Does Musharakah Mutanaqisah converge with Bai Bithamin Ajil and conventional loans?

Kashi, Aghilasse and Mohamad, Azhar (2017) Does Musharakah Mutanaqisah converge with Bai Bithamin Ajil and conventional loans? International Journal of Law and Management, 59 (5). pp. 740-755. ISSN 1754-243X E-ISSN 1754-2448

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Abstract

This research examines the disputable Shari’ah and the technical issues underlying the implementation of the Musharakah Mutanaqisah Partnership (MMP) model in home financing by Islamic banks in Malaysia. It assesses whether this much-lauded facility is in line with Shari’ah rules and whether it diverges from or converges to the Bay’ Bithaman Ajil (BBA) and conventional loan models. This study uses a qualitative methodology based on in-depth interviews to achieve these objectives. With regard to the issue of convergence, it is obvious from the interviewees’ perceptions that the MMP model is converging with the BBA and conventional housing loans. Many factors were mentioned as the reasons for this convergence, with the most important being that Islamic banks are not operating in a fully fledged Islamic financial system, reducing the risk weightage and regulatory restrictions. As for Shari’ah compliance, controversy may result from the enhanced features that structure this facility. Though these enhanced features are Shari’ah compliant, it transforms the MMP model into a debt rather than a partnership contract.

Item Type:	Article (Journal)
Additional Information:	3334/58478
Uncontrolled Keywords:	Banks, Debt financing, Islamic finance, Musharakah Mutanaqisah, Equity capital financing, Shari’ah compliance
Subjects:	H Social Sciences > HG Finance > HG1501 Banking
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Kulliyyah of Economics and Management Sciences > Department of Finance
Depositing User:	Dr Azhar Mohamad
Date Deposited:	25 Sep 2017 12:36
Last Modified:	18 Apr 2018 14:38
URI:	http://irep.iium.edu.my/id/eprint/58478

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