Islamic Finance

There is a difference of opinion in academic and practitioner circles regarding the social role of Islamic Finance Institutions (IFIs). A structured definition of this social role based on Islamic principles of social equity and on justice due to redistribution of wealth is presented in this study. The role of IFIs as financial institutions that fulfill a collective religious obligation and their position as financial intermediaries are two reasons why IFIs should have a social responsibility. This study gives a practical framework to IFIs to address their social responsibilities.

The productive efficiency of pawnshops concerning their ability to provide and distribute funds to the society (marketability efficiency) is investigated in the study. Data Envelopment Analysis (DEA) using CCR model and BCC model is used to perform efficiency analysis of conventional and Islamic pawnshops. The most productive scale size for pawnshops is also investigated as well as a comparison of the mean efficiency of conventional and Islamic pawnshops is made using independent tests.

The possibilities of applying Bay'Salam contracts in the agriculture sector of Pakistan are investigated in this article. Information regarding crop inputs, output and credit requirements was gathered from farmers in four districts of Punjab province by using a specifically designed survey.

The murabahah mode of financing as an Islamic instrument and contract for MMEs (Micro and Medium sized enterprises) in the working of Baitul Mal Wattamwil (BMT), Yogyakarta, Indonesia is investigated in this study. BMT is a unique Islamic micro finance institution. The practice of murabahah financing products, its procedures and its applications in the BMTs in the light of shari’a rules is examined.

Even though the majority of the Muslims in South Africa do not live below the poverty line, they still have a duty to help the poor.

The paper discusses the economic condition of the peasants in Indonesia in detail and their eligibility for

Mudaraba financing in Indonesian Rural Shari‘a banks gives rise to many agency problems. The project attributes and the Mudaribs’ attributes that are financed by the banks under consideration are investigated in the study.

The paper explores the relationship between the success of an entrepreneur and the success of his/her business. A survey of

MMEs can decrease partnership when acquiring assets and financing complete ventures as suggested by contemporary scholars. Increasing emphasis on equity participation will allow ancillary contracts of ijarah and sale to function independently. Instead of focusing on the calculation of the profit from the capital outlay, the realistic pricing of ijarah rentals and the units should be emphasized as the reality of the underlying contracts. Expenses of the business should be proportionally shared in businesses that are financed on decreasing partnership.

On the deposit side, Islamic banks work on a mudaraba (partnership) contract, where the depositor and the bank are business partners.