scholarly journals Contemporary Challenges Confronting Islamic Banking & Finance

2015 ◽  
Vol 55 ◽  
pp. 86-94
Author(s):  
Muhammad Asif Khan ◽  
Muhammad Waseem Shehzad ◽  
Muhammad Atif Khan
Keyword(s):  
Capital Market ◽  
Regulatory Framework ◽  
Western Society ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Reporting Standards ◽  
Financial Instruments ◽  
Tabular Form ◽  
Banking And Finance

The philosophy of Islamic economics is “brining economics in consonance with Shariah”, guiding Islamic banking and finance to abolish interest from operations, has reported a monumental growth, envisaged the most lucrative and unsusceptible segment of the economy. Islamic finance is undoubtedly flourishing worldwide entails trajectory development but at other front it encounters a number of impediments in development since its inception. The emphasis of this study is to encapsulate in tabular form, the contemporary problems and challenges Islamic finance has encountered during the span of last 28-years from 1988 to 2015. The austere Shariah compliance; regulatory and prudential challenges; misconception among western society about Islamic banking philosophy; unavailability of money and capital market for scant Islamic financial instruments; piercing competition; privation of Islamic banking and finance awareness; absence of uniform reporting standards; complexities of regulatory and supervisory issues; lack of central supervisory body, governance and dearth of consensus among Shariah scholars been the precarious challenges among many others. A unified central regulatory and supervisory mechanism required in converging sprinkled Islamic finance practices and to foster a synchronized and standardized regulatory framework consensus need to be developed among all Shariah scholars

scholarly journals Legal and Regulatory Framework of Islamic Banking and Finance: A Study in Singapore

2019 ◽  
Vol 6 (4) ◽  
pp. 234-244
Author(s):  
Ledy Mahara Ginting ◽  
Nafisah Ruhana ◽  
Nur Haziyah Haji Abdul Halim ◽  
Salsabilla Terra Finieli
Keyword(s):  
Capital Flow ◽  
Regulatory Framework ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Flexible Approach ◽  
Banking And Finance ◽  
Finance Industry ◽  
Muslim Minority ◽  
Shariah Governance

The aim of this paper is to examine the Islamic Banking and Finance (IBF) industry in Singapore. Singapore is known to be a global financial hub with a resilient economy for capital flow. As a Muslim minority country, the Islamic finance industry in Singapore is established and fairly stable. This study analyses Singapore’s legal and regulatory framework of IBF to review the legal and regulatory framework which promotes the development of Islamic finance in Singapore. IBF in Singapore has been treated equally as the conventional banking under the same regulatory framework, with little guidelines on Shariah governance in the country. This paper concludes that the Singaporean government adopts a flexible approach in regulating IBF in Singapore, with little interventions on Shariah matters.

Fudhuli Transactions:Potential Applications and Parameters

2021 ◽  
Vol 12 (3) ◽  
pp. 2801-2811
Author(s):  
Ahmad Zakirullah Mohamed Shaarani Et.al
Keyword(s):  
Islamic Finance ◽  
Islamic Banking ◽  
Banking And Finance ◽  
Library Research ◽  
Do So

Tasarrufal-Fudhuli refers to transactions or contracts carried out by a person who does not have the authority or legitimacy to commit the transaction, and these contracts include exchange contracts such as sales, rent and services, or charitable contracts such as representation/wakalah, hibah, loans, guarantees, and so on. In the context of Islamic finance, although it is a type of transaction that is argued and debated by the jurists and fuqaha, some have begun to realize its great potential in keeping with current developments, especially in the field of Islamic banking and finance. Besides looking at Fudhuli in terms of its meaning and the Shariah rules that govern it, the main focus of this study is the discussion of its dhawabhit/ parameters as it has its own risks associated with it compared to other established types of Islamic contracts. The study utilizes a full library research by analyzing scholar`s debates and their arguments on this kind of contract, the contract`s potential, followed by analyzing the parameters that should be adopted in operationalizing this contract together with the discussion on the issues of fudhulithat are relevant to current Islamic banking and finance operations. The results of this study show that the views that allow this contract has strong arguments, and that it has also been widely practiced outside of Malaysia, but is relatively new in Malaysia. While it is permissible, however, some parameters must be put in place so that it is not in conflict with Shariah, and comply with the Shariah requirement of each contract done on a fudhuli basis. There must also be an urgent and genuine need to do so, and not involve ribawi items that require immediate delivery of the asset, as well as the existence of a council or body that controls and monitors the process and implementation by the involved parties

scholarly journals Sukuk Default Regulation in Malaysia and United Arab Emirates: Comparative Analysis

2019 ◽  
Author(s):  
International Journal of Fiqh and Usul al-Fiqh Studies
Keyword(s):  
Comparative Analysis ◽  
United Arab Emirates ◽  
Capital Market ◽  
Regulatory Framework ◽  
Court Decision ◽  
Islamic Finance ◽  
Moral Hazards ◽  
Finance Industry ◽  
Market Framework ◽  
The Right

