What Policy for Islamic Financial Literacy?

10.26414/a148 ◽  
2021 ◽  
Author(s):  
Ahmed Tahiri Jouti
Keyword(s):  
Literature Review ◽  
Financial Institutions ◽  
Financial Literacy ◽  
Sustainable Growth ◽  
Islamic Finance ◽  
Finance Industry ◽  
Literacy Policy ◽  
Islamic Financial Institutions ◽  
Financial Behaviour

This paper addresses the concept of financial literacy in Islamic finance and suggests a methodology to elaborate an effective Islamic financial literacy policy (IFLP). Based on a literature review, the paper summarizes the conclusions of studies and surveys conducted in the field of conventional financial literacy while identifying the specificities of the Islamic finance industry. Indeed, the paper would help financial authorities and Islamic financial institutions in elaborating Islamic financial literacy policies (IFLPs) in order to contribute to the sustainable growth of the industry. It promotes the idea that qualitative aspects are worth studying when elaborating an Islamic financial literacy policy that has to take into account many factors such as the maturity of the industry, the objectives of the policy (inclusion or migration), the degree of Shari’ah awareness, the understanding of Arabic terminologies, etc. Finally, the IFLP measurement should include quantitative (Total reach and number of people reached) as well as qualitative aspects (level of financial literacy, impact on financial behaviour).

Part I Introduction, 1 Status of the Global Islamic Finance Industry

2020 ◽  
Author(s):  
Warde Ibrahim
Keyword(s):  
Financial Institutions ◽  
Significant Role ◽  
Islamic Finance ◽  
Trial And Error ◽  
Global Finance ◽  
Finance Industry ◽  
Complex Process ◽  
Islamic Financial Institutions ◽  
Political Economic

This introductory chapter provides an overview of Islamic finance. Modern Islamic finance did not come out of nowhere. It appeared as the result of specific historical circumstances in the 1970s, and later evolved through a complex process of trial-and-error. It was also shaped by broader competitive and political–economic factors. Although religion was by definition central to Islamic finance, other variables—political, economic, social, cultural, and demographic—also played a significant role. No longer confined to the outer fringes of global finance, Islamic finance has also gone mainstream. Most major financial institutions are now involved in one way or another in Islamic finance, as are global consulting, accounting, and information companies. Within the Islamic world, Islamic financial institutions have become major economic players.

scholarly journals Comparative Analysis on Shariah Governance in Malaysia: SGF 2010, IFSA 2013 and SGPD 2019

2020 ◽  
Vol 10 (1) ◽  
pp. 110 ◽  
Author(s):  
Muhammad Iqmal Hisham Kamaruddin ◽  
Mustafa Mohd Hanefah ◽  
Zurina Shafii ◽  
Supiah Salleh ◽  
Nurazalia Zakaria
Keyword(s):  
Comparative Analysis ◽  
Financial Institutions ◽  
Financial Services ◽  
Islamic Finance ◽  
Policy Document ◽  
Finance Industry ◽  
The World ◽  
Governance Practices ◽  
Islamic Financial Institutions ◽  
Shariah Governance

The main focus of shariah governance for an organization is to ensure that it is comply with shariah laws and regulations. Under Islamic finance industry, shariah governance is being given attention due to rapid growth of this industry in the world. For Malaysia, the authority through Bank Negara Malaysia (BNM) have taken a proactive role by introducing shariah governance guidelines including the Shariah Governance Framework (SGF) 2010, the Islamic Financial Services Act (IFSA) 2013 and the latest is the Shariah Governance Policy Document (SGPD) 2019. These shariah governance guidelines are supposed to support the development of shariah governance practices especially by Islamic Financial Institutions (IFIs) in Malaysia. However, there is limited to none study conducted to compare these guidelines. These shariah governance guidelines is necessary to be compared in order to find out whether these guidelines are complemented each other and to identify any differences among these guidelines. Therefore, the aim of this study is to compare between these shariah governance guidelines. Based on the analysis, it has been found that SGPD 2019 is the most comprehensive covers on shariah governance as compared to IFSA 2013 and SGF 2010. However, these three guidelines still not become comprehensive enough, as there is still limited to none discussion on the definition and objectives of shariah governance itself.

scholarly journals Islamic Financial Services Act (IFSA) 2013 and the Sharīʿah-compliance requirement of the Islamic finance industry in Malaysia

