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Institutional Tawarruq: A Products of Ill Repute in Islamic Finance

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Abstract

Tawarruq is a form of revisionism that replaces the Islamic allocation criteria with conventional ones, while maintaining a symbolic badge of Islamic finance attached to the whole process. It is unfortunate that the successful expansion of Islamic finance is accompanied with challenges that threaten to suffocate the whole process under the guise of financial innovation. In this paper, we intend to show that institutional Tawarruq falls outside the paradigm of Islamic finance. Its use, if predominant, can be precipitous, leading to impose a conventional model onto Islamic finance and therefore could make it an exercise in futility.

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  • Al-Jarhi, Mabid, 2011. "Institutional Tawarruq: A Products of Ill Repute in Islamic Finance," MPRA Paper 66809, University Library of Munich, Germany, revised 2011.
    • Handle: RePEc:pra:mprapa:66809
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    1. Al-Jarhi, Mabid, 2004. "Islamic Finance: An Equitable and Efficient Option," MPRA Paper 55765, University Library of Munich, Germany.
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    More about this item

    Keywords

    Islamic finance; Tawarruq; Islamic finance paradigm; Murabaha; artifice;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services

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