Islamic law and finance

Abstract

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to discuss Islamic laws which are relevant to finance. More specifically, it covers the types of contracts as foundation for the distinctive Islamic financial products. The current institutional framework of financial institutions seems to be incompatible with the nature of these Islamic contracts. Design/methodology/approach -This is a conceptual paper describing the link between finance and economic growth in the present of Islamic contracts, which have various types from contract of partnership, buy-sale contract, to contract of usufructs. The nature of Islamic contract is to avoid riba (i.e. interest system), because it is unjust and prohibited, meanwhile under conventional system they rely very much on the interest system. Findings -The conclusion of the paper is that the distinctive character of Islamic contracts applied by Islamic banking and finance relies mostly on the profit and loss sharing mechanism which contains the cooperative spirit, in the contracts such as mudharabah (profit-sharing), musharakah (partnership). The development of equity partnership instruments in the financial system necessitates a different set of regulation and institutions in order to achieve Islamic goal through economic/financial activities. Research limitations/implications -This paper opines that the current framework of financial institutions does not match with the nature of Islamic contracts. Practical implications -This paper suggests that a new framework for financial institutions is necessary in order to accomplish the maqasid-al-shariah, by implementing the true spirit of cooperative through various Islamic contracts. Consequently, the rules and regulations and other relevant elements also need to adjust. Originality/value -The paper indicates a possible different consequence on the link between finance and growth in the presence of Islamic contracts, i.e. a more positive relation.

Pengaruh Pembiayaan Mudharabah Pada Nasabah Pemilik Umkm Ditinjau Dari Perubahan Ekonomi

“…Permasalahan yang diambil penelitian ini adalah tingkat pengembangan UMKM pada BMT melalui akad mudharabah masih rendah. (Ryandono & Ridlwan, 2020) Adanya mudharabah menjadikan masyarakat tidak perlu merasakan keberatan untuk mengembalikan dana (Ghafar & Tohirin, 2010).…”

Legal and Sharīʿah non-compliance risks in Nigerian Islamic finance industry: a review of the literature

“…It is a fact that a robust Sharīʿah-based legal framework is important in ensuring proficient and effective operations and development of Islamic financial institutions. Likewise, it has been established that the strength and flexibility of the modern Islamic financial system is dependent upon the capability of its legal regime providing adequately for the contractual agreements used by institutions and businesses (Engku Ali and Oseni, 2017;Grassa and Gazdar, 2014;Ahmed, 2015;Ismail and Tohirin, 2010). In this vein, the International Monetary Fund (IMF) (2017) remarkably noted that legal framework based on supportive commercial laws and access to the judicial system are important for workable regulation and supervision of every financial system (Pompe and Wolfgang, 2015).…”

Abu Zahrah’s Maqasid Sharia Model as a Performance Measurement System

“….ً ‫ثابتا‬ ‫ا‬ ‫أمر‬ ‫جب‬ ‫والوا‬ ‫الحق‬ ‫بني‬ ‫التالزم‬ ‫فكان‬ ligations is profit and loss sharing concept in financial contracts provided by Islamic banks. This profit-sharing mechanism is a characteristic of Islamic banks, for example, in mudharabah (profit-sharing), musharakah (partnership), and muzara'ah (sharecrop ping) contracts (Farooq, 2015;Ghafar & Tohirin, 2010). The contract teaches us the spirit of collaboration required by humans as social beings who must interact with one another.…”