Search results

This paper aims to present a new Islamic product called gambling-free lottery, which is inspired by ideas of Musharakah, Takaful and Al-qard Al-hasan, where the winner of the lottery receives the prize as an interest-free loan, and buyers of tickets get their money back after the winner’s repayment of the loan.

The paper reports the religious opinions of three Islamic scholars who were interviewed for the purpose of this study. The results of a questionnaire to survey the mood of 430 persons about the new product are also reported.

The paper concludes that although the proposed product is still at an exploratory stage and not a definitive product acceptable to all Muslim society, it could be a successful Islamic financial product, provided that it was put into practice with some modifications to accommodate all Islamic views.

Main limitations of this study are the number of Islamic scholars interviewed does not reflect all the Islamic views regarding the new product and the lack of more information about the religious side of this type of product.

By introducing such a product, the gambling-free lottery could become not only a means of credit provision but also a new method of playing a “game” while lending money to someone who is more likely to be poor. Converting the poor into the rich could overcome many problems, particularly in poor countries.

The purpose of this paper is to identify some well-set instruments in Islam that can efficiently alleviate poverty, solve social problems and reduce social inequality through a new operational framework called “Islamic social business (ISB)”.

This is a conceptual research that is based on Al-Quranic principles as well as contemporary social welfare philosophies, such as, augmented stakeholder theory, social enterprise and social business. Al-Quran, Al-Hadith and existing traditional and Islamic literature are consulted for this study.

The study proposes an efficient system of Islamic wealth sourcing and management to make the process of poverty alleviation sustainable. Other social problems for disadvantaged people, such as, health-, shelter-, literacy- and environmental-related issues are also addressed in the proposed system. The study identifies the inefficiency in the current practices and makes some propositions that are in conformance with Islamic principles and implementable by Islamic institutions all over the world. The authors propose a theoretical framework and operational propositions for ISB.

In following this study, social policymakers, Islamic financial institutions, Islamic social enterprises and Islamic charity organizations will find organized guidelines to initiate “new entities” or “reshape existing entities”.

The study will be effective in solving social problems, alleviating poverty and reducing social inequality.

This is the first study that identifies all the potential Islamic sources of funding and the efficient management thereof through ISB. The study also proposes an ISB model and makes several propositions for different types of ISB.

The purpose of this paper is to find out whether profit‐and‐loss‐sharing (PLS) modes of finance have become viable financial alternatives for entrepreneurship and enterprise development or whether they are still merely an academic endeavour.

The method employed in this study is a combination of extensive examination of existing literature and critical analysis of the outcomes of several relevant studies in order to establish the convergent/divergent relationship between theory and practice in Islamic finance.

Based on available bank level and country level data, the paper presents evidence that the divergence between the theoretical perspective and the practical implementation of PLS modes of finance is widening to an alarming level. The paper argues that this divergence by no means can be attributed to the construct and the disposition of the PLS instruments; it is rather the product of the negative attitude and the lack of proper infrastructure of the majority of Islamic financial institutions (IFIs) – and their (reluctance) to accommodate entrepreneurship through the genuine implementation of PLS instruments.

The findings of this study draw attention to the visible shortage in practical research pertaining to the application of the principles of PLS modes in financing entrepreneurial activities. The study suggests that the relevance, the direction and the resilience of future research undertakings should be focused on bridging the increasing gap between the prescribed role of PLS instruments and the actual performance of IFIs in promoting socio‐economic development through the creation of a vibrant entrepreneurship sector.

The paper points out that while PLS models dominate the theoretical literature on Islamic finance, and whereas the majority of mainstream Muslim scholars and financial authorities overwhelmingly judge PLS models as being compelling financial options and practical developmental tools, the reality of Islamic finance paints a different picture. The paper emphasizes the need for IFIs to conform to their own charters and assume a leading developmental role in order to realize al‐Shariah objectives (maqasid al Shariah). The paper identifies key research areas that warrant the attention of keen researchers with interest in the field of Islamic finance and entrepreneurship development.

This paper aims to investigate the effectiveness of Qard-al-Hasan (QH) or interest-free loan in reducing multidimensional poverty through examining Fael Khair Waqf (FKW) program as a case.

