Default amount determination in Islamic and conventional banking: evidence from banking disputes

Saladin, Witrofoledy and Che Mohd Salleh, Marhanum and Khaliq, Ahmad (2026) Default amount determination in Islamic and conventional banking: evidence from banking disputes. Current Advanced Research on Sharia Finance and Economic Worldwide, 5 (3). pp. 209-220. ISSN 2809-848X E-ISSN 2809-8226

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Abstract

The determination of claim amounts in financing default remains a critical issue, particularly in Islamic banking, where default claim calculations must comply with both legal and Shariah requirements. Despite the growing development of Islamic finance, limited studies have examined whether the methods used to determine claim amounts differ from those applied in conventional banking. This study aims to comparatively analyze the calculation of claim amounts in Islamic and conventional banking disputes. Usinga qualitative approach, this study adopts document review and case analysis methods involving eleven Islamic financing cases and ten conventional banking cases adjudicated by Malaysian courts. The analysis focuses on the approaches adopted by financial institutions and the courts in determining the amounts claimed in financing recovery disputes. The findings reveal that the amounts claimed by Islamic banks in default cases are significantly higher compared to conventional banks. The difference is attributed to variations in contractual structures, financing mechanisms, and methodologies applied in calculating outstanding obligations. The study highlights the need for greater transparency and consistency in claim calculation practices, particularly within Islamic banking to ensure alignment with Shariah principles and legal expectations. This research contributes to the understanding of Islamic banking default case resolution by providing comparative insights into claim determination practices and offers implications for Islamic financial institutions, regulators, legal practitioners, and policymakers.

Item Type:	Article (Journal)
Uncontrolled Keywords:	Conventional Bank, Default Cost, Islamic Bank, Islamic Financing, Malaysia.
Subjects:	BPK Islamic law. Shari'ah. Fiqh > BPK36 Islamic law (General) H Social Sciences > HG Finance H Social Sciences > HG Finance > HG1501 Banking 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. Marhanum Che Mohd Salleh
Date Deposited:	15 Sep 2026 15:15
Last Update:	15 Sep 2026 15:15
Queue Number:	2026-09-Q5093
URI:	http://irep.iium.edu.my/id/eprint/131244
Indexed In:	UNSPECIFIED

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