Tawarruq time deposit with wakalah principle: an option that triggers new issues
International Journal of Islamic and Middle Eastern Finance and Management
ISSN: 1753-8394
Article publication date: 15 August 2016
Abstract
Purpose
This paper aims to make an attempt to analyze the adoption of wakalah in the tawarruq deposit that may trigger new issue.
Design/methodology/approach
This paper provides a review on the underlying contracts for deposit-taking activities.
Findings
There are two mains findings from this paper – first, the current deposit taking activities are characterized by principal guaranteed, it deems contrary to the nature of mudarabah. Second, we suggest the presence of wakalah in tawarruq term deposits and we argue that the application of the concept of bay al-wakillinafsihi would not affect the validity of wakalah.
Originality/value
This paper is considered to have its own originality in the sense that the introduction of tawarruq-based deposit product by Islamic banks could be the best alternative to the current deposit products.
Keywords
Acknowledgements
We would like to express our thanks to Ahmed Fadhlan Yahya and Abdelrahman Elzahi for their valuable comments. Any opinions expressed are those of the authors and do not necessarily reflect the policies or opinions of respective organizations. An earlier version of this paper has been presented at the Malaysia–Indonesia International Conference on Economics, Management and Accounting, 9-10 October, Institut Pertanian Bogor, Indonesia.
Citation
Ismail, A.G., Nik Abdul Ghani, N.A.R. and Mat Zain, M.N. (2016), "Tawarruq time deposit with wakalah principle: an option that triggers new issues", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 9 No. 3, pp. 388-396. https://doi.org/10.1108/IMEFM-05-2014-0048
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited