INCEIF University Journals
Not a member yet
394 research outputs found
Sort by
Supply of Islamic Microfinance in Central Asia: The Case Study of Tajikistan and Kyrgyzstan
No full textThis research examines the prospect of offering Islamic microfinance and its potential for growth in Kyrgyzstan and Tajikistan. Through structured interviews and surveys, the knowledge, motivation and intention of managers of conventional microfinance institutions regarding the supply of Sharīʿah-compliant microfinance products are investigated. The research employs both qualitative and quantitative approaches. The results are based on a survey of 35 and 12 conventional microfinance institutions in Tajikistan and Kyrgyzstan, respectively. In addition, long interviews with four officers of microfinance institutions provide further insight. Despite the lack of full knowledge of Islamic microfinance, an overwhelming number of respondents demonstrated a strong interest in supplying Islamic microfinance. This interest was motivated by respondents’ readiness to market Islamic microfinance products as new financial products; it was also based on the perception of latent demand for the Islamic method of microfinance. High cost, legal barriers, and the difficulty of financing are reported as the main obstacles to providing Islamic microfinance. Several policy options are discussed
Criteria for Determining the Sharīʿah Compliance of Shares: A Fiqhī Analysis
No full textAs the Islamic finance industry continues to gain popularity in the financial sphere, the number of faithful investors who are interested in Sharīʿah-compliant avenues for their investments also continues to increase. One of the most important of these is the equity market. However, it is evident in today’s world that it is hard to find a joint stock company whose activities are completely compliant to Sharīʿah principles and rulings. As a share of a company represents all the activities and underlying assets of the company, the Sharīʿah non-compliance issue can emerge in the share. While the primary activities of a company are Sharīʿah-compliant, its peripheral activities may be impermissible from the Sharīʿah viewpoint. Meanwhile, the assets of the company can also be in the form of cash, debt, goods, usufruct or rights, which can raise the issue of trading ribawī (interest-based) items. Thus, the study addresses the issue of Sharīʿah compliance and tradability of shares that represent a mixture of ḥalāl (permissible in Islamic law) and ḥarām (impermissible in Islamic law) activities and assets. 
Dispute Over the Legality of Al-Ijārah Al-Mawṣūfah Fī Al-Dhimmah: A Survey of Fiqhī Opinions
No full textThe legality of al-ijārah al-mawṣūfah fī al-dhimmah (AIMAD) has been disputed. Some contemporary scholars have mentioned disagreement among the early Muslim scholars about it and have identified the Ḥanafī School’s position to be prohibition. In fact, the classical texts of most juristic schools are similar in terms of the discussion on this contract. Hence, the question that arises is whether there is really a dispute among the four major Sunni schools of Islamic law or consensus on the legality of AIMAD. In order to answer the question, this paper discusses the classical and contemporary fiqh literature on this issue. The method followed in this paper is a critical analytical approach. The most important finding of this paper is that there is actually no dispute among the scholars of the four major Sunni schools of Islamic jurisprudence over the legality of AIMAD; rather, they unanimously agreed on its legality. However, what was mentioned by some contemporary scholars is only differences in their approaches while dealing with the classical texts of Islamic law. The agreed view on AIMAD could be the basis for new innovations in Islamic financial institutions in the future
Integrating Environmental, Social and Governance (ESG) Factors in Islamic Finance: Towards the Realisation of Maqāṣid al-Sharīʿah
No full textEnvironmental, social and governance (ESG) concerns underlie the value proposition of the Sustainable and Responsible Investment (SRI) industry. Overall, the SRI industry seeks to address global challenges relating to the environment, society and corporate governance by explicitly integrating ESG issues in the selection and management of investment portfolios. It thus conveys the ideas of a socially responsible goal, a sustainable economic development agenda, a concern for human welfare, social justice, peace, and a healthy environment, as well as promotion of a fairer financial world (Domini, 2001; Brill et al., 1999). Guided by Islamic ethical values, Islamic finance, by definition, is also expected to endogenise ESG issues in its provision of Islamic financial services. ESG concerns under the Islamic finance paradigm are, however, derived from Islamic principles which are rooted in the Sharīʿah (Islamic law) as compared to the SRI industry whose values are largely socially determined, sourced from such principles as humanism, socialism, secularism, or environmentalism (Wilson, 2005)
Structuring Innovative Tier 2 (T2) Capital Instruments Under Basel III: A Sharīʿah Perspective
No full textBasel III has redefined the criteria for qualifying regulatory capital instruments. Banks have to maintain Common Equity Tier 1 (CET1) capital of at least 4.5% of Risk-Weighted Assets (RWA) and Tier 1 (T1) capital should be at least 6% of RWA at all times, while total capital (i.e., Tier 1 plus Tier 2) must be at least 8% of RWA at all times. T1 capital will absorb losses during going-concern—a situation where the bank is still solvent and continuing operation. Tier 2 (T2), on the other hand, refers to gone-concern capital, which will absorb further losses when the bank is facing financial distress and reaches the point of non-viability. 
