The ontological law of Tawhid contra ‘Shari’ah-compliance’ in Islamic portfolio finance

Purpose: The purpose of this study/paper is the generalized ontological law of monotheism (unity of knowledge) and its functioning in the financial world system is summarized and contrasted with the recent conception of “shari’ah-compliance”. Thereby, some specific rulings of shari’ah-compliance in...

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Main Author: Choudhury, Masudul Alam
Format: Article
Published: Emerald 2018
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Online Access:http://eprints.um.edu.my/22194/
https://doi.org/10.1108/IJLMA-01-2017-0001
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spelling my.um.eprints.221942019-09-04T02:38:28Z http://eprints.um.edu.my/22194/ The ontological law of Tawhid contra ‘Shari’ah-compliance’ in Islamic portfolio finance Choudhury, Masudul Alam BP Islam. Bahaism. Theosophy, etc HG Finance Purpose: The purpose of this study/paper is the generalized ontological law of monotheism (unity of knowledge) and its functioning in the financial world system is summarized and contrasted with the recent conception of “shari’ah-compliance”. Thereby, some specific rulings of shari’ah-compliance in Islamic finance are critically annulled. The principal problem of the inability of shari’ah-compliance in the formalism of rate-setting and debt cancellation is pointed out in analytical ways. The alternative valuation models in the light of the Tawhidi ontological law are formalized. Many important issues are examined in analytical and Tawhidi authentic ways of Islamic law contra to shari’ah-compliance. Design/methodology/approach: The epistemological approach commencing from the Tawhidi ontological law is used as the premise of developing analytical formalism to counter the irrelevant rulings done by the field of shari’ah compliance. Thereby, endogenous moral and ethical foundations are studied in deriving analytical finance models of asset valuation, rate-determination and debt cancellation. Findings: Substantive analytical results are derived for intellection in the area of the primal ontological law of Tawhid that negates many of the rulings framed up in shari’ah-compliance area of Islamic law. These results can guide financial academia, practitioners and policymakers. Research limitations/implications: The paper can be expanded subsequently to the area of analytical Islamic finance in general by further investigating the Modigliani and Miller theorem on optimal debt-equity structure of corporate finance. An introduction to this study is provided in this paper as a starting point of dealing with the debt problem of shari’ah-compliance. Practical implications: The paper presents important guidance as input for the rulings of shari’ah-compliance idea held by shari’ah advisory boards and similar institutions presently operating at the financial level. Social implications: The paper presents a subtle transformation of the social and financial order in the light of the Tawhidi ontological law quite differently from the way that shari’ah-compliance envisions. Originality/value: The theoretical and projected applied perspectives in analytical finance presented in this paper provide a methodological worldview for all areas of social finance with ethical consciousness. Such analytical approach is much needed today in the reconstruction of global finance in the scale of ethics and away from the sole focus on capital market efficiency. Emerald 2018 Article PeerReviewed Choudhury, Masudul Alam (2018) The ontological law of Tawhid contra ‘Shari’ah-compliance’ in Islamic portfolio finance. International Journal of Law and Management, 60 (2). pp. 413-434. ISSN 1754-243X https://doi.org/10.1108/IJLMA-01-2017-0001 doi:10.1108/IJLMA-01-2017-0001
institution Universiti Malaya
building UM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Malaya
content_source UM Research Repository
url_provider http://eprints.um.edu.my/
topic BP Islam. Bahaism. Theosophy, etc
HG Finance
spellingShingle BP Islam. Bahaism. Theosophy, etc
HG Finance
Choudhury, Masudul Alam
The ontological law of Tawhid contra ‘Shari’ah-compliance’ in Islamic portfolio finance
description Purpose: The purpose of this study/paper is the generalized ontological law of monotheism (unity of knowledge) and its functioning in the financial world system is summarized and contrasted with the recent conception of “shari’ah-compliance”. Thereby, some specific rulings of shari’ah-compliance in Islamic finance are critically annulled. The principal problem of the inability of shari’ah-compliance in the formalism of rate-setting and debt cancellation is pointed out in analytical ways. The alternative valuation models in the light of the Tawhidi ontological law are formalized. Many important issues are examined in analytical and Tawhidi authentic ways of Islamic law contra to shari’ah-compliance. Design/methodology/approach: The epistemological approach commencing from the Tawhidi ontological law is used as the premise of developing analytical formalism to counter the irrelevant rulings done by the field of shari’ah compliance. Thereby, endogenous moral and ethical foundations are studied in deriving analytical finance models of asset valuation, rate-determination and debt cancellation. Findings: Substantive analytical results are derived for intellection in the area of the primal ontological law of Tawhid that negates many of the rulings framed up in shari’ah-compliance area of Islamic law. These results can guide financial academia, practitioners and policymakers. Research limitations/implications: The paper can be expanded subsequently to the area of analytical Islamic finance in general by further investigating the Modigliani and Miller theorem on optimal debt-equity structure of corporate finance. An introduction to this study is provided in this paper as a starting point of dealing with the debt problem of shari’ah-compliance. Practical implications: The paper presents important guidance as input for the rulings of shari’ah-compliance idea held by shari’ah advisory boards and similar institutions presently operating at the financial level. Social implications: The paper presents a subtle transformation of the social and financial order in the light of the Tawhidi ontological law quite differently from the way that shari’ah-compliance envisions. Originality/value: The theoretical and projected applied perspectives in analytical finance presented in this paper provide a methodological worldview for all areas of social finance with ethical consciousness. Such analytical approach is much needed today in the reconstruction of global finance in the scale of ethics and away from the sole focus on capital market efficiency.
format Article
author Choudhury, Masudul Alam
author_facet Choudhury, Masudul Alam
author_sort Choudhury, Masudul Alam
title The ontological law of Tawhid contra ‘Shari’ah-compliance’ in Islamic portfolio finance
title_short The ontological law of Tawhid contra ‘Shari’ah-compliance’ in Islamic portfolio finance
title_full The ontological law of Tawhid contra ‘Shari’ah-compliance’ in Islamic portfolio finance
title_fullStr The ontological law of Tawhid contra ‘Shari’ah-compliance’ in Islamic portfolio finance
title_full_unstemmed The ontological law of Tawhid contra ‘Shari’ah-compliance’ in Islamic portfolio finance
title_sort ontological law of tawhid contra ‘shari’ah-compliance’ in islamic portfolio finance
publisher Emerald
publishDate 2018
url http://eprints.um.edu.my/22194/
https://doi.org/10.1108/IJLMA-01-2017-0001
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