scholarly journals “Faithful money” as a new monetary concept of the Islamic banking

2016 ◽  
Vol 5 (3) ◽  
pp. 7-10 ◽  
Author(s):  
Nesrin Benhayoun ◽  
James Fogal
Keyword(s):  
Great Recession ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Economic Activities ◽  
Time Value Of Money ◽  
The Great Recession ◽  
Time Value ◽  
Value Of Money ◽  
Significant Milestone

Coinciding with the Great Recession, Islamic banks have grown rapidly and have crossed the significant milestone of increased wider acceptance at a global level. In part this is due to their unique behavior in considering both ethical and economic activities rather than focus of profit only. This presents a departure from the conventional finance systems based on the use of the interest and the time value of money. This has led to propose new pattern named ’Faithful Money’ for valuation of money and for a performing monetary policy according to Islamic finance basics. This paper presents how following Islamic finance principles can offer substantive contributions to the economic and social development of the world by revealing the rational route to the vision of the highest good without the anathema of interests and debts’ dependence and to embrace the goal to advance the needs of humanity as a whole.

scholarly journals MURABAHAH (Prinsip dan Mekanismenya Dalam Perbankan Islam)

2017 ◽  
Vol 15 (1) ◽  
pp. 83-93
Author(s):  
Ismail Hannanong
Keyword(s):  
Islamic Banking ◽  
Islamic Banks ◽  
Time Value Of Money ◽  
Time Value ◽  
Value Of Money

Abstract: This paper will discuss the mechanism of murabahah agreement and application in Islamic banking, and compare murabahah finance with fixed interest to banks in several key areas. Islamic banks have used murabahah agreements in financing activities through merchandise and expanded their network of uses. Murabahah finance and higher credit prices therein clearly indicate that there is a time value in financing based on murabahah, which leads though not directly to the acceptance of the time value of money.

scholarly journals Islamic Banking and Finance: Shariah Governance in Theory and Practice

2019 ◽  
Vol 11 (2) ◽  
pp. 1
Author(s):  
Mohammad Mansoor Khan
Keyword(s):  
Policy Instruments ◽  
Theory And Practice ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Time Value Of Money ◽  
Banking And Finance ◽  
Time Value ◽  
Banking Policy ◽  
Shariah Governance ◽  
Value Of Money

This paper investigates the case of Shariah governance and compliance at Islamic banks worldwide. It explores fundamental features of Islamic banking policy instruments from Shariah perspectives in order to appraise the business affairs of Islamic banks. This paper finds that Shariah governance has severely failed to ensure religious, ethical and social sanctities of Islamic banks. The personal, consumer finance and deposit-taking operations at Islamic banks are based on interest and time value of money, and a crystal clear case of Shariah violations. The majority of Muslim business and societal groups have shown increasing concerns over the serious Shariah governance and compliance issues at Islamic banks. There are increasing pressures on Islamic banks to prove themselves not only financially viable but also Shariah-compliant and valued-based entities.

scholarly journals Perbandingan Konsep Keuangan pada Bank Syariah dan Bank Konvensional

2019 ◽  
Vol 2 (2) ◽  
pp. 213-228
Author(s):  
Miftahuddin Miftahuddin
Keyword(s):  
Profit Sharing ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Ethical Aspects ◽  
Time Value Of Money ◽  
Time Value ◽  
Conventional Banks ◽  
Value Of Money

This paper attempts to review the comparison of the Islamic and Conventional Banks in Indonesia. There are 11 sub-topics which discuss on the concepts and matters related to both type of Banks. This include the elaboration about principles, products, institutions, time value of money, and interest versus profit-sharing. For each principles, it derived from the Al-Qur’an and Hadith. All explanations are the important points associated with the Islamic banks systems. With the examples and real simulation in calculations which presented in this article, each products can be understood comprehensively by the readers. This Islamic banking concept reveals the values, norms, and ethical aspects such as justice, fairness, trusworthy for the creditors and debitors that also bring goodness or maslahah to the society. It is expected that Islamic banks could deliver excellent services and compete internationally. With all the supports from stakeholders, the development and growth of Islamic banks is achievable.

