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Book part
Publication date: 19 December 2016

Md. Faruk Abdullah and Asmak Ab Rahman

The objective of the chapter is to discuss the role of wa’d (promise) to mitigate risk in different Islamic banking products. The chapter will illustrate the element of…

Abstract

Purpose

The objective of the chapter is to discuss the role of wa’d (promise) to mitigate risk in different Islamic banking products. The chapter will illustrate the element of wa’d in different Islamic banking products in Malaysia.

Methodology/approach

The study has adopted the document review method to get information on different banking products. Moreover, it conducted semi-structured interviews with bankers to get in-depth information.

Findings

The study finds out that wa’d plays a vital role in structuring several products including retail products, trade financing products, and treasury products. Along with the unilateral wa’d there is a usage of double wa’d (wa’dan) in some product structures. In most of the products, wa’d is included as a risk mitigation instrument along with other major underlying Shari’ah contracts. Some Shari’ah issues are involved with these products namely the Shari’ah rulings related to wa’dan, “form over substance,” etc.

Originality/value

This is an in-depth field study which adds new knowledge on wa’d-based products. The experience of Malaysia might be a lesson for other countries to minimize risk in their Islamic banking products.

Details

Advances in Islamic Finance, Marketing, and Management
Type: Book
ISBN: 978-1-78635-899-8

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Article
Publication date: 30 August 2011

Mohd. Fuad, Sawari, Razi Hassan and Faruk Abdullah

Considering the popularity of the premium savings certificate (PSC) of the National Savings Bank of Malaysia (Bank Simpanan Nasional (BSN)) the paper aims to justify the…

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2042

Abstract

Purpose

Considering the popularity of the premium savings certificate (PSC) of the National Savings Bank of Malaysia (Bank Simpanan Nasional (BSN)) the paper aims to justify the Shari'ah compliancy of this product by analyzing its underlying contracts and to propose a Shari'ah compliant savings certificate, if the current practice is invalid in the Shari'ah.

Design/methodology/approach

Inductive methodology is first used to obtain a basic understanding of this product and the characteristics of Shari'ah approved contracts as well as the views of the jurists. Interviewing method is also used to acquire first‐hand information when the inductive method is not sufficient. Afterwards, an analytical approach is adopted to justify the validity of this contract with the Shari'ah principles. Finally, an innovative methodology is used to propose a Shari'ah compliant savings certificate.

Findings

The paper argues that the underlying contract used in PSC violates the conditions of wadi'ah contract, as in wadi'ah, the bank is not allowed to spend the money for investment, but in practice, BSN uses the money for investment. Therefore, the underlying contract in PSC turns into qard (loan) contract. Since the scholars unanimously declare that giving any kind of benefit like prizes to the creditor is riba, then PSC is considered as invalid according to the Shari'ah. On the other hand, although PSC might seem like gambling, it is different from gambling as the prizes given to PSC are from a third party. The paper proposes implementing mudarabah contract in PSC where the bank is allowed to invest according to its interest and the depositors share the profit and loss but the huge fluctuation of profit and loss could be shrunk by a special fund method.

Originality/value

In particular, it attracts the attention of BSN management to change their product's features. In general, it discovers a non‐Shari'ah compliant feature of savings certificates and outlines the feature of a Shari'ah compliant saving certificate for the practitioners of Islamic banking all over the world.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 4 no. 3
Type: Research Article
ISSN: 1753-8394

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Article
Publication date: 17 February 2012

Faruk Abdullah

The purpose of this paper is to analyze the human capital theory from an Islamic perspective. It studies the primary sources of Islam to discover its contribution towards…

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2274

Abstract

Purpose

The purpose of this paper is to analyze the human capital theory from an Islamic perspective. It studies the primary sources of Islam to discover its contribution towards human capital development.

Design/methodology/approach

The paper adopts inductive and analytical method to interpret Islamic viewpoints towards human capital development. It studies the classical and modern sources of Islamic law and analyzes scholars' opinions.

Findings

In fact, human capital theory has a different understanding in Islam, due to its different objectives. However, it resembles the conventional theory in the way that it urges the development of human beings in education, skills and abilities. Islamic teachings contribute a lot to foster development among the individuals in every aspect of their lives. The way Islam gives incentive to development is unique; because, with the improvement of education, good skills, work and production, physical health and perfection, it is concerned about the moral and ethical development of employees, which is no doubt having a great effect in the development of the organization. Moreover, Islamic society plays an important role in nurturing enthusiastic and competent individuals.

Originality/value

It is expected that the paper would be of interest to Muslim authorities, as a means to motivate their employees, as well as to share ideas across the academic disciplines.

Details

Humanomics, vol. 28 no. 1
Type: Research Article
ISSN: 0828-8666

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Article
Publication date: 17 August 2015

Md. Faruk Abdullah and Asmak Ab Rahman

– The study aims to consider wa’dan-based products in Islamic banks in Malaysia and discuss the validity of wa’dan in those products from the perspective of Shari’ah.

