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Murabaha financing is one of Sharia banks financing that uses a sale and purchase agreement with a counter-performance in the form of a margin determined in accordance with an agreement between the bank and the customer. The difference between Murabaha contract and credit at a conventional bank is that, in a Murabaha contract, Sharia banks purchase the object (house or land) that the customer wants in advance. Then, the banks sell the house to the customer by informing the amount of the price that has been added with a margin. In practice, not all Sharia banks provide Murabaha financing using this procedure. Therefore, this study aimed to, first, explain the practice of Murabaha financing whose ownership object is not on behalf of Sharia banks in terms of legal protection for customers, and second, find the practice of Murabaha financing whose ownership object is not on behalf of Sharia banks in terms of fulfilling Sharia compliance. The method used is a normative juridical approach with descriptive-analytical research specifications. The data used secondary data, which was collected through library research, and then analyzed by qualitative analysis through legal interpretation methods. The results showed that, first, in terms of legal protection for customers, the practice of this Murabaha financing was not in accordance with internal and external legal protection, and second, in terms of fulfilling Sharia compliance, the practice of this Murabaha financing contained elements of gharar (unclear object) and dzalim (causing injustice). [ABSTRACT FROM AUTHOR]

Purpose: Emerging economies are increasingly benefiting from Islamic finance principles. The distinctive features of this unconventional form of finance are starting to be considered even in developed economies. Islamic finance operates under prohibitions on interest, gambling, speculation and complex derivatives according to the dogma in the Quran, Sunnah, Ijma and Qiyas. International financial reporting standards (IFRS) allow companies to attract global capital due to overcoming international borders. However, Islamic finance cannot apply all accounting standards. Therefore, this study aims to explore the implementation of international accounting standards in the Islamic finance context to present applications and future research fields. Design/methodology/approach: Using a bibliometric and coding analysis, the study analyses 226 peer-reviewed journal papers extracted from the Scopus database. Using the bibliometrix package, the authors explored the literature's intellectual, conceptual and social structures, categorising the findings into thematic clusters relevant to traditional and Islamic finance paradigms. Findings: The results reveal new and interesting elements using the lens of the conceptual, intellectual and social structure. Additionally, the authors find out three main thematic clusters: (1) IFRS and Islamic finance: general principles; (2) IFRS and Zakat; (3) IFRS and Murabaha compatibility; (4) IFRS and Takaful; and (5) IFRS and auditing organisation for Islamic financial institution: governance strategies. Originality/value: The contribution is original as the authors discover institutional theory perspectives and a diatribe between positivist and ontological approaches. [ABSTRACT FROM AUTHOR]

The asset side of Islamic banks has two different portfolios running side by side, namely risk-sharing (PLS) and non-risk sharing (non-PLS) financing. The segregation of PLS and non-PLS financing has gathered some attention recently owning to its relative importance for sustainable economic output. This study attempts to analyze the impact of decomposed Islamic financing modes (PLS and non-PLS) with a particular focus on their impact on real economic activity. In addition, we moderated the relationship with asset quality of aggregate Islamic banking sector. Quarterly data from 2014 to 2021 have been sourced from datasets of the Islamic financial service board (IFSB), the International Monetary Fund (IMF), World Bank, and Central banks' data streams. Eleven countries have been selected based on the highest local and global share in global Islamic financial assets. Panel data regression model has been used in this study. The findings indicate that PLS financing is a weaker driver to channelize funds. However, industrial production output is significantly affected by non-PLS financing. Further the results suggest, Islamic finance–output nexus found to have a stronger relationship in the presence of higher asset quality of Islamic banks. The results show that firms mostly rely on non-PLS financing, due to reduced asymmetry and higher transparency in non-PLS contracts compared to PLS modes. The results have implications for governing bodies of Islamic financial system in boosting risk-sharing contracts and firms to limit agency conflicts arising from fluctuating cost of financing. [ABSTRACT FROM AUTHOR]

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Most people still have little understanding and information about how Islamic banking system works. Misconceptions drive people to think that there is no real difference between Islamic banking and the traditional financial system. The root of the issue, in author's humble opinion, simply lies with the fact that people don't differentiate between such concepts as "riba" and "ribh" in terms of how they are formed. This article explains the essence and nature of the formation of these two concepts, while also presenting some insights that might serve as justifications for forbidding the practice of "riba" and gives a list of Shariah requirements for the most common Islamic finance product - Murabaha. [ABSTRACT FROM AUTHOR]

