Search Results

Abstract

The debate about tawarruq (monetisation) has been ongoing, especially with regard to the permissibility of organised tawarruq. The majority of contemporary Sharīʿah scholars, including the Organization of Islamic Cooperation in 2009, ruled that organised tawarruq is impermissible according to Sharīʿah (Islamic law). Nevertheless, organised tawarruq remains a widely-used product in the international Islamic banking industry. Having reviewed the literature and reasons pertaining to the prohibition of organised tawarruq, this research article argues that the prohibition ruling may have been based on certain wrongful practices that existed in the industry, rather than on evidence provided from the Sharīʿah. This research includes empirical work that qualitatively analyses organised tawarruq transactions executed by three Islamic banks in the Kingdom of Bahrain. Using empirical data and analysis provided, this article suggests that the general practice of organised tawarruq might be permissible according to Sharīʿah.

In: Arab Law Quarterly