Tier 2 Capital Instruments under Basel III: A Sharīʿah Viewpoint

in Arab Law Quarterly
Restricted Access
Get Access to Full Text
Rent on DeepDyve

Have an Access Token?

Enter your access token to activate and access content online.

Please login and go to your personal user account to enter your access token.


Have Institutional Access?

Access content through your institution. Any other coaching guidance?



Basel III has redefined the criteria for regulatory capital instruments. Accordingly, Islamic banking institutions (IBIs) have to consider the issuance of instruments that would meet both the objectives of Basel III and Sharīʿah requirements. This research particularly aims to compare the regulatory requirements for issuing Tier-2 (T2) capital instruments as defined by Basel III, Bank Negara Malaysia (BNM) and IFSB-15. In this regard, the research examines the Sharīʿah issues related to subordination and conversion arising in exchange-based contracts (such as murābaḥah and iǧārah ṣukūk) and equity-based contracts (such as muḍārabah and wakālah ṣukūk). The study relies on library research to collect secondary data in the form of classical works of Islamic jurisprudence, analyses such work and links it with the present day regulatory requirements. The study finds that there are Sharīʿah concerns over the use of exchange-based contracts. However, the use of convertible muḍārabah and wakālah ṣukūk could be justified.

Tier 2 Capital Instruments under Basel III: A Sharīʿah Viewpoint

in Arab Law Quarterly



  • View in gallery
    Structure diagram and cash flows of Albaraka Tier 2 ṣukūk


Content Metrics

Content Metrics

All Time Past Year Past 30 Days
Abstract Views 39 39 18
Full Text Views 56 56 31
PDF Downloads 5 5 2
EPUB Downloads 0 0 0