Institutional Development to Facilitate MushÄrakah and Muá¸Ärabah Mode of Financing
DOI:
https://doi.org/10.31436/ijema.v26i1.593Keywords:
Islamic economics, Profit/Loss sharing, MushÄrakah financing, Institutional development, Research in Islamic financeAbstract
This paper is based on the premise that it is not workable for the banks in their existing form, whether as conventional banks or as Islamic banks, to implement the profit and loss sharing mode of financing such as MushÄrakah and Muá¸Ärabah. The purpose of this paper is to make some practical suggestions for facilitating and promoting the use of MushÄrakah and Muá¸Ärabah mode of financing. Rather than focusing on the SharÄ«Ê¿ah compliance of existing banking instruments, a detailed research and development work needs to be carried out to develop completely a new form of institution outside the realm of the conventional banking system, which provides more workable and sustainable systems for implementing an alternate mode of financing consistent with the SharÄ«Ê¿ah objectives. This paper presents a conceptual framework of the functioning of these institutions and presents an outline of a sample research and development project to set up one such institution. The institutional concept and the sample project presented in this paper will contribute significantly to the existing literature by providing an alternative approach to address the scarcity of MushÄrakah and Muá¸Ärabah financing. It is anticipated that with implementation of the sample project presented in this paper, the pilot operations of the proposed institution can be started within six to eight years.
References
Ainley, Michael, Ali Mashayekhi, Robert Hicks, Arshadur Rahman and Ali Ravalia. “Islamic Finance in the UK: Regulation and Challenges.†Financial Services Authority (FSA) - November 2007.
Aliyu, Sirajo, M. Kabir Hassan, Rosylin Mohd Yusof and Nasri Naiimi (2017).
“Islamic Banking Sustainability: A Review of Literature and Directions for Future Research.†Emerging Markets Finance and Trade 53, no. 2 (2017): 440–70.
Al-Salem, Fouad H. “Islamic Financial Product Innovation." International Journal of Islamic and Middle Eastern Finance and Management 2, no. 3 (2009): 187-200.
Chachi, Abdelkader. “Origin and Development of Commercial and Islamic Banking Operations.†Journal of King Abdul Aziz University: Islamic Economics 18, no. 2 (2005): 16-9.
Chapra, M. Umer. “Innovation and Authenticity in Islamic Finance.†Eighth Harvard University Forum on Islamic Finance: Innovation and Authenticity - April 19-20, 2008.
Dubai Islamic Bank. “Overview of the Global Islamic Finance Industry.†Global Islamic Finance Report, 2017.
Dusuki, Asyraf W. and Abdulazeem Abozaid. “A Critical Appraisal on the Challenges of Realizing MaqÄá¹£id al SharÄ«Ê¿ah in Islamic Banking and Finance.†IIUM Journal of Economics and Management 15, no. 2 (2007): 143-65.
Iqbal, Munawar, Ausaf Ahmad and Tariqullah Khan (1998). “Challenges Facing Islamic Banking.†Islamic Development Bank - Islamic Research and Training Institute, Occasional Paper – no. 1, 1419AH (1998).
Iqbal, Zamir. “Challenges Facing Islamic Financial Industry.†Journal of Islamic Economics, Banking and Finance 3, no. 1 January - June (2007).
Kahf, Monzer. “Strategic Trends in the Islamic Banking and Finance Movement.†Fifth Harvard University Forum on Islamic Finance: Islamic Finance: Dynamics and Development, Harvard University Cambridge, Massachusetts, April 6-7, 2002.
Laldin, M. Akram and Hafas Furqani. “Innovation Versus Replication: Some Notes on the Approaches in Defining Sharīʿah Compliance in Islamic Finance.†Al-Jamiah: Journal of Islamic Studies 54, no. 2 (2016): 249-72.
Lembaga Tabung Haji. Corporate Information – About Us. https://www.tabunghaji.gov.my/en/corporate/corporate-inform ation /about-us.
Malik, M. Shaukat, Ali Malik and Waqas Mustafa. “Controversies that Make Islamic Banking Controversial: An Analysis of Issues and Challenges.†American Journal of Social and Management Sciences 2, no. 1 (2011): 41-6.
Noman, Abdullah M. (2002). “Imperatives of Financial Innovation for Islamic Banks.†International Journal of Islamic Financial Services 4, no. 3 October -December (2002).
Siddiqi M.N. “Obstacles to Islamic Economics Research.†Seventh International Conference on Islamic Economics, Islamic Economics Research Center, KAAU, Jeddah, April 1-3, 2008.
______. “A Vision for the Future of Islamic Economics.†9th International Conference in Islamic Economics-Istanbul, Turkey, 9 September, 2013.
Uppal, Jamshed Y. and Inayat U. Mangla. “Islamic Banking and Finance Revisited after Forty Years: Some Global Challenges.†Journal of Finance Issues 13, no. 1 (Spring 2014): 1-12
World Bank / Islamic Development Bank (IDB). “Global Report on Islamic Finance – Islamic Finance: A Catalyst for Shared Prosperity.†2016: 69.
Downloads
Published
How to Cite
Issue
Section