A Multidimensional Poverty Index (MPI) approach has been used in this study, which was conducted over 1,600 households including 1,200 program households in 40 villages and 400 control households in 20 villages of 8 districts in the south-western region of Bangladesh.

It is found that 38.5% of sample population was multidimensional poor with deprivation of above the cutoff score. However, FKW participants were relatively less multidimensional poor. It was 35.3%. Hence, it is argued that the FKW is an effective program in terms of poverty reduction as it has contributed to higher economic outcomes for their participating households. The econometric result also suggests that the likelihood of the participants of FKW to be MPI poor is around 1.5 times lower than the nonparticipants, and the result is significant at 1% level. This indicates that program has a positive impact in reducing multidimensional poverty.

The analysis in this paper would fill the literature gap by investigating the link between application of QH and poverty alleviation. It will also guide academicians, researchers and decision-makers to design evidence-based policy to alleviate poverty.

To the best of the authors’ knowledge, there has been no empirical work in Bangladesh on the effectiveness of QH in poverty reduction considering an MPI approach. Hence, this study is a unique contribution to the literature of Islamic social finance.

The purpose of this paper is to investigate the compliance level of Islamic banks with disclosure accounting standards in some Middle East and North African countries, and most importantly to analyse the factors associated with compliance.

This study uses a self-constructed checklist of 203 items to measure the compliance of 38 Islamic banks with disclosure accounting standards during the 2011-2013 period. A multivariate regression analysis is used to determine significant factors influencing the extent of this compliance.

The results show a wide variation in compliance levels among the disclosure accounting standards and reveal that compliance is positively related to the listing status, the existence of an audit committee, the bank’s age and the country of domicile.

This study analyses the compliance level with only disclosure accounting standards. It remains to future research to examine compliance with all Accounting and Auditing Organization for Islamic Financial Institutions’ Financial Accounting Standards (AAOIFI FAS). Moreover, the explanatory power of the model remains modest. This connotes the existence of omitted variables that could be explored in future research.

The research contributes to the international financial accounting literature about the banking industry. The results are relevant for researchers, accounting professionals, stakeholders, standard-setters and regulatory bodies that are concerned with Islamic banks’ disclosures.

Although AAOIFI was established since 1991, very few empirical studies about compliance with the FAS have been undertaken. To the authors’ knowledge, there are no studies that investigated the determinants of compliance level with AAOIFI FAS. Then, this study concentrates on disclosure accounting standards (FAS 1 and FAS 5) with a high risk of non-compliance.

Cryptocurrencies are hidden monies that are specifically created to be used as digital currencies while assuming the characteristics of real money. Barring the divergent opinions on whether permitted in Islamic law (that is/are halal) or forbidden in Islamic law (that is/are haram), and for which the swing tends to be in favor of its blockchain underlying technology permissibility in Islam, cryptocurrencies are undoubtedly indicating potential for relevance in the global trade, investment, and other contract settlements in some years to come. The potential of the blockchain technology is phenomenal with recent estimates suggesting it will be worth more than $20 trillion in just two years, which is more than the entire American economy. Since fortunes are made by those entrepreneurs and indeed savvy investors who have discerned its future potential earlier on, there exists some great temptation for people to jump on the blockchain bandwagon. Apparently the growing acceptability of digital fiat money as a result of technology development on one hand, and the failure of the paper money to mitigate inflation and other economic disequilibria since the disappearance of the gold standard on the other, various forms of cryptocurrencies including Bitcoins (referred to as the king) appear to roar toward wider recognition. However, an emerging phenomenon associated with cryptocurrency revolution is an observed significant fluctuation (the tide) in its value and thus a subject of discussion within Islamic finance community and beyond. In the midst of this also is the current agitation founded on some of the Islamic law (Sharīʿa) view on the necessity of asset-backed money, to be extended to the current cryptocurrency innovation for its transformation into a Sharīʿa compliant precious metal backed currency. The big question now which this chapter sought to provide the answer is, what are the implications of these developments to a more established and widening global phenomenon of Islamic finance and its development in Muslim world vis-á-vis aspirations for sustained economic development. The work finds that cryptocurrencies would generate three advantages over all forms of money including gold through: establishing a unified financial system through its standard decentralization, being rarer than gold and its significant mitigation of inflation. It is also noted that the prevalent foreign exchange risk resulting from the underlying activities (rather than the currency itself) is free from speculation (Gharar). It is, therefore, recommended that stakeholders in the Islamic Finance world should not be passive but be proactive in commencing processes to develop technical notes, standards, and operational guidelines to partake in the inevitable migration to cryptocurrencies.

