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Dr Hayat Khan

Vice Dean Undergraduate Programs & Internship and Assistant Professor of Economics

Dr Hayat Khan

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2021
Aydin N, Khan H. G-Donic Happiness: An Alternative to Hedonic and Eudemonic Happiness for Sustainable Consumption. Sustainability. 2021;13(11).
Kutubi SS, Ahmed K, Khan H, Garg M. Multiple directorships and the extent of loan loss provisions: Evidence from banks in South Asia. Journal of Contemporary Accounting & Economics. 2021;17(3).
2019
Khan H. A Nontechnical Guide on Optimal Incentives for Islamic Insurance Operators. Journal of Risk and Financial Management. 2019;13(3):127.
Khan H. Optimal Incentives Under Gift Exchange. The B.E. Journal of Theoretical Economics. 2019;(SSN (Online) 1935-1704):20180041.
2018
Kutubi SS, Ahmed K, Khan H. Bank Performance and Risk-Taking–Does Directors’ Busyness Matter?. Pacific-Basin Finance Journal [Internet]. 2018;50:184-199. Bank Performance and Risk-Taking–Does Directors’ Busyness Matter?Abstract
This paper extends the literature on the association between bank performance and risk-taking with directors’ busyness in concentrated ownership and weak-external governance regimes. We argue that a quadratic model parsimoniously captures the tension between the ‘reputation hypothesis’ and ‘over-boarding hypothesis. We find a robust inverted u-shaped relationship between directors’ busyness and bank performance and a u-shaped relationship between directors’ busyness and bank risk-taking. Inside directors’ busyness has a significant effect on bank performance and risk-taking whereas independent directors’ busyness does not have a significant effect on performance and risk-taking. We calculate the optimal level of busyness where the reputation hypothesis dominates the over-boarding hypothesis at less than the optimal level of busyness and vice versa. This allows us to reconcile the mixed evidence in the literature on the relationship between busyness and performance/risk-taking.
Jalil A, Khan H. Consumption Patterns and Demand Elasticities of Selected Horticulture Products in Pakistan. WORKING PAPER 04/18. 2018.
Khan H. Islamic economics and a third fundamental theorem of welfare economics. The World Economy [Internet]. 2018;21(3):723-737. Islamic economics and a third fundamental theorem of welfare economicsAbstract
The discipline of economics started as a moral science but became detached from moral concerns over time to emulate natural science and to adopt positivism. Consequently, mainstream economics assumes people to be sordidly selfish. The teachings of Islam, however, promote social preferences where individuals should be other-regarding and have preferences over social outcomes. This paper replaces the selfish agent with a social agent and presents the results in a theorem referred to as the third fundamental theorem of welfare economics (TFTWE). The TFTWE states that “when the selfish agents are replaced with the social agents, market outcomes are Pareto optimal, equitable, and unique”. This is an important result which has widespread implications. We show that the TFTWE holds under conditions where the first two fundamental theorems of welfare economics fail and that a Walrasian equilibrium is more likely to exist when selfish preferences are non-convex. Unlike the popular convention, there is no equity-efficiency trade-off. In fact we point to the possibility of reversal in equity-efficiency trade-off.
Khan H, Jayasuriya S. Vertical Integration and Cross-Country Price Transmission in Pakistan’s Agriculture Market. Monash University [Internet]. 2018:1-22. Working Paper 07/18
2017
Shah A, Khan K, Khan H. Social preferences and values. an experimental analysis for religiosity. In: ; 2017. p. 23-46. Website
2016
Khan H. CPA Australia Islamic Finance Short Course. 2016.
2015
Hasan H, Khan H. Do Sen's capabilities determine happiness? Evidence from a unique survey data. International Journal of Happiness and Developmen. 2015;2(2):160-181.Abstract
We use a unique dataset in the Pakistan Socio-Economic Survey (PSES) to measure sense-of-achievement, sense-of-freedom-to-achieve, and sense-of-ability-to-achieve which quantifies Sen's functioning, freedom and conversion efficiency respectively for an overall functioning of 'being achieved'. We show that the PSES capability indicators of subjective well-being (SWB) provide distinctive information while together with the happiness indicator they capture additional insights about SWB which is lacking in human development index (HDI) as shown by a comparison of districts ranking on the basis of HDI and SWB indices. Moreover, we find that the capabilities of 'being achieved' are the most important and stable determinants of happiness vis-à-vis income and education.
Khan H. Gift exchange anomaly: evidence from incentives vis-à-vis performance of Islamic insurance operators. Applied Economics Letters. 2015:1175-1178.Abstract
