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Not on My Nickel: The Aptness of Blank Check Companies for Islamic Finance

Author

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  • Tasawar Nawaz

Abstract

This work assiduously analyses the aptness of ‘blank check’ companies, also known as special purpose acquisition companies (SPACs), for Islamic finance. By so doing, I divulge that SPAC structure terms, that is, having no substantive assets, operations, or commercial substance underlying the investment stipulate covenants that involve Gharar (ambiguity) to the degree that adulterates blank check IPOs under the ambit of Islamic jurisprudence—vernacularly referred to as Shariah. The inaptness of the basal SPAC covenants and the devoid of Gharar in financial activities under Shariah can cause collusion in the manner in which this niche faith‐based financial segment operates. It is, thus, postulated that blank check IPOs are a hard pass under Shariah jurisprudence except if the SPAC structure terms are redux to comply with the rudimentary principles of the Islamic banking business model. Jusque‐là, the outlook for a Shariah‐compliant SPAC is bleak.

Suggested Citation

  • Tasawar Nawaz, 2025. "Not on My Nickel: The Aptness of Blank Check Companies for Islamic Finance," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 30(4), pages 4125-4131, October.
    • Handle: RePEc:wly:ijfiec:v:30:y:2025:i:4:p:4125-4131
    DOI: 10.1002/ijfe.3112
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    References listed on IDEAS

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    1. Mohamed Ariff & Munawar Iqbal, 2011. "Introduction to Islamic Financial Institutions," Chapters, in: Mohamed Ariff & Munawar Iqbal (ed.), The Foundations of Islamic Banking, chapter 1, Edward Elgar Publishing.
    2. Kolb, Johannes & Tykvová, Tereza, 2016. "Going public via special purpose acquisition companies: Frogs do not turn into princes," Journal of Corporate Finance, Elsevier, vol. 40(C), pages 80-96.
    3. Cumming, Douglas & Haß, Lars Helge & Schweizer, Denis, 2014. "The fast track IPO – Success factors for taking firms public with SPACs," Journal of Banking & Finance, Elsevier, vol. 47(C), pages 198-213.
    4. Banerjee, Snehal & Szydlowski, Martin, 2024. "Harnessing the overconfidence of the crowd: A theory of SPACs," Journal of Financial Economics, Elsevier, vol. 153(C).
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