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Shari'ah compliance of foreign exchange transactions in the islamic banking institutions

Shamsudin, Mohidin Yahya (2017) Shari'ah compliance of foreign exchange transactions in the islamic banking institutions. PhD thesis, Universiti Teknologi Malaysia, Faculty of Islamic Civilization.

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Abstract

The subject of foreign exchange transactions in the Islamic banking institutions with particular focus on shariʻah compliance is the central theme of this research. The issue of shariʻah compliance has always been at the forefront of the Islamic banking and finance intellectual and academic discourses. Basically, the conducts of foreign exchange transactions in the conventional as well as the Islamic banking institutions are ostensibly similar. The issue is therefore, what differentiate between these two Forex transactions? That Islamic Forex differs from the conventional Forex and does not contravene the Islamic laws. This study sought to ascertain the permissibility of foreign exchange transactions from the perspective of shariʻah. Next the study examines differences in foreign exchange rulings in the Malaysian Islamic banking against the fatwa issued by other jurisdictions; the extent to which uniformity or differences of fatwa issued by different jurisdictions in Malaysia and the Gulf Cooperation Council countries. The study also aims to reconcile the differences and reach a common understanding to standardise methods of foreign exchange transactions in the Islamic banking institutions. This is to ensure that the Islamic rules on foreign exchange transactions can be institutionalised to become a system that is universal, acceptable and able to meet the needs of the industry players. Employing the methodology used by the International Shariʻah Research Academy (ISRA), the Islamic principles related to Forex trading are examined to determine their sources and evidences and then the fatwa from various jurisdictions are compared to ascertain their similarities and differences. The study found that the shariʻah principle unanimously accepted by all jurisdictions is Bai’ al-Sarf, while other shariʻah principles related to Waád and Tawarruq are to facilitate the execution of Bai’ al-Sarf at the end of the respective transactions. The study has contributed to the Islamic banking literature, particularly on the subject of foreign exchange transactions; that foreign exchange transactions as practiced by the Islamic banking institutions in Malaysia and other countries are legitimate transactions from the perspective of shariʻah. The fact that a truly independent and competent Islamic financial system is needed makes the standardisation of procedures and the establishment of an independent legal framework for Islamic foreign exchange necessary and timely.

Item Type:Thesis (PhD)
Additional Information:Thesis (Ph.D (Fiqh Sains dan Teknologi)) - Universiti Teknologi Malaysia, 2017; Supervisor : Assoc. Prof. Dr. Hussin Salamon
Subjects:B Philosophy. Psychology. Religion > BP Islam. Bahaism. Theosophy, etc
Divisions:Islamic Civilisation
ID Code:79147
Deposited By: Widya Wahid
Deposited On:30 Sep 2018 16:23
Last Modified:30 Sep 2018 16:23

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