The Time Value of Money Concept in Islamic Finance

2006 ◽  
Vol 23 (1) ◽  
pp. 66-89
Author(s):  
Abu Umar Faruq Ahmad ◽  
M. Kabir Hassan
Keyword(s):  
Basic Element ◽  
Islamic Finance ◽  
Purchasing Power ◽  
Conventional Theory ◽  
Modus Operandi ◽  
Time Value Of Money ◽  
Time Value ◽  
Value Of Money ◽  
Future Date ◽  
Rule Out

The time value of money is a basic investment concept and a basic element in the conventional theory of finance. The Shari`ah does not rule out this consideration, for it does not prohibit any increment in a loan given to cover the price of a commodity in any sale contract to be paid at a future date. What is prohibited, however, is making money’s time value an element of any lending relationship that considers it to have a predetermined value. Here, the Shari`ah requires that a loan be due in the same currency in which it was given. The value (i.e., purchasing power) of paper currencies varies due to changes in many variables over which the two parties of a loan contract usually have no control. This study examines possible modus operandi of time valuation according to the Shari`ah’s precepts vis-à-vis the concept of money, and whether any value can be attributed to time while considering money’s value. For this purpose, it investigates the juristic views on such relevant issues as the permissibility of difference between a commodity’s cash and credit prices and an increase and reduction of the loan’s amount in return for early repayment.

A critique on accounting for murabaha contract

2016 ◽  
Vol 7 (3) ◽  
pp. 190-201 ◽  
Author(s):  
Mezbah Uddin Ahmed ◽  
Ruslan Sabirzyanov ◽  
Romzie Rosman
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Economic Consequences ◽  
Islamic Banks ◽  
Content Type ◽  
Time Value Of Money ◽  
Time Value ◽  
Islamic Financial Institutions ◽  
Financial Transactions ◽  
Value Of Money

Purpose The purpose of this paper is to examine the accounting treatment and reporting of a murabaha contract and its implication to the financial statements of Islamic banks. In addition, the paper also explains the implication of time value of money on the measurement of a murabaha contract and the concept of substance over form in recognising financial transactions. Design/methodology/approach This study reviews the accounting treatment and reporting for a murabaha contract as stated in the Financial Accounting Standards (FAS) of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the application of a murabaha contract as a financial instrument based on International Financial Reporting Standards (IFRS). Findings The paper finds that, while IFRS-based financial reporting primarily focuses on economic consequences of financial instruments, AAOIFI further takes into consideration the legal structure of the instruments, which are based on Shari’ah precepts. The paper also finds that IFRS-based financial reporting cannot always capture the distinctive structure of the murabaha and, hence, may lack representational financial reporting. However, the IFRS recognizes the substance of a murabaha contract as financing, and the majority of Islamic banks in Malaysia report it as one of financing and not as a trading contract. For measurement, IFRS adopted the concept of time value of money where the profit allocation is based on amortized cost, which is similar to the measurement of conventional loan transactions that apply the concept of effective interest rate. Meanwhile, AAOIFI uses a straight-line basis to allocate the profit of a murabaha contract. Practical implications The forthright discussion and the observations of the paper are expected to assist regulators and standard setters in developing accounting standards that are in convergence but also cater to the unique characteristics of Islamic financial transactions. Originality/value The paper criticizes both accounting treatment of a murabaha contract based on the AAOIFI and IFRS and then suggests an extension of these treatments to be adopted to improve the reporting.

scholarly journals DIMENSI WAKTU DALAM ANALISIS TIME VALUE OF MONEY DAN ECONOMIC VALUE OF TIME

2013 ◽  
Vol 4 (1) ◽  
pp. 131
Author(s):  
Fetria Eka Yudiana
Keyword(s):  
Time Preference ◽  
Economic Value ◽  
Islamic Finance ◽  
Value Of Time ◽  
Time Value Of Money ◽  
Time Value ◽  
Positive Time ◽  
A Charge ◽  
Finance Theory ◽  
Value Of Money

The development of the Islamic finance theory today has become a hot issuediscussed, such as polemic of the concept of time value of money. This concept cored that money today is more valuable than the same amount of money in the future, so that the grounding or assumptions used by this theory is al ghunmu bila ghurmin (get results regardless of risk) and al kharaj bila dhaman (get results without issuing a charge), and it’s contrary to the principles of Islam. Then The positive time preference concept was replaced with the concept of economic value of time, this concept cored that time has economic value, not money has a time value

