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The Islamic gracious monetary instruments a theoretical approach

The Islamic gracious monetary instruments a theoretical approach Purpose This paper attempts to construct Islamic gracious monetary instruments namely Qardh hassan, Waqf and Gift central bank certificates. The certificates do not only function as monetary instruments per se, but also give economic and social benefit for the public such as the needy. However, the central bank and its counterparts still need to manage the funds professionally to produce profit, maintain the values of the funds and prevent business losses. As such, this theoretical study aims to offer alternative Islamic monetary instruments for the central bank to manage liquidity and especially to improve the welfare of the people.Designmethodologyapproach The paper exercises three Islamic gracious monetary instruments Qardh hassan, Waqf and Gift central bank certificates for both investment based Mudarabah and Musharakah financing and trading based Ijarah and Murabahah financing. Every instrument is elaborated mathematically to analyze its economic impact, treatment of profit and loss coming from the business and status of the funds. Finally, the paper compares every gracious certificate and explains the terms and conditions to use them optimally.Findings The exercises find unique characteristics, operations and contribution of every Islamic gracious monetary instrument to the economy. Based on economic impact, nature of the contracts and management of the funds, the central bank can now have alternative Islamic monetary instruments to be offered to the generous depositors to improve the welfare of the people particularly the needy.Research limitationsimplications The paper only assesses the feasibility of three Islamic gracious monetary instruments. There might be more alternatives of Islamic gracious monetary instruments to be considered and elaborated.Originalityvalue To the best of author's knowledge, this is the first paper to try to exercise the alternative of the Islamic gracious monetary instruments. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic and Administrative Sciences Emerald Publishing

The Islamic gracious monetary instruments a theoretical approach

Ismal, Rifki
Journal of Economic and Administrative Sciences , Volume 29 (1): 18 – May 10, 2013
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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1026-4116
DOI
10.1108/10264111311319231
Publisher site
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Abstract

Purpose This paper attempts to construct Islamic gracious monetary instruments namely Qardh hassan, Waqf and Gift central bank certificates. The certificates do not only function as monetary instruments per se, but also give economic and social benefit for the public such as the needy. However, the central bank and its counterparts still need to manage the funds professionally to produce profit, maintain the values of the funds and prevent business losses. As such, this theoretical study aims to offer alternative Islamic monetary instruments for the central bank to manage liquidity and especially to improve the welfare of the people.Designmethodologyapproach The paper exercises three Islamic gracious monetary instruments Qardh hassan, Waqf and Gift central bank certificates for both investment based Mudarabah and Musharakah financing and trading based Ijarah and Murabahah financing. Every instrument is elaborated mathematically to analyze its economic impact, treatment of profit and loss coming from the business and status of the funds. Finally, the paper compares every gracious certificate and explains the terms and conditions to use them optimally.Findings The exercises find unique characteristics, operations and contribution of every Islamic gracious monetary instrument to the economy. Based on economic impact, nature of the contracts and management of the funds, the central bank can now have alternative Islamic monetary instruments to be offered to the generous depositors to improve the welfare of the people particularly the needy.Research limitationsimplications The paper only assesses the feasibility of three Islamic gracious monetary instruments. There might be more alternatives of Islamic gracious monetary instruments to be considered and elaborated.Originalityvalue To the best of author's knowledge, this is the first paper to try to exercise the alternative of the Islamic gracious monetary instruments.

Journal

Journal of Economic and Administrative Sciences – Emerald Publishing

Published: May 10, 2013

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