The nascent Islamic finance industry is still facing the challenges of uncertainties in legal regimes, Sharī’ah interpretations, the right of investors, and remedies in default circumstances. The event of Sukūk default is one of the significant challenges faced by the Islamic capital market. The recent Dana Gas Sukūk default triggered by Sharī’ah compliance interpretations has shown the extent of danger that moral hazards could cause to the entire Islamic finance space. Scholars have argued that the Sharī’ah-compliant arguments witnessed in the industry were because of the nature of the capital market framework of any particular jurisdiction and were not significantly Sharī’ah issues. This study aims to carry out a brief comparative analysis of the default cases in Malaysia and the United Arab Emirates (UAE). The study compares the legal jurisdiction and regulatory framework in summary-background of the judges and court decision samples based on these structures and how they have influenced Sukuk default regulations in the jurisdiction. This study employs a comparative analysis by considering fundamental elements in the regulatory framework.

scholarly journals The Application of Ju'alah in Islamic Finance: The Malaysian Perspective

2020 ◽  
Vol 7 (1) ◽  
pp. 29-41
Author(s):  
Ismail Mohamed ◽  
Mohd Rafede Mohd ◽  
Aishath Muneeza
Keyword(s):  
Capital Market ◽  
Islamic Finance ◽  
Specific Reference ◽  
Islamic Banking ◽  
Finance Industry ◽  
Potential Applications

Ju’alah is one of the least researched types of Shariah contracts used in Islamic finance. The objective of this paper is to explore the current and potential applications of Ju’alah with specific reference to Malaysian Islamic banking, takaful and the Islamic capital market. This paper establishes that there is potential for using Ju’alah in Islamic finance as a primary and/or secondary contract. It also establishes that Ju’alah can be used in takaful, though it is not being currently used for this in Islamic banking and the Islamic capital market in Malaysia. It is anticipated that the findings of this paper will improve understanding of the practice of Ju’alah in the Malaysian Islamic finance industry.

scholarly journals The Role of Musharakah in the Economic Development of Tehsil Dargai, District Malakand, Khyber Pakhtunkhwa, Pakistan

2019 ◽  
Vol 6 ◽  
pp. 80-97
Author(s):  
Suhail Ahmad ◽  
Ejaz Aslam ◽  
Prof. Dr. S. Ghiasul Haq ◽  
Prof. Dr. Mohd Ma'Sum Billah
Keyword(s):  
Response Rate ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Limited Data ◽  
Khyber Pakhtunkhwa ◽  
Banking And Finance ◽  
Finance Industry ◽  
Muslim Countries ◽  
Job Opportunities

Islamic finance industry has been growing for the last twenty years, both in Muslim and non-Muslim countries around the world. There are different modes of Islamic finance which provide job opportunities across the globe. In Pakistan, the contemporaneous growth of Islamic banking and finance is not different from other countries. Islamic banking and finance does not only provide employment for individuals, indeed it also offers various products and services to customers across the country. Musharakah is a form of business in Islamic finance that is being adopted rapidly by most of the customers in Islamic banking and finance institutions. Therefore, the purpose of this study is to examine the role of Islamic finance, mainly how Musharakah is playing its due role in creating employment and maintaining sustainable development projects which in turn are causes of the development of the economy, particularly of Tehsil Dargai. For this purpose, this study collected data through a questionnaire that was randomly distributed among 100 respondents in Tehsil Dargai, District Malakand, Khyber Pakhtunkhwa (KP), Pakistan and the response rate was 60%. We found that Islamic finance is rapidly growing in Dargai; indeed, people are practicing different modes of Islamic finance and Musharakah is the most popular form of Islamic finance in this area. This study utilizes limited data because it was only conducted in Dargai.

scholarly journals Analyzing the Role of Islamic Finance in Kuwait Regarding Sustainable Economic Development in COVID-19 Era

2022 ◽  
Vol 14 (2) ◽  
pp. 701
Author(s):  
Salah Alhammadi
Keyword(s):  
Economic Development ◽  
Best Practices ◽  
Management Strategies ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Banking And Finance ◽  
Sustainable Economic Development ◽  
Grounded Theory Method ◽  
The Impact

The aim of the present study was first to consider the impact of COVID-19 on Kuwait’s economy. Second, it attempted to examine the role of Islamic banking and finance in achieving socioeconomic justice and attaining best practices by securing social goods. Hence, the research assessed how Islamic banking and finance can help in reconstructing the economy based on Maqasid Al-Shari’ah (higher ethical objectives) to redevelop social, economic, and environmental welfare, especially in the COVID-19 era. A theoretical approach was adopted, namely, the grounded theory method (GTM), to explore COVID-19 related solutions for achieving sustainable economic development. The findings show that Islamic banking and finance can be employed to mitigate the impact of coronavirus and can be used as an alternative financial system to support both affected people and entrepreneurs. The paper expands on previous literature discussing the role of Islamic finance in management strategies through Islamic ethical objectives, with a particular focus on Kuwait’s post-COVID-19 era. This research can help policymakers to develop mechanisms and supporting approaches for Kuwait’s economy.