Copyright of Selcuk Law Review / Selçuk Üniversitesi Hukuk Fakültesi Dergisi is the property of Selcuk Law Review and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Purpose: The main purpose of this study is to experiment with interest-free microfinance (IFMF) products and investigate the factors affecting IFMF institutions. Design/methodology/approach: This study uses both quantitative and qualitative data types that will be collected through questionnaires, secondary data, interviews and experimental tests to answer key questions. The collected data were analyzed using repeated-measures analysis ANOVA. This study determines the factors affecting the default rate of Islamic microfinance (MF) products, and evaluates the repayment performance of IFMF products using field experiments. Findings: The participants found that the repayment performance level is higher than that of Qard Al-Hassan, which shows that it is one of the best mechanisms to reduce the default rate among borrowers. It has been observed that women have higher repayment performance than men, and those with different income sources have higher repayment performance levels than those who do not. This study showed that the effects of age, marital status and educational status on the repayment performance level of the participants were not statistically significant. In addition, it was shown that the participants' status of having or not having children did not have a significant effect on the level of repayment performance. Originality/value: This study differs from other studies in two ways. First, in terms of field experimentation, this study focuses on the practical impact of IFMF products on customer reimbursement performance. Second, this study tested different demographic variables that could affect the reimbursement performance. [ABSTRACT FROM AUTHOR]

Copyright of AL-MUZARA'AH - Journal of Islamic Economics & Finance is the property of IPB University and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of International Journal of Islamic Marketing is the property of International Islamic Marketing Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Eurasian Journal of Religious Studies is the property of Al-Farabi Kazakh National University and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Purpose: This study aims to explain the Sukuk structures individually by highlighting the key differences and commonalities in their influential aspects. It also compares the core aspects of Sukuk literature with conventional bonds and suggests the point of differences between them. Design/methodology/approach: This study uses a quali-quantitative approach with the help of segmented bibliometric analysis to describe core differences and commonalities in various Sukuk structures in terms of core authors, countries, sources, affiliation, documents and keywords. In addition, it deploys "biblioshiny" from R-package "bibliometrix 3.0" to identify key influential aspects of different Sukuk instruments. Findings: Results reported that Malaysia is the core contributing country in Sukuk publications and the center of author correspondence. There is a structural difference among various Sukuk instruments. The significant literature commonalities in Ijarah, Mudarabah, Musharakah and Murabahah Sukuk affiliations and globally cited journal articles are also found. However, the influential aspects of Sukuk compared with conventional bonds are different from other Sukuk literature. It also conducted a keyword analysis to report significant themes in the literature. Originality/value: This study contributes to the existing body of knowledge as it helps investors to understand the shariah permissibility and investment supremacy of various Sukuk alternatives. Investors, policymakers, scholars and researchers should understand the dynamics of multiple Sukuk structures and their Shari'ah permissibility. This study significantly elaborates on this objective. [ABSTRACT FROM AUTHOR]

Copyright of Bait Al-Mashura Journal is the property of Bait Al-Mashura Journal and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This study explores the role of agent in the Islamic modes of financing in order to identify ambiguities/issues related with the role of agent in Murabaha, Salam, Istisna and Tijara. The research further discovers the view of the Shari’ah experts with respect to such ambiguities so that they can either be verified as Shari’ah issues or non- Shari’ah issues. The role of agent was examined using content analysis of the model documents used by Islamic banks followed by soliciting the views of the Shari’ah specialists through interviews. No Shari’ah issue was found in hiring the customer as agent by the bank in any Islamic modes or binding the agent to act as an “undisclosed agent”. Conversely, the supplier’s risk, was declared to be the obligation of the bank and transferring this risk to the agent was observed as a real issue from Shari’ah point of view in the practice of Murabaha. Similarly, the principal is not allowed to charge any penalty to the agent if he is working without negligence and in good faith. Shifting charges like transportation, storage, etc., to the agent is not correct. However, no Shari’ah issue was found in binding the agent to provide collateral/security, etc., to the bank. Nevertheless, no consensus was observed on binding the agent to provide corporate guarantee. This research appears to be a preliminary but important attempt of its nature examining the critical role of agent in Islamic modes of financing adding value to the body of knowledge in Islamic banking. [ABSTRACT FROM AUTHOR]

