Al-Shajarah Journal of the International Institute of Islamic Thought and Civilization (ISTAC)
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THE APPLICATION OF TANĀZUL AND ITS SHARĪ'AH ISSUES IN EQUITY-BASED ṢUKŪK
Get PDFThere are number of product innovations in Islamic capital market instruments particularly in Ṣukūk using the equity based contract; mushārakah, mudārabah and wakālah bi al istithmar. Within the Islamic parameter of these contracts, there is not to be determination of return or possible arrangement for these that may lead to guaranteeing the return of any partners in mushārakah and muḍārabah. Conventional bond usually offers a fixed income determination for their bond structures and issuance. This raises issue as to whether the ṣukūk equity based structure may have the same implication. This is where the tanāzul may play its role to give effect in ṣukūk structuring using mushārakah, muḍārabah and wakālah bi al istithmar contracts to offer a similar feature of fixed income instrument. This paper attempts to ascertain the status of tanāzul in equity based ṣukūk from the Shariah perspective. The paper will analyze the use of the concept of tanāzul in ṣukūk structures and its implications on the validity of the equity based ṣukūk transactions
INNOVATION IN ISLAMIC FINANCE: THE WAY FORWARD
Get PDFDeveloping modern Islamic financial products can be very challenging due to a number of constraints from different aspects, including the formation of regulatory, taxation and economic frameworks that are based on conventional principles. Much emphasis was given to replication of conventional instruments by restructuring conventional financial products according to the Islamic law of commercial contracts and eliminating prohibitory elements from these products. This paper aims to discuss the role of innovation in structuring contemporary Islamic financial products. A series of library research is conducted by reviewing both classical and contemporary texts in areas relevant to the present study. In addition, we conducted a field study of the practice of financial innovation made by the stakeholders of the Islamic finance industry. It was found that though replication is acceptable, its continuous application may not be suitable. Hence, it is important for shari’ah scholars and industry experts to think beyond replication. The novelty of this paper lies in the proposed guidelines for innovating Islamic financial instruments
AN ANALYSIS OF REPUTATIONAL RISKS IN ISLAMIC BANKS IN MALAYSIA WITH A PROPOSED CONCEPTUAL FRAMEWORK
Get PDFThe most critical intangible asset that a bank possesses is its reputation. The reputation reflects a bank’s relative success in fulfilling the expectations of multiple stakeholders. Establishing a great reputation is a key element of organizational strategy, especially for banks. In case of Islamic banks, this is more important due to the nature of its business which is reputed to be defined by shariah principles. Any significant issues with regard to the operations of Islamic banks either in terms of shariah non-compliant financial products or customer complaints may damage the reputations of Islamic banks, thereby driving away customers, investors, shareholders and counterparties. As such, it is expected that Islamic banks pay more attention to managing reputational risks. This paper provides a review on the annual reports and financial statements of local and Islamic banks in Malaysia in order to assess the transparency of reporting and disclosing their reputational riskmanagement framework. It is found that local domestic Islamic banks in Malaysia are more transparent compared to the locally incorporated foreign Islamic banks. Finally, we propose a framework for Islamic banks to manage reputational risks
A TRIBUTE TO AL-MARHUM PROFESSOR DATUK MOHAMED MACKEEN (1928–2013)
Get PDFProfessor Mackeen, together with the late Tan Sri Dr. Abdul Rauf, laid the foundation of Islamic Religious Studies in the then newly established Department of Islamic Studies, University of Malaya, in 1961. The department offered courses on Islamic thought, law, mysticism, history, literature, Qur’anic exegeses and Arabic language. I joined the department as an undergraduate student in1963 when the late Tan Sri Dr. Abdul Rauf was the head. A few years later Tan Sri left Malaysia to work in the U.S.A. and Professor Mackeen took over as the head for several years
THE PSYCHOLOGY OF PREACHING: THE POWER OF DIARIES
Get PDFRecent discoveries in neuroscience shows that individuals have an impulsive system and a reflective system. These two systems are protected by powerful psychological defense mechanisms. In particular, confirmation bias, cognitive and the way people remember and forget information can prevent learning new things about Islam. To be effective, Muslim preachers must overcome these defense mechanisms so that new knowledge about Islam can be internalised. To achieve this goal, this author experimented with students at the International Islamic University Malaysia. Since 2010, over 1,100 students have listened to Islamic videos on a weekly basis throughout the semester and kept a diary documenting their reflections. Both qualitative and quantitative data are presented. The analysis suggest that keeping diary is a useful way to overcome defense mechanisms. This author conclude that preachers can think about shifting their role from providing content about Islam to providing a process for helping Muslims discover new things about Islam
THE MYSTERIOUS DISAPPEARANCE OF MH370: MALAYSIAN MUSLIM SPIRITUAL AND RELIGIOUS RESPONSE
Get PDFThe disappearance of Malaysian Airlines Flight MH370 has led to a remarkable Muslim spiritual response demonstrating a profound mass religious coping phenomenon, and understandably, an intense sense of spirituality; This includes significant, no less relevant issues, such as religious, preaching responses and theological interpretations, the pilots suicidal scenario, the bomohs, and interfaith rapprochement. This study not only highlights the social implications of the spiritual and religious capital inherent in Malaysian society, i.e., indicating of adaptable religious capital in Malaysian society at large, but also unveils to a large degree the extent to which the Malaysian Muslim religious and spiritual capital can play a potentially positive, and effective role in coping with disasters and calamities, and further identifies a collective religious pattern used for adapting to and managing national and international catastrophes and crisis
SHARI’AH RISK MANAGEMENT FRAMEWORK FOR ISLAMIC FINANCIAL INSTITUTIONS
Get PDFIn addition to systematic and unsystematic risks faced by traditional financial institutions, Islamic banks are widely exposed to Shari’ah risks with regards to the needs for ensuring Shari’ah compliance of its operational activities and financial products. In order to mitigate these additional risks, IFIs are urged to establish a comprehensive Shari’ah risks management tool that can help them to monitor their banking, financing and investment activities in conformity with Shari’ah principles and hence enhance their sustainability in the long run. Therefore, the objective of this paper is to contribute to discussion on the development of the Shari’ah risk management framework for IFIs. This paper refers to Islamic primary sources of knowledge, the Quran and hadith in scrutinizing the permissibility of risk management practices by IFIs. The processes that take place in Shari’ah risk management; (i) risk identification; (ii) risk measurement and; (iii) risk monitoring/controlling are then thoroughly discussed. This paper hopes to shed some light on the importance of having a comprehensive standard of procedures in performing Shari’ah risk management function
PROHIBITED ELEMENTS IN ISLAMIC FINANCIAL TRANSACTIONS: A COMPREHENSIVE REVIEW
Get PDFThis paper analyzes prohibited elements in transactions from a shari’ah perspective, since it is obligatory on the individual (fardhu ‘ayn) to understand the Islamic law of transactions (fiqh mu’amalat). Islam is not only a religion, but also a complete way of life. Islam has clearly forbidden all business transactions that lead to exploitation and injustice in any form to any of the parties of a contract. Islam requires that all financial and business transactions be based on transparency, accuracy, and disclosure of all material information so that no one party takes advantage of other parties. There is wisdom (hikmah) behind every prohibited transaction and in order to practice business and banking activities that are genuinely shari’ahcompliant,it is important to understand the prohibited elements in Islamic law. Accordingly, prohibited elements such as riba, gharar, qimar, maysir, fraud and coercion are discussed, as well as, the importance of the legality of the subject matter. Sahih, fasid, batil contracts and extrinsic conditions are covered in respect to different schools of thought