Legal Origin, Institutional Quality, and Islamic Finance Development: Does Shari’a Matter?

2020 ◽  
Vol 13 (2) ◽  
pp. 345-369
Author(s):  
Rihab Grassa
Keyword(s):  
Financial Development ◽  
Legal System ◽  
Civil Law ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Financial Industry ◽  
Legal Origin ◽  
Muslim Population ◽  
Legal Origins ◽  
Shari'a Law

AbstractPrevious studies on financial development have shown that differences in the legal origin explain differences in financial development. Using historical comparisons and cross-country regressions for 40 countries observed for the period from 2005 to 2018, our research assesses how different legal origins have affected the development of Islamic finance worldwide. More particularly, our research assesses empirically why and how the adoption of Shari’a, wholly or partially (combined with common or civil law), could explain the level of development of Islamic finance in different jurisdictions. Our primary results show that countries adopting a Shari’a legal system have a very well-developed Islamic financial system. Moreover, countries adopting a mixed legal system based on common law and Shari’a law have sufficient flexibility within their legal systems to make changes to their laws in response to the changing socioeconomic conditions, and this has helped the development of the Islamic financial industry. However, countries adopting a mixed legal system based on both civil law and Shari’a law appear less flexible in making changes to their old laws and this thwarted the development of the Islamic financial industry in these countries. Furthermore, we have found that the concentration of a Muslim population (the percentage of Muslim population) along with the level of income have both had a positive effect on the development of Islamic banking assets and on the development of Islamic banking as a whole.

Islamic Financial Inclusion

2020 ◽  
pp. 155-173
Author(s):  
S. M. Sohrab Uddin ◽  
Mohammad Zoynul Abedin ◽  
Nahid Afroz
Keyword(s):  
Banking Sector ◽  
Financial Inclusion ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Policy Makers ◽  
Muslim Population ◽  
Muslim Countries ◽  
The World ◽  
Global Concern ◽  
Empirical Contribution

Financial Inclusion (FI), a global concern of this decade, has been accepted by development agencies, governments, and policymakers as one of the pre-eminent ways to eradicate worldwide poverty and income inequality. Consequently, authorities are looking for possible ways to include the unbanked in formal financial chain. Islamic finance, specifically Islamic banking, with its welfare-oriented principles and unique products, has been able to capture the attention of policy makers. Moreover, a major portion of the Muslim population still exclude themselves from the formal financial chain due to religious prohibition of interest-based transactions for whom Islamic finance is the only way to inclusion. Bangladesh, one of the major Muslim countries in the world, is still to bring one-fourth of its total population under formal financial chain. At this backdrop, this chapter examines the empirical contribution of Islamic banking sector in financial inclusion condition as well as development scenario of Bangladesh.

scholarly journals The civil law form of musharakah as an instrument for direct participation of the Islamic bank in capital: A retrospective analysis and modernity

Pravovedenie ◽  
2020 ◽  
Vol 64 (3) ◽  
pp. 326-351
Author(s):  
Anna N. Kuznetsova ◽  
◽  
Inese Tenberga ◽  
Keyword(s):  
Economic Development ◽  
Civil Law ◽  
Banking System ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Free Banking ◽  
Muslim Population ◽  
Legal Nature ◽  
Distribution Of Resources ◽  
Conventional Banks

Conventional banks, which operate under the conditions of interest capitalism, no longer dominate the financial sector. In the 21st century, Islamic banks, which provide services on an interest-free basis, have become their main competitors. In recent years, Islamic banking has grown rapidly even though 30–40 years ago it was only a regional phenomenon that could be found in countries with a predominantly Muslim population. The dispersal of capital by scaling a separate interest-free banking segment is now on the agenda of the Islamic world. It is stimulating the growing social demand for a fair distribution of resources within the community, as well as sustaining, at the same time, resilient economic development. However, the activity of Islamic banks remains a poorly studied and understood phenomenon within the circles of Russian legal science. In this article, the authors reveal the legal nature of the participation transaction involving shirkat al’-inan, while attempting to clarify the notion of using musharakah as a form of civil law, derived from shirkat al’-inan, within the Islamic banking system.