Copyright of Journal of Financial Researches & Studies / Finansal Araştirmalar ve Çalişmalar Dergisi is the property of Marmara University, School of Banking & Insurance and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Purpose: This study aims to examine the validity of the installment payment contract when using the first Islamic credit card (ICC) in Jordan and will explore the hidden techniques that are used to operate such a financial product. The purpose of the study will be achieved by examining the structure and the issues surrounding the first ICC that was introduced to the Jordanian market as a hybrid contract of Qard Hassan (benevolent loan), Murabaha, Wakalah (agency) and Bay' Al Ajjal (credit sale). In addition, a further objective is to examine whether this credit card is a Sharia-compliant financial product. Design/methodology/approach: A qualitative research method approach was adopted to understand the issues, nature and structure of the first Jordanian ICC. This was due to the explanatory nature of the product, the different financial solutions it offered and the fact that the ICC in Jordan is, to date, relatively unexplored. This paper used the technique of content/thematic analysis that involves multiple sequenced steps to analyze these matters. Findings: The main finding of this research is that the first ICC in the Jordanian financial market has caused a degree of uncertainty. This is because, once a customer decides to choose the installment payment contract option, the bank does not have real possession of the assets in question. The issue of constructive possession has been denied by several classic and contemporary Islamic scholars, including the General Iftaa Department of Jordan. Therefore, it can be seen that the installment payment contract option does not comply with Islamic principles and particular Fatwas that have been decreed. Originality/value: This is the first study that shows how the first ICC, being a new Islamic financial product in Jordan, operates in relation to the installment payment contract. In addition, focusing on the concept of changing the nature of the contract from a Qard Hassan (benevolent loan) to a hybrid contract is significant, to encourage Islamic scholars to take a clear, legal stand under Sharia law. [ABSTRACT FROM AUTHOR]

Purpose: This study aims to compare the use of risk-sharing and risk-shifting contracts (RSFCs) in Islamic banks using a triple grouping of conservative, moderate and liberal Islamic banks based on the Khaled Khandelwal (KK) model. Six fundamental Islamic contracts are used in this study, namely, Mushãrakah, Mudãrabah, Murãbaha, Salam, Ijãrah, Istisnã. Mushãrakah and Mudãrabah represent profit and loss sharing contracts (i.e., risk-sharing contracts – RSHCs), whereas Murãbaha, Salam, Ijãrah and Istisnã represent RSFCs. This study extends the previous studies by addressing an issue that has been neglected in the literature. The extent to which the two groups of contracts are used is extremely important because of its effect on the valuation of Islamic banks and on their earning quality. Design/methodology/approach: This study aims to analyze, using descriptive statistics and inferential statistics, the use of RSHCs and RSFCs made by 72 fully Islamic banks, using a sample that includes banks in most of the countries where Islamic banks are present. Only fully Islamic Banks were considered, that is, banks that are essentially mainstream banks; therefore, banks that include only a specific line of Islamic products, often called the Islamic Window, were excluded. The total number of the sample was 118, but the study was restricted to 72 banks due to the availability of time series data covering the period of study, 2007 to 2015. Findings: The study documents that over the period 2007 to 2015 the moderate banks have better distribution and balance of RSHCs and RSFCs than the conservative and liberal banks. The conservative banks are found to depend greatly on RSFCs, whereas the liberal banks are found to depend almost completely on RSFCs. Unexpectedly, the conservative banks have not shown a noticeable improvement over the period of analysis on their level of reliance on RSHCs. The results show that there is a significant difference in the percentage income distribution of the two contracts between the moderate banks and the conservative banks and between the moderate banks and the liberal banks. However, no significant difference was found between the conservative banks and the liberal banks. Originality/value: The study uses an alternate rating model for Islamic financial institutions. The study examined the issue of risk sharing and risk shifting contracts usage in banks for a long period of nine years and at a global level and with an additional dimension of three categories of Islamic Banks based on the KK model. [ABSTRACT FROM AUTHOR]

