The actualization of maqāṣid al-Sharīʿah in Islamic finance: a conceptual framework

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abu Talib Mohammad Monawer ◽  
Noor Naemah Abdul Rahman ◽  
Ameen Ahmed Abdullah Qasem Al-‎Nahari ◽  
Luqman Haji Abdullah ◽  
Abdul Karim Ali ◽  
...  
Keyword(s):  
Conceptual Framework ◽  
Product Design ◽  
Qualitative Content Analysis ◽  
Group Discussion ◽  
Islamic Finance ◽  
Content Type ◽  
Finance Industry ◽  
Product Consumption ◽  
Islamic Financial Institutions ◽  
Comprehensive Framework

Purpose This paper aims to formulate a conceptual framework that will facilitate the actualization of maqāṣid al-Sharīʿah in product design and consumption within Islamic financial institutions (IFIs). Design/methodology/approach This paper relies on the classical and contemporary literature on maqāṣid al-Sharīʿah and Islamic finance and adopts a qualitative content analysis method and an inductive approach to outline the constituent elements that formulate the framework. Findings This study determines six vital constituents of maqāṣid al-Sharīʿah, namely, parameters of maqāṣid, particular objectives, appropriate means, micro provisions, level of need and legal maxims to develop a conceptual framework of actualizing maqāṣid al-Sharīʿah in Islamic finance. The framework covers the following three stages: identification of maqāṣid, operationalization of maqāṣid in product design and consumption based on maqāṣid. Research limitations/implications This paper proposes a conceptual framework without investigating the practice of any particular industry or products. Further research would focus on formulating a practical framework based on a focus group discussion with industry experts, elaborating the parameters of maqāṣid, scrutinizing the maqāṣid available in the literature by the parameters of maqāṣid and assessing the IFIs’ products and services using the proposed framework. Practical implications This paper provides insights into the importance of maqāṣid elements and the effects of overlooking them on IFIs and customers’ product consumption. Furthermore, a major implication of the proposed framework is to learn how to use the maqāṣid approach as the baseline for designing new financial products. Originality/value The novelty of this paper lies in its pioneering attempt of harmonizing all essential maqāṣid elements and using them as constituents to formulate a comprehensive framework that actualizes maqāṣid al-Sharīʿah in the Islamic finance industry.

scholarly journals Islamic Financial Services Act (IFSA) 2013 and the Sharīʿah-compliance requirement of the Islamic finance industry in Malaysia

2018 ◽  
Vol 10 (1) ◽  
pp. 94-101 ◽  
Author(s):  
Mohamad Akram Laldin ◽  
Hafas Furqani
Keyword(s):  
Content Analysis ◽  
Financial Institutions ◽  
Financial Services ◽  
Design Methodology ◽  
Islamic Finance ◽  
Content Type ◽  
Governance Framework ◽  
Finance Industry ◽  
Islamic Financial Institutions ◽  
Comprehensive Framework

Purpose This paper aims to observe the development of the Sharīʿah governance framework (SGF) and practice in Islamic financial institutions (IFIs) in Malaysia. Design/methodology/approach The study is a qualitative-based research. It uses various documents and content analysis approach to understand and analyze the structure, process and practice of SGF in IFIs in Malaysia. Findings It is found that the Central Bank of Malaysia, Bank Negara Malaysia, has attempted to develop a comprehensive framework of Sharīʿah governance for IFIs in Malaysia. The framework governs the practice of the industry, covers stakeholders’ scope of duties and responsibilities and provides details on processes and procedures in the operations of IFIs to achieve the objective of Sharīʿah compliance. To maintain the relevance of the SGF to the needs of the industry, the framework has also been updated recently in 2017. The amendments aim to strengthen the effectiveness of Sharīʿah governance implementation within the Islamic finance industry. Originality/value This study attempts to comprehensively examine the evolution of the SGF Sharīʿah governance framework for IFIs in Malaysia. The Malaysian model of the SGF is unique and could be emulated by other countries in developing the Islamic finance industry in their respective jurisdictions.

