scholarly journals EVOLUTION IN WAQF JURISPRUDENCE AND ISLAMIC FINANCIAL INNOVATION

2018 ◽  
Vol 4 (1) ◽  
pp. 161-182 ◽  
Author(s):  
Mohammad Abdullah
Keyword(s):  
Risk Mitigation ◽  
Financial Innovation ◽  
Evolutionary Process ◽  
Islamic Finance ◽  
Finance Industry ◽  
Financial Products ◽  
Current Scenario ◽  
Charitable Institution ◽  
Investment Tool ◽  
Compare And Contrast

This paper aims to analyse the evolutionary process in the jurisprudential structure of modern waqf (Islamic endowment) and underlines the scope of Islamic financial innovation through the mechanism of waqf. The paper proposes the innovative models of parallel waqf, waqf-based social and financial instruments, waqf-based ṣukūk, micro-takāful, and waqf-based commodity bank. The research adopts the qualitative approach and employs socio-legal research methodology for the analysis. The paper relies on desk-based research. Compared to the classical structure of waqf which was confined within the domain of a perpetual charitable institution, this paper finds that modern waqf has ushered in several new dimensions into its fold. Modern waqf is in the process of re-evolution. Waqf, in the current scenario, has evolved into a financial product, a property-conveyance tool, an instrument of contract, an investment tool, a risk mitigation mechanism and an incorporated entity. The scope of this paper is limited to analysing the jurisprudential evolution of waqf and its impact on the Islamic finance industry. It does not seek to discuss the overall role or impact of waqf on the society as a whole. This paper also does not endeavor to compare and contrast the mechanism and modalities of other philanthropic institutions vis-ā-vis waqf. This paper examines the jurisprudential underpinnings of waqf and their implications and applicability to the Islamic finance industry. The paper draws on the process of how the mechanism of waqf has already been employed to develop various innovative Islamic financial products and how this process can be a catalyst for further innovation in the Islamic finance industry. The main contribution of the paper is encapsulated in the analysis of how the jurisprudential structure of the modern waqf has been evolving in the last few decades to accommodate the modern needs of Islamic finance. It further enumerates a few innovative Islamic financial products which can be developed by exploiting the available flexibility in the evolved version of modern waqf.

Social sukuk: A new mechanism to fund social services

2017 ◽  
Vol 5 (1) ◽  
pp. 69
Author(s):  
Saadiah Mohamed ◽  
Jaizah Othman ◽  
Othmar Lehner ◽  
Ruhaini Muda
Keyword(s):  
Social Services ◽  
Risk Sharing ◽  
Social Needs ◽  
Islamic Finance ◽  
Social Sector ◽  
Banking And Finance ◽  
Finance Industry ◽  
Financial Products ◽  
The Social ◽  
Asset Class

While the premise of Islamic finance embraces  the principles of maqasid al-shariah and risk sharing with  claims to social justice and welfare, the direct impact of the modern Islamic finance industry and its contribution to the social sector  has been limited. This paper examines the claim among critics that there is an inherent  weakness of the present day Islamic banking and finance in terms of its underdeveloped social sector and argues for the need for new models that will enhance a proliferation of shariah compliant financial products  for solutions in the social sector. The paper examines the emergence in Social finance of  social bonds as new financing tools targeting on  social needs and problems that otherwise would not be tackled.  This paper discusses  the benefits of  structuring such a shariah compliant product and  makes recommendations for structuring this new asset class  referred to in this paper  as social sukuk. 

scholarly journals ISU GLOBAL PEREKONOMIAN ISLAM: Telaah Kritis terhadap Tata Kelola dan Aktivitas Lembaga-lembaga Keuangan Islam

2016 ◽  
Vol 1 (2) ◽  
pp. 111
Author(s):  
Muhdi Kholil
Keyword(s):  
Financial Institutions ◽  
Islamic Finance ◽  
Islamic Banking ◽  
International Forum ◽  
Banking And Finance ◽  
Finance Industry ◽  
Financial Products ◽  
Economic Practice ◽  
The World ◽  
Islamic Economic