Copyright of Accounting & Financial Studies Journal is the property of Republic of Iraq Ministry of Higher Education & Scientific Research (MOHESR) and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Liquidity risk management in finance has always been well known as a necessity for conventional finance and Islamic finance. Conventional financing addresses this risk through known means. Unlike Islamic financing, this has few instruments suitable for Shari’a to manage this risk. If this risk accelerates, the Islamic bank faces significant challenges in the face of their depositors and investment projects. The objective of this study is to show that holding an optimal level of liquidity is necessary for Islamic banks to minimize the liquidity risk. In this paper, we also examine the relationship between profitability and liquidity. This importance is explained by the fact that these banks cannot always count on the support of the central bank, or on the Islamic money market. We refer in particular to the work of Ben Jedidia et al. (2013). Unlike Ben Jedidia et al. paper, our model of financial intermediation and liquidity risk management uses two factors: Murabaha and Ijara. Two analysis were used, the first one is static and the second one is dynamic, to determine the optimal amount to be held by an Islamic bank using the optimization method. The study reveals that the factors in the first analysis are: the anticipated penalty costs, the rate of return on financing, the sharing rate between the bank and the depositors. This study also reveals in a second dynamic analysis that the factors are: the expected marginal cost of penalty, the ratio of the change in deposits to the change in funding. [ABSTRACT FROM AUTHOR]

This paper examines and assesses the extent to which pricing of Islamic banking and finance (IBF) worldwide is correlated to conventional finance. The data used were obtained from the Islamic Finance Country Index (IFCI) and the Cbonds platform. The IFCI is a methodology developed by Edbiz Consulting to measure the growth of IBF. The IFCI has been gathering data for nine years, sufficient time to yield meaningful results. Cbonds is a financial-data vendor highly specialised in the analysis of bond markets. This study provides both a qualitative analysis in the form of a tile map chart and a statistical test aimed at generalising the correlation between IBF expansion and interest rates to all countries where IBF banks might locate. This correlation is estimated by dividing the analysed countries into tertiles according to their interest rate and comparing the mean IFCI scores. The difference between the lowest tertile and the others is statistically significant. This appears to be the first empirical study to incorporate the whole geographical scope of the IFCI and analyse the interest rates of all countries to which IBF expansion metrics apply. Emerging markets represent an important growth opportunity for Islamic banks. In fact, the presence of Zakat as a mandatory tax to reduce poverty and the idea of a system based on distribution of wealth are important factors for developing economies. This study is consistent with previous findings: the IBF pricing system is correlated to the conventional banking system, and there is a positive correlation between the IFCI and countries with high yields. The main limitation of this study is the difficulty in obtaining the 10-yearyield to maturity (YTM) of countries for which no data was available. [ABSTRACT FROM AUTHOR]

Copyright of Journal of Baghdad College of Economic Sciences University is the property of Republic of Iraq Ministry of Higher Education & Scientific Research (MOHESR) and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Boğaziçi Journal: Review of Social, Economic & Administrative Studies is the property of Bogazici University, Faculty of Economics & Administrative Sciences and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Purpose: This paper aims to investigate the economic substance of Islamic banks' transaction as perceived by the employees and regulators of banks and the effect of such substance on the need for special accounting standards for Islamic banks. If there is a distinctive "Islamic economic substance", then special accounting practices may be necessary such as the standards of the Accounting and Auditing Organization for Islamic Financial Institutions. Design/methodology/approach: A qualitative inquiry on one of the leading Islamic banks in the Middle East was conducted to investigate the economic substance of the bank's main two transactions; the deposit system and Murabaha financing, as perceived by informants within one of the earliest Islamic banks and its regulators. Findings: It is found that despite the belief that the transactions under examination were different from equivalents within conventional banking, practice within the bank was not consistent with such a belief. Informants largely perceived the economic reality of the investigated transaction as being not different from conventional banks' transactions, and this would affect the need for special accounting and regulatory frameworks. Research limitations/implications: This investigation is confined to informants working within one Islamic bank; their views and perceptions may not coincide with those working in other Islamic banks in the world. Practical implications: The results of this investigation provide policy implications for Islamic banks, regulators and standards setters in regard to the need for special accounting standards for Islamic banks. Originality/value: The paper is one of the first papers that uses a qualitative inquiry on the main transactions of Islamic banks and the related need for special accounting practices. The paper provides a new perspective on the debate over whether Islamic banking is genuinely innovative or is merely a replicate for conventional banking. [ABSTRACT FROM AUTHOR]

