Discrepancies in Islamic finance

Subject. The article focuses on discrepancies in Islamic finance, the construct of Islamic finance, its profit-generation mechanism, economic effects, unique nature and competition with traditional financial institutions. Objectives. We analyze the Islamic economic model and perform the comparative analysis of Islamic and traditional financial instruments. We also investigate conflicting issues of Islamic finance. Methods. The study involves methods of comparison, deduction, economic analysis and graphic interpretation. Results. We analyze the Islamic economic model to point out some fundamental principles of the Islamic economy, and its strengths. The article overviews types of Islamic financial instruments, compares them with traditional finance. The practical part of the study compares annual financial statements of the Abu Dhabi Islamic Bank and Russia’s Sberbank. We unfold the profit-generating mechanism of Islamic financial institutions and discover discrepancies in Islamic finance. Conclusions and Relevance. Having compared Islamic and traditional finance, we revealed some similar and different aspects. We discovered discrepancies in Islamic finance that translate into the overall nature of the Islamic economy and the performance of the Islamic financial institution above. The findings can be used for further studies into Islamic finance and outlining Islamic banking development strategies at the governmental level. Furthermore, the findings may come in handy to professional and non-professional market actors for making investment decisions.

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Controversies of Islamic finance

Digest Finance ◽

10.24891/df.26.1.67 ◽

2021 ◽

Vol 26 (1) ◽

pp. 67-82

Author(s):

Mikhail L. DOROFEEV ◽

Mikhail K. GRIBAN'

Keyword(s):

Financial Institutions ◽

Economic Model ◽

Financial Institution ◽

Economic Effects ◽

Islamic Finance ◽

Financial Instruments ◽

Islamic Financial Institutions ◽

Unique Nature ◽

Islamic Economic ◽

Banking Development

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PENGENTASAN KEMISKINAN DAN PENGEMBANGAN MASYARAKAT MELALUI MODEL KEUANGAN ISLAM BMT AL-ISHLAH CIREBON

BISMA (Bisnis dan Manajemen) ◽

10.26740/bisma.v9n2.p101-108 ◽

2018 ◽

Vol 9 (2) ◽

pp. 101

Author(s):

Muhammad Awaluddin Ardiansyah

Keyword(s):

Financial Institutions ◽

Poverty Reduction ◽

Islamic Law ◽

Financial Institution ◽

Financial System ◽

Islamic Finance ◽

Islamic Financial Institutions ◽

Islamic Economic ◽

A Charge ◽

The Right

Although in fact the conventional financial system has manifestly failed in the fair distribution of wealth, but Islamic financial system in Indonesia is not a strong alternative financial system. Market share of Islamic financial institutions are still low below 5% with growth of 34% in 2015. The data indicates the existence of problems in the implementation of the principles of Islamic finance though in terms of potential prospects. Islamic economic principles which have a charge values of justice, divinity, freedom and responsibility, the right should be a system of democratic economy in the economic empowerment of the poor. Some of the reasons based on the analysis of the field to be the cause of them; The first people are still accustomed to a conventional system that has been around longer, the second Islamic financial institutions are not ready completely adopt the Islamic financial system in particular lost Pofit product sharing (PLS), the third implementation of Islamic financial institutions require relatively high operating costs. On the above problems, the authors analyzed qualitatively descriptive of a theme study "Al-Islah BMT Cirebon as Islamic Financing Model for Poverty Reduction and Development". An analysis of the terms of the Muamalat Islamic law and court analyzes considering the author as a community development agency practitioners who use Islamic financial institutions Baitul Maat wa Tamwil (BMT) in technical operations. This simple paper notes that Islamic financial institutions in Indonesia has not fully practice the principles of Islamic finance because of certain interests. That has existed in Indonesia an Islamic financial institution which according to the principles of Islam in practice the empowerment of people out of poverty.

