INCEIF University Journals
Not a member yet
394 research outputs found
Sort by
Avoiding Financial Crisis: In Support of Islamic Financial Institutions
No full textThe unfavourable outcomes of the 2008 Global Financial Crisis (GFC) have led to the search for an alternative to the conventional form of banking and finance. Non-interest finance such as Islamic finance has been gaining popularity in recent times, and claims have been made regarding the superior stability of the Islamic financial system (Khan, 1987). Authors such as Hasan & Dridi (2010) support this view by pointing out that Islamic financial institutions (IFIs) have routinely performed better than their conventional counterparts during financial crises
Combination of Contracts in Islamic Finance: A Synthesis
No full textCombination of contracts is a fusion of two or more contracts in a single arrangement by contracting parties to achieve a specific objective. It has been widely used in Islamic finance for many purposes such as product development and risk management. Nevertheless, combination of contracts encounters some problematic issues since there are three aḥādīth (Prophetic traditions) that prohibit the combination of two sales in one sale, a loan and a sale, and two transactions in one transaction. Although many studies have been undertaken, they remain inconclusive on the interpretation of the aḥādīth since scholars rendered various opinions on them. This has resulted in some perplexity among scholars and practitioners in their discussion of and employment of the concept of contract combination in Islamic financial transactions. Hence, this paper aims to revisit the issue and attempts to synthesise and consolidate all the opinions discussed by various scholars. To achieve this aim, the paper employs a qualitative research methodology, whereby it analyses secondary sources, namely classical and contemporary literature on fiqh (Islamic jurisprudence). The paper finds a strong basis for the conclusion that the interpretation of the aḥādīth can best be related to contractual stipulation—which means the execution of the first contract is dependent on the execution of the second contract, or vice versa. Contractual stipulation is not totally prohibited in combination of contracts so long as it is coherent with the legal requirements of the combined contracts and preserves the rights of the contracting parties. This paper also finds that most contracts which are combined are nominate contracts having specific requirements that must be honoured. If one contract is dependent on another, it may lead to ribā (interest) or gharar (uncertainty); hence, the contracts should be separated. The findings of this paper are especially useful for practitioners who aim to employ the concept as a product development tool or for other purposes in Islamic financial transactions
Revisiting the Classification, Reporting and Treatment of Sharīʿah Non-Compliant Events
No full textFor Islamic financial institutions, ensuring that their activities, products and services are in compliance with the Sharīʿah (Islamic law) is paramount for many reasons. Among the most important is that it is a means of attaining and maintaining public confidence. With the introduction of Islamic Financial Services Act (IFSA) 2013 and new policies in Malaysia, the industry’s awareness of such requirement has also increased. Stakeholders are concerned and keen to ensure that the full lifecycle of Islamic financial products and services are compliant with the Sharīʿah. Sharīʿah non-compliance (SNC) is seen as a serious risk that has to be properly managed. Bank Negara Malaysia (BNM) has introduced policies dealing with the way to report and treat SNC events in financial transactions or business activities of Islamic financial institutions. At first glance, the approach laid down in those policies seems holistic. It appears capable of covering all SNC events and providing the best “cure” to all issues as it requires the practice, and similar practices, to cease immediately until the matters are rectified in the manner approved by the board of directors (BoD) of the concerned institution. The danger of applying a one-size-fits-all approach, however, is that there are instances where a different approach is more appropriate. Furthermore, requiring a financial institution to cease a practice or similar practices while waiting for the BoD’s approval of a rectification plan—a step suggested in the BNM policies—is not warranted and may not be necessary for events of a certain nature. Hence, this paper aims to revisit the issues related to the reporting and treatment of SNC events by introducing a classification of the SNC events. Furthermore, it proposes that the reporting manner and treatment of SNC events be commensurate with and correspond to the events as classified
Knowledge and Behaviour Regarding Takāful among Non-Muslim Consumers in the United Arab Emirates
No full textTakāful is an insurance mechanism which satisfies the religious values of Muslim consumers and which has exhibited steady growth in Islamic finance systems. However, takāful does not comprise a significant share of the global insurance market, which is dominated by stock-based, mutual and cooperative organisations. Despite literature advocating its appeal to non-Muslim consumers, there is a gap in research exploring consumer behaviour in this demographic group. This qualitative phenomenological study utilises the theory of planned behaviour as a framework to explore the beliefs and attitudes towards takāful among non-Muslim consumers in the United Arab Emirates (UAE) and to identify potential salient mutual-cooperative and religious attributes. The data demonstrate that non- Muslim consumers are unfamiliar with takāful products and this knowledge deficiency generates attitudes that negatively influence decision making; however, the provision of product information reveals that faith-based attributes create beliefs that may be salient to attitude formation and influence decision making when applied to the theory of planned behaviour. This study is important for takāful researchers in advancing the discussion on non-Muslim consumer behaviour, and for takāful operators in understanding non-Muslim behavioural influences as part of a strategic expansion of that demographic. The results suggest further research is required to identify takāful’s salient attributes and their influence in the decision-making process for non-Muslims. In addition it asks what marketing and promotional strategies should be employed to improve awareness and understanding of takāful among non-Muslims