<p>Indonesia is to be known widely by the world, which has Islamic finance system different from most countries. Indonesia which is in the international forum of financial syriah known "orthodox" or conservative in the application of Islamic principles recognized the economic practice of Islam which is closer to the economic substance of Islam, and relatively completed all aspects of the economy. Islamic economic development not only in the sectors has been developed such as banking, capital markets and non-bank financial institutions other, but also in extended development of the microfinance sector,  social and financial practices of real business to meet Islamic principles.</p><p>The composition and transaction of Islamic financial products’ Indonesia is a fact that is not owned by other countries which are also developing Islamic banking and finance industry. No wonder, since the majority of developing countries in the world of sharia finance industry with the approach of imitation (mimicry) with conventional, and many experts doubt the originality/economic system of Islamic finance, both conventional and expert on Islamic scholars. But on many opportunities, from seminars, conferences and working group forum, many countries are aware that Indonesia has a different form of sharia industry, the application of Islamic finance that has another color.</p><p>Keyword: Economics, Sharia, Indonesia.</p>

The (mis)use of al-Hilah (legal trick) and al-Makhraj (legal exit) in Islamic finance

2020 ◽  
Vol 11 (9) ◽  
pp. 2169-2182
Author(s):  
Edib Smolo ◽  
Abubakar Muhammad Musa
Keyword(s):  
Financial Services ◽  
Islamic Finance ◽  
Research Approach ◽  
Financial Contracts ◽  
Content Type ◽  
Practical Applications ◽  
Finance Industry ◽  
Financial Products ◽  
Theoretical Paper ◽  
Practical Implications

Purpose The purpose of this paper is to discuss the concepts of hilah (legal stratagem or legal trick) and makhraj (legal exit) and to examine their relevance and application in the contemporary Islamic financial services and products. Design/methodology/approach This paper uses the qualitative research approach to provide a theoretical overview of hilah and makhraj literally and technically and to examine their practical applications in Islamic financial products and services. In particular, this paper evaluates several Islamic financial contracts and examines its practices in light of the implications of hilah or makhraj. Findings The paper finds that there is a glaring difference in perception and application of hilah and makhraj, as argued by some scholars. It has been found that the principle of hilah has been extensively used in the Islamic finance industry as a way to circumvent the riba prohibition. For example, Islamic financial instruments such as bay’ bithaman al-ajil, bay’ al-‘inah, tawarruq, commodity murabahah, musharakah mutanaqisah and, in some cases, the sale and lease back sukuk are found to be tainted by hilah. Research limitations/implications Because this is a theoretical paper, it should be explored in more detail, and critical analysis of Islamic financial services and products should be reviewed in line with these two principles to ascertain if the products and services are in line with Shariah requirements and devoid of hilah practices or not and to align the industry with the maqasid al-Shariah. Practical implications This paper identifies a serious challenge that Islamic finance practitioners face in product development in their effort to provide more competitive services to their customers. As a result, it demonstrates the need to proactively use makhraj in innovating Islamic financial products and proffering more sustainable and competitive solutions. Originality/value This paper discusses a topic that attempts to dispel the suspicious perceptions of some analysts as to the genuineness of Islamic financial practices.

scholarly journals DO SOCIO-DEMOGRAPHIC CHARACTERISTICS AND ISLAMIC FINANCIAL LITERACY MATTER FOR SELECTING ISLAMIC FINANCIAL PRODUCTS AMONG COLLEGE STUDENTS IN INDONESIA?