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Alternative Interest-Free Financial Institutional Systems for Fair Economy: A Constructive Overview

Jihbiz jurnal ekonomi keuangan dan perbankan syariah ◽

10.33379/jihbiz.v3i2.803 ◽

2019 ◽

Vol 3 (2) ◽

pp. 174-183

Author(s):

Jeni Susyanti

Keyword(s):

Economic System ◽

Financial Institutions ◽

Asset Management ◽

Financial Management ◽

Financial Institution ◽

Market Mechanism ◽

Human Welfare ◽

Islamic Financial Institutions ◽

World Economic ◽

Islamic Economic

The Islamic economic system can be an option during the current world economic system with its market mechanism that can no longer be controlled by anyone and any system. The Islamic economic system is present as an alternative to the alignment of the economic system in a market order that is just and beneficial for human welfare. Islamic sharia principles in asset management emphasize the balance between individual and community interests, where assets must be used for productive things, especially investment activities which are the basis of economic activity in society. Interest-free financial institutions (Islamic financial institutions) as the implementation of the Islamic economic system include two institutions, namely bank financial institutions and non-bank financial institutions. In carrying out their financial activities, the two types of institutions carry out the main principles in transactions, namely: the prohibition of usury (interest) in various forms of transactions, conducting business, and trading activities based on obtaining legal profits according to sharia, and giving zakat. So that the financial institution must have a financial management strategy, properly and following muamalah fiqh.

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The importance of providing Islamic finance services for non- Muslims in Europe

Journal of Economics and Administrative Sciences ◽

10.33095/jeas.v24i102.163 ◽

2018 ◽

Vol 24 (102) ◽

pp. 24

Author(s):

Al Siddig Talha Mohammed Rahma

Keyword(s):

Financial Institutions ◽

Insurance Companies ◽

Islamic Finance ◽

Islamic Banking ◽

Islamic History ◽

The World ◽

Islamic Financial Institutions ◽

Islamic Economic ◽

Muslims In Europe ◽

Islamic Insurance

Abstract This paper follows the growing interest and continuity of Islamic finance products worldwide, which has encouraged the formulation of financial institutions based on the concepts of Islamic Sharia in many countries of the world and is no longer limited to Islamic countries only, and Not exclusive to Muslims which is due to Islamic finance services and their ability to apply in non-Islamic societies, and perhaps what encouraged the development and progress of this industry Islamic history, which was attended by many different models With the development of trade's share between different countries as well as trips carried out by Muslims trade in the world and their role in the spread of Islam in Africa, Asia, Europe and so on. The paper focuses on the need to direct and allocate Islamic funding to non-Muslims so as not to be exclusive to Muslims only and thus highlights the ability of Islamic economic services and its ability to expand its outreach, this will help to activating many of the desired objectives and to clarify and reflect the Islamic principles of other societies, and thus achieve the universality of Islam and reduce the manifestations of hostility to Islam and Muslims in the world The paper concludes that the spread of various Islamic financial institutions in European countries, including banks, Islamic insurance companies and Islamic sukuk, and the establishment of identical institutions in Europe all this confirms the ability of Islamic banking to spread in the world, Islamic banking has emerged as one of the fastest-growing industry sectors over recent years. Islamic Finance has now become a global phenomenon due in large part because it is perceived as less risky than the conventional finance – especially during crises.

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Pandangan Hukum Islam terhadap Status Muflis (Debitur Pailit) sebagai Gharimin (Mustahik Zakat)

Reslaj : Religion Education Social Laa Roiba Journal ◽

10.47467/reslaj.v4i3.807 ◽

2022 ◽

Vol 4 (3) ◽

pp. 528-544

Author(s):

Desi Ratnasari ◽

Muhammad Iqbal Fasa ◽

A. Kumedi Ja’far

Keyword(s):