Copyright of International Journal of Economic & Social Research is the property of Abant Izzet Baysal University, Faculty of Economics & Administrative Sciences and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Purpose: This paper aims to explain the "murabaha syndrome" of Islamic banks. It further attempts to offer alternatives for the expansion of profit and loss sharing (PLS)-based financing. Design/methodology/approach: Audited financial statements of 18 Islamic banks in the GCC countries are analyzed to assess the financing structures of banks. Moreover, additional data about financing pattern of Islamic banks in other Muslim majority countries are collected from the Islamic finance literature. A comparative analysis is offered to examine the financing structures of Islamic banks. Findings: The paper confirms murabaha (mark-up financing) concentration of Islamic banks. About 90 per cent of the total financing are concentrated on murabaha, which is the result of existing institutional underpinnings. Islamic banks would logically be involved with PLS-based financing only limitedly unless the current governing institutions are changed. Entrepreneurs' financing needs based on PLS contracts should be catered by venture capital, whereas micro-finance enterprises can meet the demand for funds of marginal clients. Practical implications: PLS investment in the portfolio of Islamic banks would result in higher risk and uncertainty. Ambiguity, or its equivalent uncertainty, is prohibited in Islam. This is a dilemma which the existing literature does not sufficiently explain. Originality/value: Ideally, Islamic banks should practice PLS-based financing; otherwise, their raison d'être would be difficult to justify. Islamic finance literature does not shed sufficient analytical lights in explaining Islamic banks' preference of mark-up financing to PLS-based financing. Moreover, strategies to ameliorate this condition have largely remained unexplored. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this study is to examine how the Islamic banks fix their mark-up for Murabaha contract strategically when traditional banks also co-exist in a country. This study also aims to investigate what role the varying degree of Iman (faith) plays in shaping the preferences of the consumers to choose between the services of Islamic banks and the traditional banks. Design/methodology/approach: This paper constructs a mathematical model like the Bertrand competition in neo-classical economic theory. A religiosity parameter for the consumers has been inserted into their demand functions for their products. A simple optimization technique from mathematics has been used to arrive at the results. Findings: This paper applies game theory to analyze how Islamic banks determine their mark-up when they are facing competition with traditional banks. It considers the demand functions of the consumers for the products of Islamic banks and traditional banks. The demand functions depend on the mark-up, as well as on the interest rate with the difference that they also depend on the religiosity of the consumers. The paper shows that Islamic, as well as the conventional banks charge lower prices for their loans if there is consideration of religiosity aspect of the consumers. Further, it shows that as religiosity increases in a country, the lending rates decrease. The theoretical result is also consistent with the real practices of the banks. Therefore, the dual banking system is welfare enhancing for the customers. Research limitations/implications: The Islamic banks can leverage the religiosity aspect of the consumers and expand their business competitively by charging them lower mark-up. The adherence of religious customers to the services of Islamic banks creates some kind of loyalty premium for them. This could lead to the reduction of mark-up price triggering competition between both types of banks to attract more customers. Therefore, it is prudent for the government to develop a system for furthering the quality of honesty that is an integral part of Islam. Originality/value: To the best of author's knowledge, this is the first paper where it has been analyzed theoretically how the Islamic banks determine their mark-up for Murabaha contract strategically. This approach explains why the rate of return of Islamic banks hinges on the interest rates of traditional banks. One of the novel feature of this paper is that religiosity character of the consumer is good for banks because religiosity prohibits the people to default on their loans. [ABSTRACT FROM AUTHOR]

Copyright of Journal of Knowledge Economy & Knowledge Management is the property of Journal of Knowledge Economy & Knowledge Management and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Poverty and inequality are global phenomena that have increased in recent times. The condition of poverty is alarming at global level as it was reported that some 57million children were out of school. Hence Ahmad and Hassan (2015) posit that half of this number was in Sub-Saharan Africa (SSA). With Nigeria as the largest nation in Africa thus it has the highest figure of these out of school children. Poverty indicates lack of income and necessary ways to achieve a standard of living. Islamic finance plays critical role in reducing the level of poverty and inequality through the profit and loss sharing among investors. Therefore, this study explores alternative way to reduce poverty and inequality from Islamic perspective in Nigeria. This would contribute to the economic development of the country. The method adopted is to review previous literature on the impacts of various Islamic financial instruments in addressing the menace of poverty and economic inequality. The study concludes that profit and loss products of Musharakah and Mudarabah, and cost based products which include Murabaha, Ijarah, Sukuk contribute to poverty reduction and promote economic activities. It thus recommends the adoption of these products in Nigeria to address the prevailing infrastructural deficit and promote economic development. [ABSTRACT FROM AUTHOR]

