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ANALYSIS OF THE CONCEPT OF ISLAMIC CHOICE (IKHTIYAR) ON OPPORTUNITY COST AND TIME VALUE OF MONEY IN ISLAMIC ECONOMICS AND FINANCE

International Journal of Economics, Management and Accounting

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Title ANALYSIS OF THE CONCEPT OF ISLAMIC CHOICE (IKHTIYAR) ON OPPORTUNITY COST AND TIME VALUE OF MONEY IN ISLAMIC ECONOMICS AND FINANCE
 
Creator Suharto, Ugi; Department of Banking and Finance, Ahlia University, P.O Box 10878, Manama, Kingdom of Bahrain.
 
Description The paper discusses the concept of Islamic choices (ikhtiyar) and its implication on the opportunity cost’s concept. In choosing between good and bad, there is no opportunity cost involved as the good is the only choice. Opportunity concept only applies when the choice is between two or more good choices. To forgo investments in interest bearing deposits is not an opportunity cost. However, to forgo getting a fixed salary in an employment (ijarah) contract while choosing to work as mudarib has an opportunity cost. This concept of ikhtiyÉr also has an impact on the conception of time value of money as it is derived from the concept of opportunity cost. Compensation for time value of money in loan or receivable is not permitted, while that for credit sale is permissible. Time alone cannot be the basis for compensation and counter-value . It must be attached to other factors, such as guarantee, effort, and risk. Without meeting these requirements in credit sale, the sale such as murÉbaÍah would become an invalid  sale, which must not be chosen by Islamic banks.
 
Publisher Kulliyyah of Economics and Management Sciences
 
Contributor —
 
Date 2014-12-31
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/269
 
Source International Journal of Economics, Management and Accounting; Vol 22, No 2 (2014)
 
Language eng
 
Relation http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/269/181