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The Potential of Fintech in Enhancing the Use of Salam Contract in Islamic Banking

International Journal of Islamic Economics and Finance

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Title The Potential of Fintech in Enhancing the Use of Salam Contract in Islamic Banking
 
Creator Muneeza, Aishath
Mustapha, Zakariya
 
Subject Blockchain technology; exceptional contract; fintech; Islamic banking; salam
 
Description An Islamic banking system employs different Shariah contracts to develop and offer products and services in different jurisdictions. One of such contracts is salam which is a forward sale contract. This study aims to examine the practice of salam as an instrument of Islamic banks financing and how technology can be used to enhance its application thereto. A qualitative approach is employed in this research where primary data sources on salam contract were examined, along with content analysis of relevant secondary data sources on the contract and how its practiced in Islamic banking. In furtherance of that practice, salam instrument can be leveraged on technology, mainly the blockchain. This would enhance its operation by bringing about automation, transparency, fair pricing, saving time and cost as well as enabling widespread access of Islamic bank financing to smaller enterprises to promote societal well-being. This research reveals that salam instruments cater for different clients’ needs and enjoy patronage in many jurisdictions even though it is currently the least utilized contract in Islamic banks financing due to divergence of juristic views on its general permissibility. Also, salam is an exceptional contract for Islamic banks financing of agriculture and related enterprises among others. The research offers an insight for Islamic banks to leverage on technology in utilizing salam contract towards providing financing for variety of clients, particularly poor farmers. Similarly, jurisdictions not practicing salam stand to learn of the benefits of using salam to offer technologically innovative yet affordable Islamic banking products/services for variety of clients.
 
Publisher Universitas Muhammadiyah Yogyakarta
 
Contributor none
 
Date 2020-07-27
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier https://journal.umy.ac.id/index.php/ijief/article/view/8685
10.18196/ijief.3231
 
Source International Journal of Islamic Economics and Finance (IJIEF); Vol 3, No 2 (2020): IJIEF Vol 3 (2), July 2020; 305-334
2622-4372
2622-3562
 
Language eng
 
Relation https://journal.umy.ac.id/index.php/ijief/article/view/8685/5483
 
Rights Copyright (c) 2020 International Journal of Islamic Economics and Finance (IJIEF)
http://creativecommons.org/licenses/by-sa/4.0