One example of the sale of debt is selling receivables to another party, but, is it permissible in Islamic finance? Such a transaction likely occurs when the receivable holder needs liquidity while it is not yet due. The trading of Negotiable Islamic Certificate of Deposit (NICD) in Malaysia is another example of the sale of …
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Cash Waqf is currently becoming popular as it can contribute to develop the microfinance society. This article discusses the development of cash waqf in Indonesia jurisdiction particularly. We begin to briefly introduce the definition of waqf, its types, and cash waqf. Then, we present the growth of cash waqf in Indonesia and the role of …
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Goldman Sachs, JP. Morgan, Wells Fargo, etc. are examples of investment banks that made huge money in the capital market. The investment bank is a financial institution that operates within a capital market system to facilitate all related matters of transaction. This fact makes an investment bank becomes a very lucrative business in the field …
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The time value of money is one of the essential principles in investment, both conventional and Islamic. However, it stems from the conventional finance point of view that presumes today’s money is more favorable to people than future dates. To illustrate, a person will prefer to receive USD 100 today than a year later. This …
This article will discuss two types of specific risks in the Islamic finance industry. As we know, Islamic finance is different from conventional finance as it has specific rulings and characteristics. In general, we learn various types of risks in finance, such as business risk, credit risk, market risk, liquidity risk, legal risk, operational risk, …
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The relationship between risk and return in Islamic finance involves these two important shariah principles. They are al ghunm bil ghurm and al kharraj bid daman. Both principles are Islamic legal maxims that build the fundamental Islamic law of contracts. 1. Al ghunm bil ghurm Al ghunm bil ghurm refers to the principle in which …
Risk and Return in Islamic Finance: 2 Important Shariah Principles Read More »
What is a basic fixed cash flow Sukuk and how to value it? Sukuk is an Arabic term as a plural form of sakk which means investment or trustee certificate. In the modern-day, Sukuk represents an alternative of bond that pays fixed income to the holders. Given the similarity at a glance, Sukuk is essentially …
Owning stocks is subject to market price volatility risk, and hence if we use an option contract to hedge such risk, is it permissible in shariah? Before discussing whether a stock option is halal, we should know its nature and why people use it. What is an option contract? An option is a contract that …
Is Option Contract Haram to Hedge Desired Stocks Value? Read More »
This article will discuss 5 important risks for every investor. However, firstly let us understand the definition of risk. Every investment takes a risk. In the financial world, risk refers to the probability that an investments’ actual gain will be different from its expected return. It also means a chance of one losing some or …
Financial derivative products could protect our investment from unfavorable events. The profit comes with risk, so the investment also contains several risks. If we invest in foreign currency, we are afraid of the appreciation of the home currency. Similarly, investors in the stock market will not expect the decline of purchased stocks price in the …
Financial Derivative Products and Their Features Read More »