Abstract

Purpose

The study aims to consider wa’dan-based products in Islamic banks in Malaysia and discuss the validity of wa’dan in those products from the perspective of Shari’ah.

Design/methodology/approach

Case studies were conducted of three Islamic banks in Malaysia. Semi-structured interviews were carried out with bankers as well as Shari’ah scholars. The document analysis method was adopted to strengthen the findings.

Findings

The study shows that three Islamic banking products: Musyarakah Mutanaqisah (MM) home and property financing; Al-Ijarah Thumma Al-Bai’ (AITAB) vehicle financing; and Ijarah rental swap (IRS) use wa’dan in their product structures. After discussing the different views of the scholars, the study concludes that wa’dan should be allowed in the above-mentioned products because it is different from muwa’adah. In wa’dan, every single wa’d is separate from each other, as every one of them is related to different types of events. With regard to the issue of Shari’ah in MM home and property financing, it was concluded that wa’d from the customer to purchase the bank’s share is not a capital guarantee. Moreover, IRS is not a form of gambling but is in line with Maqasid al-Shari’ah.

Research limitations/implications

The study is limited to three Islamic banks in Malaysia that focus on retail and commercial banking products. Therefore, the study excludes application of wa’dan in sukuk and some other Islamic derivatives that are not the practice of these three banks.

Originality/value

This empirical study adds new knowledge by developing the concept and practice of wa’dan. Wa’dan as an innovative tool for product development to overcome Shari’ah issues in conventional banking may be of interest to practitioners all around the world.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 8 no. 3
Type: Research Article
ISSN: 1753-8394

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Content available
Article
Publication date: 30 August 2011

M. Kabir Hassan

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591

Abstract

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 4 no. 3
Type: Research Article
ISSN: 1753-8394

Content available
Book part
Publication date: 19 December 2016

Abstract

Details

Advances in Islamic Finance, Marketing, and Management
Type: Book
ISBN: 978-1-78635-899-8

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Article
Publication date: 30 April 2021

Faruk Bulut, Melike Bektaş and Abdullah Yavuz

In this study, supervision and control of the possible problems among people over a large area with a limited number of drone cameras and security staff is established.

Abstract

Purpose

In this study, supervision and control of the possible problems among people over a large area with a limited number of drone cameras and security staff is established.

Design/methodology/approach

These drones, namely unmanned aerial vehicles (UAVs) will be adaptively and automatically distributed over the crowds to control and track the communities by the proposed system. Since crowds are mobile, the design of the drone clusters will be simultaneously re-organized according to densities and distributions of people. An adaptive and dynamic distribution and routing mechanism of UAV fleets for crowds is implemented to control a specific given region. The nine popular clustering algorithms have been used and tested in the presented mechanism to gain better performance.

Findings

The nine popular clustering algorithms have been used and tested in the presented mechanism to gain better performance. An outperformed clustering performance from the aggregated model has been received when compared with a singular clustering method over five different test cases about crowds of human distributions. This study has three basic components. The first one is to divide the human crowds into clusters. The second one is to determine an optimum route of UAVs over clusters. The last one is to direct the most appropriate security personnel to the events that occurred.

Originality/value

This study has three basic components. The first one is to divide the human crowds into clusters. The second one is to determine an optimum route of UAVs over clusters. The last one is to direct the most appropriate security personnel to the events that occurred.

Details

International Journal of Intelligent Unmanned Systems, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2049-6427

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Article
Publication date: 22 September 2021

Ali Yavuz Polat, Ahmet Faruk Aysan, Hasan Tekin and Ahmet Semih Tunali

This study aims to investigate the effect of fear sentiment with a novel data set on Bitcoin’s (BTC) return, volatility and transaction volume. The authors divide the…

Abstract

Purpose

This study aims to investigate the effect of fear sentiment with a novel data set on Bitcoin’s (BTC) return, volatility and transaction volume. The authors divide the sample into two subperiods to capture the changing dynamics during the COVID-19 pandemic.

Design/methodology/approach

The authors retrieve the novel fear sentiment data from Thomson Reuters MarketPsych Indices (TRMI). The authors denote the subperiods as pre- and post-COVID-19 considering January 13, 2020, when the first COVID-19 confirmed case was reported outside China. The authors use bivariate vector autoregressive models given below with lag-length k, to investigate the dynamics between BTC variables and fear sentiment.

Findings

BTC market measures have dissimilar dynamics before and after the Coronavirus outbreak. The results reveal that due to the excessive uncertainty led by the outbreak, an increase in fear sentiment negatively affects the BTC returns more persistently and significantly. For the post-COVID-19 period, an increase in fear also results in more fluctuations in transaction volume while its initial and cumulative effects are both negative. Due to extreme uncertainty caused by the COVID-19 pandemic, investors may trade more aggressively in the initial phases of the shock.

Practical implications

The authors are convinced that the results in this paper have more far-reaching implications for other markets regulated by the states. BTC provides a natural benchmark to understand how fear sentiment drives and impacts the markets isolated from any interventions. Hence, the results show that in the absence of regulatory frameworks, market dynamics are likely to be more volatile and the fear sentiment has more persistent impacts. The authors also highlight the importance of using micro, asset-specific sentiment measures to capture market dynamics better.

