DETERMINANTS OF VIABLE ASSETS FOR THE DEVELOPMENT OF ISLAMIC FINANCE PRODUCTS

Mediu Writers

Abstract


There have been increasing contentions on the way Islamic banking products are developed in the market. There seems to be an implicit majority view that Islamic finance products are replica of the conventional ones. Whereas many studies have focused on the technicalities of developing these Islamic finance products, the question of what determines a viable asset for these products remain largely neglected. The present study aims at exploring modern juristic views on the concept and characteristics of an asset from an Islamic perspective in the current financial setting in order to arrive at a definition under which the development of certain Islamic finance products is possible. The study adopts the inductive approach to present views of scholars in the Islamic heritage, in books of contemporary jurisprudence, traditional finance, other relevant research and studies that are conducted on the topic of asset. The study also adopts the comparative and analytical approaches to the views of the various scholars under review to arrive at a clear concept of an asset. In this study, the term “asset” is attributed to anything tangible and non- tangible that has a lawful benefit within the boundaries of the Shariah, common law and accepted custom, and can be disposed of within these boundaries. The study adopts the theory of asset possession that is based on three elements: existence of financial value in the item, fulfillment of the ownership of the plaintiff in the item and the plaintiffs’ right and ability to use the item. The author hypothesized that Islamic finance products can be developed based on anything that fulfils the identified characteristics of an asset as long as it does not lead to prohibition. The study provides some Shariah guidelines to the determinants and uses of assets in every stage of Islamic finance product development.

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