Bai ‘Al-Tawarruq: Concept Of Islamic Financing?

2016 ◽  
Vol 4 (3) ◽  
pp. 49
Author(s):  
Luqman Nurhisam
Keyword(s):  
Islamic Law ◽  
Legal Framework ◽  
Islamic Finance ◽  
Basic Rule ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Research Subjects ◽  
Financial Products ◽  
Commodity Trading ◽  
Private Financing

Shariah Committee in Malaysia in his fatwa has legitimized the execution of the contract al-Tawarruq and al-'nah in Islamic banking practices, while the contract is not ratified by the National Sharia Council in Indonesia. This study will discuss the reasons and background differences fatwa, and an aspect ratio of banking products and the legal framework used to legitimize Islamic financial products in Indonesia and Malaysia. Therefore, further research is needed to analyze how the views of the scholars against al-Tawarruq along with proof of his, and the extent to which the contract tawarruq has been applied in Islamic finance, especially in Indonesia and Malaysia. As a result of a comparison of Islamic financial products in general, and the legal framework used by the Sharia Board between Indonesia and Malaysia. The method used is descriptive qualitative analysis. In this study, the research subjects are the scholars of Sharia Council. While the object of research is the view of the scholars of fiqh against al-Tawarruq, aspects of financial products, and the framework of Islamic law. From this study, it was found that the mechanism of al-Tawarruq, can not be regarded as an Islamic financial products, because a lot of flaws in it. Hilah known that there are not good that lead to usury, so this is the reason of the majority of scholars do not technically separated in Indonesia. However, as far as the development of the contract used that alTawarruq al-fiqhi been applied in syariah commodity trading in the Jakarta Futures Exchange. While Malaysia believes that the buying and selling of al-Tawarruq is halal as the basic rule for the legitimacy of the agreement, which has been applied in private financing in Islamic banks, as well as a commodity murabaha on Bursa Malaysia namely Bursa Suq Al-Sila.  

scholarly journals نظرية المضاربة في الشريعة الاسلامية وتطبيقها في البنوك الاسلامية وتنمية الاقتصاد الإسلامي في إندونيسيا

2018 ◽  
Vol 6 (2) ◽  
pp. 124
Author(s):  
Abdurrohman Kasdi
Keyword(s):  
Islamic Law ◽  
Stock Exchange ◽  
Field Research ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Economic Literature ◽  
Economic Concept ◽  
Price Differentials

<p><em>This article aims at explaining the theory of mudharabah in Islamic Sharia and its application in Islamic banking and the development of the Islamic economy in Indonesia. This study is based on field research. The method of analysis of the data used is the analysis of the content on the messages received from mudharabah in Islamic law and its application in Islamic banks and the development of the Islamic economy. The result of this research is that mudharabah is one of the most important and oldest forms of investment of funds in the Islamic Sharia. The fuqaha have agreed on the legality of mudharabah, and the evidence of legality, from the al-Qur’an, Sunnah, Ijma’, and Qiyas. The mudharabah formula in Islamic banks came as a legitimate alternative to traditional financing operations. It is one of the most important forms of Islamic finance and is thought to have been the cause of Islamic banks, which are said to be the Islamic financing formula. In Islamic banks, mudharabah is divided into absolute mudharabah and restricted mudharabah. The economic concept of mudharabah in the economic literature goes to the stock exchange and its predictions of market fluctuations. The investor may have to pay the price differentials in the case of lower prices. </em></p>

scholarly journals The Analysis of the Turkish Islamic Banking System Between 2005 and 2014

2016 ◽  
Author(s):  
Lívia Tálos ◽  
Gyöngyi Bánkuti ◽  
Jozsef Varga
Keyword(s):  
High Risk ◽  
Economic Crisis ◽  
Islamic Law ◽  
Banking System ◽  
Rating System ◽  
Annual Reports ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Conventional Banks

Islamic banking is a banking system that is based on the principles of sharia or Islamic law. The principles of Islamic finance forbid interest - this is commonly known as riba - charity (zakat), forbid high risk (gharar), forbid some transactions like gambling, and are based on PLS (Profit-Loss Share). The most important concept is that both charging and receiving interest are strictly forbidden; money may not generate profits. Islamic banks have largely survived the global economic crisis intact and they offer a safer operation than conventional banks. CAMEL analysis is a supervisory rating system to classify a bank's overall condition according to Capital (C), Assets (A), Management (M), Earnings (E) and Liquidity (L). In the analysis a variety of indicators were calculated based on data from the annual reports. The results of the four banks were averaged separately, then classified (1 = good, 2 = adequate, 3 = satisfactory, 4 = acceptable, 5 = unacceptable) according to the desired criteria, the changes over the years and the relative values of the four banks.