scholarly journals Managing Shariah Non-Compliance Risk via Islamic Dispute Resolution

2019 ◽  
Vol 13 (1) ◽  
pp. 2 ◽  
Author(s):  
Maria Bhatti
Keyword(s):  
Dispute Resolution ◽  
Institutional Arrangements ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Legal Analysis ◽  
Normative Approach ◽  
Banking And Finance ◽  
Finance Industry ◽  
Governance Systems ◽  
Shariah Governance

This article discusses Shariah non-compliance risk as a form of operational risk intending to ensure that operations in the Islamic and banking finance industry comply with Shariah procedures. In the field of Islamic finance, Shariah non-compliance risk refers to the possibility that Islamic finance transactions may be challenged based on Shariah non-compliance. This article uses a comparative and normative approach as well as a legal analysis of the case of Beximco. The article proposes the management of Shariah non-compliance risk by augmenting the effectiveness of Shariah governance systems with Islamic banking and finance arbitration; arbitration should be an enforced part of Islamic finance institutional arrangements—as it always has been classically—to provide flexibility for dispute resolution. To this end, the article examines contemporary implementations of Shariah arbitration rules to assess how Shariah non-compliance risk can be better managed via Islamic dispute resolution procedures.

Sukuk as an Attractive Alternative of Funding and Investment in Tunisia

2015 ◽  
Vol 3 (1) ◽  
pp. 60
Author(s):  
Hajer Chermi ◽  
Yacin Jerbi
Keyword(s):  
Private Sector ◽  
Capital Market ◽  
Government Funding ◽  
Islamic Finance ◽  
Attractive Alternative ◽  
Special Focus ◽  
Financial Instruments ◽  
Key Factors ◽  
Finance Industry ◽  
The Past

During the past decade, the Islamic finance industry has witnessed significant developments, particularly in the field of Sukuk (Islamic bonds). Sukuk represent one of the most successful products in Islamic finance. They have attracted the attention of several investors and become increasingly popular in various markets worldwide. They have gained prominence as financial instruments serving both government funding through the issuance of sovereign sukuk and private sector funding through corporate sukuk. This paper starts by providing a brief overview on the sukuk structuring and on the major developments in the flourishing world Islamic capital market. It then investigates the Malaysian sukuk market, with special focus on the key factors contributing to its successful experience. The paper concludes by explaining the ways through which sukuk represent an attractive alternative of funding and investment for Tunisia, taking into account that Tunisia is preparing for its first issuance of sovereign sukuk in the second term of 2013. The promising potential sukuk is also demonstrated through comparing measures taken by the Tunisian and Malaysian governments. 

The possible inclusion of legal provisions in Islamic banking and finance

2018 ◽  
Vol 60 (2) ◽  
pp. 662-680 ◽  
Author(s):  
Carino Modan ◽  
Rusni Hassan
Keyword(s):  
Task Force ◽  
Regulatory Framework ◽  
Lessons Learned ◽  
Islamic Banking ◽  
Investment Funds ◽  
Content Type ◽  
Banking And Finance ◽  
Legal Provisions ◽  
Definition Of ◽  
Practical Implications

Purpose This paper aims to thoroughly examine the extent to which the current legal and regulatory framework is inclusive towards Islamic banking and finance (IBF) practices in the attempts to introduce IBF as a significant component in the Mozambique’s financial system. This is achieved by providing a critical review on the Mozambican current legal and regulatory framework including the court and arbitration system, as well as the country’s financial institutions law and regulations. Design/methodology/approach The methodology used in this study is the qualitative approach. The analysis made is based on descriptive and analytical approach whereby the study examined and critically analysed the banking regulations in Mozambique with the purpose of finding the legal gap in the existing legal and regulatory framework that allows the introduction of IBF in the country. Findings This study finds that whilst some legal provisions in the current legal and regulatory framework are conflicting with the Sharï’ah principles such as the definition of loans and the concept of interest, there is also a certain number of enabling features that can be immediately explored, including deposits (with no interest), leasing operations, investment funds or venture capital. Research limitations/implications At present, to the best of the authors’ knowledge, this is the first attempt ever made to assess the compatibility of the existing Mozambican commercial laws with the Islamic principles hence identifying the challenges that might arise due to the implementation of IBF practices in Mozambique. Practical implications This paper has several practical implications in the sense that it helps the financial market authorities in Mozambique to be able to foresee possible inclusion of provisions on Islamic transactions in the country’s existing financial regulations. Social implications The contributions of this paper lie in the valuable recommendations made on the insertion of Islamic principles in the current regulatory framework as well as assisting in overcoming some of the conflicting aspects in medium to long term. Mozambique should explore and benefit from the experience and lessons learned by the neighbouring countries that have successfully adopted the IBF practice. It is recommended that the Central Bank should establish a “task force team”, comprising of multi-skilled professionals and experts in Islamic finance from various internal areas ranging from licensing to supervision together with Sharï’ah scholars and representatives from the Muslim Community, to study the required process for adoption of IBF in the country. Originality/value There is no other study on IBF in Mozambique, particularly on legal and regulatory aspects.

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