This article provides evidence on the gift exchange anomaly using standard field data on the performance of Islamic insurance (takaful) operators (TOs). Takaful is a type of mutual insurance where policyholders insure each other and hire an operator to manage operations against a hybrid of financial incentives. These incentives include an upfront agency fee, which is found to have an inverted U-shaped relationship with performance of TOs. We use our results to identify an optimal hybrid contract for TO and find optimal agency fee as a percentage of net earned premium.
Khan H. Islamic Finance. In: CPA-Contemporary Business Issue. Deakin University on behalf of CPA Australia; 2015.
Khan H. Optimal incentives for takaful (Islamic insurance) operators. Journal of Economic Behavior & Organization. 2015;109:135-144.Abstract
The relationship between policyholders and an Islamic insurance (takaful) operator is in essence a principal-agent relationship. This paper analyzes the power of incentives offered to takaful operators in mitigating problems associated with such a relationship. These incentives include wakalah, an upfront agency fee as a percentage of premiums; mudarabah, a share in investment income from technical reserves; and surplus-sharing (a share in the insurance surplus). The paper concludes that all incentives offered to takaful operators must include surplus-sharing and that offering mudarabah in the presence of surplus-sharing is optimal only when the risk-adjusted return on investing technical reserves outweighs a similar return on effort exerted in underwriting risks. A wakalah hybrid is also recommended as it induces the operator to increase the size of the pool that, in turn, reduces average risk to the benefit of policyholders.
Khan H. Some Implications of Debt versus Equity-Based Financing in the Backdrop of Financial Crises. JKAU: Islamic Economics . 2015;28(1):179-195.Abstract
his paper reflects on some of the consequences of replacing debt-based financing with equity-based financing and alludes to some testable hypothesis and theoretical and philosophical debates for future research.
2014
Ejaz N, Khan H. The underlying cause of the global financial crisis: An Islamic perspective. Economic Papers: A journal of applied economics and polic. 2014;33(1):45-54.Abstract
This article highlights that the primary architecture of the conventional financial system induces financial crises as it does not legally “tie the knot” between nominal and real transactions. This legal binding would require replacing interest-based mechanisms with an arrangement where nominal transactions are backed up by real transactions and a ban on securitisation of nominal assets that is based on the principles of risk transferring rather than risk sharing. The argument underlying our contention is that the extent of the negative impact of any crisis would be proportional to the gap between the nominal and real economy, and the mechanisms governing the distribution of risk. That is why, as advocated by proponents of Islamic Finance, the Islamic financial sector showed resilience during the global financial crisis (GFC). There is however no serious academic effort that formally presents the case of Islamic Finance. This article intends to fill this gap by taking stock of the literature on GFC and relates the discussion to the financial architecture proposed in Islamic finance.
2010
Khan H. Private Intergenerational Transfers and Their Ability to Offset the Fiscal Burden of Ageing. Pacific Economic Review. 2010;15(1):116-151.Abstract
The ratio of retirees to workers in developed countries is expected to increase sharply in the next few decades. In the presence of unfunded income support policies, this increase in old age dependency is expected to increase the future fiscal burden of ageing, which is seen as a threat to living standards. Private intergenerational transfers in the form of bequests are also expected to increase in ageing societies, which may offset the adverse effects of the fiscal burden of population ageing on future living standards. This paper quantifies the ability of these private intergenerational transfers to offset the future fiscal burden of ageing in Australia. This is done through developing a dynamic overlapping generations simulation model with realistic demographics. Calculations based on steady-state simulations (with a pay-as-you-go tax rate equal to 3.3% of GDP) suggest that a bequest to GDP ratio of 1% offsets approximately one-third of the fiscal burden over the lifecycle when measured as a proportion of simple labour income and one-eleventh of the fiscal burden when measured as a proportion of full income (labour income plus leisure). The model is calibrated for Australia under a small open economy assumption such that the optimal solution mimics important cross-sectional and time-series fundamentals of the Australian economy. For the non-steady-state, intergenerational accounting suggests that the empirically plausible intergenerational transfers are strong enough to offset most of the tax burden (80–90%) when measured as a percentage of simple labour income and up to one-quarter of the burden when fiscal burden is measured as a percentage of full income.