Financial Institutions ◽

Public Interest ◽

Islamic Law ◽

Financial Institution ◽

Islamic Banks ◽

The Status ◽

Islamic Financial Institutions ◽

Islamic Economic ◽

Islamic Insurance ◽

To Receive

The development of sharia economy in Indonesia is increasing. Islamic economic development can be seen from the development of Islamic financial institutions and the Islamic financial instruments they offer, ranging from Islamic banks, Islamic capital markets, and Islamic insurance. With these developments, nowadays financing activities with sharia contracts are increasing and growing rapidly. However, only a few can pay it off. In other words, non-performing financing or bad loans at Islamic financial institutions often occur. Non-performing financing caused by the inability of the customer as a debtor to pay debts to a financial institution as a creditor resulted in the customer being bankrupted by the financial institution as a creditor. Bankruptcy is defined as the inability of the debtor or debtor (can be a person, legal entity, company) which is proven based on a court decision that the debtor has stopped paying his debts (unable to pay off debts) which results in general confiscation of his assets, so that the debtor is no longer entitled to manage his assets. . If it is associated with zakat, one of the ashnaf of zakat is gharimin or people who are in debt. Zakat institutions in Indonesia have not made bankrupt customers as gharimin who are entitled to receive zakat. The formulation of the problem in this paper is to find out the views of Islamic law on the status of bankrupt debtors as gharimin. The conclusion is that the status of a bankrupt debtor can be determined as a gharimin who is entitled to receive zakat. The use of debt in question can be for personal or public interest. The distribution pattern can use the qardh hasan pattern where the zakat given to the gharimin is not to be owned but to be returned again. The zakat funds are not only used to pay off debts, they can also be used as initial capital for bankrupt debtors to restart their business. Keywords: bankrupt debtor, gharimin, zakat mustahik.

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Issues and challenges of IFRS 9 in Malaysian Islamic financial institutions: recognition criteria perspective

Journal of Islamic Accounting and Business Research ◽

10.1108/jiabr-04-2020-0100 ◽

2021 ◽

Vol 12 (2) ◽

pp. 239-257

Author(s):

Marziana Madah Marzuki ◽

Abdul Rahim Abdul Rahman ◽

Ainulashikin Marzuki ◽

Nathasa Mazna Ramli ◽

Wan Amalina Wan Abdullah

Keyword(s):

Financial Institutions ◽

Financial Reporting ◽

Business Models ◽

Fair Value ◽

Financial Instruments ◽

Structured Interviews ◽

Content Type ◽

Reporting Framework ◽

Islamic Financial Institutions ◽

Ifrs 9

Purpose The purpose of this paper is to investigate the effects and challenges of the new amendment of International Financial Reporting Standards (IFRS) 9 in Malaysia from the perspectives of regulators, auditors, accountants and academicians in Malaysian Islamic financial institutions. For the purpose of this study, this paper focuses on the recognition criteria perspective of the standard, which provides a basic understanding of the financial reporting framework. Design/methodology/approach Using 10 series of semi-structured interviews undertaken with key individuals in regulatory bodies, audit companies, full-fledged Malaysian Islamic Banks and Malaysian higher learning institutions. Findings The findings revealed that IFRS 9 strengthens International Accounting Standards 39 in terms of relevance and reliability, recognition of financial instruments and identification of business models. Nevertheless, Islamic financial institutions face challenges in terms of a faithful representation of fair value, substance over form, identification of financial instruments before recognition criteria and the extent of the role of risk management in reducing manipulation in identifying business models. Research limitations/implications This study provides implications to regulators and standard setters in Malaysia to enhance the quality of financial reporting framework and practices in Islamic financial institutions in this country using IFRS 9. Practical implications Practically, the findings of this study can be used by the regulators to resolve the issues that arise in adopting IFRS 9 among Islamic financial institutions to further enhance financial reporting quality. Originality/value The findings of this study are very important to ensure that the adoption of IFRS among Islamic financial institutions are in line with Sharīʿah principles. To date, no studies have been done on the challenges of adopting IFRS 9 among Islamic financial institutions in Malaysia.

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QARDHUL HASAN DALAM PERSFEKTIF HUKUM ISLAM PADA BAITUL MAAL WA TAMWIL (BMT) DAN IMPLEMENTASINYA

At Taajir : Jurnal Ekonomi, Bisnis dan Keuangan Syariah ◽

10.47902/attaajir.v1i1.27 ◽

2019 ◽

Vol 1 (1) ◽

pp. 44-58

Author(s):

Muhamad Bisri Mustofa ◽

Mifta Khatul Khoir

Keyword(s):

