An Overview of Islamic Finance

Hussain, Mumtaz; Shahmoradi, Asghar; Ariss, Rima Turk

doi:10.2139/ssrn.2623805

Cited by 17 publications

(13 citation statements)

References 14 publications

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“…Furthermore, the Islamic financing has increased almost 40 times since 1982 (Akbar et al, 2021). In 2014, the total asset value reached US$2tn (Mumtaz Hussain, 2015) and increased by 10% growth rate and reaches to US$2.05tn in 2017 (Ureta, 2020). However, in 2018, growth rate extended by 2% only.…”

Section: Islamic Perspective Of Financingmentioning

confidence: 99%

“…Islamic financing is increasing at a rapid rate in the last two decades (Paltrinieri et al, 2019;Godil et al, 2020). It has current assets worth of US$2.88tn (Mumtaz Hussain, 2015) with minimum risk of failure as is evident from the GFC 2008, which did not have any effect on Islamic financing (Ahmed, 2010). Islamic financing is free from financial crisis shocks because it takes only a moderate risk and is based on real activities (Mumtaz Hussain, 2015).…”

Section: Introductionmentioning

confidence: 99%

“…It has current assets worth of US$2.88tn (Mumtaz Hussain, 2015) with minimum risk of failure as is evident from the GFC 2008, which did not have any effect on Islamic financing (Ahmed, 2010). Islamic financing is free from financial crisis shocks because it takes only a moderate risk and is based on real activities (Mumtaz Hussain, 2015). The proper check and balance in Islamic finance helps to keep the economy regulated.…”

Section: Introductionmentioning

confidence: 99%

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Islamic Finance an alternative mode for short term financing – working capital management

Kayani¹

2022

IMEFM

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PurposeThis paper aims to review and compare the conventional and Islamic perspectives of working capital management (WCM) to devise the best option of financing for managing working capital (WC) in South Asia. The paper also aims to help the business world for running its operations more smoothly by devising an alternative source of financing especially during crises such as the global financial crisis 2008 and the COVID-19 pandemic.Design/methodology/approachThe divergence approach is used for a critical analysis of existing literature to derive the best possible alternative to the conventional system of financing.FindingsThis paper identifies that Islamic financing is an appropriate mode of financing as compared to conventional financing for meeting WC requirements in South Asia. Furthermore, under Islamic financing, the best available alternative way for managing WC needs is theMudarabahIslamic mode of financing.Research limitations/implicationsThis is a theoretical paper and thus does not include empirical results.Practical implicationsThis paper provides conventional and Islamic perspectives of WCM. The Islamic banks in South Asia may devise policies to encourage and convenience firms for usingMudarabahmode for meeting their WC needs instead of conventional sources. This paper also identifies that small and medium enterprises may be targeted by Islamic banks in Asian markets for providing funds for their smooth operations especially during a financial crisis when conventional banks refuse to lend. This will help managers to run businesses more efficiently and effectively especially during any kind of financial crisis in the future.Originality/valueTo the best of the author’s knowledge, this is the first study that studies the relationship between WCM and Islamic financing in comparison to conventional financing. Although prior studies identify an alternative to conventional financing as Islamic financing, no one studied while considering the WC as the main variable. This paper informs practitioners and researchers about a “state of the art” Islamic perspective of WCM.

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Section: Islamic Perspective Of Financingmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Islamic Finance an alternative mode for short term financing – working capital management

Kayani¹

2022

IMEFM

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“…According to Mumtaz et al (2015), the growing need of Muslims for a Sharīʿa-compliant financial system seems to drive the growth of Islamic finance, as conventional banks continue to charge high interest rates. Mahdzan et al (2017) investigated the adoption of IB services in Malaysia and found that the understanding of IB concepts and perceived advantage significantly influence the adoption of IB services.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The adoption of IB services in the USA and the UK was due to the financial crisis creating the need for more funding of private investments and government operations (Islamic Financial Services Board, 2015). In other jurisdictions, IB has been adopted mainly because of enabling laws, sensitization of the public about the products, laxity at the implementation of the profit and loss sharing (PLS) principle and interest-free loans (Mumtaz et al , 2015; Sulaiman and Datin, 2013; Dusuki and Abdullah, 2007).…”

Section: Introductionmentioning

confidence: 99%

Adoption of Islamic banking in a non-Islamic country: evidence from Uganda

Bananuka

Katamba

Nalukenge

et al. 2020

JIABR

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Purpose This paper aims to examine the concept and practice of Islamic banking in the context of a non-Islamic country such as Uganda. Design/methodology/approach Semi-structured interviews were used to elicit the strategies banks may use to ensure that the Islamic banking system is successful and to ascertain those factors that may hinder its success. Chief executive officers of business associations, heads of committees on Islamic banking and religious leaders were interviewed. Findings The strategies used by financial institutions in ensuring the adoption of Islamic banking are now known such as “creating awareness of Islamic banking’s mode of operation among existing and potential clients.” The findings also show that factors such as “lack of trust among clients” may hinder the success of Islamic banking. Research limitations/implications The research findings are useful for informing the deliberations of regulators, the business community and financial institutions. The results are applicable only to those countries in the preparation stages of adopting Islamic banking services for the first time, but they could be generalized to any new product launch in any country. Originality/value This paper may help Ugandan financial institutions to design strategies that will accelerate the adoption and, ultimately, the diffusion of Islamic banking in Uganda.

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The New Sustainable Approach

Sümer

2023

The World Economy and Financial System

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An Overview of Islamic Finance

Cited by 17 publications

References 14 publications

Islamic Finance an alternative mode for short term financing – working capital management

Islamic Finance an alternative mode for short term financing – working capital management

Adoption of Islamic banking in a non-Islamic country: evidence from Uganda

The New Sustainable Approach

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