PETA KEKUTAN EKONOMI SYARIAH DALAM MENGHADAPI MASYARAKAT EKONOMI ASEAN (MEA)

ALQALAM ◽  
2015 ◽  
Vol 32 (2) ◽  
pp. 331
Author(s):  
Itang Itang
Keyword(s):  
Free Market ◽  
Islamic Finance ◽  
Islamic Banks ◽  
Economic Community ◽  
Financial Industry ◽  
Muslim Population ◽  
The People ◽  
Islamic Financial Institutions ◽  
Asean Economic Community ◽  
Islamic Economic

This paper examines the economic power of sharia that is not only able to survive but also can grow in the free market zone in Southeast Asia (ASEAN Economic Community (AEC)). The Islamic economic strength in Indonesia can be based on several reasons namely: 1). Muslim population. As the country with the largest Muslim population of about (87-90%), Indonesia should be the pioneer and the great power of Islamic finance in the world 2). Inherent Islamic doctrine and human resources. 3). Regulation of Islamic Economics as a tool that can legalize all policies the implementation of Islamic Economics. 4). Actors of Islamic Economics that come from various backgrounds such as practitioners, academics and customers. 5). Islamic Financial Industry Development. According to the data from Bank Indonesia in October 2013, there are 11 Islamic Banks, 23 Islamic Banks in the form of Sharia Business Unit , and 160 small sharia banks that distribute the fund for the people. Islamic banking assets currently has reached Rp. 228 trillions. The development of Islamic financial institutions does not only reach Islamic banks but also Islamic non­ banks such as insurance and pawnshop. Therefore we  are optimistic that sharia economy can grow in ASEAN Economic Community (AEC).Key word: sharia economy , islamic finance, AEC , ASEAN ,

scholarly journals THE INTERPLAY BETWEEN THE GLOBAL ISLAMIC FINANCE AND ECONOMIC GROWTH OF MUSLIM COUNTRIES

2021 ◽  
Vol 3 (38) ◽  
pp. 231-239
Author(s):  
A. Batorshyna ◽  
V. Tokar ◽  
L. Kolinets ◽  
L. Sybyrka ◽  
O. Almarashdi
Keyword(s):  
Economic Growth ◽  
Saudi Arabia ◽  
Capital Market ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Financial Industry ◽  
Muslim Countries ◽  
Current Trends ◽  
Islamic Insurance ◽  
The Impact

Abstract. The article discloses development peculiarities of the global Islamic financial industry and determines its interplay with the economic growth of Muslim countries. The aim of the article is to reveal current trends in key segments of the global Islamic finance market (Islamic banking, capital market and Iinsurance) and analyze the impact of each of them on the economic growth of the countries, which are most developed in the field of Islamic finance. The countries surveyed were selected according to the Islamic Finance Development Indicator (IFDI), which reflects the general state of the Islamic financial industry worldwide and in each country. IFDI is based on five indicators: quantitative development (QD), knowledge, governance, corporate social responsibility (CSR) and awareness. In 2019, the United Arab Emirates (UAE), Bahrain, Indonesia, Malaysia and Saudi Arabia were the most developed countries in terms of Islamic finance. Examining the impact of different types of Islamic financial assets on the GDP of these Muslim countries, we used Eviews10 to conduct a regression analysis, which showed a positive relationship between GDP and only two types of assets, namely bank and Islamic bonds (sukuk). associated with significant volumes of these segments of the global Islamic financial market and the tradition of investing in key sectors of the economy. We discovered the negative relationship between GDP and Islamic insurance (Takaful) in all countries studied, which can be explained by ineffective investment strategies of Islamic insurance companies, which suffer from low profitability and are unable to increase their assets in line with current trends in innovation and development.  We also found the inverse relationship between Islamic funds and GDPs of the UAE, Malaysia and Saudi Arabia, which may be related to the distribution of financial resources from these countries to other parts of the world and investment cycles, including the waiting period before repatriation of profits and interest; the concentration of funds in major markets makes it impossible to scale their activities in the global market. Keywords: Global islamic finance, Islamic banking, Islamic capital market, Sukuk, Islamic funds, Takaful, Economic growth. JEL Classification G15, O43, O53, Z12 Formulas: 1; fig.: 1; tabl.: 5; bibl.: 20.

