Contracts and Deals in Islamic Finance

Kureshi, Hussain; Hayat, Mohsin

doi:10.1002/9781119161059

Cited by 6 publications

(9 citation statements)

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“…In essence, in the event of a default, the bank will be required to repay advance rents received from consumers, while the financing issued will be forfeited. Furthermore, according to Kureshi and Hayat (2015), in the event of a product recall, the bank would be required to give a compensation or replacement to the customer. When this occurs, the banking operations involve more complexities.…”

Section: Analysis and Findingsmentioning

confidence: 99%

Does Tawarruq still remain the top option for Islamic home financing (IHF) products in Malaysia?

Ibrahim

Sapian

2022

QRFM

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Purpose The purpose of this study is to investigate whether Tawarruq Islamic home financing (IHF) products remain untouched and maintain their position as the top IHF product in Malaysia. Design/methodology/approach The study adopted a qualitative research methodology that included both literature review and content analysis. Firstly, the existing studies and literature were reviewed to compare different types of IHF. The composition of IHF products offered by these Islamic banks was then investigated further to analyse each bank’s progress in IHF from 2015 to 2019. The data were gathered from bank websites, brochures, product disclosure sheets and annual reports. Findings The findings reveal that around 62.5% of Islamic banks offered Tawarruq for IHF in the year 2020. For the banks that offered Tawarruq, the amount of the financing continued to grow each year. The plausible reason for the preference for Tawarruq was its less risky nature, despite facing numerous operating, legal and Shariah issues. Research limitations/implications This study has several limitations, including the fact that it was limited to home financing products only, the methodology used and the research period. Practical implications This study aimed to provide beneficial insights into the use of Tawarruq, which has been a source of concern for regulators as well as steps made to reduce its usage in the industry. Islamic banks should be more proactive in developing non-Tawarruq products to enhance product innovation in the market and minimise the heavy reliance on debt-based products. Originality/value This study provides useful insights by analysing IHF in depth for each Islamic bank and making recommendations for future research. Specifically, the method facilitated critical discussions and comparisons to previous research findings as to why Tawarruq has remained popular.

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Section: Analysis and Findingsmentioning

confidence: 99%

Does Tawarruq still remain the top option for Islamic home financing (IHF) products in Malaysia?

Ibrahim

Sapian

2022

QRFM

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“…In the modern financial era, the principle of ḥawālah is commonly used in both formal and informal financial systems. As indicated by Kureshi and Hayat (2014), the concept of ḥawālah has been widely adopted in contemporary banking services, namely: bill of exchange, promissory note, cheques, remittance and bank draft. It is also a mechanism which can be used to settle international accounts by book transfer.…”

Section: Diagram 2: Unrestricted Type Of ḥAwālahmentioning

confidence: 99%

“…The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) (2010) defines Al-Ḥawālah as a transfer of a debt from the transferor to the payer. In fiqh muamalat, ḥawālah refers to the transfer of financial liability from one debtor to another that would free the initial debtor from any debt (Kureshi and Hayat, 2014). The Hanafi's define ḥawālah legally as a transfer of liability for a debt from the debtor to the person whose name appears in the contract as being liable for the debt (Al-Zuhayli, 2003).…”

Section: Introductionmentioning

confidence: 99%

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Implication of Ḥawālah in Islamic Finance Practice

Raisi¹,

Rodriguez²,

Tustikbayev³

et al. 2016

IJMAR

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This article aims at examining the concept of ḥawālah and its contemporary applications in banking sector. For this purpose, the authors examine the conceptual and literal meaning of ḥawālah and scrutinise its applications in two Malaysian banks. While Bank A is a dual bank which offers both conventional and Islamic banking, Bank B is a full-fledged Islamic bank. Results indicated that there is a general lack of awareness about the concept of ḥawālah used by both banks. Although there is strong awareness of Islamic Shariah's strong prohibition on taking interest, the staff members are uninformed about the underlying concepts of ḥawālah. In addition, the authors found that the ḥawālah-based services offered by both banks were not significantly different from conventional banks' products and services. It is recommended that further research can be conducted to find out the reluctance among the Islamic banks to name remittance system by using the term ḥawālah.

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“…Evidence shows that Islamic banking in practice is also involved in money creation, mimicking its conventional counterpart (Abdullah, 2016;Kureshi and Hayat, 2015;Hasan, 2014), although few scholars (Askari et al, 2010) refute this claim. This raises the following pertinent research questions:…”

Section: Introductionmentioning

confidence: 99%

Developing a Shari’ah based FinTech Money Creation Free [SFMCF] model for Islamic banking

Altwijry

Mohammed

Hassan

et al. 2021

IMEFM

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Purpose The purpose of this study is to develop and thereafter validate a Sharīʿah-based FinTech Money Creation Free [SFMCF] model for Islamic banking. Design/methodology/approach The study has adopted a qualitative research methodology, using three approaches, namely, a survey of the literature to identify the research gap and the variables needed for developing the model, content analysis to construct the variables into a model and semi-structured interview with 10 experts in banking, Sharīʿah and Financial Technology (FinTech) to validate the SFMCF model. Findings The major findings of the study lie in developing the SFMCF model for Islamic banking, empirical validation of the model’s viability and acceptability and the implications for the main stakeholders of Islamic banks. Research limitations/implications The SFMCF model is specific to Islamic banking and its validation is based on the views of 10 experts. Practical implications The SFMCF would necessitate changes to the central bank regulatory framework, convince Islamic banks to forego their powers and advantages of creating money and enhance their abilities to fully adopt Sharīʿah-compliant FinTech. Social implications The proposed model if implemented would change positively the perception of the society particularly the stakeholders of Islamic banks and restore their trust and confidence about the direction of the institution toward achieving the Sharīʿah objectives. Originality/value The novelty of this work lies in developing and validating the viability and acceptability of the SFMCF model for Islamic banking.

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Contracts and Deals in Islamic Finance

Cited by 6 publications

References 0 publications

Does Tawarruq still remain the top option for Islamic home financing (IHF) products in Malaysia?

Does Tawarruq still remain the top option for Islamic home financing (IHF) products in Malaysia?

Implication of Ḥawālah in Islamic Finance Practice

Developing a Shari’ah based FinTech Money Creation Free [SFMCF] model for Islamic banking

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