nep-isf New Economics Papers
on Islamic Finance
Issue of 2018‒07‒23
eight papers chosen by
Halimatun Aris
Bangor University

  1. Ibn Qayyim al-Jawziyyah’s Usury Concept By Gunarso, Gatot Hadi
  2. Measurement of the displaced commercial risk in Islamic Banks By Kaouther Toumi; Jean-Laurent Viviani; Zeinab Chayeh
  3. Market Mechanism in the View of Ibn Taymiyyah By Pancarini, Ans Shinta
  4. Economic Legal Minds By Al-Ghazali By Jeri, Ramsito
  5. Money Function and Money Banking by Ibnu Taimiyah By Khalamillah, Fahmi
  6. Public expenditure management in Indonesia: Islamic economic review on state budget 2017 By Jaelani, Aan
  7. Countries, economy and markets: Analysis of hisbah institution and its contribution to Al-Mawardi perspective By Nashihah, Faidatun
  8. The concept of economic thought Ibn Khaldun By Mujahidin, Muhamad

  1. By: Gunarso, Gatot Hadi
    Abstract: This article uses a literature review approach focusing on explaining how the concept of usury in the view of Ibn al-Qayyim al-jawziyyah. This article asserts that usury is one of the forbidden transactions in Islam because it is recorded in the letter of Al-Baqarah verse 275, In interpreting the verse related usury, Ibn al-Qayyim explains that usury is divided into two namely riba fadl and usury nasiyah. The usury has become a core in conventional banking in modern times better known as flowers.
    Keywords: Ibn Qayyim, Usury Concept, Interest Bank
    JEL: A10 B00 B30
    Date: 2018–06–14
  2. By: Kaouther Toumi (LGCO - Laboratoire Gouvernance et Contrôle Organisationnel - UPS - Université Paul Sabatier - Toulouse 3); Jean-Laurent Viviani (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Zeinab Chayeh (U. Paris 6 - Université Pierre & Marie Curie - Paris 6)
    Abstract: Highlights We identify the displaced commercial risk DCR exposure of Islamic banks. We identify the scenarios of displaced commercial risk exposure to compute the DCR Profits and Losses to Islamic banks shareholders. Scenarios of risk depend on the actual rate of return on investment accounts, the benchmark rate of return and level of existing reserves to mitigate the DCR. We assess the capital charge needed to cover the displaced commercial risk using the Value-at-risk measure of risk, DCR-VaR. We assess the coefficient alpha α CAR-VaR for the capital adequacy ratio for Islamic banks. We consider three methods, the Historical non-parametric VaR, the parametric-VaR and the Extreme Value Theory-VaR. Abstract The objective of the research is to quantify the displaced commercial risk (DCR) based on quantitative finance techniques. We develop an internal model based on the Value-at-risk (VaR) measure of risk to assess the DCR-VaR and the alpha coefficient in the capital adequacy ratio of Islamic banks. We identify first the scenarios of exposure of Islamic banks to DCR that depend on the actual return on unrestricted profit sharing investment accounts (PSIA U), the benchmark return as well as the level of the existing profit equalization reserve (PER) and investment risk reserve (IRR). Second, we quantify the DCR-VaR and the alpha coefficient for a given holding period and for given confidence level. We illustrate the DCR-VaR model on selected Islamic banks from Bahrain. Our model helps to better assess the needed equity to cover the DCR and an accurate capital adequacy ratio for Islamic banks. The model has also policy implications for regulators and the IFSB to develop better guidance on good practices in managing this risk.
    Keywords: Displaced commercial risk, Value-at-risk, Extreme value theory, Profit equalization reserve, Investment risk reserve, Capital adequacy ratio
    Date: 2018–03
  3. By: Pancarini, Ans Shinta
    Abstract: The advancement of the economy is heavily dependent on market conditions. The market brings together the sellers and buyers, to conduct transactions on goods and services (supply and demand). Balance in supply and demand is needed to maintain economic stability. Market urgency attracts the characters to put forward their theories of both Islamic and western thinkers. Islam is a divine religion that brings the benefit of the afterlife. Islam has different views and thoughts about market mechanisms. This thinking precedes what western thinkers have expressed. Ibn Taymiyya reveals five concepts in the development of market mechanisms, namely fair prices, fair markets, fair profit concepts, the concept of fair wages and aims for society. The essence of Ibn Taimiyyah's thought is about the justice of the ummah. Broadly speaking Ibn Khaldun thought of concept on justice.