scholarly journals EXISTENCE AND POSITION OF ISLAMIC ECONOMIC LAWS IN INDONESIA

2019 ◽  
Vol 27 (2) ◽  
pp. 222
Author(s):  
Angkat Poetra Pratama ◽  
Hari Sutra Disemadi ◽  
Paramita Prananingtyas
Keyword(s):  
Financial Institutions ◽  
Legal System ◽  
Research Method ◽  
Islamic Banking ◽  
Real Sector ◽  
Financial Industry ◽  
Economic Law ◽  
The People ◽  
Halal Food ◽  
Islamic Economic

The Islamic economy in Indonesia has the potential to continue to grow and has great benefits for the welfare of the economy. The Islamic economic system has also penetrated the real sector with the presence of several types of sharia businesses that include halal food and medicine, Islamic fashion, and even sharia tourism. This study aims to determine the existence and position of Islamic economic law in Indonesia. The research method used in this study is normative juridical. The existence of the Islamic economy is marked by the mushrooming of Islamic-based financial institutions, for example, Islamic Banking, and Islamic Non-Bank Financial Industry (IKNB). The position of Islamic economic law in the Indonesian legal system is no longer just because of historical demands and population because the majority are Muslim but the needs of the wider community. Sharia economic law is felt to be fair so that it can oversee the welfare of the people aspired by the Indonesian people.

scholarly journals OPTIMALISASI PERAN DEWAN PENGAWAS SYARIAH (DPS) DALAM MENJAGA KEPATUHAN SYARIAH PADA PERBANKAN SYARIAH DI INDONESIA

2017 ◽  
Vol 2 (1) ◽  
pp. 196-220
Author(s):  
Sumar'in Sumar'in
Keyword(s):  
Islamic Finance ◽  
Islamic Banking ◽  
Real Sector ◽  
Financial Globalization ◽  
Financial Industry ◽  
The Real ◽  
Islamic Bank

The challenge of financial globalization impact on Islamic finance businesses to maintain shariah compliance aspects as a means of mistake prevention and possible risks in the real sector. Compliance functions as actions and measures, both are preventive to ensure the policies, rules, systems and procedures, the business activities carried out by the Islamic Bank. The design of this study is library reaserch approach. The result shows that the system of supervision of compliance toward sharia must been done based on the rules by DPS. The functions of DPS on Islamic Banking, normatively must been implemented in accordance with the principles of compliance, the compliance culture, management risk and the values of shariah systems. The existence of DPS really determines the establishment of sharia compliance, which becomes the main unsure in the existence and continuity of syariah financial industry.

scholarly journals Exploring Small and Medium Enterprises’ Perceptions Towards Islamic Banking Products in Morocco

2019 ◽  
Vol 11 (10) ◽  
pp. 106
Author(s):  
Mustapha Ziky ◽  
Raja Daouah
Keyword(s):  
Risk Sharing ◽  
Small And Medium Enterprises ◽  
Policy Formation ◽  
Islamic Finance ◽  
Financial Policy ◽  
Islamic Banking ◽  
Financial Industry ◽  
Business Support ◽  
Industry Practice ◽  
Medium Enterprises

The main purpose of the study is to examine the willingnesslof Moroccanlsmall andlmediumlsizelenterpriseslto adopt Islamic finance methods andlthe factors thatlmay affect theirldecision. The researchlmethod is based on a modified version of theory of planned behavior (TPB). A total of 250 questionnaires were randomly distributed to SME’s managers but only 167 were valid for Analysis. The empirical findings based on our research framework indicate that most of SMEs are potential user of Islamic finance instruments. Noticeably, cost plays a major role in determining the likelihood of demand of these products by Moroccan SMEs. In addition, business support, risk sharing, suitability and self-efficacy were also found significant in determining the probability of use of Islamic financial methods by SME. The findings extend our understanding of Moroccan SMEs attitudes and awareness towards Islamic finance, and they are of key importance in informing future financial industry practice and financial policy formation in Morocco.

