Critical evaluation of the compliance of online Islamic FOREX trading with Islamic principles

Rafik Fakhry Omar (School of Management, Cardiff Metropolitan University, Cardiff, UK)
Eleri Jones (School of Management, Cardiff Metropolitan University, Cardiff, UK)

International Journal of Islamic and Middle Eastern Finance and Management

ISSN: 1753-8394

Publication date: 20 April 2015

Abstract

Purpose

This study aims to evaluate the compliance of online Islamic FOREX products with Islamic jurisprudence principles and determines the degree of similarity or difference between Islamic and conventional FOREX products.

Design/methodology/approach

This study involves the collection and analysis of secondary data from online sources (i.e. four Islamic FOREX Web sites selected on the basis that they appeared on two Islamic FOREX Web site lists) It also undertakes content analysis of the rulings of jurisprudence scholars on one of the Web sites.

Findings

There is no evidence to suggest that the technical processes underpinning current Islamic FOREX products are any different to those underpinning conventional FOREX products. Also there are major contradiction and ambiguities in the rulings offered by the jurisprudence scholars about the permissibility of the products.

Research limitations/implications

The study relies on the analysis of secondary data. Further research that will involve interviews with banking industry employees in both conventional and Islamic banking sectors would provide a better understanding of: how financial products are created and managed and the role of bank regulations in creating and managing different financial products.

Practical implications

It would seem that Islamic FOREX is simply rebranding of conventional FOREX. The paper calls for a modern-day definition of usury (riba).

Social implications

The way Islamic FOREX is marketed today to online users as synonymous with gambling, and, although branded as Islamic, the actual technical processes that underpin Islamic FOREX products are the same as conventional FOREX products and therefore not compliant with Islamic principles.

Originality/value

This research explores the marketing of Islamic FOREX products.

Keywords

Citation

Rafik Fakhry Omar and Eleri Jones (2015) "Critical evaluation of the compliance of online Islamic FOREX trading with Islamic principles", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 8 No. 1, pp. 64-84

Download as .RIS

DOI

: https://doi.org/10.1108/IMEFM-06-2014-0059

Publisher

:

Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

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