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IWAD AS A REQUIREMENT OF LAWFUL SALE: A CRITICAL ANALYSIS

International Journal of Economics, Management and Accounting

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Title IWAD AS A REQUIREMENT OF LAWFUL SALE: A CRITICAL ANALYSIS
 
Creator Rosly, Saiful Azhar
 
Description This paper will argue that replacing riba with al-bayc does not mean that the latter can imply any form of sale (al-bayc) to justify Islamic legitimacy. Apart from the prohibition of uncertainties (gharar) in sale, the requirement of an equivalent countervalue (ciwad) must also be met. Risk (ghurm) and liability (daman) after sale and value-addition or effort (ikhtiyar) are the principal components of ciwad. As such, any increase from sale must contain ciwad, otherwise riba is implicated. In classical Islamic commercial contracts such as ijarah, salam and mudarabah, ciwad is evident. However, the contracts of credit of al-murabahah or al-bayc bithaman ajil are widely used by Islamic banking practitioners. To prove Islamic legitimacy, this contract must show that the financiers assume the risk of ownership in making the sale. It must also show evidence that the seller is liable to the option of defect (khiyar al-cayb). The same holds for bayc al-cinah and bayc al-dayn which are also widely used in Islamic money and capital markets in some Muslim countries.JEL classification: G20, K39, Z12Key words: Islamic banking, Iwad, Riba
 
Publisher Kulliyyah of Economics and Management Sciences
 
Date 2013-02-27
 
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/72
 
Source International Journal of Economics, Management and Accounting; Vol 9 No 2 (2001)
2462-1420
 
Language eng
 
Relation http://journals.iium.edu.my/enmjournal/index.php/enmj/article/view/72/55