2018 ◽  
Vol 10 (1) ◽  
pp. 94-101 ◽  
Author(s):  
Mohamad Akram Laldin ◽  
Hafas Furqani
Keyword(s):  
Content Analysis ◽  
Financial Institutions ◽  
Financial Services ◽  
Design Methodology ◽  
Islamic Finance ◽  
Content Type ◽  
Governance Framework ◽  
Finance Industry ◽  
Islamic Financial Institutions ◽  
Comprehensive Framework

Purpose This paper aims to observe the development of the Sharīʿah governance framework (SGF) and practice in Islamic financial institutions (IFIs) in Malaysia. Design/methodology/approach The study is a qualitative-based research. It uses various documents and content analysis approach to understand and analyze the structure, process and practice of SGF in IFIs in Malaysia. Findings It is found that the Central Bank of Malaysia, Bank Negara Malaysia, has attempted to develop a comprehensive framework of Sharīʿah governance for IFIs in Malaysia. The framework governs the practice of the industry, covers stakeholders’ scope of duties and responsibilities and provides details on processes and procedures in the operations of IFIs to achieve the objective of Sharīʿah compliance. To maintain the relevance of the SGF to the needs of the industry, the framework has also been updated recently in 2017. The amendments aim to strengthen the effectiveness of Sharīʿah governance implementation within the Islamic finance industry. Originality/value This study attempts to comprehensively examine the evolution of the SGF Sharīʿah governance framework for IFIs in Malaysia. The Malaysian model of the SGF is unique and could be emulated by other countries in developing the Islamic finance industry in their respective jurisdictions.

Musharakah Mutanaqisah home financing: issues in practice

2018 ◽  
Vol 9 (1) ◽  
pp. 91-103 ◽  
Author(s):  
Alam Asadov ◽  
Zulkarnain Bin Muhamad Sori ◽  
Shamsher Mohamad Ramadilli ◽  
Zaheer Anwer ◽  
Shinaj Valangattil Shamsudheen
Keyword(s):  
Financial Institutions ◽  
Current Mode ◽  
Fair Value ◽  
The Body ◽  
Islamic Finance ◽  
Islamic Banks ◽  
Periodic Review ◽  
Content Type ◽  
Finance Industry ◽  
Islamic Financial Institutions

Purpose This paper aims to examine the practical issues in the Musharakah Mutanaqisah (MM) financing and subsequently, recommends possible solutions to mitigate these issues and improve the current practice. Design/methodology/approach This paper analyses the theory and current practices of MM offered by Islamic banks. Findings It is suggested that Islamic financial institutions consider revaluation of property’s value to its fair value, especially during termination of MM contract and annual or agreed periodic review of the market value of the assets to determine the “rental” payments by the customer. It is also recommended that Islamic financial institutions should share all associated costs in performing the contract. Research limitations/implications Research findings reported in this paper contribute to the body of knowledge on MM in general and to the Islamic finance practices in Malaysia and abroad. Indeed, the Malaysia Central Bank (i.e. Bank Negara Malaysia) should form a special committee to look into the issues highlighted in this paper and recommend strict guidelines for Islamic financial institutions to improve their practices. Practical implications Islamic banks should extend the use of MM contract in automobile and trade financing where rent or profit could be easily identified and value of the asset is more certain. The regulators and Islamic financial standard setting authorities need to oversee the Shari’ah board decisions on MM contracts and keep the gates in the interest of ensuring a more viable and authentic Islamic finance industry. Originality/value This paper briefly views the current mode of MM contracts, specifically for home financing, and highlights the incompliance to Shari’ah requirements in exercising these contracts in practice.

Part II Islamic Law and Contracts in Practice, 8 Derivatives and Islamic Finance

2020 ◽  
Author(s):  
Eisenberg David M
Keyword(s):  
Risk Management ◽  
Financial Institutions ◽  
Islamic Law ◽  
Islamic Finance ◽  
Futures Options ◽  
Finance Industry ◽  
Considerable Debate ◽  
Islamic Financial Institutions ◽  
Lack Of Knowledge

