Tawarruq time deposit with wakalah principle: an option that triggers new issues

Research output: Contribution to journalArticle

Abstract

Purpose: This paper aims to make an attempt to analyze the adoption of wakalah in the tawarruq deposit that may trigger new issue. Design/methodology/approach: This paper provides a review on the underlying contracts for deposit-taking activities. Findings: There are two mains findings from this paper – first, the current deposit taking activities are characterized by principal guaranteed, it deems contrary to the nature of mudarabah. Second, we suggest the presence of wakalah in tawarruq term deposits and we argue that the application of the concept of bay al-wakillinafsihi would not affect the validity of wakalah. Originality/value: This paper is considered to have its own originality in the sense that the introduction of tawarruq-based deposit product by Islamic banks could be the best alternative to the current deposit products.

Original languageEnglish
Pages (from-to)388-396
Number of pages9
JournalInternational Journal of Islamic and Middle Eastern Finance and Management
Volume9
Issue number3
DOIs
Publication statusPublished - 2016

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Deposits
New issues
Trigger
Islamic financial institutions
Design methodology

Keywords

  • Banking services
  • Guarantee
  • Islamic bank
  • Tawarruq

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Finance

Cite this

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title = "Tawarruq time deposit with wakalah principle: an option that triggers new issues",
abstract = "Purpose: This paper aims to make an attempt to analyze the adoption of wakalah in the tawarruq deposit that may trigger new issue. Design/methodology/approach: This paper provides a review on the underlying contracts for deposit-taking activities. Findings: There are two mains findings from this paper – first, the current deposit taking activities are characterized by principal guaranteed, it deems contrary to the nature of mudarabah. Second, we suggest the presence of wakalah in tawarruq term deposits and we argue that the application of the concept of bay al-wakillinafsihi would not affect the validity of wakalah. Originality/value: This paper is considered to have its own originality in the sense that the introduction of tawarruq-based deposit product by Islamic banks could be the best alternative to the current deposit products.",
keywords = "Banking services, Guarantee, Islamic bank, Tawarruq",
author = "Ismail, {Abd. Ghafar} and {Nik Abdul Ghani}, {Nik Abdul Rahim} and {Mat Zain}, {Mat Noor}",
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journal = "International Journal of Islamic and Middle Eastern Finance and Management",
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T1 - Tawarruq time deposit with wakalah principle

T2 - an option that triggers new issues

AU - Ismail, Abd. Ghafar

AU - Nik Abdul Ghani, Nik Abdul Rahim

AU - Mat Zain, Mat Noor

PY - 2016

Y1 - 2016

N2 - Purpose: This paper aims to make an attempt to analyze the adoption of wakalah in the tawarruq deposit that may trigger new issue. Design/methodology/approach: This paper provides a review on the underlying contracts for deposit-taking activities. Findings: There are two mains findings from this paper – first, the current deposit taking activities are characterized by principal guaranteed, it deems contrary to the nature of mudarabah. Second, we suggest the presence of wakalah in tawarruq term deposits and we argue that the application of the concept of bay al-wakillinafsihi would not affect the validity of wakalah. Originality/value: This paper is considered to have its own originality in the sense that the introduction of tawarruq-based deposit product by Islamic banks could be the best alternative to the current deposit products.

AB - Purpose: This paper aims to make an attempt to analyze the adoption of wakalah in the tawarruq deposit that may trigger new issue. Design/methodology/approach: This paper provides a review on the underlying contracts for deposit-taking activities. Findings: There are two mains findings from this paper – first, the current deposit taking activities are characterized by principal guaranteed, it deems contrary to the nature of mudarabah. Second, we suggest the presence of wakalah in tawarruq term deposits and we argue that the application of the concept of bay al-wakillinafsihi would not affect the validity of wakalah. Originality/value: This paper is considered to have its own originality in the sense that the introduction of tawarruq-based deposit product by Islamic banks could be the best alternative to the current deposit products.

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KW - Guarantee

KW - Islamic bank

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