The time value of money is a basic investment concept and a basic element in the conventional theory of finance. The Shari`ah does not rule out this consideration, for it does not prohibit any increment in a loan given to cover the price of a commodity in any sale contract to be paid at a future date. What is prohibited, however, is making money’s time value an element of any lending relationship that considers it to have a predetermined value. Here, the Shari`ah requires that a loan be due in the same currency in which it was given. The value (i.e., purchasing power) of paper currencies varies due to changes in many variables over which the two parties of a loan contract usually have no control. This study examines possible modus operandi of time valuation according to the Shari`ah’s precepts vis-à-vis the concept of money, and whether any value can be attributed to time while considering money’s value. For this purpose, it investigates the juristic views on such relevant issues as the permissibility of difference between a commodity’s cash and credit prices and an increase and reduction of the loan’s amount in return for early repayment.
The paper’s purpose is threefold: (1) probing what makes Islamic financing so important for the largest Muslim minority in a highly diversified multicultural Australia, (2) realising musharakah mutanaqisah (MM) as the real alternative for interest-based conventional finance and (3) evaluating the practice of MM by Australian Institutions offering Islamic Financial Services (AIIFS) from Islamic legal perspectives. By comparing the two systems - Islamic and conventional finance - the study finds that the latter is exploitative and thus creates conflict, stress and insecurity, while contributing to greater disparities of income and wealth. The practice of Islamic finance, on the other hand, is found to reduce conflict, stress and insecurity and make for a more harmonious and equitable society. In this context, the paper recommends that the regulatory impediments are removed to facilitate AIIFS to provide greater security, liquidity and diversity in order to meet the demand of investors in the Muslim community in Australia.
PurposeThe study explores the existing Shariah audit practice of Islamic banks (IBs) in Bangladesh aiming at providing suggestions for improvements on the detected shortfalls in the relevant areas.Design/methodology/approachThis research applied a qualitative method, and data were collected through conducting semi-structured interviews in Bangladesh. A total of 17 interviews were conducted for accomplishing the research objectives.FindingsThe study finds that there is no comprehensive Shariah audit manual in the current operation for IBs in Bangladesh, and as such, the requirements of their Shariah compliance remain a big question. Although the Shariah audit is conducted within IBs, and the Shariah audit officers or Shariah officers inspect necessary documents while conducting the Shariah audit, they only cover 10–20% of total investments and transactions. Based on the findings of this study, it is recommended that the Shariah auditing tasks should broadly cover at least 80% of the investment portfolios, documents and financial contracts and activities.Research limitations/implicationsThe findings of this research are expected to significantly contribute to the regulatory authorities concerned in Bangladesh and beyond, which include the suggestions that IBs can adopt to strengthen their Shariah governance system. The study also pinpoints that in the current system, Shariah auditors' roles are somehow limited in examining and checking the investment sides with a minimal portion (10–20%), for which they are unable to perform their responsibilities in a befitting manner to provide assurance services and overall Shariah compliance of IBs activities.Practical implicationsThis study explores the current Shariah audit systems and provides recommendations to improve the existing systems which will be beneficial for Islamic banks of Bangladesh.Originality/valueTo the researchers' knowledge, perhaps this is the first research of its kind which seeks to explore the current Shariah audit practice in Bangladesh qualitatively, and it provides some practical suggestions for making the necessary developments of the current audit process of IBs. In addition, there are no empirical studies in the entire Emerald insight publishers and Scopus database regarding Shariah audit practices. The study contributes to the agency, stakeholder and legitimacy theories by exploring the Shariah audit of IBs.
Non-bank financial service actors in the era of the COVID-19 pandemic made a breakthrough by creating fintech (Financial technology) through the development of Peer Peer Lending (P2P) or online loans. The purpose of this study is to analyze the implementation of 5C principles in the practice of peer-to-peer lending Fintech based on a review of Islamic business ethics. The method used in this research is a normative juridical approach with a descriptive research approach. The data that has been obtained will be arranged systematically for further qualitative analysis. This study concludes that principles and business ethics must be considered with the concept of “The Five C’s Principle of Credit Analysis†in either conventional or sharia systems. In the case of customers who choose a sharia online loan system, they must also pay attention to the ethical aspects of financial business in Islam, which is something that must be considered considering that in Islam, ethical issues are related to the determination of economic policies that will affect the halalness of service and the agreement of the parties.Â
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