Ownership Risk in Contemporary Islamic Banking

2020 ◽  
pp. 189-211
Author(s):  
Alam I. Asadov
Keyword(s):  
Risk Taking ◽  
Current Situation ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Policy Recommendations ◽  
Islamic Banks ◽  
Financial Products ◽  
Real Risk

The unwillingness of contemporary Islamic banks to undertake real business risks has left many to ponder on whether the objectives laid down by the industry's founders have been realized. The need for real risk taking by Islamic banks is critical to justify the profits they earn in the forms of margins, rents, or service charges. This chapter analyzes issues relating to ownership risk (ḍamān al-milkiyyah) in Islamic banking by examining three of its popular products, namely Murabahah (mark-up sale), Ijarah (leasing), and Musharakah Mutanaqisah (diminishing partnership). Following close scrutiny, the chapter concludes that principles of ownership risk as laid down in Fiqh Muamalat (law of transactions) are violated in each of the studied products. Unfortunately, the problem extends beyond these products to include a number of other Islamic financial products. The author calls for closer attention to this important Shari'ah concept of ownership risk in designing Islamic finance products and offers some policy recommendations to improve the current situation.

scholarly journals Ijtihad in Islamic Finance: A Methodology Approach

2020 ◽  
pp. 64-78
Author(s):  
Amir Shaharuddin
Keyword(s):  
Banking Industry ◽  
Methodological Approach ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Muslim Community ◽  
Financial Products ◽  
Banking Institutions ◽  
New Challenges ◽  
Muslim Scholars

Islamic classical contracts have been revitalized in creating various financial products in Islamic banking institutions. However, their application in the current banking industry is not without argument. It is viewed that the classical contracts are not practiced as propounded in the classical fiqh doctrines. The article discusses the issue by proposing a different methodological approach for Shariah advisors in guiding Islamic banks. Shariah advisors in Islamic banking institutions are encouraged to unbind themselves from nominated Islamic classical contracts (uqud al-musamma’). They need to unveil new contracts that suit with modern practices and authentically able to solve problems and limitations faced by Islamic banks. Based on examination of twelve main classical texts of the four Sunni schools, it is found that Islamic classical commercial contracts evolved over times especially in the Hanafis, Shafi’is and Hanbalis schools. Past Muslim scholars expanded the classical contracts in response to new challenges and problems encountered by Muslim community in their commercial dealings. The evolution of Islamic commercial contracts can be further enhanced by adhering to the principles of transparency, honesty, mutual consent and humanitarian goals.

Syari'ah Compliance for Developing Innovation of Sharia Banking Products in Indonesia

2017 ◽  
Vol 1 (2) ◽  
pp. 57-62
Author(s):  
Dasep Sugandi
Keyword(s):  
International Standards ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Real Sector ◽  
Islamic Banks ◽  
Preventive Action ◽  
Literature Study ◽  
Financial Products ◽  
Shariah Governance

This paper discusses the application of Sharia compliance to industry and Islamic finance business. Sharia compliance is a possible means of preventing risk and fraud in the real sector. This also applies to the innovation of Islamic financial products. Shariah rules are expected to be a guide in the operationalization of Islamic banking in Indonesia. With literature study, this paper found that Shariah compliance serves as an ex-ante (preventive) action and measure, to ensure policies, rules, systems and procedures, and business activities undertaken by Islamic banks. Innovation of Islamic banking products refers to sharia standards and shariah governance sourced from Qur'an and Hadith, guided by international standards, fulfillment of integrity and quality of Islamic banking human resources, suitability of contracts, and not dozens of people as consumers.

scholarly journals THE SHAPE OF ASSIKO’ KANA (Hybrid Contract) ON MAKASSAR NATIVES : ETHNOMETHODOLOGY PERSPECTIVE

2020 ◽  
Vol 28 (1) ◽  
pp. 1-27
Author(s):  
Sultan Syah ◽  
Eko Sukoharsono ◽  
Erwin Saraswati ◽  
Roekhudin
Keyword(s):  
Design Methodology ◽  
Qualitative Method ◽  
Islamic Law ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Financial Products ◽  
Flying Fish ◽  
Religious Aspects ◽  
Contract Form ◽  
Practical Implications

