Abstract
Ignoring Maqasid Al Shariah in product development is expected to emerge as an issue in Shariah compliance and/or risk management in financing schemes. For financing services, unlike merchandise trade finance, the very existence of the conflict with Maqasid Al Shariah, precipitates the Shariah-compliance issue. Health and education services should be provided through Waqf, and the financing of such services should be avoided. Murabaha contracts, unlike in merchandise trade, do not pave the way, neither does non-Shariah compliant organized Tawarruq, aka commodity Murabaha. Murabaha is the most commonly used tool of Islamic finance. Since Islamic finance should mimic the real economy, prevalence of Murabaha is expected and it is commendable. However, there are still misunderstandings related to different functions of Islamic tools such as Murabaha versus Waqf.
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Notes
- 1.
Muda and Jalil (2007).
- 2.
Ghazali based Maqasid understanding on safeguarding the five pillars: faith (Dīn), the human self (Nafs), intellect (‘Aql), posterity (Nasl), and wealth (Māl).
- 3.
Chapra (2008).
- 4.
Gundogdu (2019a).
- 5.
- 6.
Dariyoushi and Nazimah (2016).
- 7.
Gundogdu (2009).
- 8.
Refers to the authors work experience and Proceedings of the 2nd International Congress on Islamic Commercial Law, October 15–18, 2015, Konya, Turkey.
- 9.
Late payment charges are acceptable in Islamic finance as long as funds received from late payments by no means get into balance sheet of the bank. The separation will include use of these funds for PR or marketing campaigns in the name of so-called charity.
- 10.
Refers to the authors work experience and Proceedings of the 2nd International Congress on Islamic Commercial Law, October 15–18, 2015, Konya, Turkey.
- 11.
In addition to value addition requirement for debt creation, the rights and obligation of parties in a debt contract should clearly be stipulated in order to dismiss Gharar.
- 12.
Beck et al. (2007).
- 13.
Amine (2015).
- 14.
Surat Al-Isra, Verse 30: “Verily thy Lord doth provide sustenance in abundance for whom He pleaseth, and He provideth in a just measure. For He doth know and regard all His servants.”
- 15.
Financial institutions calculate interest rates of credit cards by adding statistical default rates on top of their cost of capital and expected real return. For instance, if the cost of capital is 5 percent, expected real return is 3 percent and observed default rate is 3 percent, they would determine the lending rate at 11 percent.
- 16.
Gundogdu (2014).
- 17.
Beck et al. (2010).
- 18.
Gundogdu (2016b).
- 19.
Gundogdu (2016b).
- 20.
WTO categorization of trade in service:
-
(a)
from the territory of one member into the territory of any other member;
-
(b)
in the territory of one member to the service consumer of any other member;
-
(c)
by a service supplier of one member, through commercial presence in the territory of any other member;
-
(d)
by a service supplier of one member, through presence of natural persons of a member in the territory of any other member.
-
(a)
- 21.
Such discourse might have not been feasible at the initial stage of GATS. But rapid diffusion and development in Information and Communication Technology afterwards and widespread use of Single Windows in customs by many countries as a consequence can make such option reasonable; today customs declaration forms can be completed online through Single Window applications of customs and excise departments.
- 22.
Gundogdu (2019a).
- 23.
The full story is available at: https://www.washingtonpost.com/education/2020/01/27/5-most-serious-charter-school-scandals-2019-why-they-matter/.
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Diallo, A.T., Gundogdu, A.S. (2021). Islamic Financial Product Development in the Context of Education and Health. In: Sustainable Development and Infrastructure. Palgrave Studies in Islamic Banking, Finance, and Economics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-67094-8_8
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