Islamic “interest-free” bonds-how Islamic are they?
(2024) p.71-85- Abstract
The Islamic financial sector has developed its instruments rapidly since the 1960s, and a Muslim customer can get almost all financial services supplied by the conventional Western type of financial sector through so-called participation banks, which are run, it is said, in compliance with Islamic values and norms. For instance, they collect funds by special methods to finance economic activities, such as interest-free Islamic bonds. However there are no significant differences compared to normal banking understanding. In other words, you will not see serious differences between an account with interest-bearing banking and an account at a participation bank. An interesting feature of the so-called Islamic interest-free bonds is the... (More)
The Islamic financial sector has developed its instruments rapidly since the 1960s, and a Muslim customer can get almost all financial services supplied by the conventional Western type of financial sector through so-called participation banks, which are run, it is said, in compliance with Islamic values and norms. For instance, they collect funds by special methods to finance economic activities, such as interest-free Islamic bonds. However there are no significant differences compared to normal banking understanding. In other words, you will not see serious differences between an account with interest-bearing banking and an account at a participation bank. An interesting feature of the so-called Islamic interest-free bonds is the “predetermined” rate of return or “excess” or “profit” called “rental payment.” A critical question regarding sukuk is Is the process of collecting funds via Islamic interest-free bonds subject to rental payment at a predetermined rate compliant with Islamic values? An alternative approach in terms of “earned” vs. “unearned” incomes may change the nature of the analysis and conclusions radically.
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- author
- Gürak, Hasan LU
- organization
- publishing date
- 2024
- type
- Chapter in Book/Report/Conference proceeding
- publication status
- published
- subject
- host publication
- The Law of Riba in Islamic Banking : Conventional and Unconventional Approaches to Interest-Free Financing - Conventional and Unconventional Approaches to Interest-Free Financing
- pages
- 15 pages
- publisher
- Taylor & Francis
- external identifiers
-
- scopus:85190183633
- ISBN
- 9781003860990
- 9781032631516
- language
- English
- LU publication?
- yes
- id
- be4af464-365e-420f-8463-c78ff219b9bd
- date added to LUP
- 2025-01-15 14:30:10
- date last changed
- 2025-04-23 22:17:11
@inbook{be4af464-365e-420f-8463-c78ff219b9bd,
abstract = {{<p>The Islamic financial sector has developed its instruments rapidly since the 1960s, and a Muslim customer can get almost all financial services supplied by the conventional Western type of financial sector through so-called participation banks, which are run, it is said, in compliance with Islamic values and norms. For instance, they collect funds by special methods to finance economic activities, such as interest-free Islamic bonds. However there are no significant differences compared to normal banking understanding. In other words, you will not see serious differences between an account with interest-bearing banking and an account at a participation bank. An interesting feature of the so-called Islamic interest-free bonds is the “predetermined” rate of return or “excess” or “profit” called “rental payment.” A critical question regarding sukuk is Is the process of collecting funds via Islamic interest-free bonds subject to rental payment at a predetermined rate compliant with Islamic values? An alternative approach in terms of “earned” vs. “unearned” incomes may change the nature of the analysis and conclusions radically.</p>}},
author = {{Gürak, Hasan}},
booktitle = {{The Law of Riba in Islamic Banking : Conventional and Unconventional Approaches to Interest-Free Financing}},
isbn = {{9781003860990}},
language = {{eng}},
pages = {{71--85}},
publisher = {{Taylor & Francis}},
title = {{Islamic “interest-free” bonds-how Islamic are they?}},
year = {{2024}},
}