Purpose: This study aims to provide an interest-free valuation methodology for Murabaha and Musharakah Moutanaquissah contracts. Indeed, In Islamic finance, Murabaha contracts are widely negotiated. Their yield depends mainly on the contracted profit margin. In the current practices, this latter is based on a reference interest rate, which is highly criticized in Islamic literature, just like Musharakah Moutanaquissah contracts. In this perspective, authors suggest a new valuation methodology with parameters related to the real economy. Design/methodology/approach: The authors apply an indirect method to determine a lower bound of the profit margin of a Murabaha contract. Considering Musharakah Moutanaquissah as an equivalent contract, the new valuation methodology is based on participation and focuses on parameters from the real economy: the market rent and the rate of return used for an equivalent project. Findings: The results show that the pricing of Musharakah Moutanaquissah contracts could be based on several parameters linked to the real economy. Consequently, an implied value of the profit margin could be computed. Also, the interest rate is no longer implicated in the pricing of neither Murabaha nor Musharakah Moutanaquissah contracts. Research limitations/implications: The valuation methodology is applicable only if the underlying asset's financing can be made with Murabaha and Musharakah Moutanaquissah contracts. Practical implications: This work will restore the link between Islamic contracts and the real economy. For Islamic banks in particular, the suggested model would reduce the exposure to reputational risk and enhance the compliance to the Sharia (Islamic Law). Originality/value: Several studies have analyzed the dependence between Islamic contracts and interest rates. In general, these studies confirm this dependence and few of them have suggested alternatives. Thus, the authors contribute to the literature by providing a practical and applicable model to detach the valuation of Murabaha and Musharakah Moutanaquissah from the interest rate. [ABSTRACT FROM AUTHOR]

A primary source of asymmetric information arises from banks' uncertainty about borrowers 'Creditworthiness. This can generate two types of barriers to efficient credit allocation in the loan market: ad-verse selection in the likelihood of repayment and moral hazard in the riskiness of firms' business decisions, also affecting repayment. This study investigated the consequences of asymmetric information on Islamic financial contracts in the Pakistani market for small and medium enterprise (SME) business lines of credit. Islamic bank's main financial contracts were discuss the two of them which are Istisna and Murabaha. The methods of' T test' was conducted to ascertain the difference in means of both forms of financing, whereas Multiple Regression Analysis using panel data to assess the relationship of critical variables with Disbursed amount, profit rate, spread, tenor. Data of three year i.e. from 2016 to2018 of 35 firms, with 105 numbers of observations having istisna and Murabaha contract, were taken. The results suggested that both the means of Murabaha and istisna financing are significantly different in major performance indicators, implicating companies that have taken these two financing have performed differently. Secondly, in most of the ratio that mattered like efficiency and profitability, Murabaha based financing have yielded results that are more efficient and better performed as compared to istisna). [ABSTRACT FROM AUTHOR]

A primary source of asymmetric information arises from banks' uncertainty about borrowers 'Creditworthiness. This can generate two types of barriers to efficient credit allocation in the loan market: ad-verse selection in the likelihood of repayment and moral hazard in the riskiness of firms' business decisions, also affecting repayment. This study investigated the consequences of asymmetric information on Islamic financial contracts in the Pakistani market for small and medium enterprise (SME) business lines of credit. Islamic bank's main financial contracts were discussing the two of them which are Istisna and Murabaha. The methods of' T test' was conducted to ascertain the difference in means of both forms of financing, whereas Multiple Regression Analysis using panel data to assess the relationship of critical variables with Disbursed amount, profit rate, spread, tenor. Data of three years i.e. from 2016 to2018 of 35 firms, with 105 numbers of observations having Istisna and Murabaha contract, were taken. The results suggested that both the means of Murabaha and Istisna financing are significantly different in major performance indicators, implicating companies that have taken these two financing have performed differently. Secondly, in most of the ratio that mattered like efficiency and profitability, Murabaha based financing have yielded results that are more efficient and better performed as compared to Istisna. [ABSTRACT FROM AUTHOR]

Copyright of Journal of Economic Sciences, Management & Commercial Sciences (JESMCS) is the property of Association of Arab Universities and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This research intended to explore issues in the contemporary implementation of Murabaha in Pakistan. For this purpose, the model agreements of Murabaha, obtained from the State Bank of Pakistan (SBP) and two Islamic banks (IB-I and IB-II), were analysed through content analysis. Resultantly 7 misgivings/issues were identified in form of open-ended questions. These issues were discussed with 30 Shari'ah scholars through semi-structured interviews in order to verify them as Shari'ah issues or clarify them as no Shari'ah issues. The findings confirmed no Shari'ah issue in appointing the customer as agent by the bank but shifting the supplier's risk to the agent was a practical Shari'ah issue. Further, filling and signing all the documents of Murabaha at the same time was confirmed as a serious Shari'ah issue equivalent to selling a commodity without assuming the ownership risk creating another Shari'ah issue. Shifting all types of risks to the customer either as agent or as ultimate consumer reflected the whole Murabaha as heela. [ABSTRACT FROM AUTHOR]

