Tunisia Islamic finance: overview and future prospects

2014 ◽  
Vol 5 (1) ◽  
pp. 2-14 ◽  
Author(s):  
Neila Boulila Taktak ◽  
Sarra Ben Slama Zouari
Keyword(s):  
Critical Mass ◽  
Financial Education ◽  
Legal Framework ◽  
Islamic Finance ◽  
Islamic Banks ◽  
Content Type ◽  
Finance Industry ◽  
Current State ◽  
Potential Development ◽  
Recent Developments

Purpose – The purpose of this paper is to better understand the current state of the Islamic financial system in Tunisia. In addition, it is aimed at discussing the preconditions that can help exploit the potential development of Tunisia's Islamic finance and expand the banked population. Design/methodology/approach – The paper describes the regulatory and legal framework governing the Tunisian Islamic banks. It provides a mapping of Islamic banks, mutual funds, Takaful institutions and a potential Sukuk market. The paper also relates recent developments including academic qualifications and training in Islamic finance. Findings – The paper concludes with various recommendations for the successful transition from a niche position to a critical mass. It argues the need to establish a specific regulatory framework, supervisory standards and rules of accounting for this kind of institutions. It suggests the development of Islamic financial education to strengthen the role played by the Islamic financing Ecosystem and to help Tunisia promote local and exportable expertise to other countries. Finally, authorities should focus more on promoting market Sukuk, Takaful and microcredit to fund SME. Originality/value – This paper contributes to the assessment of the current situation of Islamic finance in Tunisia by performing a full scan of the Islamic financial landscape instead of being limited only to Islamic banks. It proposes some prerequisites to benefit from the opportunities offered by the Islamic finance industry in Tunisia to take advantage of its future potential and ensure its promotion.

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.

scholarly journals The internal challenges facing Islamic finance industry

2016 ◽  
Vol 9 (2) ◽  
pp. 222-235 ◽  
Author(s):  
Abdulazeem Abozaid
Keyword(s):  
Product Development ◽  
Design Methodology ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Banking And Finance ◽  
Finance Industry ◽  
Development Methodology ◽  
Shariah Governance

Purpose The paper aims to highlight the challenges facing Islamic finance industry and outline the prospectus of what constitutes a sound Islamic banking product in terms of both its Shariah control and product development methodology. Design/methodology/approach The paper analytically addresses the internal challenges facing Islamic finance industry by highlighting, first, the deficiencies in the existing Shariah supervisory work and, then, the deficiencies in the product development methodology followed in Islamic banks. Findings Islamic banking and finance is facing some internal challenges which require immediate action. Although facing the external challenges may be beyond the capacity of the industry players, Islamic banks have no excuse to overlook or turn a blind eye to their internal challenges which can be overcome by enacting Shariah governance for both products and Shariah control and reforming the methodology of product development. Originality/value This paper highlights an issue that has not received the needed attention, and it proposes the necessary solutions to the problems it identifies.

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.

Fatwā shopping and trust: towards effective consumer protection regulations in Islamic finance

2017 ◽  
Vol 12 (3) ◽  
pp. 340-355 ◽  
Author(s):  
Umar A. Oseni
Keyword(s):  
Consumer Protection ◽  
Financial Services ◽  
Relevant Literature ◽  
Legal Framework ◽  
Legal Regulation ◽  
Policy Framework ◽  
Consumer Trust ◽  
Islamic Finance ◽  
Content Type ◽  
Finance Industry

Purpose This study aims to examine the phenomenon of Fatwā shopping, its effect on consumer trust in Islamic finance products and the need for effective consumer protection regulations in the Islamic finance industry. Design/methodology/approach The methodology used in this study is qualitative research which draws significantly from relevant regulations on financial consumer protection through analytical method to identify common themes on Fatwā shopping and consumer trust in the relevant literature. Findings This study finds that the increasing practice of Fatwā shopping through clandestine searches by some Islamic banks to get their new products endorsed by leading Sharī‘ah scholars requires proper legal regulation to avoid a total erosion of trust in the entire Islamic finance industry. Research limitations/implication Though Fatwā shopping is practiced in the Islamic finance industry, it is always difficult to get some desperate Islamic bankers to agree to this; hence, this study does not portend to examine the evidence on Fatwā shopping, but it seeks to bring to the fore the effect of Fatwā shopping on consumer trust in Islamic financial services, and the need for effective consumer protection regulations. Practical implications This study is expected to provide an invaluable guide and policy framework for emerging and promising jurisdictions on the need to regulate Fatwā shopping through an effective legal framework based on some best practices identified in the study. Originality/value Though there have been a number of studies relating to Fatwā shopping, focusing on the need for effective consumer protection regulations in the Islamic finance industry will enrich the existing literature and have significant implications for the future of the industry.

