The role of bank lending in Pakistan’s economy is critical due to the scarcity of investment options like stocks and bonds. Continuous interest rate movements put extra pressure on banks to transmit the monetary policy through the credit channel. Islamic banks face an extra layer of difficulty while operating with limited open market instruments, lender of last resort facilities and tough competition with conventional banks. This paper aims to examine the co-participation of Islamic and conventional banks in monetary policy transmission and to explore factors that differentiate the lending of the two bank types. For descriptive statistics, Pearson correlation and panel data techniques for regression analysis such as the random and fixed effect regression models were considered after conforming to the Hausman specification (1978) test. The quarterly data for the ten years of 2009-2018 was analyzed to understand the impact of monetary policy changes on bank lending. This paper modeled bank financing as a dependent variable while three bank-specific variables (total assets, liquidity, and capitalization) and three macroeconomic variables (Growth, inflation, and policy rates) were used as explanatory variables. The analysis in this paper concluded that policy rate changes do not influence bank lending by Islamic banks. However, conventional bank lending is significantly affected by policy rates and growth. This paper concluded that Islamic banks have an insignificant role in policy transmission due to limited Shariah investment opportunities. Influenced by conventional monetary policy, tools and differences in operations and contracts affect the bank’s equity and liquidity which may suffer long-term participation in the economy. Keywords: Monetary Policy, Central Bank, Bank Lending Channel, Islamic Banks-

This study attempts to examine different risk measures and their combinations as the part of a suitable asset pricing model for Islamic stocks. We choose beta, coskewness, downside beta, and downside coskewness and their combinations in single- and two-factor asset pricing model settings. We selected 91 companies from PSX using monthly returns from 2000-2018. The double sorting procedure is adopted for robustness, and collinearity between beta/downside beta and its respective higher moments is addressed by orthogonalizing each variable with its counterpart. Results tend to indicate that the two-factor model comprising downside beta and downside coskewness-based model is the most suitable asset pricing model for Islamic stocks. The use of two risk measures in the Islamic asset pricing framework yields a better understanding of stock prices which can help assess the risk of Islamic stocks for an investment decision.
Keywords: Downside beta, Downside coskewness, Islamic stocks, Double sorting

This study investigates the impact of using Islamic microfinance products on the microenterprise’s development in Nouakchott-Mauritania and tests the moderator effect of gender. The data is collected from 381 beneficiaries of PROCAPEC-Nouakchott through a questionnaire. Structural equation modeling is utilized to test the hypothesis. The results show that the usage of Islamic microfinance products has a positive impact on microenterprises. Nonetheless, gender has no moderator effect in the model. Based on these findings, policymakers and managers of Islamic microfinance institutions are highly recommended to ease the usage of Islamic microfinance products for micro- entrepreneurs to increase their productivity and financial independence.
Keywords: Mauritania, Islamic Microfinance, Financial Inclusion, Microenterprises, Poverty Alleviation, Structural Equation Modeling.

This study investigates the effect of business cycle stages on the financial stability of conventional banks and Islamic banks for the period 1995 to 2020. The data is taken from a sample of Islamic banks (62) and conventional banks (218) of twenty countries having dual banking systems. The data was analyzed using System GMM. The pertinent findings established that Islamic banks outclass conventional banks and hence have greater financial stability. The study reveals that Islamic banks exhibit better stability in comparison with the conventional banks in terms of their real-asset investments, improved real economy collaborations, real assets investment, better non-aggressive advancement, and restricted speculative actions. 
Keywords: Banks stability, Business cycle, Peak phase, Trough phase, GEC countries

Islamic banking industry is apart from conventional banking but still it has rivalry with conventional banking as both serve the same set of customers. Islamic banks are way behind conventional competitors in terms of innovation and product development. The innovation of Islamic banking and finance sector is dependent on hybrid contracts. The customer needs have become complicated. It requires the Islamic banks to introduce new products. But, Islamic banks cannot evolve without indulging into hybrid contracts. The standing of early Islamic jurists and scholars have made hybrid contracts somewhat contradictory as they have differences of opinion. Their opinion is based on the four Hadiths prohibiting four types of hybrid contracts, but some scholars have applied it to all other hybrid contracts. It has caused a major setback to the progress and development of Islamic finance industry. The apprehension of induction of prohibited elements like riba, maysir, and gharar has virtually paralyzed this sector. Last few decades have observed a progress as contemporary fuqha have stepped forward to reinterpret the Shariah instructions to develop Islamic banking. This study has researched the scope and potential of hybrid contracts for product development. The work of famous scholars has been consulted to understand the contradiction. Prominent contemporary scholars were consulted to get their profound opinion. It is concluded that the hadiths addressing trade contracts can be reinterpreted through mutual Fiqhi consensus. New products developed through hybrid contracts should be free from clearly prohibited elements and it should not contradict with clear shariah instructions. The use of hilah (trick) to turn the haram into halal is a sin and hybrid contracts should not be used to gain riba. The focus of hybrid contract based products should be on profiting from trade rather than riba.
Key Words: Al-Murakibbah, Bay-Al-Inah, Bay-Wa-Salaf , Musharika, Ijarah, Musharika Mutanaqisa