Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract

Purpose – This paper provides a case study on a Sharī‘ah-compliant house loan contract based on the Bai Bitham Ajil (BBA) contract generally used by Islamic banks in Malaysia. The study emphasises the need to comply with the existing legal framework and execute relevant contracts in line with the S...

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Main Authors:	Oseni, Umar Aimhanosi, Ayob, Mohd Fairullazi, Abdul Rashid, Khairuddin
Format:	Conference or Workshop Item
Language:	English English English English English
Published:	2014
Subjects:	HG1501 Banking KBP173.25 Islamic law and other disciplines or subjects TX301 The house
Online Access:	http://irep.iium.edu.my/39488/ http://irep.iium.edu.my/39488/ http://irep.iium.edu.my/39488/1/BBA_Housing_Loan_paper_03.11.2014.pdf http://irep.iium.edu.my/39488/3/MiCRA2014_CERTIFICATE.jpg http://irep.iium.edu.my/39488/4/MICRA2014_CD_COVER.jpg http://irep.iium.edu.my/39488/17/MiCRA_2014_BEST_AWARD_PAPER.pdf http://irep.iium.edu.my/39488/18/micra-2014-abstract-list.pdf

id	iium-39488
recordtype	eprints
spelling	iium-394882018-06-11T01:21:10Z http://irep.iium.edu.my/39488/ Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract Oseni, Umar Aimhanosi Ayob, Mohd Fairullazi Abdul Rashid, Khairuddin HG1501 Banking KBP173.25 Islamic law and other disciplines or subjects TX301 The house Purpose – This paper provides a case study on a Sharī‘ah-compliant house loan contract based on the Bai Bitham Ajil (BBA) contract generally used by Islamic banks in Malaysia. The study emphasises the need to comply with the existing legal framework and execute relevant contracts in line with the Sharī‘ah resolutions of the Sharī‘ah Advisory Council of Bank Negara Malaysia without causing harm (ḍarar) to the customers or introducing uncertain elements or procedures (gharar) in the execution of the agreements. Design/methodology/approach – This paper is based on doctrinal analysis of the relevant issues as well as a qualitative legal research through content analysis of relevant BBA agreements, case law, as well as statutory provisions. The case study used in this paper is completely anonymised. Findings – The study finds that the execution of BBA agreements in Malaysia leaves much to be desired. Even though the regulatory framework for Sharī‘ah-compliant housing loans in Malaysia is robust, there are some legal and Sharī‘ah considerations which the stakeholders need to look into in order to project Malaysia as the main global hub of Islamic finance. Research limitations/implications – The study focuses only on Sharī‘ah and legal issues and does not touch on economic, financial or accounting aspects of the BBA housing loan contract. Practical implications – This study demonstrates the need for proper Sharī‘ah auditing of the practical execution of BBA agreements to avoid an incorporated element of gharar at the time of execution of the agreements which might ultimately lead to unforeseen reputation risks for the bank. Originality/value – Though there are several studies on the Sharī‘ah, financing, and accounting aspects of the BBA housing loan agreement, this study focuses on both Sharī‘ah and legal issues using the case study approach. The recommendations are expected to provide a good policy framework for the stakeholders in the Islamic banking industry in Malaysia. 2014-11-06 Conference or Workshop Item PeerReviewed application/pdf en http://irep.iium.edu.my/39488/1/BBA_Housing_Loan_paper_03.11.2014.pdf application/pdf en http://irep.iium.edu.my/39488/3/MiCRA2014_CERTIFICATE.jpg application/pdf en http://irep.iium.edu.my/39488/4/MICRA2014_CD_COVER.jpg application/pdf en http://irep.iium.edu.my/39488/17/MiCRA_2014_BEST_AWARD_PAPER.pdf application/pdf en http://irep.iium.edu.my/39488/18/micra-2014-abstract-list.pdf Oseni, Umar Aimhanosi and Ayob, Mohd Fairullazi and Abdul Rashid, Khairuddin (2014) Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract. In: 13th Management in Construction Researchers' Association (MiCRA) Annual Conference and General Meeting 2014, 6th November 2014, Gombak, Kuala Lumpur. (Unpublished) http://micra14.wordpress.com/accepted-abstract/
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English English English English English
topic	HG1501 Banking KBP173.25 Islamic law and other disciplines or subjects TX301 The house
spellingShingle	HG1501 Banking KBP173.25 Islamic law and other disciplines or subjects TX301 The house Oseni, Umar Aimhanosi Ayob, Mohd Fairullazi Abdul Rashid, Khairuddin Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract
description	Purpose – This paper provides a case study on a Sharī‘ah-compliant house loan contract based on the Bai Bitham Ajil (BBA) contract generally used by Islamic banks in Malaysia. The study emphasises the need to comply with the existing legal framework and execute relevant contracts in line with the Sharī‘ah resolutions of the Sharī‘ah Advisory Council of Bank Negara Malaysia without causing harm (ḍarar) to the customers or introducing uncertain elements or procedures (gharar) in the execution of the agreements. Design/methodology/approach – This paper is based on doctrinal analysis of the relevant issues as well as a qualitative legal research through content analysis of relevant BBA agreements, case law, as well as statutory provisions. The case study used in this paper is completely anonymised. Findings – The study finds that the execution of BBA agreements in Malaysia leaves much to be desired. Even though the regulatory framework for Sharī‘ah-compliant housing loans in Malaysia is robust, there are some legal and Sharī‘ah considerations which the stakeholders need to look into in order to project Malaysia as the main global hub of Islamic finance. Research limitations/implications – The study focuses only on Sharī‘ah and legal issues and does not touch on economic, financial or accounting aspects of the BBA housing loan contract. Practical implications – This study demonstrates the need for proper Sharī‘ah auditing of the practical execution of BBA agreements to avoid an incorporated element of gharar at the time of execution of the agreements which might ultimately lead to unforeseen reputation risks for the bank. Originality/value – Though there are several studies on the Sharī‘ah, financing, and accounting aspects of the BBA housing loan agreement, this study focuses on both Sharī‘ah and legal issues using the case study approach. The recommendations are expected to provide a good policy framework for the stakeholders in the Islamic banking industry in Malaysia.
format	Conference or Workshop Item
author	Oseni, Umar Aimhanosi Ayob, Mohd Fairullazi Abdul Rashid, Khairuddin
author_facet	Oseni, Umar Aimhanosi Ayob, Mohd Fairullazi Abdul Rashid, Khairuddin
author_sort	Oseni, Umar Aimhanosi
title	Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract
title_short	Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract
title_full	Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract
title_fullStr	Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract
title_full_unstemmed	Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract
title_sort	sharī‘ah-compliant home financing in malaysia: a case study of legal issues in bai bithaman ājil contract
publishDate	2014
url	http://irep.iium.edu.my/39488/ http://irep.iium.edu.my/39488/ http://irep.iium.edu.my/39488/1/BBA_Housing_Loan_paper_03.11.2014.pdf http://irep.iium.edu.my/39488/3/MiCRA2014_CERTIFICATE.jpg http://irep.iium.edu.my/39488/4/MICRA2014_CD_COVER.jpg http://irep.iium.edu.my/39488/17/MiCRA_2014_BEST_AWARD_PAPER.pdf http://irep.iium.edu.my/39488/18/micra-2014-abstract-list.pdf
first_indexed	2023-09-18T20:56:44Z
last_indexed	2023-09-18T20:56:44Z
_version_	1777410354098208768

Sharī‘ah-compliant home financing in Malaysia: a case study of legal issues in Bai Bithaman Ājil contract

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