Drawing ethical mentation in Islamic banks; addressing operational lines heterogeneity with special reference to Al-Ghazali’s ethical philosophy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shinaj Valangattil Shamsudheen ◽  
Saiful Azhar Rosly ◽  
Syed Abdul Hamid Aljunid
Keyword(s):  
Decision Making ◽  
Special Reference ◽  
United Arab Emirates ◽  
Partial Least Square ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Ethical Philosophy ◽  
Divine Knowledge

Purpose This study aims to examine the decision-making behaviour of Islamic banking practitioners of the United Arab Emirates with special reference to the operational line heterogeneity by employing factors that are religious in nature such as intellect, satanic force and divine knowledge as encapsulated in al-Ghazali’s ethical philosophy. Design/methodology/approach A total of 337 samples were collected from the Islamic banking practitioners in the United Arab Emirates using a purposive sampling technique, and the empirical analysis was conducted with the measures of model fit and bootstrapping technique using Partial least square Structural equation modelling and multi-group analysis. Findings The empirical findings reveal that the dedicated use of intellect in making decisions related to ethical issues where desires and emotions tend to overwhelm reason and human choices. While divine knowledge is found ineffective guidance of the intellect, the element of satanic force is found significantly impacting decision-making. As the lack of religious consciousness is evident among respondents, higher exposure to operational risk is expected. These findings were found identical across the Islamic banking practitioners in different lines of operations. Research limitations/implications The span of the study is limited to a single country. Future studies are recommended to replicate the study to more markets where the share of Islamic finance is significant. Practical implications Findings of the study highly suggest respective authorities of Islamic financial institutions to intensify the capacity-building programs on the foundation of faith which includes Islamic thought and worldview, to enhance the corporate ethical decision-making. Moreover, equal importance should be given to all the banking practitioners regardless of line of business operations. Originality/value With undue emphasis is given to the juristic (fiqh) aspects of Shariah compliance in the Islamic banking and finance industry, less has been attempted to explore its ethical dimension (akhlaq) in the compliance parameters that leave a relatively large gap to address prevailing unethical practices in Islamic finance institutions. Findings from this study can be useful as a warning to the Islamic banking firms to enhance the sense of God-fearing and improve existing measures in the organisation in mitigating operational risks that may arise from people or system and consequently ensure the smooth governance of the Islamic banks.

Building trust in Islamic finance products and services

2017 ◽  
Vol 12 (3) ◽  
pp. 356-372 ◽  
Author(s):  
Syed Nazim Ali
Keyword(s):  
Financial Services ◽  
Islamic Finance ◽  
Illustrative Case ◽  
Content Type ◽  
Finance Industry ◽  
The Past ◽  
Building Trust ◽  
Central Tenet ◽  
Stake Holder ◽  
Perceived Impact

Purpose With the increasing instances of malfeasance and frauds coming to light in the financial services industry, trust has become a key concern for customers. Fortunately, in the case of Islamic Finance, trust is a central tenet, and its importance can be seen through the emphasis of Amanah or trustworthiness that should be present in every financial transaction. However, it has been argued that the principle of trust has not been truly realized in Islamic Finance, or that there are still issues of distrust regarding anything which is obtrusively branded as “Islamic”. In this paper, the author will analyze the reasons for gaps between the expectations and reality of the finance industry today by looking at the main factors contributing to distrust among the different stakeholders and the perceived impact of the distrust on the industry and the general public. It then focuses on the past and ongoing efforts by academia to bridge these gaps between the different stake holder groups with the help of illustrative case studies as well as recommends future steps to be taken to ensure a stronger foundation of trust within the Islamic Finance community.

scholarly journals Analisis Rasch Pada Atribut Perbankan Syariah: Studi pada Generasi Milenial

2019 ◽  
Vol 5 (3) ◽  
pp. 145
Author(s):  
Anggiya Rossana ◽  
Egi Arvian Firmansyah
Keyword(s):  
University Students ◽  
Market Share ◽  
Rasch Analysis ◽  
Primary Data ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking Services ◽  
Finance Industry ◽  
Potential Customers

The presence of Islamic banking in Indonesia is one form of progress and development of the Islamic finance industry in Indonesia. However, for more than 20 years, Islamic banking has apparently not been able to grow optimally and experienced a slowdown in its growth. Islamic banks need to increase their market share and also need to identify which attributes are most considered by the potential customers, especially the millennials whose number is large. This study aims to find out which attributes are most considered in using Islamic banking services. This study uses primary data by distributing online questionnaires to 180 university students in Bandung, namely Unpad, ITB and UPI students. To analyze the data, Rasch analysis was used. The results of Rasch analysis show that cleanliness, friendliness, and Islamic principles turned out to be the most considered attributes in selecting Islamic banking in Indonesia. Given that these three attributes are the most considered, it is expected that Islamic banking strengthen these three aspects in order to increase the market of Islamic finance industry markets.