The purpose of this paper is to initiate a direct discourse towards an Islamic microfinance focus agenda for the economic enlistment of the poor minority community and to allow poorer households in the financial inclusion. The issue of the Indian conventional microfinance institutions in failing to attract the poorest of the poor amongst Muslims is important for the purpose of this paper. This study explores a Shari’ah-compliant microfinance system which will create a level of playing-field with respect to the financial inclusion of the poor.

The paper is a theoretical discussion on Islamic microfinancial services for financial inclusion of the poor. Therefore, there is little to say about “methodology” other than the conventional microfinance model is reviewed, and an alternative model of Islamic microfinancial service has been suggested to allow poorer households in the financial inclusion.

The paper finds that there are some opportunities capable of improving the economic condition of the poor Muslim communities through some innovative approaches. To illustrate this finding, the paper emphasises on designing and delivering Islamic microfinancial products suitable for the poor based on the principle of Islamic solidarity. It argues that this service will help the poor and turn their savings into sums large enough to satisfy a wide range of personal, social and asset-building needs as well as needs relating to small businesses and consumption.

The paper’s findings are limited to the matter of financial inclusion of the poor through Islamic microfinancial services in India.

Combining the Islamic social principle of solidarity for the less fortunate with the power of microfinance to provide financial access to the poor has the potential to reach out to millions more people. The ideas presented in this paper are designed to direct discourse towards an Islamic microfinance focus agenda for the economic enlistment of the poor Muslims in India.

The paper aims to revive the Islamic economic system discourse given the increasing interest in the moral economy agenda.

Proponents of Islamic economics theorise that the Islamic system presents the ideal form of a socio-economic order. However, the reported huge gap between theoretical construct and real activities seems to support the critics’ claim that it is a mere utopian state that directly challenges the viability of the Islamic economy idea.

The fact of the matter is that homo economicus is overpowering homo Islamicus despite the presupposed position of homo Islamicus as the mainstay of Islamic economics.

To manifest the Islamic economic system notion further, it is argued that a shariah-based values infusion policy (VIP) needs to be formulated to actualise the predominance of homo Islamicus.

Owing to the overarching and holistic nature of the proposed public policy, the operations of individuals, firms and state agencies should have the tendency to reflect the expected behaviour of homo Islamicus better than the present state of affairs.

The success of the VIP would include the enhancement of social integration and cohesion.

The link between moral economy, homo Islamicus and public policy is clearly established. Thus, this research guides policy makers in promoting the Islamic economic system as a universally-aspired moral economy project.

The purpose of this article is to highlight the importance of waqf in financing higher education. Nowadays, higher education is costly and this has prevented students, especially those who are self-financed, from accessing such learning environments. This paper offer an alternative solution to relieve such a situation, namely, through the application of an endowment-based or waqf educational institution. The study suggests a way to establish an endowment university by concentrating the discussion on the concept and principles of its establishment, as well as sharing the experiences of the Malaysian waqf universities and the Turkish Foundation Universities/Vakif Üniversitesi in financing their universities using waqf, i.e. a pious endowment instrument.

The empirical data were mainly collected using in-depth interviews with the universities’ higher management authorities and some of the members of the board of trustees.

The findings show that the role of waqf or pious endowment is significant in providing financial assistance to their communities as well as strengthening their academic quality. In addition, tawhidic epistemology together with morality and ethics have influenced waqf donors or founders to donate their wealth and property to enrich and sustain universities and higher education.

This article provides the experiences of the Malaysian Waqf Universities and the Turkish Foundation Universities/Vakif Üniversitesi in financing their universities using waqf. It also contains some good examples from the experience of several earlier Islamic civilizations, in particular those of the Ottoman Empire and the Mamluk Sultanate of Egypt. In addition, examples of the implementation of waqf and endowment-based universities in the UK and USA as well as the Al-Azhar University of Egypt is also included.