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Book part
Publication date: 14 December 2018

Abstract

Details

Management of Islamic Finance: Principle, Practice, and Performance
Type: Book
ISBN: 978-1-78756-403-9

Open Access
Article
Publication date: 19 June 2018

Norbaizurah Abdul Jabar, Razli Ramli and Sazali Abidin

In Malaysia, both Islamic financial institutions (IFIs) and Islamic co-operatives (ICs) provide mushārakah mutanāqiṣah (diminishing partnership) (MM) financing. It was initially a…

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Abstract

Purpose

In Malaysia, both Islamic financial institutions (IFIs) and Islamic co-operatives (ICs) provide mushārakah mutanāqiṣah (diminishing partnership) (MM) financing. It was initially a preferred contract as it is deemed to be more Sharīʿah-compliant and free from the element of ribā (interest) in comparison to other Sharīʿah-compliant sale contracts. Nevertheless, MM is now considered less appealing to IFIs due to its existing challenges. This paper aims to emphasise on MM as practiced by ICs which will highlight approaches to default, pricing of rental rates, profit sharing method and early settlement which differ to the practice of MM by IFIs.

Design/methodology/approach

This study focuses on Koperasi Pembiayaan Syariah Angkasa (KOPSYA), an IC based in Malaysia, which the authors concurred as being an ideal organisation to study on the matter due to its strong stance in promoting Sharīʿah-compliant financing products.

Findings

The research highlights the flexibility of MM implementation in KOPSYA to provide some insights on the rationale behind MM operations in KOPSYA.

Originality/value

The authors are hopeful that this paper will aspire further interest by giving the readers better understanding on the implementation of MM in KOPSYA and how it will benefit the customers.

Details

ISRA International Journal of Islamic Finance, vol. 10 no. 1
Type: Research Article
ISSN: 0128-1976

Keywords

Open Access
Article
Publication date: 16 October 2018

Mohd Zaidi Md Zabri and Mustafa Omar Mohammed

This study aims to validate a potential synergistic venture between cash waqf (Islamic endowment) institutions (CWIs) and financial cooperatives (FCs) in the provision of…

3934

Abstract

Purpose

This study aims to validate a potential synergistic venture between cash waqf (Islamic endowment) institutions (CWIs) and financial cooperatives (FCs) in the provision of affordable Islamic home financing (IHF) in Malaysia.

Design/methodology/approach

The study adopted semi-structured interviews with ten experts to validate the cash waqf-financial-cooperative-mushārakah mutanāqiṣah (CWFCMM) model. Thematic analysis technique was used to analyse the verbatim texts.

Findings

The findings show that the majority of the informants have positive perceptions of the potential of the CWFCMM model to provide financially affordable IHF products in Malaysia. Nevertheless, this study sheds light on the varying degrees of latent issues and challenges that might arise in the implementation of this model. For example, FCs need to practice the correct business model, implement good governance structures and employ the right people. Meanwhile, CWIs need to work on their accountability issues by publishing their audited accounts in mainstream newspapers, much like what is being done by non-governmental organisations such as the widely recognised Malaysian Medical Relief Society (MERCY Malaysia).

Research limitations/implications

This study interviewed a small, industry-specific number of informants in generating its findings. Time and budget constraints are some of the limiting factors in carrying out the study. Because of these factors, the generalisation of the study’s findings will be limited.

Practical implications

First, the CWFCMM model offers an alternative, financially affordable IHF instrument to low- and middle-income households in Malaysia. Second, the involvement of third-sector institutions such as FCs and CWIs in the provision of IHF will reduce the burden of the government in its spending on home financing solutions for civil servants. Third, this model will harness the potential of waqf-based financing beyond the contemporary limited applications to mosques, graveyards and taḥfīẓ (Qurʾan memorization) schools.

Originality/value

This study presents an alternative IHF model that transcends the current institutional framework that is heavily dominated by Islamic commercial banks and government-owned home financing institutions. The study does not focus on a single third-sector institution but on an integration of at least two of them, CWIs and FCs, in implementing the IHF model.