Pembiayaan Perumahan Secara Islam Di Malaysia: Analisis Kelebihan Produk Berasaskan Musharakah Mutanaqisah Di Kuwait Finance House Malaysia Berhad (KFHMB)

2011 ◽  
Author(s):  
Mohd Sollehudin Shuib ◽  
Ahmad Azam Sulaiman@Mohamad ◽  
Mohammad Taqiuddin Mohamad
Keyword(s):  
Key Words ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Financial Industry ◽  
Finance House

Produk Pembiayaan Secara Islam telah mula berkembang pesat dalam arus industri perbankan dan kewangan pada masa ini. Keadaan ini antaranya boleh dilihat melalui pertambahan aset perbankan Islam saban tahun di samping penyertaan lebih banyak institusi yang menawarkan produk secara Islam. Produk pembiayaan perumahan Islam contohnya menampilkan pengaplikasian konsep syariah seperti Murabahah, Bay ‘Bithaman Ajil (BBA), BBA komoditi, Ijarah Thumma Bay‘, Istisna’ dan Musharakah Mutanaqisah (MM). BBA paling banyak digunakan dalam menawarkan produk pembiayaan perumahan secara Islam sementara penggunaan konsep lain seperti MM masih lagi dianggap baru. MM adalah kontrak hibrid berasaskan perkongsian dan diakhiri dengan pemilikan tunggal. Konsep ini mula diaplikasi dalam amalan perbankan di Malaysia selepas tahun 2000. Konsep berasaskan ekuiti adalah sangat digalakkan penggunaanya dalam muamalat Islam berbanding konsep berasaskan hutang seperti BBA. Justeru kajian ini akan menganalisis kelebihan yang terdapat dalam produk berasaskan konsep MM dengan tumpuan kepada produk pembiayaan perumahan yang ditawarkan Kuwait Finance House Malaysia Berhad (KFHMB). Kata kunci: Produk pembiayaan perumahan Islam; Musharakah Mutanaqisah Islamic finance products has grown rapidly in the current banking and financial industry. This situation can be seen by the increasing of Islamic banking assets each year in addition to the participation of more institutions offering Islamic products. Islamic home financing products in Islamic banks use the concepts of Murabahah, Bay ‘Bithaman Ajil (BBA), BBA commodities, Ijarah Thumma Bay ‘, Istisna’ and Musharakah Mutanaqisah (MM). BBA concept is the most mode of financing use in Islamic home financing products, while others use the concept of MM. MM is a hybrid contract–based on partnerships. This concept was applied in banking practice in Malaysia since 2000. The concept of equity–based are very much encouraged to be used in the Islamic muamalat than debt–based concepts such as the BBA. Hence, this study will analyze the advantages of the products based on the concept of MM with a focus on home financing products offered by Kuwait Finance House Malaysia Berhad (KFHMB). Key words: Islamic home financing products; Musharakah Mutanaqisah

Islamic Financial Inclusion

2021 ◽  
pp. 292-310
Author(s):  
S. M. Sohrab Uddin ◽  
Mohammad Zoynul Abedin ◽  
Nahid Afroz
Keyword(s):  
Banking Sector ◽  
Financial Inclusion ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Policy Makers ◽  
Muslim Population ◽  
Muslim Countries ◽  
The World ◽  
Global Concern ◽  
Empirical Contribution

