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Article
Publication date: 14 August 2017

Syammon Jaffar, Adam Abdullah and Ahamed Kameel Mydin Meera

This paper aims to discuss the opinions of current Shariah scholars on the concept of debt money in the present-day fiat money system.

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Abstract

Purpose

This paper aims to discuss the opinions of current Shariah scholars on the concept of debt money in the present-day fiat money system.

Design/methodology/approach

Research design of this paper is a quantitative investigation of Shariah experts by distributing a questionnaire to them. As majority of Shariah scholars are also Shariah advisory of the current banking system, it is important to find out their level of knowledge on the issue of debt money created by the commercial banking system through the fractional-reserve banking (FRB) system.

Findings

Based on this investigation, most Shariah scholars are unaware of and confused about the mechanics underpinning the creation of money, especially with respect to FRB as it is practiced by the conventional and Islamic banking systems.

Originality/value

Based on this research, it is recommended that these scholars should improve their understanding of the operation of the fiat money system and its consequences. It is recommended that, in future, Shariah scholars should think “outside of the box” by creating Islamic financial instruments that do not resemble those of the conventional system.

Details

Humanomics, vol. 33 no. 3
Type: Research Article
ISSN: 0828-8666

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