The substance and form of Islamic Finance instruments: an accounting perspective

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmed Ebrahim ◽  
Tarek Abdelfattah
Keyword(s):  
Theoretical Analysis ◽  
Conceptual Framework ◽  
Design Methodology ◽  
Islamic Finance ◽  
Content Type ◽  
Modern Economy ◽  
Analytical Review ◽  
Comprehensive Framework ◽  
Industry Needs ◽  
Practical Implications

Purpose This study aims to critically analyze the fundamentals of the current major Islamic Finance (IF) instruments and contracts in light of both the foundations of IF and the concept of substance over form in the accounting conceptual framework. Such analysis is believed to be necessarily for the IF institutions to provide better and more genuine service to their customers. Design/methodology/approach To achieve the study purpose, the methodology is based on theoretical analysis and analytical review of the major IF contracts. Findings The IF industry needs to focus on the economic substance of the products offered to their clients. In developing and promoting their products, IF institutions need to focus on the ultimate and substantial goals of Islamic Sharia rather than re-packaging existing conventional products under different arrangements and formats to make them appear as Sharia-compliant to their clients. Both religious scholars and IF professionals need to engage in much deeper analysis and understanding of the substantial design of IF instruments and the concept of usury in modern economy. Research limitations/implications This paper does not intend to develop a comprehensive framework for the design of IF instruments to meet the economic substance and ultimate goals of IF principles or measure such economic substance. However, that is definitely a subject for further research. Originality/value By applying concepts like substance over form from other business fields such as the accounting theoretical framework to the IF instruments and contracts, we should gain better understanding and practical implications of these instruments and figure out ways to improve their design to be more consistent with and better serve the ultimate goals of the Islamic Sharia.

Towards a global hub

2016 ◽  
Vol 58 (1) ◽  
pp. 48-72 ◽  
Author(s):  
Umar A. Oseni ◽  
Abu Umar Faruq Ahmad
Keyword(s):  
Dispute Resolution ◽  
Legal Framework ◽  
Institutional Framework ◽  
Islamic Finance ◽  
Legal Analysis ◽  
Content Type ◽  
Finance Industry ◽  
Recent Developments ◽  
Islamic Financial Institutions ◽  
Resolution Processes

Purpose – The paper aims to examine significant developments in the institutional framework for dispute resolution in the Islamic finance industry in Malaysia. Malaysia, as part of its efforts to consolidate its enviable Islamic finance industry, has strengthened its institutional framework for dispute resolution. Design/methodology/approach – Data for this study were collected from both primary and secondary legal sources. Through a conceptual legal analysis, the institutional frameworks of dispute resolution in the Malaysia’s Islamic finance industry are studied. Findings – The study finds that Malaysia is far ahead of other jurisdictions by a significant margin in spearheading reforms in the emerging global Islamic finance industry. The dispute resolution framework has been largely affected by the recent reforms. Research limitations/implications – Other jurisdictions may borrow a leaf from Malaysia’s initiative in providing a robust legal framework for dispute management in the Islamic finance industry. Practical implications – Apart from adopting Malaysia’s framework and possibly adapting it to suit their specific local variations, other jurisdictions may also encourage Islamic financial institutions to incorporate effective dispute resolution processes in Islamic finance contracts. Originality value – This study critically discussed most recent developments in the institutional framework on dispute resolution in the Islamic finance industry in Malaysia.