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Publications

Export
  • BibTex
  • RTF
  • Tagged
  • XML
  • RIS
2021
Aydin N, Khan H. G-Donic Happiness: An Alternative to Hedonic and Eudemonic Happiness for Sustainable Consumption. Sustainability. 2021;13(11).
Kutubi SS, Ahmed K, Khan H, Garg M. Multiple directorships and the extent of loan loss provisions: Evidence from banks in South Asia. Journal of Contemporary Accounting & Economics. 2021;17(3).
2019
Khan H. A Nontechnical Guide on Optimal Incentives for Islamic Insurance Operators. Journal of Risk and Financial Management. 2019;13(3):127.
Khan H. Optimal Incentives Under Gift Exchange. The B.E. Journal of Theoretical Economics. 2019;(SSN (Online) 1935-1704):20180041.
2018
Kutubi SS, Ahmed K, Khan H. Bank Performance and Risk-Taking–Does Directors’ Busyness Matter?. Pacific-Basin Finance Journal [Internet]. 2018;50:184-199. Bank Performance and Risk-Taking–Does Directors’ Busyness Matter?Abstract
This paper extends the literature on the association between bank performance and risk-taking with directors’ busyness in concentrated ownership and weak-external governance regimes. We argue that a quadratic model parsimoniously captures the tension between the ‘reputation hypothesis’ and ‘over-boarding hypothesis. We find a robust inverted u-shaped relationship between directors’ busyness and bank performance and a u-shaped relationship between directors’ busyness and bank risk-taking. Inside directors’ busyness has a significant effect on bank performance and risk-taking whereas independent directors’ busyness does not have a significant effect on performance and risk-taking. We calculate the optimal level of busyness where the reputation hypothesis dominates the over-boarding hypothesis at less than the optimal level of busyness and vice versa. This allows us to reconcile the mixed evidence in the literature on the relationship between busyness and performance/risk-taking.
Jalil A, Khan H. Consumption Patterns and Demand Elasticities of Selected Horticulture Products in Pakistan. WORKING PAPER 04/18. 2018.
Khan H. Islamic economics and a third fundamental theorem of welfare economics. The World Economy [Internet]. 2018;21(3):723-737. Islamic economics and a third fundamental theorem of welfare economicsAbstract
The discipline of economics started as a moral science but became detached from moral concerns over time to emulate natural science and to adopt positivism. Consequently, mainstream economics assumes people to be sordidly selfish. The teachings of Islam, however, promote social preferences where individuals should be other-regarding and have preferences over social outcomes. This paper replaces the selfish agent with a social agent and presents the results in a theorem referred to as the third fundamental theorem of welfare economics (TFTWE). The TFTWE states that “when the selfish agents are replaced with the social agents, market outcomes are Pareto optimal, equitable, and unique”. This is an important result which has widespread implications. We show that the TFTWE holds under conditions where the first two fundamental theorems of welfare economics fail and that a Walrasian equilibrium is more likely to exist when selfish preferences are non-convex. Unlike the popular convention, there is no equity-efficiency trade-off. In fact we point to the possibility of reversal in equity-efficiency trade-off.
Khan H, Jayasuriya S. Vertical Integration and Cross-Country Price Transmission in Pakistan’s Agriculture Market. Monash University [Internet]. 2018:1-22. Working Paper 07/18
2017
Shah A, Khan K, Khan H. Social preferences and values. an experimental analysis for religiosity. In: ; 2017. p. 23-46. Website
2016
Khan H. CPA Australia Islamic Finance Short Course. 2016.
2015
Hasan H, Khan H. Do Sen's capabilities determine happiness? Evidence from a unique survey data. International Journal of Happiness and Developmen. 2015;2(2):160-181.Abstract
We use a unique dataset in the Pakistan Socio-Economic Survey (PSES) to measure sense-of-achievement, sense-of-freedom-to-achieve, and sense-of-ability-to-achieve which quantifies Sen's functioning, freedom and conversion efficiency respectively for an overall functioning of 'being achieved'. We show that the PSES capability indicators of subjective well-being (SWB) provide distinctive information while together with the happiness indicator they capture additional insights about SWB which is lacking in human development index (HDI) as shown by a comparison of districts ranking on the basis of HDI and SWB indices. Moreover, we find that the capabilities of 'being achieved' are the most important and stable determinants of happiness vis-à-vis income and education.
Khan H. Gift exchange anomaly: evidence from incentives vis-à-vis performance of Islamic insurance operators. Applied Economics Letters. 2015:1175-1178.Abstract
This article provides evidence on the gift exchange anomaly using standard field data on the performance of Islamic insurance (takaful) operators (TOs). Takaful is a type of mutual insurance where policyholders insure each other and hire an operator to manage operations against a hybrid of financial incentives. These incentives include an upfront agency fee, which is found to have an inverted U-shaped relationship with performance of TOs. We use our results to identify an optimal hybrid contract for TO and find optimal agency fee as a percentage of net earned premium.