2020 ◽  
Vol 6 (1) ◽  
Author(s):  
Salma Fadhilah Widityani ◽  
Taufik Faturohman ◽  
Raden Aswin Rahadi ◽  
Yulianti Yulianti
Keyword(s):  
College Students ◽  
Significant Relationship ◽  
Financial Literacy ◽  
Educational Institution ◽  
Demographic Characteristics ◽  
Islamic Finance ◽  
Determinant Factors ◽  
Finance Industry ◽  
Financial Products ◽  
Course Experience

Indonesia is a promising market for the Islamic finance industry since most of the population is Muslim. However, the growth of Islamic finance in Indonesia is still low. Therefore, Islamic financial literacy needs to be improved in order to grow the Islamic finance industry significantly. The purpose of this study is to determine the factors that enhance Islamic financial literacy among college students in Indonesia. The development of validated constructs for Islamic financial literacy is important because conventional financial literacy might contain some elements that are not compatible with Islamic financial principles. This study also measures the level of Islamic financial literacy and its relationship with socio-demographic characteristics using multilinearregression. Furthermore, the relationship between Islamic financial literacy and the possession of Islamic financial products is observed by logistic regression. The determinant factors are perception, attitude and behaviour, and knowledge. The study found that type of educational institution, Islamic finance course experience, being educated to Master’s degree level, having one’s own income, and having an incomeabove five million have a significant relationship with the Islamic financial literacy of college students. The factors that have a significant relationship with the possession of Islamic financial products are Islamic financial literacy, choice of major, Islamic finance course experience, and monthly income above five million . This research attempts to provide an Islamic financial literacy measurement through exploratory factor analysis.The development of a validated instrument for an Islamic financial literacy index and its determinant factors is our scientific and practical contribution to the literature on Islamic financial literacy in Indonesia.

Skills shortage to test Islamic finance globally

2015 ◽  
Keyword(s):  
Human Capital ◽  
Islamic Finance ◽  
Real Economy ◽  
Content Type ◽  
Finance Industry ◽  
Financial Products ◽  
The United Kingdom ◽  
Skills Shortage ◽  
Alternative Markets ◽  
Definition Of

Subject Progress towards addressing the skills shortage in Islamic finance. Significance Islamic finance is fast growing, driven by a surge in interest for alternative markets. In 2014, it surpassed 2 trillion dollars in global assets. In order for an Islamic instrument to be permissible, it must be sharia-compliant. Sharia law typically prohibits paying and receiving interest (riba) and places restrictions on investing in certain types of 'haram' (non-permissible) activities, such as armaments, alcohol and pornography. Islamic finance focuses on developing financial products linked to the real economy, such as asset-backed bonds (sukuk). A skills shortage, one of the industry's bottlenecks, is being addressed by initiatives to develop human capital and provide qualifications for professionals in the sector. Impacts The Islamic finance industry will require increasingly more finance professionals with specialist training. Education providers and market players in the United Kingdom and South-east Asia will aim to satisfy this demand. The industry will also require a commonly accepted definition of sharia-compliance, particularly across borders. The development of human capital in Islamic finance will make it a cost-competitive alternative to traditional financing.

scholarly journals The Enforceability of Wa‘d Mulzim (Binding Promise) from a Fiqh Perspective: A Critical Analysis of Wa‘d Application in Sukūk Contracts

2018 ◽  
Author(s):  
Mohd Fuad Md. Sawari ◽  
Nik Azizu Nik Abdullah ◽  
Mustafa Mat Jubri Shamsuddin ◽  
Akhtarzaite Abd. Aziz
Keyword(s):  
Critical Analysis ◽  
Islamic Finance ◽  
Finance Industry ◽  
Financial Products