Purpose — The purpose of this research is to discuss the accounting shari’a in assikko’ kana (hybrid contract) applied by Makassar natives by interpreting the existence of accounting in the trade activity area. Design/methodology/approach — In order to determine the existence of accounting, this research uses a qualitative method by using the ethnomethodology approach. Findings — The result reveals that accounting is the accountability process of economic, social, cultural, and religious aspects of the trade activities, which also can be found in the kalula[1] system. The research also finds that the trade actors are highly committed to trusting each other even though they incur losses. Thus this indicates that sociability becomes their priority. In addition, there is one more important factor so-called papalele (shareholders) whos contribute to the run of activities. Practical Implications — Banking, financial companies, and Islamic finance including capital owners can benefit from the preparation of assikko’ kana (hybrid contracts) so that the contracts made do not conflict with the prevailing Islamic Sharia Originality/value — a hybrid contract form applied to the flying fish fishermen community (patorani) is the result of acculturation between local culture and Islamic law. What's interesting is that the majority of Islamic banking and financial products and services are hybrid contracts, but the source of funding is still sourced from local investors (papalele). This paper tries to make a reality in the patorani community in establishing Sharia parameters, about how to combine more than one contract in one transaction

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

Litigation or Arbitration for Resolving Islamic Banking Disputes

2018 ◽  
Vol 32 (4) ◽  
pp. 413-438
Author(s):  
Farouq Saber Al-Shibli
Keyword(s):  
Dispute Resolution ◽  
Financial Market ◽  
Current Practice ◽  
Legal Framework ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking And Finance ◽  
Financial Products ◽  
Alternative Method ◽  
Unique Nature

Abstract When investors decide to deal with Islamic banks, one of their main concerns is to ensure their businesses are protected in the case of disputes arising. For this reason, developing a good legal framework for resolving disputes is crucial to strengthen the position of Islamic banks in the global financial market. However, the unique nature of Islamic financial products and transactions requires that the disputes arising from this sector should not be dealt with by means of conventional laws and courts (litigation). It can be said that current practice, where Islamic banking and finance disputes are resolved by litigation with lopsided judgments is counterproductive to the practice of Islamic banking and finance. This article therefore explores the problems associated with resolving Islamic banking disputes through litigation and proposes arbitration as an alternative method for establishing a legal framework for dispute resolution in countries where Islamic banking is implemented.

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.

Islamic Banking and Finance in Theory and Practice

2005 ◽  
Vol 22 (2) ◽  
pp. 69-86 ◽  
Author(s):  
Abdus Samad ◽  
Norman D. Gardner ◽  
Bradley J. Cook
Keyword(s):  
Financial System ◽  
Primary Objective ◽  
Theory And Practice ◽  
Islamic Banking ◽  
Relative Importance ◽  
Islamic Banks ◽  
Equity Financing ◽  
Banking And Finance ◽  
Financial Products ◽  
Islamic Bank

This paper’s primary objective is to identify the relative importance of various Islamic financial products, in theory and in practice, by examining the financing records of the Bank Islam Malaysia (Berhad) and the Bahrain Islamic Bank. Currently, seven available Islamic financing products are considered viable alternatives to interest-based conventional contracts: mudarabah (trust financing), musharakah (equity financing), ijarah (lease financing), murabahah (trade financing), qard al-hassan (welfare loan), bay` bi al-thaman al-ajil (deferred payment financing), and istisna` (progressive payments). Among these financial products, mudarabah and musharakah are the most distinct. Their unique characteristics (at least in theory) make Islamic banks and Islamic financing viable alternatives to the conventional interest-based financial system. The question before us is to determine the extent of mudarabah and musharakah in Islamic financing in practice. The data are as follows: the average mudarabah is 5% of total financing, and the average musharakah is less than 3%. The combined average of mudarabah and musharakah for the two Islamic banks is less than 4% of the total finance and advances. The average qard al- hassan is about 4%, while istisna` does not yet exist in practice. Murabahah is the most popular and dominates all other modes of Islamic financing. The average use of murabahah is over 54%. When the bay` bi al-thaman al-ajil is added to the murabahah, the percentage of total financing is shown to be 2.68%. This paper also explores some possible reasons why these two Islamic banks appear to prefer murabahah to mudarabah and musharakah.

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