Financial Inclusion (FI), a global concern of this decade, has been accepted by development agencies, governments, and policymakers as one of the pre-eminent ways to eradicate worldwide poverty and income inequality. Consequently, authorities are looking for possible ways to include the unbanked in formal financial chain. Islamic finance, specifically Islamic banking, with its welfare-oriented principles and unique products, has been able to capture the attention of policy makers. Moreover, a major portion of the Muslim population still exclude themselves from the formal financial chain due to religious prohibition of interest-based transactions for whom Islamic finance is the only way to inclusion. Bangladesh, one of the major Muslim countries in the world, is still to bring one-fourth of its total population under formal financial chain. At this backdrop, this chapter examines the empirical contribution of Islamic banking sector in financial inclusion condition as well as development scenario of Bangladesh.

scholarly journals System of Governance in Malaysia, and the Extent of its Effectiveness in Islamic Banks and their Windows in Algeria

2021 ◽  
Vol 4 ◽  
pp. 75-103
Author(s):  
Mohamed Chourana ◽  
Sana Bensayah ◽  
Aghilas Kashi
Keyword(s):  
Civil Society ◽  
Islamic Law ◽  
Supervisory Board ◽  
Advisory Board ◽  
Islamic Finance ◽  
The Political ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Financial Industry ◽  
Governance System

هدفت هذه الدراسة إلى التعرف بصفة أساسية على مبادئ الحوكمة في المصارف الإسلامية وقياس مدى  تطبيق تلك المبادئ في المصارف الإسلامية بالجزائر، لأنّ ما يميز الصيرفة الإسلامية هو وجود هيئة رقابية شرعية تنظر في الأنشطة والعقود التي تنتج عنها، وهذا ما يجعلها رائدة في عالم المال، لاتخاذ الشريعة الإسلامية مرجعا لها في كل البنود. ولذلك فإن بعض الدول وعلى رأسهم ماليزيا قامت بانشاء المجلس الإستشاري الشرعي على مستوى البنك المركزي الماليزي، وهو بمثابة السلطة المخولة بالتحقق من تطبيق أحكام الشريعة الإسلامية والإلزام بها في أعمال المصارف الإسلامية، وهو ما يمثل بالحوكمة الشرعية للمصارف الإسلامية. ويعمل هذا البحث على دراسة مدى توفير الإدارة السياسية على البنية التحتية اللاّزمة لتطوير الصناعة المالية الإسلامية في الجزائر الناشئة في كل أبعادها القانونية والشرعية والمالية، وهل يمكن إقامة نظام حوكمة شرعية بضوابطها ومعاييرها في إدارة المصارف الإسلامية بالجزائر، وإنشاء قانون مركزي للمجالس الاستشارية والشرعية؟  وما مدى اعتبار نظام الحوكمة ومدى فعاليته في المصارف الإسلامية، بالاستفادة من التجربة الماليزية؟ خصوصا وأن البنوك الإسلامية الجزائرية لا تحظى بثقة المجتمع المدني بسبب غياب أسس الحوكمة الشرعية بها الكلمات المفتاحية: حوكمة شرعية، المالية الإسلامية، الجزائر، ماليزيا   Abstract This study aimed mainly at identifying the principles of governance in Islamic banks and measuring the extent to which these principles are applied in Islamic banks in Algeria, because what distinguishes Islamic banking is the existence of a Sharia supervisory board that looks at the activities and contracts that result from it. Islamic law as a reference for it in all items. Some countries, on top of them Malaysia, have established the Sharia advisory board at the level of the Central Bank of Malaysia, which is the authority empowered to verify the implementation of the provisions of Islamic law and its obligation in the work of Islamic banks Which represents the Sharia governance of Islamic banks. This research studies the extent to which the political administration provides the necessary infrastructure for the development of the emerging Islamic financial industry in Algeria in all fields, legal, sharia and Financial. Is it possible to establish a Sharia governance system with its controls and standards in the management of Islamic banks in Algeria, and to establish a central law for advisory and Sharia councils? And to what extent is the governance system considered and the extent of its effectiveness considered in Islamic banks, taking advantage of the Malaysian experience? Especially since Algerian Islamic banks do not have the confidence of civil society due to the absence of legitimate governance foundations in them. Keywords: Islamic governance, Islamic finance, Algeria, Malaysia

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