Details

ISRA International Journal of Islamic Finance, vol. 10 no. 2
Type: Research Article
ISSN: 0128-1976

Keywords

Open Access
Article
Publication date: 12 November 2018

Hatem Adela

This paper aims to contribute to formulating the methodological framework for a paradigm of Islamic economics, using the development of the conventional economics, theoretical and…

8306

Abstract

Purpose

This paper aims to contribute to formulating the methodological framework for a paradigm of Islamic economics, using the development of the conventional economics, theoretical and mathematical methods.

Design/methodology/approach

The study based on the inductive and mathematical methods to contribute to economic theory within the methodological framework for Islamic Economics, by using the return rate of Musharakah rather than the interest rate in influence the economic activity and monetary policy.

Findings

Via replacement, the concept of the interest rate by the return rates of Musharakah. It concludes that the central bank can control the monetary policy, economic activity and the efficient allocation of resources by using the return rates of Musharakah through the framework of Islamic economy.

Practical/implications

The study is a contribution to formulate the methodological framework for a paradigm of Islamic economics, where it investigates the impact of return rates of Musharakah on the money market and monetary policy, by the mathematical methods used in the conventional economy. Also, the study illustrates the importance of further studies that examine the methodological framework for Islamic Economics.

Originality/value

The study aims to contribute to formulating the Islamic economic theory, through the return rate of Musharakah financing instead of the interest rate, and its effectiveness of the monetary policy. As well as reformulating the concepts of the investment function, the present value and the marginal efficiency rate of investment according to the Islamic economy approach.

Details

Review of Economics and Political Science, vol. 3 no. 3/4
Type: Research Article
ISSN: 2631-3561

Keywords

Open Access
Article
Publication date: 3 August 2020

Reazul Islam and Rubi Ahmad

This study aims to gain the perception of Selangor’s disadvantaged women on the Sharīʿah (Islamic law) rules on two micro-equity financing instruments, namely, muḍārabah (profit…

3687

Abstract

Purpose

This study aims to gain the perception of Selangor’s disadvantaged women on the Sharīʿah (Islamic law) rules on two micro-equity financing instruments, namely, muḍārabah (profit sharing) and mushārakah (profit-and-loss sharing) (M&M).

Design/methodology/approach

A survey was carried out in the rural area of Selangor district in Malaysia by administering a self-generated structured questionnaire. A total of 330 completed questionnaires were retrieved from the members of an Islamic microfinance institution (IsMFI), namely, Amanah Ikhtiar Malaysia (AIM). The data were analysed by using structural equation modelling.

Findings

The female borrowers of AIM perceive the Sharīʿah rules of M&M requiring high moral and ethical values and diligent repayment performance. They are aware of some other underlying provisions such as business liquidation, share transfer, information discloser and business termination. The overall findings of this study suggest that the perceived Sharīʿah rules are akin to those that are commonly used in general partnership businesses between Muslims. It also indicates that disadvantaged entrepreneurs would accept the rules that are easy to comprehend as well as favourable to their interests. It further suggests that respondents’ experiences of microfinance and business operation do not have a significant influence on their perception of M&M instruments.

Research limitations/implications

This study was limited to Selangor. So, the perception of Muslim women surveyed may not represent the views of all women in Malaysia. However, it can offer a primary understanding of the said issue.

Practical implications

The findings of this study can help IsMIFs take initiatives to offer M&M as micro-equity finance to poor women entrepreneurs.

Originality/value

So far, limited studies have been carried out on M&M-based microfinancing. This paper offers new insights presenting disadvantaged women entrepreneurs’ perception of these financing instruments.

Details

ISRA International Journal of Islamic Finance, vol. 12 no. 2
Type: Research Article
ISSN: 0128-1976

Keywords

Content available
Book part
Publication date: 20 January 2022

Abstract

Details

Towards a Post-Covid Global Financial System
Type: Book
ISBN: 978-1-80071-625-4

Open Access
Article
Publication date: 19 June 2018

Ashraf Md. Hashim

647

Abstract

Details

ISRA International Journal of Islamic Finance, vol. 10 no. 1
Type: Research Article
ISSN: 0128-1976

Open Access
Article
Publication date: 4 December 2017

Lutfi Abdul Razak and Muhammad Nabil Saupi

The purpose of this paper is to elucidate the concept of ḍamān al-milkiyyah (ownership risk) and to assess its application in contemporary Islamic financial products and services.

