Shariah parameters in islamic structured products

Shariah parameters in islamic structured products. Journal of Contemporary Islamic Law, 3 (1). pp. 16-26. ISSN 0127-788X (2018)


Nowadays, various of Islamic structured products are offered by most Islamic banking in Malaysia to meet the demads of investors that need products strictly adhere to the shariah principles. However, the existence of Islamic structured products led to the issue of these products are new due to the demands are still in its early stage and controversial in nature. Due to Islamic structured products are still controversial, especially in terms of almost similar to conventional structured products, thus a study of the shariah parameters is needed as of now, there is no shariah parameter specifically for Islamic structured products. Thus, the objective of this article is to identify the shariah parameters that exist in Islamic structured products in Malaysia. This article is a qualitative study that uses a content analysis approach to obtain the required information. The findings suggest that shariah parameters related to the principle of muḍārabah in Islamic structured products, such as these products should meet the essential elements of muḍārabah contract are parties, ṣighah, transaction management, capital, profit sharing ratio (PSR), loss, guarantee and contract cancellation along with special conditions and so on. Meanwhile, for the shariah parameters related to ᶜurbūn principle, Islamic structured products must meet the important features of ᶜurbūn contract that are buyer, seller, the price of goods, duration, ownership so on. Therefore, many banks should adhere to the suggested shariah parameters in offering Islamic structured products to Muslim investors. That is important in order to raise the reputation of Islamic banking as well as to gain investors’ confidence on these products. Hence, this study is vital in ensuring that Islamic structured products are able to compete with existing conventional structured products on the market, both nationally and globally. As the market has become more complex, there must be a holistic shariah parameter that enables Islamic structured products to operate more efficiently while meeting shariah requirement.

Item Type: Article
Keywords: Shariah parameters, Islamic structured products, Muḍarabah, Urbūn
Taxonomy: By Subject > Law > Malaysian Islamic Legal System
Local Content Hub: Subjects > Law
Depositing User: Eza Eliana Abdul Wahid
Date Deposited: 15 Sep 2021 09:27
Last Modified: 15 Sep 2021 09:27
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