purchase promise. In Malikite law, the contract would not be enforceable in the first place on the basis of ambiguity (gharar). The irrevocability of promise is based on the AAOIFI Shari’ah standard with the effect that the promising party must either fulfill the promise or pay compensation for any losses incurred. Laldin (2009) pointed out that IFIs have adopted the irrevocable promise clause in order to eliminate any potential risks for the banks and their investors. The fact that such an elementary alteration to the original traditional murabahah promise was negating fundamental principles of Islamic finance seemed not to have deterred any of the parties involved. Surprisingly, the irrevocability of promises which is to the sole benefit of financial institutions and their investors, perfectly agrees with the Prudent Investor Act of 1830 stated by Judge Samuel Putnum1. This Act was passed to guarantee the assurance of investors‟ returns and constitutes part of secular capitalist legislation serving the interests of Western capitalist finance – the very same system modern Islamic finance was supposed to oppose and provide with an alternative. The Investor Act of 1830 did not regard customer protection as paramount but modern Islamic finance has been expected and supposed to ensure exactly that.

Conclusion This study revealed that the present practice murabahah promise offered by IFIs as a permissible mode of financing is indeed not Shari’ah compliant. The comparative analysis of all elements of the contemporary usage of murabahah promise and the traditional reveals striking and disquieting differences. Classical Muslim jurists allowed murabahah promise on the condition that it constituted a revocable promise while modern IFIs have altered it into an irrevocable promise which modern Muslim scholars have declared as equally permissible. Secondly, our graphical illustration has demonstrated the 100% inverse relationship between traditional and contemporary murabahah contracts, the traditional murabahah being a demand-oriented contract while the contemporary murabahah being a supply-oriented contract. Similarly, today‟s customer risk exposure lies at 100%, while in the original murabahah contract it only amounted to 10% representing the waiting period. Since modern murabahah contracts were officially pronounced as permissible and in perfect accordance with Islamic law, the uninformed Muslim public has been grievously misled into entrusting their capital into the hands of these scholars. Many critics have continued to express the need to alter the present condition of Islamic finance and demanded the issuance of new and binding legal rulings on IFIs dealings because the presently practiced Islamic financing models bear more or less the same conventional traits as its secular capitalist counterparts.

The challenge of modern Islamic finance is to achieve a viable synthesis of the traditional Islamic murabahah contract and modern elements – without altering the basic structure and principles it was based on and was declared permissible and in accordance with Islamic law. However, in order to successfully implement this approach, IFIs and their regulators will have to show more creativity and authenticity in developing future financing models to address the particular types of risks associated with their operation. They must learn to truly and sincerely serve the interests of the communities they operate in, not merely their own.

Notes: The learned Judge Samuel Putnum defined in 1830 how a professional money manager should conduct

himself and stated as follows: “Those with responsibility to invest money for others should do so with prudence, discretion, intelligence, and regard for the safety of capital as well as income”. Retrieved 21st June 2011; www.investorwords.com

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