Potential application of Istisna’ financing in Malaysia

Purpose – This study aims to investigate the potential application of Istisna’ financing in Malaysia. Design/methodology/approach – Using primary data from semi-structured interviews with 17 participants, including Islamic financial institutions (IFIs), regulatory body and property development co...

Full description

Saved in:
Bibliographic Details
Main Authors: Hasmawati, Anisza, Mohamad, Azhar
Format: Article
Language:English
English
English
Published: Emerald 2019
Subjects:
Online Access:http://irep.iium.edu.my/73402/1/73402_Potential%20application%20of%20Istisna%E2%80%99.pdf
http://irep.iium.edu.my/73402/2/73402_Potential%20application%20of%20Istisna%E2%80%99_SCOPUS.pdf
http://irep.iium.edu.my/73402/13/73402_Potential%20application%20of%20Istisna%27%20financing%20in%20Malaysia_wos.pdf
http://irep.iium.edu.my/73402/
https://www.emerald.com/insight/content/doi/10.1108/QRFM-07-2018-0083/full/pdf?title=potential-application-of-italicistisnaitalic-financing-in-malaysia
Tags: Add Tag
No Tags, Be the first to tag this record!
Institution: Universiti Islam Antarabangsa Malaysia
Language: English
English
English
id my.iium.irep.73402
record_format dspace
spelling my.iium.irep.734022020-04-04T14:58:41Z http://irep.iium.edu.my/73402/ Potential application of Istisna’ financing in Malaysia Hasmawati, Anisza Mohamad, Azhar HG3368 Islamic Banking and Finance Purpose – This study aims to investigate the potential application of Istisna’ financing in Malaysia. Design/methodology/approach – Using primary data from semi-structured interviews with 17 participants, including Islamic financial institutions (IFIs), regulatory body and property development companies, the findings of the study suggest that Istisna’ is perceived as a good contract that has unique features and the potential to be implemented in Malaysia; although, it has only been implemented a little by current businesses, mainly due to its perceived high risks. Findings – The authors find there is a gap between the theory and the actual operation of IFIs in Malaysia – some salient features of an Islamic contract are actually difficult to execute in reality as there are many factors to be considered, such as default risk in Istisna’, legal issues and accounting treatment of Istisna’ contract. This study recommends the further development of Istisna’ in Malaysia due to its huge potential in the Islamic financial market there. Practical implications – Istisna’ is a unique type of sale contract that is used in the manufacturing sectors where the sale of a commodity is transacted before the commodity exists. In practice, data from the Central Bank of Malaysia show that Istisna’ financing is scarce. Originality/value – The study differs from previous research studies on Istisna’ – to the best of the authors’ knowledge, this is the first study to provide evidence the real thoughts of IFIs with regard on Istisna’ specifically and IFIs’ operations in general. Previous studies related to Istisna’ have limited scopes, as they have mainly explored the theoretical nature of the contract, issues of permissibility from the Shariah perspective and its comparability with other IFIs product such as Salam. In this study, from respondents’ views, the authors notice actually there is a gap between theory and the real practice of Islamic finance. An Islamic finance instrument may be an ideal choice to customers but not very popular from IFIs’ sides. In this respect, the authors add to the growing literature of Istisna’ by asking the direct questions to IFIs and the authors get honest responses pertaining to default risk, legal issues and accounting treatment. Emerald 2019-05-07 Article PeerReviewed application/pdf en http://irep.iium.edu.my/73402/1/73402_Potential%20application%20of%20Istisna%E2%80%99.pdf application/pdf en http://irep.iium.edu.my/73402/2/73402_Potential%20application%20of%20Istisna%E2%80%99_SCOPUS.pdf application/pdf en http://irep.iium.edu.my/73402/13/73402_Potential%20application%20of%20Istisna%27%20financing%20in%20Malaysia_wos.pdf Hasmawati, Anisza and Mohamad, Azhar (2019) Potential application of Istisna’ financing in Malaysia. Qualitative Research in Financial Markets, 11 (2). pp. 211-226. ISSN 1755-4179 https://www.emerald.com/insight/content/doi/10.1108/QRFM-07-2018-0083/full/pdf?title=potential-application-of-italicistisnaitalic-financing-in-malaysia 10.1108/QRFM-07-2018-0083
institution Universiti Islam Antarabangsa Malaysia
building IIUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider International Islamic University Malaysia
content_source IIUM Repository (IREP)
url_provider http://irep.iium.edu.my/
language English
English
English
topic HG3368 Islamic Banking and Finance
spellingShingle HG3368 Islamic Banking and Finance
Hasmawati, Anisza
Mohamad, Azhar
Potential application of Istisna’ financing in Malaysia
description Purpose – This study aims to investigate the potential application of Istisna’ financing in Malaysia. Design/methodology/approach – Using primary data from semi-structured interviews with 17 participants, including Islamic financial institutions (IFIs), regulatory body and property development companies, the findings of the study suggest that Istisna’ is perceived as a good contract that has unique features and the potential to be implemented in Malaysia; although, it has only been implemented a little by current businesses, mainly due to its perceived high risks. Findings – The authors find there is a gap between the theory and the actual operation of IFIs in Malaysia – some salient features of an Islamic contract are actually difficult to execute in reality as there are many factors to be considered, such as default risk in Istisna’, legal issues and accounting treatment of Istisna’ contract. This study recommends the further development of Istisna’ in Malaysia due to its huge potential in the Islamic financial market there. Practical implications – Istisna’ is a unique type of sale contract that is used in the manufacturing sectors where the sale of a commodity is transacted before the commodity exists. In practice, data from the Central Bank of Malaysia show that Istisna’ financing is scarce. Originality/value – The study differs from previous research studies on Istisna’ – to the best of the authors’ knowledge, this is the first study to provide evidence the real thoughts of IFIs with regard on Istisna’ specifically and IFIs’ operations in general. Previous studies related to Istisna’ have limited scopes, as they have mainly explored the theoretical nature of the contract, issues of permissibility from the Shariah perspective and its comparability with other IFIs product such as Salam. In this study, from respondents’ views, the authors notice actually there is a gap between theory and the real practice of Islamic finance. An Islamic finance instrument may be an ideal choice to customers but not very popular from IFIs’ sides. In this respect, the authors add to the growing literature of Istisna’ by asking the direct questions to IFIs and the authors get honest responses pertaining to default risk, legal issues and accounting treatment.
format Article
author Hasmawati, Anisza
Mohamad, Azhar
author_facet Hasmawati, Anisza
Mohamad, Azhar
author_sort Hasmawati, Anisza
title Potential application of Istisna’ financing in Malaysia
title_short Potential application of Istisna’ financing in Malaysia
title_full Potential application of Istisna’ financing in Malaysia
title_fullStr Potential application of Istisna’ financing in Malaysia
title_full_unstemmed Potential application of Istisna’ financing in Malaysia
title_sort potential application of istisna’ financing in malaysia
publisher Emerald
publishDate 2019
url http://irep.iium.edu.my/73402/1/73402_Potential%20application%20of%20Istisna%E2%80%99.pdf
http://irep.iium.edu.my/73402/2/73402_Potential%20application%20of%20Istisna%E2%80%99_SCOPUS.pdf
http://irep.iium.edu.my/73402/13/73402_Potential%20application%20of%20Istisna%27%20financing%20in%20Malaysia_wos.pdf
http://irep.iium.edu.my/73402/
https://www.emerald.com/insight/content/doi/10.1108/QRFM-07-2018-0083/full/pdf?title=potential-application-of-italicistisnaitalic-financing-in-malaysia
_version_ 1665894774014476288