Conceptualization of the Real Economy and Islamic Finance: Transformation Beyond the Asset-Link Rhetoric

Farooq, Mohammad Omar; Salim, Mohammed

doi:10.2139/ssrn.3034628

Cited by 6 publications

(8 citation statements)

References 18 publications

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“…This is because in the era of cryptocurrency, it is important to offer a Sharīʿah ‐compliant cryptocurrency and understand the factors that influence potential users' decision in adopting this cryptocurrency. In addition, Islamic finances are much in their desire to focus on real assets and real economy (Farooq & Salim, , p. 693). Therefore, this cryptocurrency would contribute in this manner.…”

Section: Resultsmentioning

confidence: 99%

“…They include various professionals mainly in the private and public sectors, self‐employed businesses as well as students (Adewale et al, , p. 2150). The wisdom behind conducting the research in this geographical area is that Malaysia with its Islamic financial ecosystem is considered a hub for its neighboring countries in South East Asia in terms of Sharīʿah ‐compliant products (Farooq & Salim, , p. 694; Niyomwittayanont, ). In addition, Malaysian society reflects an ethnic and religious diversity; therefore, studying such a society is vital as a reflection of South East Asia.…”

Section: Methodsmentioning

confidence: 99%

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Acceptance of Sharīʿah‐compliant precious metal‐backed cryptocurrency as an alternative currency: An empirical validation of adoption of innovation theory

Ajouz

Abdullah²,

Kassim

2019

Thunderbird Intl Bus Rev

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In the crypto world, there is a proverbial (and literal) gold rush now occurring. Currently, more than 37 gold-backed cryptocurrency companies have now emerged.Interestingly, some of them also claim to be Sharīʿah-compliant. Introducing precious metal-backed cryptocurrencies is perceived to be an innovation among global payment systems, hampered in part by lack of supporting empirical evidence. Therefore, this research investigates potential users' tendency to adopt a Sharīʿah-compliant precious metal-backed cryptocurrency. As such, this study adopts an extended adoption model, which consists of eight factors. Partial least squares structural equation modeling (PLS-SEM) analysis was conducted on data elicited from economic active residents in Klang Valley from questionnaires. Overall, it was found six out of the eight constructs specified to influence the adoption of precious metal-backed cryptocurrency were statistically significant where 54.5% of the variation in adoption of PMBC can be explained by the structure model provided by this research. It was also found 63.55% of the respondents are willing to adopt precious metal-backed cryptocurrency in their future transactions. K E Y W O R D Sadoption model, cryptocurrency, Malaysia, precious metal, Sharīʿah-compliant

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Section: Resultsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Acceptance of Sharīʿah‐compliant precious metal‐backed cryptocurrency as an alternative currency: An empirical validation of adoption of innovation theory

Ajouz

Abdullah²,

Kassim

2019

Thunderbird Intl Bus Rev

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“…This is because in the era of cryptocurrency, it is important to offer a Shariah-compliant crypto currency and understand the factors that influence potential users' decision in adopting this crypto currency. In addition, Islamic finances are much in their desire to focus on real assets and real economy (Farooq & Selim, 2019). Therefore, this crypto currency would contribute in this manner.…”

Section: Discussionmentioning

confidence: 99%

Potential Users’ Acceptance of Shariah-Compliant Precious Metal Backed Crypto Currency: A Malaysian Perspective

Abuamria¹,

Ajouz²

2020

IJARBSS

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Recent developments in crypto currency have heightened the emergence and development of a new forms of money generally and crypto currency particularly. This development has reached to the precious metal, which is historically known as money. Reusing precious metal as money by benefiting from crypto currencies technology is perceived to be an innovation in the current payment system that abandoned precious metal as money since 1973. Therefore, the aim of this research is to investigate the potential users' tendency to adopt a Shariah-compliant precious metal-backed crypto currency. The methodological approach adopted in this study is a quantitative method using questionnaires that were built based on the original model of innovation diffusion theory, which consists of five factors. The analysis was conducted based on data elicited from 92 questionnaires using PLS-SEM. Overall, the results indicate that four out of the five constructs that specified to affect the adoption of PMBC were statistically significant. 50.4 percent of the differences in the adoption of PMBC can be explained by the structural model provided by this research. Just over half of the respondents (63.35) reported that they are willing to use PMBC in their future transaction. It is recommended that further empirical investigations be undertaken using alternative theories and methods.

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“…However, what is real economy is rarely explained in the literature and generally it is understood as Islamic http://journals.uob.edu.bh finance being asset-linked (asset-based or asset-backed) (Iqbal, 2014;Visser, 2009). However, reducing real economy to mere asset-link is a serious and misleading reductionism (Farooq and Selim, 2017).…”

Section: Islamic Finance and The Real Economymentioning

confidence: 99%

“…Firstly, it is focused on the real economy, where the actual economic activities take place and financial sector primarily plays the facilitating role (Warde, 2010;Ariff and Lewis, 2014). Secondly, Islamic finance transactions are to be generally asset-linked, thus better connecting with the real economy (Farooq and Selim, 2017). Thirdly, it is primarily interested in profit-loss sharing, where risk is also fairly shared among the participants (Harrison and Ibrahim, 2016).…”

Section: Introductionmentioning

confidence: 99%

Sectoral Distribution and Islamic Finance: Comparative Study of Conventional and Islamic Banks in Bahrain

Farooq¹,

Taher²,

Alkhenaizi³

et al. 2018

JIFS

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The proponents of Islamic finance argue that unlike conventional finance it emphasizes the real economy. Such emphasis should be reflected in the sectoral distribution in an economy. In this paper, in light of a conceptualization of the real economy, the sectoral distribution of financial activities of conventional and Islamic banks in Bahrain is explored. The paper uses the data available from the Central Bank of Bahrain (CBB) regarding the sectoral distribution in both conventional and Islamic banks. The breakdown of banks into both retail and wholesale banks as well as onshore and offshore banks is examined to identify any important trends or patterns in light of the conceptualization of the real economy. The analysis of data finds certain concentration in the real estate sector. Islamic banks also have a bias toward consumer finance, which has implications in promoting a debt culture. Several other gaps between the commonly proclaimed merits of Islamic finance and the praxis in reality are also identified. The research is based on a single country, Bahrain, a financial hub for both conventional and Islamic banks. Even though Bahrain has a diversified economy, it is still limited in terms of some key sectors, such as manufacturing and agriculture. Thus, broader study including other countries with major presence of Islamic banks would be the next step in this research. Bias to certain sectors can be problematic in case of a potential crisis. Also, in certain respects, such as bias of Islamic banks toward consumer finance, it might be serving to promote debt culture that many developed countries are already beset with. The research can create better awareness about various patterns of sectoral distribution.

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Conceptualization of the Real Economy and Islamic Finance: Transformation Beyond the Asset-Link Rhetoric

Cited by 6 publications

References 18 publications

Acceptance of Sharīʿah‐compliant precious metal‐backed cryptocurrency as an alternative currency: An empirical validation of adoption of innovation theory

Acceptance of Sharīʿah‐compliant precious metal‐backed cryptocurrency as an alternative currency: An empirical validation of adoption of innovation theory

Potential Users’ Acceptance of Shariah-Compliant Precious Metal Backed Crypto Currency: A Malaysian Perspective

Sectoral Distribution and Islamic Finance: Comparative Study of Conventional and Islamic Banks in Bahrain

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