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2021 | OriginalPaper | Buchkapitel

6. The Integrity of Islamic Finance

verfasst von : Marizah Minhat, Nazam Dzolkarnaini, Mazni Abdullah

Erschienen in: Ethical Discourse in Finance

Verlag: Springer International Publishing

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Abstract

This chapter provides a critical account of popularly used Islamic financial instruments and discusses the gap between theory and practice in Islamic financial industry. The critical discussion is mainly related to financial innovations, which were derived from concepts including murabahah, ijarah and sukuk. Empirical evidence and/or real-life examples are illustrated to elucidate points. The central thesis of this chapter suggests that an ideal Islamic principle of risk-sharing has not been successfully implemented due to challenges associated with governance (or lack thereof) and behavioural factors including perverse incentives. A solution can be found through effective stakeholders’ education and activism to steer the Islamic finance industry in the right direction.

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Fußnoten
1
Ijtihad is “the efforts expanded by jurists to extract solutions to problems based on the principles of primary and secondary sources, where rules of behaviour are not explicitly addressed by the primary sources, i.e., Quran and Sunnah” (Iqbal & Mirakhor, 2007, p. x).
 
2
The same example was illustrated in Minhat and Dzolkarnaini (2020).
 
3
The same illustration was discussed during a talk by Dr Marizah Minhat entitled “Is Islamic finance as practised accounted differently from conventional finance?” held at the London School of Economics and Political Science (LSE) on 4 September 2019 (see: https://​www.​lse.​ac.​uk/​law/​events/​ellm-talks/​Executive-LLM-Talks-How-did-Islamic-finance-prosper-under-English-Law).
 
5
Full financial statements are available at: https://​www.​alrayanbank.​co.​uk/​investor-relations-regulatory-information (Accessed 8 June 2021).
 
6
In 2017, Dana Gas, a Sharjah-based gas company, declared its two sukuk structures, totalling $700 million, non-shariah compliant. For further details on Dana Gas sukuk, see Haroon et al. (2020).
 
7
For further details on Maqasid al-Shariah, see Abu Seman and Dzolkarnaini (2019). Their study emphasises five elements/dimensions of Maqasid al-Shariah, viz., the human self (nafs), faith (din), intellect (‘aql), posterity (nasl) and wealth (mal) under the purview of socio-economic development. These dimensions in combination build a sustainable development.
 
8
See Product Disclosure Sheet https://​www.​bankrakyat.​com.​my/​index.​php?​rp=​business_​micro_​musk_​en_​4 (Accessed 6 June 2021). This concern was raised during our talk at the Bank Rakyat Sustainable Planet Series event on 18 December 2019.
 
9
For further details on 1MDB’s corruption scandal, see United States Department of Justice (2016).
 
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Metadaten
Titel
The Integrity of Islamic Finance
verfasst von
Marizah Minhat
Nazam Dzolkarnaini
Mazni Abdullah
Copyright-Jahr
2021
DOI
https://doi.org/10.1007/978-3-030-81596-7_6