Financial Institutions ◽

Islamic Law ◽

Financial Institution ◽

Social Institution ◽

Small Communities ◽

Economic Law ◽

Potential Source ◽

Islamic Financial Institutions

Abstract In the implementation of Islamic Financial Institutions such as the Baitul Maal wa Tamwil (BMT) there are various ways of collecting funds and channeling funds. Funds are collected through wadi'ah deposits and deposits. While the distribution of funds is done by murabahah, mudharabah, musyarakah, rahn (pawn), ijarah, ijarah multijasa and qardhul hasan financing. Qardhul Hasan's financing is the orientation of the function of the Islamic Financial Institution (Baitul Maal Wa Tamwil) as a social institution. Qardhul hasan is a soft loan given on the basis of mere social obligations. In this case the borrower is not required to return anything except the amount borrowed. In Qardhul Hasan financing there are pillars and conditions, namely the perpetrator of the contract consisting of muqtaridh (borrower), muqridh (lender), qardh (fund), shighat ijab and qabul willingness for both parties and funds used for something useful and lawful. Qardhul Hasan is an activity to achieve a predetermined goal or target by the relevant Islamic financial institutions. The mechanism for implementing Qardhul Hasan is solely aimed at providing assistance to meet the needs of small communities. Thus it can be seen that the form of borrowing through Qardhul Hasan is in accordance with the principles of sharia economic law, the potential source of Qardhul Hasan's funding is quite large if it is utilized and managed optimally and its implementation is very useful for the community. Keywords: Qardhul Hasan, Islamic Law, BMT

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The Principles of Law of Negligence as Causes of Compensation in the Sharia Economic Law in Indonesia

Al-Ulum ◽

10.30603/au.v19i1.722 ◽

2019 ◽

Vol 19 (1) ◽

pp. 53-78

Author(s):

Asyari Hasan ◽

Alimin Alimin ◽

Rizal Fahlefi ◽

Desmadi Saharuddin

Keyword(s):

Financial Institutions ◽

Careful Consideration ◽

Legal Principles ◽

Economic Law ◽

Positive Law ◽

Islamic Financial Institutions ◽

Islamic Economic

This study discusses what are the concepts of legal principles of negligence as a cause of compensation contained in the positive Indonesian Islamic economic law concerning the implementation of contracts for Islamic financial institutions that are studied in a qualitative-normative exploratory manner. This study indicates that there are six legal principles of negligence as a cause of compensation in the positive law of Indonesian sharia economy, namely: 1) carried out with careful consideration, 2) carried out appropriately, 3) carried out carefully, 4) business activities may not exceed permitted limits, 5) business activities must be in line with the provisions stipulated in the contract (not violating the agreement), and 6) negligence classified as intentional negligence and accidental negligence. While the legal principles of negligence contained in conventional law are currently more complete (11 principles of negligence) than those contained in the positive law of sharia economy (only 6 principles)

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Towards New Sharia Governance for Islamic Financial Institutions

Justicia Islamica ◽

10.21154/justicia.v18i1.2341 ◽

2021 ◽

Vol 18 (1) ◽

pp. 39-58

Author(s):

Abdulazeem Abozaid

Keyword(s):