Possession is an important condition of the Islamic law of contract. Today, numerous banks are operating under Islamic banking principles. Therefore, it is an important requirement of the Islamic financial institutions to carry out transactions in accordance with the rules of Sharia. According to Sharia, any transaction without possession is considered void. On the other hand, possession is an important condition in all the modes of the Islamic finance, especially in a Murabaha contract. The concept of possession is simple; however, its implementation is difficult. This paper aims to discuss the practical issues of possession in execution of Murabaha Financing. [ABSTRACT FROM AUTHOR]

Copyright of REMAH Journal is the property of Research & Development of Human Recourses Center (REMAH) and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This study aims to explore the application of Murabaha contracts in agricultural sector. The study was conducted at Islamic microfinance institution namely Islamic Financial Services Cooperative (IFSC) Al-Hikmah located in Paleran Village, Umbulsari District, Jember Regency, Indonesia. This paper employs qualitative research with a case study approach. The method used for the informant's determination is snowball method. This paper found four important points: Firstly, there are three models of the application of Murabaha, namely goods-based Murabaha; cash-based Murabaha; and business capital-based Murabaha. Goods-based Murabaha is in accordance with sharia compliance, but the cash-based Murabaha is still not suitable because the Murabaha contract is not equipped with wakalah contract. Secondly, there are two risks namely goods expiring on goods-based Murabaha concept and the risk of late payment due to failed crops on cash-based Murabaha. Thirdly, the provided amount of funding is only 30% of the estimated agricultural output. Fourthly, Al-Hikmah requests collateral for Murabaha financing. [ABSTRACT FROM AUTHOR]

E- Murabaha is a new approach proposed as an e-commerce mechanism; intend to create an electronic Murabaha system. This system provides an effective technical mechanism for the execution of the Murabaha contract, allowing for the purchase of goods online from the commercial sites of the Islamic bank, in a manner which corresponds with the Islamic faith. Murabaha in Islamic banks: the client can view the item available on the bank's website and directly select the item and reviews its details. The next step is to agree on the cost price of a real commodity and the price of a commodity after determining the margin of profits, premiums and payment mechanisms. Moving to the last stage of the system, the process of selling and sending takes place after the client has agreed to all the details of the property contract for the items. According to this system, the bank is presumed to have a commercial website where all the goods are available, so the system consists of two parties, thereby abiding by sharia rules. The bank discloses the actual cost of the item including the agreed profits. The systems offer a new addition to e-commerce, in the Islamic way, and provide significant development in both e-trading and finance structures compliant with sharia. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to draw upon existing debate over "financial sector rent" (bank rent) to analyze the current pattern of financing of Bangladeshi and Indonesian Islamic banks during the period of 2011 and 2015. Design/methodology/approach: The empirical evidence through a comparative approach of analyzing the performance of Islamic banks with that of conventional banks in respective countries – two of the largest countries where majority of the population are Muslims – is drawn to demonstrate the objective. Findings: While Islamic banks in Bangladesh are primarily concentrating on the murabaha (mark-up contract) mode of financing, some transactions under musharaka (partnership/equity-based contract) are observed in the Indonesian Islamic banking sector. This anomaly in Indonesia can be explained by the nature of their musharaka financing which is not of the purely "participatory" financing type. As a result, we can observe the quasi-murabaha syndrome in Indonesian Islamic banking sector. The concentration of asset-based financing including consumers' financing (hire purchase) in the credit portfolio gives Islamic banks relatively higher Islamic bank rent opportunity for protecting their "franchise value" as Sharīʿah-compliant (Islamic law-compliant) lenders. However, Indonesian Islamic banks share a still infant Islamic banking market, and enjoy less rent opportunity under a severe competition with conventional banks. Research limitations/implications: The bank rent approach suggests that the syndrome observed both in Bangladesh and Indonesia can be ironically justifiable. Moreover, the mode of profit-and-loss sharing provides, in practice, an idea of the difficulty in managing the participatory financing embedded with high credit risk. Under this scenario, it is necessary for Islamic scholars and the regulatory authority to design an appropriate financial architecture, enabling Islamic banks to avail the benefit from a wider variety of Sharīʿah-based Islamic financing. Originality/value: This paper expands the newly emerged concept of "Islamic bank rent" to make sense of the murabaha syndrome in Bangladesh and the quasi-murabaha syndrome in Indonesia. This approach also contributes to clarifying the unique risk and cost to be compensated with the spreads that Islamic banks are expected to earn. [ABSTRACT FROM AUTHOR]

