Tawarruq and Wa’d as main ingredients of Islamic structured investment: food for thought

Mustaffa Kamil, Nazrol Kamil (2020) Tawarruq and Wa’d as main ingredients of Islamic structured investment: food for thought. International Journal of Economics, Management and Accounting, 18 (1). pp. 255-275. E-ISSN 2462-1420

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Abstract

This article discusses in detail one example of an Islamic structured investment product. The said product is used as an illustration to highlight some issues deemed critical in the development of the wider Islamic finance space. The author humbly submits that convoluted structures, quite common in contemporary Islamic finance, are generally not healthy for the industry and its stakeholders. Opacity in financial dealings not only increases the cost of doing business, it makes risk assessment and management that much more challenging, to both transacting parties and regulators. Some additional perspectives related to the polemic on the practice of tawarruq are also offered. Finally, some thoughts on the widespread usage of wa’d as a somewhat indispensable tool in structuring contemporary Islamic financial instruments as well as the attitude towards risk inherent in structured products vis-à-vis a reasoned Islamic risk-return paradigm are deliberated upon.

Item Type:	Article (Journal)
Additional Information:	4979/81252
Subjects:	H Social Sciences > HG Finance > HG3368 Islamic Banking and Finance
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. Nazrol Kamil Mustaffa Kamil
Date Deposited:	16 Jul 2020 15:10
Last Modified:	01 Apr 2021 10:02
URI:	http://irep.iium.edu.my/id/eprint/81252

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