IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/67713.html
   My bibliography  Save this paper

Principles and application of Preemption in Islamic finance: A critical analysis

Author

Listed:
  • Uddin, Md Akther

Abstract

This paper discusses the concept of Al-Shuf’ah (pre-emption), literally means amalgamation, addition, subjunction or joining. In Islamic law, Al-Shuf’ah implies that a co-owner has the right to demand a pre-emption from his partner in a jointly owned property to purchase it at a certain price, before other people (Al-Zurqani, 1981). The study confirms (Al-Zuhayli, 2003) preemption is a weak right, fortified and confirmed by requesting its exercise; preemption was legalized to protect the preemptor’s interests. All jurists agree that a partner in the property is a preemptor, but the Hanafis included neighbors as well, and preemption cannot result in a harm to the buyer by partitioning the sale. The study finds that in contemporary Islamic commercial law and transactions, the doctrine of Al-Shuf’ah might play an important role in partnership contracts, immovable real estate and can be drawn similar analogy in the context of venture capital and housing financing, moreover, many scholars argue for extending the principle of pure ownership rights in intangible assets, options and preemptive rights of the shareholders of a corporation.

Suggested Citation

  • Uddin, Md Akther, 2015. "Principles and application of Preemption in Islamic finance: A critical analysis," MPRA Paper 67713, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:67713
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/67713/1/MPRA_paper_67713.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mohammed Obaidullah, 2005. "The Islamic Financial Services الخدمات المالية الإسلامية," Books published by the Islamic Economics Institute, KAAU., King Abdulaziz University, Islamic Economics Institute., edition 1, number 40, July.
    2. Alsayyed, Nidal, 2009. "The Guide to Islamic Economics, Banking, and Finance," MPRA Paper 20128, University Library of Munich, Germany.
    3. SElF I. TAG EL-DIN, 1996. "The Stock-Exchange from an Islamic Perspective سوق الأسهم في إطار إسلامي," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 8(1), pages 31-50, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pejman Abedifar & Shahid M. Ebrahim & Philip Molyneux & Amine Tarazi, 2015. "Islamic Banking And Finance: Recent Empirical Literature And Directions For Future Research," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 637-670, September.
    2. Pejman Abedifar & Philip Molyneux & Amine Tarazi, 2013. "Risk in Islamic Banking," Review of Finance, European Finance Association, vol. 17(6), pages 2035-2096.
    3. Andrew C. Worthington & Alsadek H. Gait, 2009. "Libyan Business Firm Attitudes towards Islamic Methods in Finance," Discussion Papers in Finance finance:200910, Griffith University, Department of Accounting, Finance and Economics.
    4. Ashraf, Dawood & Khawaja, Mohsin, 2016. "Does the Shariah screening process matter? Evidence from Shariah compliant portfolios," Journal of Economic Behavior & Organization, Elsevier, vol. 132(S), pages 77-92.
    5. Waemustafa, Waeibrorheem & Sukri, Suriani, 2015. "Theory of Gharar and its interpretation of Risk and Uncertainty from the perspectives of Authentic Hadith and the Holy Quran: A Qualitative Analysis," MPRA Paper 78316, University Library of Munich, Germany, revised 10 Jan 2016.
    6. Mohd Zulkifli Muhammad & Hanudin Amin & Alex Anderson & Rosita Chong, 2015. "Challenges Facing Bank in Financing International Trade: From an Islamic Perspective," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 73-83.
    7. Philip Molyneux & John Yip, 2013. "Income diversification and performance of Islamic banks," Journal of Financial Management, Markets and Institutions, Società editrice il Mulino, issue 1, pages 47-66, January.
    8. Muhammad Abdurrahman Sadique, 2009. "Profit and Loss Allocation among Islamic Bank and Client Partner in Equity Financing: Practice, Precepts and Alternatives توزيع الأرباح والخسائر بين المصارف الإسلامية وعملاء تمويل المشاركة: المنطق وال," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 22(1), pages 145-168, January.
    9. Muhammad Sobarsyah & Wahyoe Soedarmono & Wahdi Salasi Apri Yudhi & Irwan Trinugroho & Ari Warokka, 2020. "Loan growth, capitalization, and credit risk in Islamic banking," International Economics, CEPII research center, issue 163, pages 155-162.
    10. Islahi, Abdul Azim, 2013. "Hamidullah on Mutuality based Islamic Insurance," MPRA Paper 66434, University Library of Munich, Germany, revised Sep 2013.
    11. Amir-Ud-Din, Rafi, 2014. "Maqāṣid al-Sharīʿah: Are We Measuring The Immeasurable?," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 22, pages 1-32.
    12. Tasawar Nawaz & Roszaini Haniffa & Mohammad Hudaib, 2021. "On intellectual capital efficiency and shariah governance in Islamic banking business model," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 3770-3787, July.
    13. Zulkufly Ramly & Nurusysyifa Nordin, 2018. "Sharia Supervision Board, Board Independence, Risk Committee and Risk-taking of Islamic Banks in Malaysia," International Journal of Economics and Financial Issues, Econjournals, vol. 8(4), pages 290-300.
    14. Ahmed Elnahas & Ghada Ismail & Rwan El‐Khatib & M. Kabir Hassan, 2021. "Islamic labeled firms: Revisiting Dow Jones measure of compliance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 48(5-6), pages 988-1021, May.
    15. Maazullah, & Bedi, Arjun S., 2017. "Returns to Islamic Microfinance: Evidence from a Randomized Experiment in Pakistan," IZA Discussion Papers 10965, Institute of Labor Economics (IZA).
    16. Gait, Lsadek Hesain A., 2009. "The Impact Of Demographic Variables On Libyan Retail Consumers’ Attitudes Towards Islamic Methods Of Finance," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 17, pages 1-18.
    17. Uddin, Md Akther, 2015. "Principles of Islamic Finance: Prohibition of Riba, Gharar and Maysir," MPRA Paper 67711, University Library of Munich, Germany.
    18. Oubdi, Lahsen & Raghibi, Abdessamad, 2017. "An Overview on the Practice and Issues of Hedging in Islamic Finance," MPRA Paper 82646, University Library of Munich, Germany.
    19. NEIFAR, Malika & Gharbi, Leila, 2020. "Islamic vs Conventional banks: what differences ? Tunisian case," MPRA Paper 102972, University Library of Munich, Germany.
    20. Raghibi, Abdessamad & Oubdi, Lahsen, 2020. "Shari’ah-compliant Stock Screening: A Financial Perspective," MPRA Paper 101845, University Library of Munich, Germany.

    More about this item

    Keywords

    Islamic finance; Al-Shuf’ah (Pre-emption); Al-Shafi (Preemptor); Ownership Rights;
    All these keywords.

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics
    • G2 - Financial Economics - - Financial Institutions and Services

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:67713. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.