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.

Farmers' perception and preference of Islamic Banking in Turkey

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mehmet Bulut ◽  
Harun Celik
Keyword(s):  
Logistic Regression ◽  
Agricultural Sector ◽  
Income Level ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Knowledge Level ◽  
Islamic Banks ◽  
Agricultural Finance ◽  
Content Type ◽  
Islamic Bank

PurposeThe purpose of this paper is to examine the factors that influence farmers' preference for the use of Islamic banks in Turkey and to investigate their knowledge level and perception about Islamic finance.Design/methodology/approachSurvey data used in this study is obtained by drawing a sample of 1902 farmers who are members of the Agricultural Credit Cooperatives Union (ACCU) from 37 provinces of Turkey. Pearson's Chi-square test is used to analyze the association between the demographic features of farmers, conventional bank usage and Islamic bank usage. Binary logistic regression model is used to estimate the factors influencing the preference for Islamic banks. Explanatory variables include knowledge on Islamic banking and finance, perception of compliance to religion, saving ability and cost concern along with the control variables of Islamic bank branch number in the region and age of respondent. Robustness check is conducted via alternative models using ordinary least squares (OLS) and logistic regression.FindingsLess than 10% of the participant farmers use Islamic banks and 59% declare they know nothing about Islamic banking. Age, education level, income level, nonagricultural income level, saving ability, duration of working in agriculture, land size and region are significantly related to farmers' preference of using Islamic banks. Knowledge level, perception of religious compliance, saving ability and cost concern are statistically significant factors that influence the probability of using Islamic banks.Research limitations/implicationsThis study does not include the analysis of the relationship between being religious and using Islamic banks because questions related to the assessment of religious practice were excluded due to the ACCU's sensitivity to investigate personal beliefs. Therefore, future studies can expand the scope of this research by investigating religiousness. The sample is chosen from the ACCU members who are already benefiting from a formal source of credit; therefore, the results should not be attributed to all farmers.Practical implicationsIslamic banks and microfinance institutions' further engagement in the agricultural sector and ACCU's implementation of Islamic finance instruments.Social implicationsIslamic banks' further diversification in the agricultural sector and ACCU's implementation of Islamic finance instruments.Originality/valueTo the best of the authors' knowledge, this paper is the first to investigate the farmers' perception and preference of Islamic banking in Turkey. The sample size of 1902 is much larger and geographically diversified compared to studies in agricultural finance. This study will be valuable for the agricultural finance empirical studies in Turkey as well as an important addition to the emerging literature on Islamic finance.

Value- based Islamic banking and reporting in Bahrain

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Akhtar Ali Saeed Mohammed ◽  
Fadillah Mansor
Keyword(s):  
Annual Reports ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Reporting Standard ◽  
Content Type ◽  
Islamic Financial Institutions ◽  
Islamic Economic ◽  
Practical Implications ◽  
Specific Contribution

Purpose This paper aims to analyse whether the practices of Islamic banks in Bahrain are in line with value-based Islamic banking (VBIB) and reporting disclosure in the annual reports towards achieving their fundamental objectives of human-centred economic development and social justice. Design/methodology/approach Based on Islamic finance, Islamic economic principles and perception of Maqasid al-Shari’ah, this paper examines and assesses the current practices of Islamic financial institutions (IFIs) in Bahrain through content analysis of financial and annual reports of Islamic banks in Bahrain and interviews of Islamic banking experts. Findings The findings reveal that value-based banking (VBB) has not been translated fully into practice by the Islamic banks in Bahrain. Research limitations/implications The data analysis was restricted to Islamic banks in Bahrain. Practical implications This paper identifies the need for reporting standard development to improve the VBB practice in Bahrain in the future. Looking at the objectives of the IFIs, this paper introduces the concept of VBB in Bahrain, which includes ethical banking, responsible banking and social responsibility. The study adds value not only to the current Islamic finance literature but also helps many stakeholders, including prospective academics, who may conduct comparative studies in different jurisdictions throughout the world. Originality/value The specific contribution of this paper is the identification of the VBB practices and related disclosure in the Islamic banking industry in Bahrain. The study is useful to harmonise and standardise the practices of VBIB by the contemporary Islamic banks in Bahrain.

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