Pre-Signing and Sequence in Contract Execution of Islamic Banking Products
No full textCustomer pre-signing of all transactional documents in one sitting is a questionable procedure as it does not follow the required sequence in the Sharīʿah concept of “offer and acceptance”. As “offer and acceptance” or “ījāb and qabūl” (i.e.ṣīghah) is, according to the vast majority of scholars, an absolute requirement of exchange contracts and can be executed only after the seller possesses the contracted item. Pre-signing in normal circumstances has been seen as either a promise from one party to purchase or to sell, or as an execution of contract without proper ownership by contracting parties. Hence, the study is integral in order to analyse the permissibility of considering pre-signing as offer and acceptance. Furthermore, it is assumed that any non-compliance issues in the execution of a contract will affect its validity. Therefore, this study aims to explain the Sharīʿah view on the sequence of contract execution in Islamic banking products, and the Islamic banks’ practices in executing contracts in vehicle financing, house financing and personal financing. The paper applies the qualitative research method comprising of document analyses, fiqh muqāran and interviews with the stakeholders. This paper suggests that “offer and acceptance” should be done in a proper manner as described by Islamic jurists and that modern technology, especially communication technology, should be used to overcome pre-signing needs. In a nutshell, this study contributes in sharpening the practices of Islamic banks to comply with contractual sequence as required by Islamic la
Islamic Finance: Legal and Institutional Challenges
No full textThe paper focuses on some of the challenges and constraints faced by the contemporary Islamic finance industry. The paper will also briefly discuss the epistemological foundation of Islamic finance and the general outline of an ideal Islamic financial system. The nature of the spectrum of instruments that should serve the Islamic financial system will also be considered. The authors will also highlight the Islamic understanding of risk and uncertainty and prove that risk sharing is the operational essence of Islamic finance. The paper then focuses on solutions that would address some of the challenges facing Islamic finance institutions and how common law has played a key role in the development of the contemporary Islamic finance industry
Stemming Water-Related Deaths in Sub-Saharan Africa: The Place of Islamic Project Finance and Malaysian Contractors
No full textAnnually 3.5 million children under the age of 5 years die from water-related diseases, as reported by the World Health Organisation (WHO). The bulk of these deaths are in the developing countries of Asia, Latin America and Sub-Saharan Africa (SSA). Asia and Latin America have taken steps to stem the tide of these water-related deaths by investing heavily in water infrastructure through publicprivate partnerships (PPPs) or concession contracts to meet their Millennium Development Goals (MDGs). Studies, however, show that SSA is the only region that will not meet its MDG targets before 2015. Water-related diseases have led to productivity losses of over USD 28 billion annually in SSA. Although they have tried the PPP route, these projects have often been cancelled or become distressed due to affordability issues. Tariff levels are highly dependent on the source of financing, and the country risk profiles of SSA countries further add to the cost of capital. This article argues for the adoption of interest-free Islamic project finance (IPF) as a cheaper alternative to conventional project finance for water and sanitation in SSA. Arguments are also made in support of bundling such finance with Malaysian contractors as a complete package to enhance successful outcomes
Reverse Salam as an Innovative Instrument for Investment Accounts
No full textCurrently the marketplace in Malaysia offers only two fixed deposit instruments based on muḍārabah (profit sharing) and reverse commodity murābaḥah (tawarruq). Recent developments in the regulatory framework expressed in the Islamic Financial Services Act (IFSA) 2013 makes the use of muḍārabah for structuring fixed deposit accounts difficult since in muḍārabah the profit cannot be predetermined and the losses should be transferred to the accountholders
Effect of Nomination Under Life Insurance and Family Takāful
No full textIt is a requirement that a policyholder or participant who wants to join a life policy or family tākaful certificate must nominate someone to receive the benefits after his/her demise. The issue to be decided here is: in what capacity is the nominee receiving the benefits? This study seeks to examine the status of the nominee of a Muslim policyholder or participant under the Malaysian Insurance and Takaful Laws and Muslim jurists’ views on this issue. The findings of this research show that there is two juristic views on this issue; one view says that a nominee can only be a trustee and this means the benefits shall be distributed based on al-mīrāth (Islamic law of inheritance) and al-waṣiyyah (bequests), whereas the other view states that a nominee may also be a beneficiary based on al-hibah. Moreover, under the Malaysian Insurance Law as provided by Insurance Act 1996 and current Financial Services Act 2013, the nominee of a Muslim policyholder can only receive the policy benefits as a trustee. On the other hand, the Islamic Financial Services Act 2013 provides that the nominee under a family takāful certificate may be an executor and may also be a beneficiary based on a conditional hibah. This study recommends that the status of the nominee under the family takāful certificate provided by the Islamic Financial Services Act 2013 be the same as that under a trust nomination under the Insurance Act 1996 and the current Financial Services Act 2013, which provides that the nominee is only a trustee. This is in order to achieve maqāṣid al-Sharīʿah