Financial Institutions ◽

Financial Services ◽

Financial Institution ◽

Islamic Banking ◽

Banking And Finance ◽

Finance Industry ◽

Regulatory Authorities ◽

Governance Model ◽

Islamic Financial Institutions ◽

Shariah Governance

Since its inception a few decades ago, the industry of Islamic banking and finance has been regulating itself in terms of Sharia governance. Although some regulatory authorities from within the industry, such as Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and Islamic Financial Services Board (IFSB), the Islamic banking and finance industry remains to a great extent self-regulated. This is because none of the resolutions or the regulatory authorities' standards are binding on the Islamic financial institution except when the institution itself willingly chooses to bind itself by them. Few countries have enforced some Sharia-governance-related regulations on their Islamic banks. However, in most cases, these regulations do not go beyond the requirement to formulate some Sharia controlling bodies, which are practically left to the same operating banks. Furthermore, some of the few existing regulatory authorities' standards and resolutions are conflicted with other resolutions issued by Fiqh academies. The paper addresses those issues by highlighting the shortcomings and then proposing the necessary reforms to help reach effective Shariah governance that would protect the industry from within and help it achieve its goals. The paper concludes by proposing a Shariah governance model that should overcome the challenges addressed in the study.Pada awal berdiri, Lembaga Keuangan Syariah merupakan lembaga keuangan yang menerapkan Hukum Syariah secara mandiri dalam sistem operasionalnya. Ia tidak tunduk pada peraturan lembaga keuangan konvensional, sehingga dapat terus berkomiten dalam menerapkan Hukum Syariah secara benar. Selanjutnya, muncullah beberapa otoritas peraturan yang berasal dari pengembangan Lembaga Keuangan Syariah. Diantaranya adalah Islamic Financial Services Board (IFSB) dan Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Hal ini tidak menyimpang dari kerangka peraturan Hukum Syariah, sebab standar peraturan dan keputusan yang dikeluarkan ditujukan khusus untuk Lembaga Keuangan Syariah saja. Beberapa Negara telah menerapkan peraturan tata kelola Hukum Syariah pada Bank Syariah mereka. Namun dalam banyak kasus, peraturan yang diterapkan tidak mampu mengontrol Lembaga Keuangan Syariah tersebut secara penuh. Sehingga, secara praktis proses pengawasan diserahkan kepada lembaga keuangan yang beroperasi. Akan tetapi, beberapa standar dan keputusan yang dikeluarkan oleh sebagian pemangku kebijakan bertentangan dengan keputusan yang dikeluarkan oleh beberapa akademi Fiqh. Artikel ini ditulis untuk menyoroti permasalahan yang timbul pada tata kelola Lembaga Keuangan Syariah, khususnya kekurangan yang tampak pada sistem tata kelola. Kemudian, penulis akan mengajukan usulan tentang efektifitas tata kelola Lembaga Keuangan Syariah yang bebas dari permasalahan.

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PENYELESAIAN UTANG IMPOR, JU’ALAH DAN SERTIFIKAT BANK INDONESIA SYARIAH (SBIS) PERSPEKTIF FATWA DSN-MUI

JES (Jurnal Ekonomi Syariah) ◽

10.30736/jes.v2i2.41 ◽

2018 ◽

Vol 2 (2) ◽

pp. 217-225

Author(s):

Khozainul Ulum

Keyword(s):

Financial Institutions ◽

Commercial Banks ◽

Financial Institution ◽

Letter Of Credit ◽

The Public ◽

Islamic Financial Institutions ◽

Monetary Control ◽

Debt Repayment ◽

Level Of Risk

Sharia financial Institution is one of the economic supporters of Indonesia. It is evidenced by the number of Islamic financial institutions that have sprung up this year, both sharia bank and non-bank sharia financial institution. It accommodates the aspiration and need of the society. The public is given the widest opportunity to establish a bank based on sharia principles, including convert from commercial banks whose business activities are based on conventional patterns into sharia patterns. The more sharia financial institutions that emerge, the more products offered by Islamic financial institutions to customers with the level of risk that can be overcome. The writing aims to answer the formulation of problem of settlement of import debts, contract of ju’a>lah and Sharia Certificate of Bank Indonesia (SBIS) in perspective of DSN-MUI fatwa. The result of research shows that in the DSN-MUI fatwa, it is explained that the settlement of imported debt or we know as letter of credit (L/C) may use the kafa>lah contract by taking a fee. It is also explained that one of the forms of kafa>lah contract is kafa>lah bi al-ma>l which is the application of kafa>lah contract which guarantees the payment of goods or debt repayment. This guarantee may be provided by the sharia bank to its customers in return for a fee. For the settlement of import debt there are several contracts that can be used, namely the contract of h}iwa>lah bi al-ujrah, waka>lah bi al-ujrah, and kafa>lah bi al-ujrah The Sharia Certificate of Bank Indonesia which used to be wadi>’ah with Wadi>’ah Certificate of Bank Indonesia which is now changed with Sharia Certificate of Bank Indonesia uses ju’a>lah contract. In this contract, Bank Indonesia pays the repayment upon maturity of SBIS with the relevant sharia banking record having performed and achieving the objectives expected by Bank Indonesia. If the sharia banking concerned is not able to achieve the desired objectives or stipulated by Bank Indonesia in terms of monetary control based on sharia principles, the relevant sharia banking will not receive any compensation from Bank Indonesia.

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