This chapter studies how conventional derivatives—especially futures, options, and swaps—have been or may be based on bay’ salam, bay’ ʻurbun, and other traditional Islamic transaction structures. Bridging the gap between traditional Islamic transaction structures and conventional derivatives continues to be among the most urgent challenges facing the global Islamic finance industry, not least to provide Islamic financial institutions with a crucial tool for risk management. Salam and ʻurbun clearly illustrate the nature of the challenge to create Shari’a-compliant derivatives. Paradoxically, it is their deviation from the standard conditions for a valid sale contract that allow them to function to some extent as proxies for conventional derivatives. Among jurists, a consensus (ijma’) emerged as to the validity of salam, although special conditions were imposed not only to minimize gharar (uncertainty) and the kindred contractual defect of jahl (lack of knowledge), but also to reduce the possibility of riba (unlawful gain). There is still considerable debate among the various schools of law as to whether ʻurbun constitutes a valid sale contract under the Shari’a.

scholarly journals Empowering the Shari’ah Committee towards Strengthening Shari’ah Governance Practices in Islamic Financial Institutions

2016 ◽  
Vol 8 (2) ◽  
pp. 142 ◽  
Author(s):  
Nawal Kasim ◽  
Sheila Nu Nu Htay ◽  
Syed Ahmed Salman
Keyword(s):  
Financial Institutions ◽  
Review Process ◽  
Islamic Finance ◽  
Rapid Rate ◽  
Finance Industry ◽  
The World ◽  
Limited Support ◽  
Governance Practices ◽  
Islamic Financial Institutions ◽  
Operational Practices

<p>The Islamic finance industry is growing at a rapid rate. Its products and services are widely offered all over the world. The ultimate vision of the emergence of Islamic finance industry is to avoid the prohibited practices of conventional financial institutions such as interest, uncertainty, gambling, and investment in prohibited items. If Islamic Financial Institutions (IFIs) manifest by excluding this vision, then they have failed in their mission. Consequently, <em>shari’ah</em> risk, i.e., non-<em>shari’ah</em> compliant risk is the main risk that IFIs must manage to maintain its distinguished status as <em>shari’ah</em> compliant institutions. <em>Shari’ah</em> governance is used as the guideline to mold the operational practices of IFIs to achieve the mission of <em>shari’ah</em> compliance. For this purpose, the <em>shari’ah</em> committee members are the main players for implementing good <em>shari’ah</em> governance practices. However, due to the limited authority of <em>Shari’ah</em><em> </em>committee members in performing their tasks, IFIs are voluntarily exposed to <em>Shari’ah</em> risk. This paper highlights the current <em>Shari’ah</em> governance problems and proposes that the authority of <em>Shari’ah</em> committee should be enhanced for better <em>Shari’ah</em> governance practices. Problems with current <em>Shari’ah</em><em> </em>governance practices are mostly due to <em>fatawa</em> variation, non-harmonization of <em>Shari’ah</em><em> </em>governance practices and products, variance in the four schools of thought, and limited support from IFI management in discharging their full responsibilities such as their involvement in the <em>Shari’ah</em> review process and audit. This paper is set to develop <em>Shari’ah</em> governance guidelines.</p>

Limited purpose banking (LPB) and Islamic finance

Humanomics ◽  
2014 ◽  
Vol 30 (2) ◽  
pp. 122-135 ◽  
Author(s):  
Edib Smolo ◽  
Abbas Mirakhor
Keyword(s):  
Financial Institutions ◽  
Design Methodology ◽  
Financial System ◽  
Islamic Finance ◽  
Extensive Literature ◽  
Content Type ◽  
Finance Industry ◽  
Islamic Financial Institutions ◽  
Alternative Solutions ◽  
Practical Implications

Purpose – This paper primarily aims to review and analyze a new model for Islamic finance based on Laurence J. Kotlikoff's idea of limited purpose banking (LPB). In addition, this paper aims to highlight, explain and discuss various aspects of LPB and how it suits the original aspirations of pioneer writers in Islamic finance. Design/methodology/approach – Based on an extensive literature review, this paper aims to highlight, explain and discuss the reform of the Islamic finance industry based on Kotlikoff's model of LPB. Findings – Based on a modified LPB model, Islamic financial institutions could be established to provide specific services with clear aims and objectives. These LPB Islamic financial institutions would operate in a similar way to LPB. Research limitations/implications – As there is no perfect plan, the proposal of this paper is far from being perfect and is open to discussions and improvements. The paper will, hopefully, spark off quite a discussion on the topic; may result in a better understanding of the model; and provide some alternative solutions to the current structurally ill financial system. Practical implications – The paper provides some practical ideas for a better implementation of Shari'ah principles in financial intermediation of the Islamic financial system. Originality/value – Kotlikoff's LPB proposal for reforming the financial system is new and has been directed to the conventional financial system. This paper represents the first attempt to apply his proposal to the Islamic finance industry.