Musharakah Mutanaqisah home financing: issues in practice

2018 ◽  
Vol 9 (1) ◽  
pp. 91-103 ◽  
Author(s):  
Alam Asadov ◽  
Zulkarnain Bin Muhamad Sori ◽  
Shamsher Mohamad Ramadilli ◽  
Zaheer Anwer ◽  
Shinaj Valangattil Shamsudheen
Keyword(s):  
Financial Institutions ◽  
Current Mode ◽  
Fair Value ◽  
The Body ◽  
Islamic Finance ◽  
Islamic Banks ◽  
Periodic Review ◽  
Content Type ◽  
Finance Industry ◽  
Islamic Financial Institutions

Purpose This paper aims to examine the practical issues in the Musharakah Mutanaqisah (MM) financing and subsequently, recommends possible solutions to mitigate these issues and improve the current practice. Design/methodology/approach This paper analyses the theory and current practices of MM offered by Islamic banks. Findings It is suggested that Islamic financial institutions consider revaluation of property’s value to its fair value, especially during termination of MM contract and annual or agreed periodic review of the market value of the assets to determine the “rental” payments by the customer. It is also recommended that Islamic financial institutions should share all associated costs in performing the contract. Research limitations/implications Research findings reported in this paper contribute to the body of knowledge on MM in general and to the Islamic finance practices in Malaysia and abroad. Indeed, the Malaysia Central Bank (i.e. Bank Negara Malaysia) should form a special committee to look into the issues highlighted in this paper and recommend strict guidelines for Islamic financial institutions to improve their practices. Practical implications Islamic banks should extend the use of MM contract in automobile and trade financing where rent or profit could be easily identified and value of the asset is more certain. The regulators and Islamic financial standard setting authorities need to oversee the Shari’ah board decisions on MM contracts and keep the gates in the interest of ensuring a more viable and authentic Islamic finance industry. Originality/value This paper briefly views the current mode of MM contracts, specifically for home financing, and highlights the incompliance to Shari’ah requirements in exercising these contracts in practice.

The new paradigm of Islamic corporate governance

2018 ◽  
Vol 44 (5) ◽  
pp. 513-523 ◽  
Author(s):  
Walid Mansour ◽  
M. Ishaq Bhatti
Keyword(s):  
Corporate Governance ◽  
Well Being ◽  
Islamic Finance ◽  
World Population ◽  
Business Practices ◽  
New Paradigm ◽  
Content Type ◽  
Finance Industry ◽  
Islamic Financial Institutions ◽  
Best Business Practices

PurposeThe purpose of this paper is to examine the new paradigm of Islamic corporate governance (ICG) in an emerging area of Islamic finance.Design/methodology/approachThe paper adopts an analytical approach to investigate the new executive and managerial roles that ICG is expected to play in the process of corporate financial decision making.FindingsThe authors argue that ICG is no longer expected to play the traditional supervisory and regulatory role within Islamic financial institutions. Indeed, the acuteness of competition, the observed failures of the Islamic finance industry, the unprecedented challenges, and the required ethical considerations levy as a new approach that improve the growth of the Islamic finance industry sustain its survival in the global financial world, and enhance the welfare of 25 percent of the world population who survived beyond all level of poverties.Originality/valueThe authors claim that ICG must be endowed with a multi-faceted, new paradigm for the purpose of improving the stakeholders’ interests and reaching the best business practices of the Islamic finance industry to cater investors’ need and the social well-being of the homeless and disadvantaged communities.

Limited purpose banking (LPB) and Islamic finance

Humanomics ◽  
2014 ◽  
Vol 30 (2) ◽  
pp. 122-135 ◽  
Author(s):  
Edib Smolo ◽  
Abbas Mirakhor
Keyword(s):  
Financial Institutions ◽  
Design Methodology ◽  
Financial System ◽  
Islamic Finance ◽  
Extensive Literature ◽  
Content Type ◽  
Finance Industry ◽  
Islamic Financial Institutions ◽  
Alternative Solutions ◽  
Practical Implications