Originality/value

BTC is not associated with any regulatory authority and is not produced by the governments and central banks. COVID-19 as a natural experiment provides an opportunity to explore the pure effects of market sentiment on BTC considering its decentralized and unregulated features. The paper has two main contributions. First, the authors use BTC-specific fear sentiment novel data set of TRMI instead of more general market sentiments used in the existing studies. Next, this is the first study to examine the association between fear and BTC before and after COVID-19.

Details

Studies in Economics and Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1086-7376

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Article
Publication date: 23 June 2020

Syed Ahmed Salman and Rusni Hassan

The purpose of this study is to examine the perception and acceptability of insurance policyholders to introduce takāful in India. The primary focus of this research is…

Abstract

Purpose

The purpose of this study is to examine the perception and acceptability of insurance policyholders to introduce takāful in India. The primary focus of this research is insurance policyholders because they currently have insurance policies and it is believed that they are familiar with the concept of insurance, compared to the people who do not have any insurance policy.

Design/methodology/approach

New product diffusion theory is used in developing the hypothesis and a questionnaire. In this research, the population is unknown, and hence, the non-probability sample is used. Quota sampling and snowball sampling methods are used in this survey, with a sample size of 909 respondents, including Muslim and non-Muslim policyholders. The external factors that motivate potential policyholders to participate in takāful are the independent variable here; while the respondents’ actual willingness to participate in takāful is the dependent variable. Regression analysis is performed to analyse the data.

Findings

Based on 909 respondents, it is found that the factors such as cost vs benefits, marketing and promotion and social and religion play a significant role in a consumers’ decision-making at 1% significant level overall. The attribute of agents can influence the consumers at a 10% significant level overall. However, other factors, namely, accessibility, availability and service quality, product features and reputation of the company cannot pursue the consumers in India.

Research limitations/implications

The questionnaires are distributed in 10 cities from nine states out of 28 states in India. Thus, it covers only one-third of the states. Future research can expand the respondents from other states that have not been researched.

Practical implications

India is opening to foreign investments in the Indian insurance industry, and thus, the findings are useful for industrial players, investors, policymakers for the development of takāful in India.

Originality/value

Limited research has been done in previous studies and this research is the pinnacle within-depth survey regarding takāful in India.

Details

Journal of Islamic Accounting and Business Research, vol. 11 no. 9
Type: Research Article
ISSN: 1759-0817

Keywords

Content available
Article
Publication date: 18 May 2020

Hammed Agboola Yusuf, Waliu Olawale Shittu, Saad Babatunde Akanbi, Habiba MohammedBello Umar and Idris Abdulganiyu Abdulrahman

In this research, we examine the role of financial development, FDI, democracy and political instability on economic growth in West Africa.

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Abstract

Purpose

In this research, we examine the role of financial development, FDI, democracy and political instability on economic growth in West Africa.

Design/methodology/approach

The study uses the dynamic fixed effects technique on the secondary data obtained from 1996 to 2016.

Findings

Our empirical findings suggest that even though no significant relationship is established in the short run, the long-run coefficient of FDI is found to be significant and positive; a 1% increase in FDI inflow into the West African sub-region results in a 0.26% increase in economic growth. The coefficient of democracy is significant neither in the short run nor in the long run, but political instability is found to significantly and negatively impact the growth of the countries. Finally, the estimate of financial development–growth nexus follows the supply-leading hypothesis.

Research limitations/implications

This research affirms the proposition that FDI is a relevant means of technology and knowledge transfers, thus resulting in increasing returns to production as a result of productive spillovers, which drives the growth of the economy. Consequently, an efficient institution – where the rule of law, political stability and economic freedom are top priorities – is a key to accelerate the growth of the West African economy. Similarly, we confirm the validity of the supply-leading hypothesis in West Africa. As such, by deepening the financial system, the growth of the subregion is propelled because an efficient financial system is a basis for sustainable development.

Practical implication

The applicable policies are those that promote growth through FDI, financial development, democracy and political instability. The governments of West African countries are enjoined to promote policies that attract FDI into the subregion and promote financial sector credits so that economic performances may be enhanced. In addition, the governments of West African subregion should fully entrench democratic practices and enhance a stable and sustainable political environment. This will not only restore investor confidence but will also facilitate the inflow of FDI into the West African economy.

Originality/value

Our study is the first to jointly examine these important growth determinants, especially in the context of West Africa. This becomes necessary in order to open the eyes of policy makers to the need for entrenched full democracy and to proffer sustainable cures to the frequent unrests in the subregion. The use of Pesaran (2007) technique of unit root is also a deviation from several existing studies. One advantage of this technique over others is that being a second-generation test, it tests variable unit root in the presence of cross-sectional dependence.

Details

International Trade, Politics and Development, vol. 4 no. 1
Type: Research Article
ISSN: 2632-122X

Keywords

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