Wa‘d (promise) is a concept that is frequently applied in various Islamic financial products. Although this concept has been used widely in Islamic financial products, as a result of the arising Sharī‘ah issues, wa‘d especially wa‘d mulzim (binding promise) in some contemporary practices towards contracts of Islamic financial products, remains a debatable practice among some Sharī‘ah scholars. This research aims to analyse some Sharī‘ah issues pertaining to the application of the wa‘d mulzim in the Islamic finance industry, especially the issue of wa‘d mulzim in sukūk contracts, particularly in partnership-based contracts which are sukūk muḍārabah, and sukūk mushārakah concepts. Two aspects are particularly emphasized. First, wa‘d can be binding in certain conditions, but to legally enforce this concept, there remain disputes and controversial discussions among scholars. Second, this study also discusses the issues of “promise to buy” or “promise to sell” (the asset) at a certain “price” i.e. the price at the same nominal value at which the bond was issued. Hence, this research will try to analyse the opinions of the scholars, certain related fatwas, Sharī‘ah resolutions and guidelines to understand the applicability of the binding promise towards Islamic financial products and ensure that the application of the binding promise is in line with the Sharī‘ah requirements.

scholarly journals Potensi Keterdedahan Risiko Syariah Syarikat Pengendali Takaful Terpilih Di Malaysia

2016 ◽  
Vol 3 (2) ◽  
Author(s):  
Mohd Faiz Mohamed Yusof ◽  
Joni Tamkin Borhan ◽  
Nurhanani Romli
Keyword(s):  
Financial Markets ◽  
Capital Market ◽  
Qualitative Methodology ◽  
Qualitative Data ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Financial Industry ◽  
Finance Industry ◽  
Financial Products ◽  
Compliance Requirements

Nowadays, various Islamic financial products have been developed and have grown tremendously in the financial markets, including Islamic equity, Islamic banking and takaful. The Islamic finance industry has its own uniqueness compared to the conventional financial industry due to the Islamic finance industry has a need for Shariah compliance in Islamic finance industry as known as Shariah risk. Globally, Islamic capital market was faced incident of Shariah risk in the end 2007 when Sheikh Taqi Uthmani has declared that 85% of sukuk issuance in the market are non Shariah compliant in the end of 2007 and cause a decrease of sukuk issuance in the following years in 2008. There are also dispute cases in Islamic banking in Malaysia such as issue of contract Bay 'Bithaman Ajil (BBA) is not shariah compliant. The takaful industry in Malaysia is also exposed to Shariah risks due to the shariah compliance requirements in all operations and activities of the takaful operator. Therefore, this study will describe the key elements that results shariah risk in Islamic finance. The research will identified potential of shariah risk using a qualitative methodology based on research data from five informants who were experienced shariah compliance management in takaful operator. This study will analyze qualitative data using a computerized program Altas.ti 7. The study infers that there are potential of Shariah risk and incident of Shariah risk in activities and operation of selected takaful operator in Malaysia.

General Takaful claims: An experience of Takaful operator in Malaysia

2017 ◽  
Vol 5 (4) ◽  
pp. 18
Author(s):  
Amirul Afif Muhamat ◽  
Mohamad Nizam Jaafar ◽  
Sharifah Faigah Syed Alwi
Keyword(s):  
Life Insurance ◽  
Islamic Finance ◽  
Rigorous Analysis ◽  
Finance Industry ◽  
General Insurance ◽  
Bright Side ◽  
Main Components ◽  
Islamic Insurance ◽  
Gathering Data ◽  
Observation Period

Takaful is interchangeably referred as Islamic insurance. In Malaysia, the takaful sector is part of the main components for Islamic finance industry. The business can be divided into two: general and family takaful. To ease understanding on this niche sector; general takaful is comparable to general insurance while family takaful is akin to life insurance with special reference needs to be given on the requirement of the business to adhere to the Islamic precepts. The main business in general takaful is motor takaful and this line of business is faced with high takaful claims. This study appraised the factors which affect the general takaful claims based on the experience of one takaful operator in Malaysia (the name of takaful operator is not disclosed due to confidentiality). The factors are: number of claims; fraud; and coverage for protection. The limitation of this study is that the observation period is only 10 years which limits rigorous analysis to be done. Nevertheless, previous studies in this area depict the same limitation – constraint in gathering data that has long observation period. On the bright side, the data in this study is still capable to produce meaningful results to be referred with regards to this issue – general takaful claims.

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