Munich Personal RePEc Archive

Institutional Tawarruq: A Products of Ill Repute in Islamic Finance

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

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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.

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