    Keywords: Ibn Taimiyyah, Market Mechanism, History of Islamic Economics
    JEL: A11 A13 B00 D40 E20
    Date: 2018–03–17
  4. By: Jeri, Ramsito
    Abstract: Al-Ghazali is a scholar whose ideas are concerned with the state of society. Some of his work deals with the improvement of social life at that time. The writing of this article aims to examine the work of Al Ghazali and connect it with the economic and political situation in the life of Al-Ghazali. The method used is the descriptive method. The results show that Al-Ghazali is a scholar who cares about the problems of society, including the economic problems of society.
    Keywords: economic law, al Ghazali, Islamic economy, economic thinking
    JEL: B0 B00
    Date: 2018–03–01
  5. By: Khalamillah, Fahmi
    Abstract: Ibn Taimiyah Is an Islamic thinker and scholar of Harran, Turkey, According to Ibn Taimiyah in terms of money, he said that the main function is as means demand value and as a medium to facilitate the exchange of an item. The method of research in this article using a descriptive method that aims to discuss the function of money and money trading according to Ibn Taimiyah. The results of this study show that Islam has its own concept of the main function of money only as a means of exchange in transactions.
    Keywords: Ibn Taimiyah, Money, Trade
    JEL: B20 E40 E51
    Date: 2018–03–23
  6. By: Jaelani, Aan
    Abstract: This paper discusses the management of public expenditures in Indonesia in State Budget 2017. The data collected from fiscal policy documents, especially about government spending plans in 2017, and then be reviewed by policy analysis, the theory of public expenditures, and the theory of public goods, and compared with the theory of public expenditure in Islamic economics. Public expenditure management in Indonesia has implemented a distribution system that divided public expenditure for central government expenditures, transfers to the regions, and the village fund. In terms of fiscal policy, public expenditure priorities to support the achievement of sustainable economic growth, job creation, poverty reduction, and the reduction of gaps in the welfare of the whole community. In Islamic economics, public expenditure is used to meet the needs of the community based on the principles of general interest derived from the shari'a. Public expenditure on Indonesia's government as an effective tool to divert economic resources and increase the income of society as a whole, and focused on the embodiment of the people's welfare
    Keywords: State budget; fiscal policy; public expenditure; Islamic Economic
    JEL: E62 H11 H41 H5 O23 P5 P50
    Date: 2018–04–10
  7. By: Nashihah, Faidatun
    Abstract: The capitalist economy and the socialist economic history can not actually manifest even the distorted performance associated with economy and nothingness. This article uses a content analysis and historical methods in revealing the Islamic economic history of the issues.
    Keywords: country, market, economy, hisbah, Islamic economy
    JEL: B0 B31 D4 P0
    Date: 2018–03–01
  8. By: Mujahidin, Muhamad
    Abstract: This article describes the economic thinking of Ibn Khaldun. This study uses the historical approach of Islamic economic thinking through textual exegesis (text analysis). The results of this study indicate that the economic thought of Ibn Khaldun explains the concept of multidimensional economy involving various social aspects. Ibn Khaldun's economic concept implies an economic system that requires five components, namely sharia, government, society, ownership, free and fair economic activity.
    Keywords: Islamic Economics, Ibn Khaldun, Social, Fair, Free
    JEL: A10 A11 A13 B00 B11 E20
    Date: 2018–03–02

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