Purpose – This paper primarily aims to review and analyze a new model for Islamic finance based on Laurence J. Kotlikoff's idea of limited purpose banking (LPB). In addition, this paper aims to highlight, explain and discuss various aspects of LPB and how it suits the original aspirations of pioneer writers in Islamic finance. Design/methodology/approach – Based on an extensive literature review, this paper aims to highlight, explain and discuss the reform of the Islamic finance industry based on Kotlikoff's model of LPB. Findings – Based on a modified LPB model, Islamic financial institutions could be established to provide specific services with clear aims and objectives. These LPB Islamic financial institutions would operate in a similar way to LPB. Research limitations/implications – As there is no perfect plan, the proposal of this paper is far from being perfect and is open to discussions and improvements. The paper will, hopefully, spark off quite a discussion on the topic; may result in a better understanding of the model; and provide some alternative solutions to the current structurally ill financial system. Practical implications – The paper provides some practical ideas for a better implementation of Shari'ah principles in financial intermediation of the Islamic financial system. Originality/value – Kotlikoff's LPB proposal for reforming the financial system is new and has been directed to the conventional financial system. This paper represents the first attempt to apply his proposal to the Islamic finance industry.

scholarly journals Conceptual framework of internal Sharīʿah audit effectiveness factors in Islamic banks

2020 ◽  
Vol 12 (2) ◽  
pp. 171-193
Author(s):  
Latifah Algabry ◽  
Syed Musa Alhabshi ◽  
Younes Soualhi ◽  
Omar Alaeddin
Keyword(s):  
Conceptual Framework ◽  
Vital Role ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Audit Process ◽  
Content Type ◽  
Finance Industry ◽  
Governance Practices ◽  
Islamic Financial Institutions ◽  
Audit Effectiveness

Purpose The main purpose of this research is to figure out the most effective determinants that play a vital role in enhancing the effectiveness of the internal Sharīʿah audit in the Islamic banking industry. Design/methodology/approach This paper reviews the existing literature to build comprehensive knowledge that would assist in determining the main factors that impact on the effectiveness of Sharīʿah audit in Islamic banks. Findings This research proposes a conceptual framework of factors that impact on Sharīʿah audit effectiveness in IBs based on previously published studies. The proposed framework includes external and internal factors as well as internal Sharīʿah audit structure, process and requirements. Practical implications First, the regulators need to provide a detailed framework for Sharīʿah audit which covers the main requirements for effective Sharīʿah governance. Second, Islamic financial institutions (IFIs) need to pay more attention to following the Sharīʿah audit process in order to achieve the objective of effective Sharīʿah governance. Finally, the dearth of empirical research on the role and effectiveness of Sharīʿah audit in Islamic banking highlights the need to develop an appropriate methodology to enhance the study of the effectiveness of Sharīʿah governance practices. Originality/value The Sharīʿah ensures compliance with its rules and regulations and enhances the soundness and credibility of the Islamic finance industry. This study identifies a number of issues that require further investigation in order to establish a better system of Sharīʿah audit and to identify the factors that affect Sharīʿah auditing practices. This paper is unique in covering the main elements that have influence on the effectiveness of Sharīʿah audit and proposes them in one framework.

Islamic finance and debt culture: treading the conventional path?

2015 ◽  
Vol 42 (12) ◽  
pp. 1168-1195 ◽  
Author(s):  
Mohammad Omar Farooq
Keyword(s):  
Current Data ◽  
Islamic Finance ◽  
Economic Policies ◽  
Content Type ◽  
Sustainable Solutions ◽  
Finance Industry ◽  
Emerging Trends ◽  
Long Run ◽  
Islamic Financial Institutions ◽  
Critical Insight

Purpose – The purpose of this paper is to examine the phenomenon of debt culture in the conventional financial systems and then to compare the existing or emerging trends in the Islamic finance industry. It provides critical insight into why economic policies that are delinked from some fundamental wisdom about sustainable lifestyle might be increasingly less effective. Design/methodology/approach – The paper identifies various areas of impact of the debt culture and provides qualitative analysis based on relevant data. Findings – The data presented in the paper shows that the Islamic finance industry is clearly biased in favor of debt-creating modes, which is expected to lead to promoting the same kind of debt culture as experienced in the conventional financial system. Research limitations/implications – Finding comprehensive and current data for Islamic financial institutions is a challenging task. The IFIs are not as transparent as their conventional counterparts in sharing relevant data and information. Practical implications – The paper highlights and analyzes a problem – i.e., the debt culture. Dealing with this problem would be indispensable in the long run for any credible as well as sustainable solutions to contemporary crisis. Social implications – Debt culture is more than an economic phenomena. The paper identifies/analyzes several areas, including consumption explosion, speculation, ethics, that are related to debt culture. Originality/value – This is probably the first research paper that looks into the issue of debt culture in the context of Islamic finance. The contemporary, ongoing global crisis underscores the kind of conventional problems that Islamic finance needs to avoid.