Background of this study the large number of Islamic financial institutions whose murabahah products are not yet fully compliant with shari'ah compliance, both the Al-Qur'an, Hadist and DSN-MUI fatwas. The purpose of this study was to obtain an overview and empirically prove how members' perceptions of shari'ah compliance with murabahah products at BMT ItQan. However, the research method used is descriptive quantitative with data collection techniques through questionnaires and interviews. The population in this study were 887 members of the ItQan BMT with a sample of 89 respondents and the object of this study was sharia compliance on murabahah products. The data analysis technique used is univariate analysis method (percentage score). The research findings show that members' perceptions of shari'ah compliance of murabahah products at the ItQan BMT are in a good category, although there are a number of indicators which are lacking, murabahah goods do not belong to ItQan BMT and the objects that are traded do not exist when signing the contract. [ABSTRACT FROM AUTHOR]

Sharia financial literacy is a person's understanding of the products of Islamic financial institutions in order to improve the ability and willingness of someone to take advantage of products in the Islamic financial institutions as one solution for the needs of economy. This study aims to obtain a picture of how the level of literacy of Islamic house financing products in Islamic house financing customers with various kinds of contracts (aqd) used in sharia house financing. This research uses quantitative descriptive method. The population in this study are sharia financing customers which amounted to 150 people and a sample of 80 people with purposive sampling technique. Instrument in this study using questionnaires. The results of this study indicate the level of customer literacy on shariah house financing products and kinds of contracts (aqd) used in sharia house financing in different Islamic banks are in good category, although there are some indicators are in good enough category. [ABSTRACT FROM AUTHOR]

Copyright of IUG Journal of Sharia & Law Studies is the property of Islamic University of Gaza and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Wakālah is an agency contract in which a party mandates another party as his agent to perform a particular task. Wakālah is the need of the society, as majority of the people are so busy in their lives and pre occupation that they don't have time to settle all the issues related to banks, so they hire the services of an agent, who works on behalf of them. In the current context of Islamic finance, the customer normally appoints the financial institution as his agent to conduct a particular transaction and in return, the financial institution will receive a fee for the service. Wakālah is used in credit card, discounting of bill of exchange, Tawarruq, and Murābaḥa etc. This article is divided in to two sections: the first one; to study Wakālah according to Fiq'hī rules, i.e. its definition, conditions, its qualities and its specifications. And in the other part Wakālah is discussed according to application of the Bank. At the end of discussion conclusion and some suggestions are given. [ABSTRACT FROM AUTHOR]

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Purpose The purpose of this paper is to examine the accounting treatment and reporting of a murabaha contract and its implication to the financial statements of Islamic banks. In addition, the paper also explains the implication of time value of money on the measurement of a murabaha contract and the concept of substance over form in recognising financial transactions.Design/methodology/approach This study reviews the accounting treatment and reporting for a murabaha contract as stated in the Financial Accounting Standards (FAS) of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the application of a murabaha contract as a financial instrument based on International Financial Reporting Standards (IFRS).Findings The paper finds that, while IFRS-based financial reporting primarily focuses on economic consequences of financial instruments, AAOIFI further takes into consideration the legal structure of the instruments, which are based on Shari’ah precepts. The paper also finds that IFRS-based financial reporting cannot always capture the distinctive structure of the murabaha and, hence, may lack representational financial reporting. However, the IFRS recognizes the substance of a murabaha contract as financing, and the majority of Islamic banks in Malaysia report it as one of financing and not as a trading contract. For measurement, IFRS adopted the concept of time value of money where the profit allocation is based on amortized cost, which is similar to the measurement of conventional loan transactions that apply the concept of effective interest rate. Meanwhile, AAOIFI uses a straight-line basis to allocate the profit of a murabaha contract.Practical implications The forthright discussion and the observations of the paper are expected to assist regulators and standard setters in developing accounting standards that are in convergence but also cater to the unique characteristics of Islamic financial transactions.Originality/value The paper criticizes both accounting treatment of a murabaha contract based on the AAOIFI and IFRS and then suggests an extension of these treatments to be adopted to improve the reporting. [ABSTRACT FROM AUTHOR]

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