scholarly journals Growth and Prospect of Islamic Finance in Bangladesh

2018 ◽  
Vol 1 (1) ◽  
pp. p253
Author(s):  
Md. Moniruzzaman
Keyword(s):  
Financial Institutions ◽  
Banking Sector ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Upward Trend ◽  
Finance Industry ◽  
Specific Investment ◽  
The Past ◽  
Rapid Economic Growth ◽  
Islamic Financial Institutions

Though conventional financial system is contributing swiftly to the economic development but the Islamic finance is not lacking behind of it now a days. The Islamic finance industry has emerged as one of the component of a rapid economic growth over the past three decades. Initially the activities of Islamic finance is limited within the country, but at present the growth of Islamic finance are thought globally with an upward trend through the establishment of various Islamic financial institutions with different shareholders. This paper examines insights into the growth and prospect of Islamic finance in Bangladesh. Islamic finance is ruled by Islamic Finance Guidelines which is issued and approved by Central Bank of Bangladesh. This system has its own principles and guidelines which would make the system of choice in meeting specific investment needs. It compares Islamic and conventional finance regard to Efficiency and Profitability, Risk Management, and Sukuk and Conventional Bonds. In Bangladesh, the atmosphere is exclusive because of the existence of Islamic banking sector. But the country has some deficiencies in imposing specific Islamic finance regulations which have been recognized and efforts are being made to solve the problems by the authorities.

Islamic Finance: Opportunities for the Russian Economy

2015 ◽  
pp. 106-127
Author(s):  
B. Chokaev
Keyword(s):  
Financial Institutions ◽  
Financial System ◽  
Economic Benefits ◽  
Islamic Finance ◽  
Finance Industry ◽  
Russian Economy ◽  
Islamic Financial Institutions ◽  
Economic Infrastructure ◽  
The Creation

The article discusses the prospects for the development of the financial system and the economy, associated with the emergence of Islamic finance industry in the country. The author briefly describes the important features of Islamic finance, examines the main obstacles for functioning of Islamic financial institutions in the Russian legislation. Furthermore, the paper analyzes the economic benefits from the creation of economic infrastructure, which enables Islamic financial companies to operate on equal conditions with other subjects of the financial system in terms of financial, tax and administrative aspects.

scholarly journals Integration of Shari’ah Governance Framework in Human Resource Management Practice in Malaysia

2019 ◽  
Vol 8 (3S3) ◽  
pp. 197-205
Keyword(s):  
Literature Review ◽  
Financial Institutions ◽  
Management Practice ◽  
Governance Structure ◽  
Job Design ◽  
Governance Framework ◽  
Finance Industry ◽  
Hrm Practices ◽  
Islamic Financial Institutions ◽  
The Impact

The discussion on Shari`ah governance has gained significant attention and concerns in the Islamic finance industry. The Central Bank of Malaysia (BNM) introduced the Shari`ah Governance Framework for Islamic Financial Institutions (SGF) in 2010 for the purpose of promoting effective and good Shari`ah governance practices of Islamic Financial Institutions. The IFIs are expected to integrate necessary elements of good Shari’ah governance structure and processes in order to sustain their business in this complex environment as well as to ensure effective implementation of SGF through effective Human Resources Management (HRM). Many studies have been done on the Shariah governance aspects, processes and its effectiveness but not on the impact of HRM in SGF implementation. Therefore, the present study examines the SGF from HRM perspective particularly on the integration between SGF and HRM. It approached the topic from the perspective of job design and description through a literature review and a survey of professionals from the Shari`ah Division and HR Division of different types of IFIs in Malaysia. The data were collected from the literature review and survey responses from 78 respondents from different IFIs. The study found seven HRM scopes highlighted in the framework and found that the respondents’ general understanding of SGF implementation and HRM practices was satisfactory. Remarkably, it is also found that theIFIs have effectively used their HRM practices from the job design and description perspective as a tool to manage their key Shari`ah governance organs. Several limitations and recommendations were also presented to further enhance SGF implementation from this perspective.

Sign in / Sign up

Export Citation Format

Share Document