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A framework for determination of actual costs in Islamic financing products

Islamic banking commonly considered as an alternative to the conventional banking system, conducts its business based on certain financial contracts in order to attain profit, while doing away with the element of interest (riba). Among the services offered by Islamic financial institutions (IFI) are...

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Main Authors: Mohd Noor, Azman, Haron, Muhamad Nasir
Format: Article
Language:English
Published: IIUM Press 2016
Subjects:
HG Finance
Online Access:http://irep.iium.edu.my/53385/1/53385_A%20framework%20for%20determination%20of%20actual%20costs%20in%20Islamic%20financing%20products.pdf
http://irep.iium.edu.my/53385/
http://journals.iium.edu.my/iiibf-journal/index.php/jif/article/view/126
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spelling my.iium.irep.533852016-12-06T06:47:35Z http://irep.iium.edu.my/53385/ A framework for determination of actual costs in Islamic financing products Mohd Noor, Azman Haron, Muhamad Nasir HG Finance Islamic banking commonly considered as an alternative to the conventional banking system, conducts its business based on certain financial contracts in order to attain profit, while doing away with the element of interest (riba). Among the services offered by Islamic financial institutions (IFI) are financing products and fee-based services to generate profits free from interests and other non-permissible incomes. The fee-based services conducted by Islamic banks may raise some Shari’ah issues such as the practice of charging a fee on services related to loan (qard) facility. Similarly, in financing activities, the IFI also imposes some amount of compensation or related charges in the case of late payment or default events for such financing. This paper aims to discuss the mechanism to determine the calculation of such actual charges and fees from Shari’ah perspective. Nevertheless, this paper does not intend to discuss the issue of “pricing” for Islamic financial products to determine its sales price and profit margin. This paper proposes Shari’ah compliance parameters on the computation of the actual costs for some related financing products offered by Islamic financial institutions. IIUM Press 2016 Article REM application/pdf en http://irep.iium.edu.my/53385/1/53385_A%20framework%20for%20determination%20of%20actual%20costs%20in%20Islamic%20financing%20products.pdf Mohd Noor, Azman and Haron, Muhamad Nasir (2016) A framework for determination of actual costs in Islamic financing products. Journal of Islamic Finance, 5 (2). pp. 37-52. ISSN 2289-2109 http://journals.iium.edu.my/iiibf-journal/index.php/jif/article/view/126
institution Universiti Islam Antarabangsa Malaysia
building IIUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider International Islamic University Malaysia
content_source IIUM Repository (IREP)
url_provider http://irep.iium.edu.my/
language English
topic HG Finance
spellingShingle HG Finance
Mohd Noor, Azman
Haron, Muhamad Nasir
A framework for determination of actual costs in Islamic financing products
description Islamic banking commonly considered as an alternative to the conventional banking system, conducts its business based on certain financial contracts in order to attain profit, while doing away with the element of interest (riba). Among the services offered by Islamic financial institutions (IFI) are financing products and fee-based services to generate profits free from interests and other non-permissible incomes. The fee-based services conducted by Islamic banks may raise some Shari’ah issues such as the practice of charging a fee on services related to loan (qard) facility. Similarly, in financing activities, the IFI also imposes some amount of compensation or related charges in the case of late payment or default events for such financing. This paper aims to discuss the mechanism to determine the calculation of such actual charges and fees from Shari’ah perspective. Nevertheless, this paper does not intend to discuss the issue of “pricing” for Islamic financial products to determine its sales price and profit margin. This paper proposes Shari’ah compliance parameters on the computation of the actual costs for some related financing products offered by Islamic financial institutions.
format Article
author Mohd Noor, Azman
Haron, Muhamad Nasir
author_facet Mohd Noor, Azman
Haron, Muhamad Nasir
author_sort Mohd Noor, Azman
title A framework for determination of actual costs in Islamic financing products
title_short A framework for determination of actual costs in Islamic financing products
title_full A framework for determination of actual costs in Islamic financing products
title_fullStr A framework for determination of actual costs in Islamic financing products
title_full_unstemmed A framework for determination of actual costs in Islamic financing products
title_sort framework for determination of actual costs in islamic financing products
publisher IIUM Press
publishDate 2016
url http://irep.iium.edu.my/53385/1/53385_A%20framework%20for%20determination%20of%20actual%20costs%20in%20Islamic%20financing%20products.pdf
http://irep.iium.edu.my/53385/
http://journals.iium.edu.my/iiibf-journal/index.php/jif/article/view/126
_version_ 1643614341046468608
score 13.211869

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