The Evolution of Islamic Economics: A Critical Analysis
No full textSince the ill-conceived separation of finance from Islamic economics in the literature, the latter has landed in confusion and neglect. Of late, much concern is being voiced about this state of affairs; divergence of views on various aspects of the subject tends to grow while cohesive efforts are missing. It is in this context that the present paper takes a brief look at the evolutionary process of the subject and examines the definition, nature, scope, methodology and systemic approach of Islamic economics. It also discusses the problems that hinder the growth of the discipline, the challenges that Islamic economics faces, and its future prospects. The paper concludes that the future of the subject depends on how realistically the academic community and policy makers respond to such challenges
Risk Mitigation and Financing Constraints: Towards the Development of Sustainable Islamic Microfinance Institutions in Bangladesh
No full textStudies on Islamic microfinance sustainability and its development are an important contribution to thought in the Islamic finance arena. The concept of Islamic microfinance is relevant given the global socioeconomic problems which have negatively impacted the Muslim ummah (community) and society in general and widened the gap between the poor and the rich. The Muslim ummah is in need of an economy that will bridge the gap between the various strata of society. Islamic microfinance is considered an alternative Sharīʿah-compliant tool for Muslims to redistribute their wealth in a way that will make the nation productive. 
Issues and Challenges in Islamic Banking Structures: The Malaysian Experience
No full textIslamic finance operates under varied legal and regulatory frameworks in various jurisdictions that reflect differing regulatory approaches to the introduction and supervision of Islamic banks. This seems logical if viewed from the perspective that the countries where Islamic banks operate are not at the same level of development; some are advanced, a few have just embarked on their journey of introducing Islamic banking and finance, while others are somewhere in the middle. Thus, one should naturally expect that reaching a certain level of consensus in regulating and supervising Islamic banks will take considerable time. 
Islamic Marketing Ethics and the Marketing Practices of Islamic Banks
No full textAn important aspect of Islamic banks (IBs) is their inherent ethical strength derived from the principles of Sharīʿah. The ethical framework should serve as the true differentiator of their practice from conventional finance. The ethical foundations that purportedly underlie the practice of IBs should also provide an adequate framework for professionals to avoid unethical practices in economic behaviour and financial dealings while achieving the objectives of Sharīʿah. The fundamentals of Islamic finance, such as risk and reward sharing, have been reported to hold universal values because the principles of fairness and justice may be attractive to a larger and diverse investor and depositor base regardless of their religion. By promoting the Islamic ethical principles in their marketing practices, IBs can thus appeal to a larger clientele, both Muslims and non-Muslims. This paper intends to critically analyse the current marketing practices of IBs in light of the ethical criteria set out in the Islamic marketing ethics literature. The objective of this paper is to evaluate the extent to which the ethical ideals espoused by the Islamic marketing ethics literature are reflected in the marketing practices of IBs
Social Impact Bonds: A Sharīʿah Point of View
No full textA new financing instrument for social projects has recently emerged that impacts directly or indirectly on the underprivileged segment of the society. It is known in the United Kingdom (UK) as ‘social impact bonds’ (SIBs); in Australia as ‘social benefit bonds’ (SBB); and in the United States (US) as ‘pay for success bonds’. These names were coined because of the nature of the bonds; they are used to finance projects that have social impact, and the commissioner of the project only pays if the outcome meets the agreed target; otherwise, investors will lose their investments, including the principal and profit. This paper will hereon use the term SIBs as it is the most popular designation as well as the original one. 
The Practice of Takāful Benefit (Nomination) in the Context of IFSA 2013: A Critical Appraisal
No full textNomination, in the context of takāful (Islamic insurance), involves the takāful participant nominating a person to receive the takāful benefits in the event of the participant’s death before the maturity of the takāful plan. Distribution of the takāful benefits that are to be received upon maturity of the takāful plan is a main concern arising in family takāful, an Islamic alternative to life insurance. Upon the death of the participant, the takāful benefits may either be payable to the estate of the participant or to a person nominated by the participant as the sole recipient of the benefits of such a takāful policy. The effect of such a nomination is the central focus of this research paper. Reference to the Islamic Financial Services Act 2013 (IFSA) is crucial to identify the nature, position and effect of nomination in Malaysia.