Khan H. Islamic Finance. In: CPA-Contemporary Business Issue. Deakin University on behalf of CPA Australia; 2015.
Khan H. Optimal incentives for takaful (Islamic insurance) operators. Journal of Economic Behavior & Organization. 2015;109:135-144.Abstract
The relationship between policyholders and an Islamic insurance (takaful) operator is in essence a principal-agent relationship. This paper analyzes the power of incentives offered to takaful operators in mitigating problems associated with such a relationship. These incentives include wakalah, an upfront agency fee as a percentage of premiums; mudarabah, a share in investment income from technical reserves; and surplus-sharing (a share in the insurance surplus). The paper concludes that all incentives offered to takaful operators must include surplus-sharing and that offering mudarabah in the presence of surplus-sharing is optimal only when the risk-adjusted return on investing technical reserves outweighs a similar return on effort exerted in underwriting risks. A wakalah hybrid is also recommended as it induces the operator to increase the size of the pool that, in turn, reduces average risk to the benefit of policyholders.
Khan H. Some Implications of Debt versus Equity-Based Financing in the Backdrop of Financial Crises. JKAU: Islamic Economics . 2015;28(1):179-195.Abstract
his paper reflects on some of the consequences of replacing debt-based financing with equity-based financing and alludes to some testable hypothesis and theoretical and philosophical debates for future research.
2014
Ejaz N, Khan H. The underlying cause of the global financial crisis: An Islamic perspective. Economic Papers: A journal of applied economics and polic. 2014;33(1):45-54.Abstract
This article highlights that the primary architecture of the conventional financial system induces financial crises as it does not legally “tie the knot” between nominal and real transactions. This legal binding would require replacing interest-based mechanisms with an arrangement where nominal transactions are backed up by real transactions and a ban on securitisation of nominal assets that is based on the principles of risk transferring rather than risk sharing. The argument underlying our contention is that the extent of the negative impact of any crisis would be proportional to the gap between the nominal and real economy, and the mechanisms governing the distribution of risk. That is why, as advocated by proponents of Islamic Finance, the Islamic financial sector showed resilience during the global financial crisis (GFC). There is however no serious academic effort that formally presents the case of Islamic Finance. This article intends to fill this gap by taking stock of the literature on GFC and relates the discussion to the financial architecture proposed in Islamic finance.
2010
Khan H. Private Intergenerational Transfers and Their Ability to Offset the Fiscal Burden of Ageing. Pacific Economic Review. 2010;15(1):116-151.Abstract
The ratio of retirees to workers in developed countries is expected to increase sharply in the next few decades. In the presence of unfunded income support policies, this increase in old age dependency is expected to increase the future fiscal burden of ageing, which is seen as a threat to living standards. Private intergenerational transfers in the form of bequests are also expected to increase in ageing societies, which may offset the adverse effects of the fiscal burden of population ageing on future living standards. This paper quantifies the ability of these private intergenerational transfers to offset the future fiscal burden of ageing in Australia. This is done through developing a dynamic overlapping generations simulation model with realistic demographics. Calculations based on steady-state simulations (with a pay-as-you-go tax rate equal to 3.3% of GDP) suggest that a bequest to GDP ratio of 1% offsets approximately one-third of the fiscal burden over the lifecycle when measured as a proportion of simple labour income and one-eleventh of the fiscal burden when measured as a proportion of full income (labour income plus leisure). The model is calibrated for Australia under a small open economy assumption such that the optimal solution mimics important cross-sectional and time-series fundamentals of the Australian economy. For the non-steady-state, intergenerational accounting suggests that the empirically plausible intergenerational transfers are strong enough to offset most of the tax burden (80–90%) when measured as a percentage of simple labour income and up to one-quarter of the burden when fiscal burden is measured as a percentage of full income.

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Recent Publications

  • Multiple directorships and the extent of loan loss provisions: Evidence from banks in South Asia
  • G-Donic Happiness: An Alternative to Hedonic and Eudemonic Happiness for Sustainable Consumption
  • Optimal Incentives Under Gift Exchange
  • A Nontechnical Guide on Optimal Incentives for Islamic Insurance Operators
  • Bank Performance and Risk-Taking–Does Directors’ Busyness Matter?
  • Islamic economics and a third fundamental theorem of welfare economics
More
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