Institutional Tawarruq: A Products of Ill Repute in Islamic Finance

Al-Jarhi, Mabid (2011): Institutional Tawarruq: A Products of Ill Repute in Islamic Finance.

Abstract

Tawarruq is a form of revisionism that replaces the Islamic allocation criteria with conventional ones, while maintaining a symbolic badge of Islamic finance attached to the whole process. It is unfortunate that the successful expansion of Islamic finance is accompanied with challenges that threaten to suffocate the whole process under the guise of financial innovation. In this paper, we intend to show that institutional Tawarruq falls outside the paradigm of Islamic finance. Its use, if predominant, can be precipitous, leading to impose a conventional model onto Islamic finance and therefore could make it an exercise in futility.

• Item Type: MPRA Paper
• Language: English
• Keywords: Islamic finance, Tawarruq, Islamic finance paradigm, Murabaha, artifice,
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services

References

1. Mabid Ali Al-Jarhi (2004), “Islamic Finance: An Efficient & Equitable Option,”

2. Mabid Ali Al-Jarhi (2003), “Islamic Banks & Universal Banks: Need For Leveled Playing Field,” the International Seminar on Islamic Banking: Risk Management, Regulation and Supervision, the Ministry Finance Indonesia, the Central Bank Indonesia and the Islamic Research and Training Institute (Member of IDB Group), Jakarta, Indonesia, September 30 - October 2. http://www.iaie.net/mabid/ISLAMIC%20&%20UNIVERSAL%20BANKS.pdf

3. Mabid Ali Al-Jarhi (2005), “Islamic Finance and Development,” in Munawar Iqbal and Ausaf Ahmad, Islamic Finance and Economic Development, Palgrave, http://www.iaie.net/mabid/Islamic%20Finance%20&%20Development.pdf

4. Wayne A.M. Visser and Alastair McIntosh (1998), “A Short Review of the Historical Critique of Usury,” Accounting, Business & Financial History, 8:2, Routledge, London, July 1998, pp. 175-189. http://www.alastairmcintosh.com/articles/1998_usury.htm.