Prepayment rebate in Islamic microfinance cost-plus sale: a descending rebate proposed approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Islam Mohamed Kamal
Keyword(s):  
Design Methodology ◽  
Relevant Literature ◽  
Islamic Finance ◽  
Content Type ◽  
Time Value Of Money ◽  
Time Value ◽  
Early Settlement ◽  
Islamic Financial Institutions ◽  
Value Of Money ◽  
Compliant Approach

Purpose This paper aims to propose an Islamic compliant approach that deals with the prepayment rebate on debts resulting from cost-plus sales and their accompanied sale-based financing contracts. The proposed approach uses the time value of money concept without charging excessive fees from the debtor in the early settlement of debts. Design/methodology/approach The paper uses a qualitative analysis via analyzing and reviewing relevant literature. A quantitative analysis is subsequently used with a proposed computation that addresses prepayment rebate accompanied by debts resulting from cost-plus sales. Findings The proposed approach results in a rebate amount for the debtor greater than those rebate amounts resulting from either conventional finance techniques or current Islamic finance practices. Research limitations/implications The application of the descending rebate proposed computation in this paper is restricted to cost-plus sale and their accompanied sale-based financing contracts only. The computation does not address any agreement or deal that may involve a rebate without a selling transaction. Originality/value The paper criticizes the prevailing practices for computing rebates in the case of debt prepayment, whether those nominated by conventional finance or others currently employed by most Islamic financial institutions. The paper also introduces a new rebate computation aimed to comply with Islamic finance's real context.

The Time Value of Money Concept in Islamic Finance

2006 ◽  
Vol 23 (1) ◽  
pp. 66-89 ◽  
Author(s):  
Abu Umar Faruq Ahmad ◽  
M. Kabir Hassan
Keyword(s):  
Basic Element ◽  
Islamic Finance ◽  
Purchasing Power ◽  
Conventional Theory ◽  
Modus Operandi ◽  
Time Value Of Money ◽  
Time Value ◽  
Value Of Money ◽  
Future Date ◽  
Rule Out

The time value of money is a basic investment concept and a basic element in the conventional theory of finance. The Shari`ah does not rule out this consideration, for it does not prohibit any increment in a loan given to cover the price of a commodity in any sale contract to be paid at a future date. What is prohibited, however, is making money’s time value an element of any lending relationship that considers it to have a predetermined value. Here, the Shari`ah requires that a loan be due in the same currency in which it was given. The value (i.e., purchasing power) of paper currencies varies due to changes in many variables over which the two parties of a loan contract usually have no control. This study examines possible modus operandi of time valuation according to the Shari`ah’s precepts vis-à-vis the concept of money, and whether any value can be attributed to time while considering money’s value. For this purpose, it investigates the juristic views on such relevant issues as the permissibility of difference between a commodity’s cash and credit prices and an increase and reduction of the loan’s amount in return for early repayment.

Potential of Islamic finance: A survey of Tunisian Northwest companies

2017 ◽  
Vol 5 (2) ◽  
pp. 28
Author(s):  
Rym Ammar Ayachi ◽  
Dhafer Saidane ◽  
Fayçal Mansouric
Keyword(s):  
Financial Institution ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Finance Development ◽  
Negative Effect ◽  
Survey Results ◽  
Potential Demand ◽  
Northwest Region ◽  
Do So

The present paper aims to assess the Islamic products potential demand for entrepreneurs in the Tunisian Northwest region. In order to do so, we developed a questionnaire which was sent to these entrepreneurs. The survey results show that the latter perceive Islamic Finance as a seductive phenomenon. However, its development appears to be difficult. Indeed, according to the survey results, the lack of knowledge may impede the expansion of Islamic banking in Tunisia. Moreover, the following factors: cost, religious conviction, proximity, flexibility and satisfaction of the needs, may affect the entrepreneurs' choice to deal with Islamic financial institution. In addition, the lack of entrepreneurs' confidence with regard to the compliance of Islamic banking with the Shariah principles has a negative effect on Islamic finance development in the Tunisian Northwest region. For this reason, Tunisian Islamic banks should put more effort to reinforce their competitiveness.

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