The Time Value of Money Concept in Islamic Finance

Ahmad, Abu Umar Faruq; Hassan, M. Kabir

doi:10.35632/ajiss.v23i1.436

Cited by 22 publications

(18 citation statements)

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“…Interestingly, the time value of money is also recognized to a certain extent in Islamic finance. As critically discussed by Ahmad and Hassan (2006), the time value of money in Islam is only acceptable ex-ante and as such, acknowledged only when undertaking trade. To be clear, the return, if and when obtained from a business transaction, is the embodiment of the Islamic time value of money.…”

Section: Cash Waqfmentioning

confidence: 99%

Cash waqf risk management and perpetuity restriction conundrum

Ambrose

Asuhaimi

2021

IJIF

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Purpose The purpose of this paper is to comprehensively discuss the issue of risk vis-à-vis the perpetuity restriction principle inherent in waqf (Islamic endowment). Specifically, it attempts to consolidate the axioms in both conventional and Islamic finance, such as the risk-return trade-off and al-ghunm bi al-ghurm (liability accompanies gain), with the perpetual nature of waqf. Overall, this paper attempts to find a resolution to the dilemma of perpetuity restriction inherent in cash waqf against the natural occurrence of the risk. Design/methodology/approach This paper is based on the secondary research methodology; past literature encompassing journal articles, books, relevant financial axioms, fatwas (Islamic rulings) and state enactments is critically reviewed to present its case. In regard to state enactments, only Malaysian state enactments have been used, thus restricting the study to the Malaysian case only. Findings This study contends that the dilemma of the perpetuity restriction and the natural occurrence of risk can be resolved through the integration of waqf risk management, especially concerning cash waqf, with the Islamic spiritual approach. By implementing standard operating procedures that inculcate awareness on waqf risk management and Islamic spirituality in waqf stakeholders (waqif (donor), trustee and beneficiaries), the stakeholders may accept the reality of risk that is inevitable even after all efforts have been exhausted. In other words, the violation of perpetuity is exonerated given that mental faculties aligned with revealed texts have been exhaustively used beforehand. Practical implications Findings from this study may broaden the choice of investment avenues for waqf trustees while adhering to the perpetual restriction of waqf. More importantly, waqf trustees will not be forced to invest in interest-bearing securities or be involved in any usurious transactions just to obtain guaranteed returns and preserve the corpus of waqf. Originality/value This study offers a unique perspective on cash waqf risk management by re-analyzing the axioms and concepts of finance and waqf while observing the welfare of the beneficiaries.

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Section: Cash Waqfmentioning

confidence: 99%

Cash waqf risk management and perpetuity restriction conundrum

Ambrose

Asuhaimi

2021

IJIF

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“…According to Islamic law principles, money and commodity have different characteristics and therefore, they are treated differently. 54 The main points of difference between money and commodity are the following:…”

Section: Significance Of Intention Of Contracting Partiesmentioning

confidence: 99%

Legality of “Borrow Me Credit” Services Offered by Telecommunication Companies: A Shari’ah Perspective

Sarumi

Yusuph

Ahmed

2021

IIUMLJ

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Telecommunication service providers are known to provide various benefits for airtime packages. Different packages have been introduced in order to satisfy consumer needs. The nexus between service providers and consumers are guided by terms and conditions. Under Islamic law, any condition stipulated by the parties, which involves riba is rejected ab inito and renders the transaction voidable. Therefore, this article seeks to examine the Airtime Credit Service by service providers such as extra time package known as ‘borrow me credit’ in order to determine whether it is a Shariah-compliant transaction or otherwise. The study adopts doctrinal legal research by using primary and secondary sources of Islamic law such as Qur’an, Sunnah. The study also relies on textbook, journals, and service providers’ websites. The study reveals that the use of the word ‘borrow’ in the package has triggered polemical discourse among the Islamic financial jurists. The study reveals that, although the word ‘borrow’ is used, the intention of service providers is to sell the airtime on credit sale. The article clarifies the juristic discourse of the sale based on Islamic law of contract. It recommends some clarifications on the form and structure of the sale and concludes that it is allowed for Muslims to buy airtime through the package.

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“…Besides, it demonstrates that actually Shari'ahonly forbids making money's time value a factor of a lending relationship where it is declared as a prearranged value. In this case, Shari'ah involves that a loan is to be paid back in the same currency by which it was given (Ahmad & Hassan, 2006).…”

Section: Money As a Potential Capitalmentioning

confidence: 99%

Halal banking in post-soviet central Asia: Antecedents and consequences

Malik¹

2015

MBR

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With the fall of Soviet Union in 1991 the whole Central Asian region perceived a considerable rise in Muslim identity, a call back to Islamic legacy. Nowadays, lots of Central Asian Muslims need to be aware of what Islam has termed legal (Halal) and illegal (Haram). The process of Islamic revival occurred rapidly soon after the unification of Central Asian republics with other Muslim geographies through the membership of Organization of Islamic Conference (OIC) and other similar organizations. This interaction tended to be an essential push factor to the previously existing indigenous reviving trends and sentiments. Besides many other needs, Muslim customer demand appeared as navel movement in the market generally and in banking and financial sector particularly. To satisfy this need, the governments of Muslim majority Central Asian states, namely Kazakhstan, Uzbekistan, Azerbaijan, Turkmenistan, Kyrgyzstan and Tajikistan presented Halal banking and financial goods in the market. In this work, it has been attempted to recognize the causes that lead to the emergence of Islamic banking and finance industry in the region and also to investigate the effect of these causes considering the development and progress of Halal banking and financial industry.

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The Time Value of Money Concept in Islamic Finance

Cited by 22 publications

References 0 publications

Cash waqf risk management and perpetuity restriction conundrum

Cash waqf risk management and perpetuity restriction conundrum

Legality of “Borrow Me Credit” Services Offered by Telecommunication Companies: A Shari’ah Perspective

Halal banking in post-soviet central Asia: Antecedents and consequences

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