Product development in Islamic finance and banking in secular economies

2020 ◽  
Vol 11 (9) ◽  
pp. 1665-1676 ◽  
Author(s):  
Yusuf Dinc
Keyword(s):  
Product Development ◽  
Development Process ◽  
Product Development Process ◽  
Islamic Finance ◽  
Content Type ◽  
Complex Process ◽  
Islamic Financial Institutions ◽  
Conceptual Research ◽  
Source Materials ◽  
Vital Element

Purpose As the global paradigm in economics shifts, Islamic economics is attracting more attention as an alternative sector. The most common and most active institutional structure of Islamic economics is in the form of Islamic finance and banking. Islamic finance and banking have been the centre of innovation in many economies in recent years. In this regard, product development is a vital element in driving the success of Islamic financial institutions (IFIs). The product development of IFIs is one of the key elements of their overall economic performance. This study aims to fill the gap in the literature concerning the product development process of IFIs in secular economies. Design/methodology/approach Verily, product development is a complex process; it is likely that introducing specific models will be useful for expanding the activities of IFIs. In this study, contemporary source materials are used to develop this conceptual research. Findings It suggests two separate methodologies for the product development process of IFIs in secular economies to overhaul two criticised product-based problems. To the best of the author’s knowledge, it is the first attempt to model the product development process for IFIs in a secular economic setup. Originality/value Recently, this study is the first attempt for modelling product development in IFIs under secular economies. Advances in the field of Shari’ah-compliant product development is important for researchers and professional.

A model bridging team brand experience and sponsorship brand experience

2017 ◽  
Vol 18 (4) ◽  
pp. 380-399 ◽  
Author(s):  
Rui Biscaia ◽  
Galen Trail ◽  
Stephen Ross ◽  
Masayuki Yoshida
Keyword(s):  
Conceptual Framework ◽  
Design Methodology ◽  
Reference Lists ◽  
Brand Experience ◽  
Content Type ◽  
Future Studies ◽  
Sponsorship Effectiveness ◽  
Comprehensive Search ◽  
Comprehensive Framework ◽  
Team Brand

Purpose Previous research has focused on the antecedents of fan loyalty or the link between fans and the team on sponsorship reactions, but no comprehensive framework has been developed to combine these perspectives. The purpose of this paper is to present an integrated framework of how team brand experience during the season impacts sponsorship brand experience. Design/methodology/approach To create the conceptual model, a comprehensive search of peer-reviewed articles was conducted in electronic databases and journal reference lists. The authors identified constructs from prior research aimed at understanding sponsorship effectiveness. These constructs not only included aspects of the sponsorship brand experience, but also aspects within the team brand experience that form the link between consumers’ responses derived from team-related stimuli and the responses evoked by sponsor-related stimuli. Findings This conceptual framework yields a set of 11 propositions regarding fans’ interactions with both team and sponsorship brands highlighting how to strengthen the bond between fans, teams, and sponsors. It provides a comprehensive understanding of this phenomenon and identifies opportunities to increase fan support and the appeal of professional teams to potential sponsors. Originality/value This study extends previous research by providing a unique conceptual framework that highlights the importance of understanding how fans view both the team brand and the sponsor brand. Several suggestions for future studies and strategies to increase the benefits for both teams and sponsors can be drawn from this framework.

Sign in / Sign up

Export Citation Format

Share Document