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Abstract

Purpose

The purpose of this paper is to elucidate the concept of ḍamān al-milkiyyah (ownership risk) and to assess its application in contemporary Islamic financial products and services.

Design/methodology/approach

The methodology adopted is that of descriptive research.

Findings

From an Islamic law of contract perspective, the concept of ḍamān al-milkiyyah is central to legitimate profit-making transactions and hence must be adhered to in practical applications of Islamic finance.

Research limitations/implications

This study should help motivate further investigation into the position of ḍamān al-milkiyyah among different parties in existing Islamic financial products and services.

Practical implications

Policymakers and regulators should ensure that Islamic financial products and services are structured in a way that does not allow parties to profit without adequately bearing the liability for potential loss.

Social implications

The condition of ḍamān al-milkiyyah as a source of legitimate profit reflects the idea that the role of finance in Islam is to promote and ensure social benefits.

Originality/value

This paper emphasizes the importance of ḍamān al-milkiyyah as a fundamental condition for profit in Islamic financial transactions.

Details

ISRA International Journal of Islamic Finance, vol. 9 no. 2
Type: Research Article
ISSN: 0128-1976

Keywords

Open Access
Article
Publication date: 19 June 2018

Mohamed Asmy Bin Mohd Thas Thaker

This paper aims to explore the opinions and recommendations of various experts on the integrated cash waqf micro enterprise investment (ICWME-I) model, particularly in terms of…

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Abstract

Purpose

This paper aims to explore the opinions and recommendations of various experts on the integrated cash waqf micro enterprise investment (ICWME-I) model, particularly in terms of its suitability, applicability and prospects in the market.

Design/methodology/approach

The research involves primary data which are collected from semi-structured interviews conducted with experts from various backgrounds. Thematic analysis was used to examine the data.

Findings

The experts support the suitability of the ICWME-I model in providing financial services to micro enterprises. They highlight the importance of establishing, managing and operating ICWME-I model under the aegis of the State Islamic Religious Council in Malaysia or the corporate sector. They further emphasize that the characteristics of micro enterprises, the element of sustainable funding, the importance of proper management and administration, legal matters and public awareness are key factors that influence the sustainability of the ICWME-I model.

Originality/value

This paper adds to the literature on waqf and micro enterprises especially from the Malaysian context. The paper validates the ICWME-I model in terms of its suitability, applicability and prospects in the market by interviewing experts from various backgrounds.

Details

ISRA International Journal of Islamic Finance, vol. 10 no. 1
Type: Research Article
ISSN: 0128-1976

Keywords

Open Access
Article
Publication date: 29 September 2020

Mohamed Benaicha

This study aims to define the parameters of the reward-risk principle in Islamic finance as established in the literature and discuss propositions that are presented on how such a…

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Abstract

Purpose

This study aims to define the parameters of the reward-risk principle in Islamic finance as established in the literature and discuss propositions that are presented on how such a principle is to be applied to Islamic banking products.

Design/methodology/approach

A descriptive approach is used to explore the normative parameters and criticisms of the application of reward-risk in Islamic finance.

Findings

The study finds that the principle of reward-risk is embodied in the multi-component concept of ʿiwaḍ (counter value) which must be evident in market transactions that involve commercial exchanges. The components include risk, costs, effort, value-adding and capital, all of which apply uniquely to different contractual forms of financing.

Research limitations/implications

The study uses academic literature and industry documents along with modest contact with prominent practitioners who provided general feedback on prevalent Islamic finance industry practices.

Practical implications

This study exposits the variety of approaches in applying the reward-risk principle and sheds light on the primary elements of the principle which will facilitate its greater consideration by the Islamic finance industry.

Originality/value

This study is a meaningful attempt at conveniently summing up and applying the parameters that are considered when discussing the scope of the reward-risk principle in Islamic finance.

Details

ISRA International Journal of Islamic Finance, vol. 12 no. 3
Type: Research Article
ISSN: 0128-1976

Keywords

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