Hiyal in Islamic finance: a recognition of genuine economic need or circumvention of Riba?

(singular of � hiyal) is an Islamic juristic term which refers to the application of acumen and ingenuity to avoid hardship in one’s commitment to Islamic rulings. It has been used as a legal device in Islamic jurisprudence to actualize a legitimate objective. Particularly, it plays a significant...

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Main Authors:	Syed, Ehsanullah Agha, Omar Mohamad, Mustafa
Format:	Article
Language:	English English
Published:	Emerald Group Publishing Ltd. 2017
Subjects:	HG Finance HG3368 Islamic Banking and Finance
Online Access:	http://irep.iium.edu.my/62913/ http://irep.iium.edu.my/62913/ http://irep.iium.edu.my/62913/ http://irep.iium.edu.my/62913/1/62913_Hiyal%20in%20Islamic%20finance%20a%20recognition%20of%20genuine%20economic_article http://irep.iium.edu.my/62913/2/62913_Hiyal%20in%20Islamic%20finance%20a%20recognition%20of%20genuine%20economic_scopus.pdf

id	iium-62913
recordtype	eprints
spelling	iium-629132018-03-21T09:23:32Z http://irep.iium.edu.my/62913/ Hiyal in Islamic finance: a recognition of genuine economic need or circumvention of Riba? Syed, Ehsanullah Agha Omar Mohamad, Mustafa HG Finance HG3368 Islamic Banking and Finance (singular of � hiyal) is an Islamic juristic term which refers to the application of acumen and ingenuity to avoid hardship in one’s commitment to Islamic rulings. It has been used as a legal device in Islamic jurisprudence to actualize a legitimate objective. Particularly, it plays a significant role in financial engineering, as it alleviates financial predicaments with remedies. Design/methodology/approach – The study adopted qualitative method of research by using content analysis approach. Inductive reasoning is applied to drive legal provisions from Sharīʿah sources that would be used as basic principles to develop an objective measure for using � hiyal in Islamic banking and finance. Findings – This study attempted to identify the distinctive features of legitimate � hiyal for the purpose of developing a Sharīʿah framework. It is observed that a � hīlah would be considered permissible in Islamic finance if it meets the prescribed criteria of (1) Sharīʿah objectives, (2) user’s motivation, (3) means, (4) benefit and (5) concessionary rules. This proposed framework may serve as an ‘objective measure’ that will determine whether a � hīlah based financial engineering aims to actualize a genuine economic need or to circumvent the prohibition ofribā. Practical implications – The proposed standard of � hiyal will enable Sharīʿah advisors, economists, financial engineer, legal experts and policy makers to develop comprehensive guidelines for using � hiyal in Islamic financial engineering. Originality/value – Islamic financial institutions rely heavily on � hiyal to operate in a predominant conventional financial system. The application of these legal stratagems in Islamic finance has been the center of an intense debate between Islamic economists and jurists. The former argues that over-reliance on � hiyal not only divorces morality from technicality but also defeats the noble purposes of Islamic economics. This paper provides a synthesis of the diverse views on the subject to facilitate a minimum level of convergence among scholars on the permissibility of � hiyal. Emerald Group Publishing Ltd. 2017 Article PeerReviewed application/pdf en http://irep.iium.edu.my/62913/1/62913_Hiyal%20in%20Islamic%20finance%20a%20recognition%20of%20genuine%20economic_article application/pdf en http://irep.iium.edu.my/62913/2/62913_Hiyal%20in%20Islamic%20finance%20a%20recognition%20of%20genuine%20economic_scopus.pdf Syed, Ehsanullah Agha and Omar Mohamad, Mustafa (2017) Hiyal in Islamic finance: a recognition of genuine economic need or circumvention of Riba? Qualitative Research in Financial Markets, 9 (4). pp. 382-390. ISSN 1755-4179 E-ISSN 1755-4187 https://www.emeraldinsight.com/doi/pdfplus/10.1108/QRFM-05-2017-0041 10.1108/QRFM-05-2017-0
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English English
topic	HG Finance HG3368 Islamic Banking and Finance
spellingShingle	HG Finance HG3368 Islamic Banking and Finance Syed, Ehsanullah Agha Omar Mohamad, Mustafa Hiyal in Islamic finance: a recognition of genuine economic need or circumvention of Riba?
description	(singular of � hiyal) is an Islamic juristic term which refers to the application of acumen and ingenuity to avoid hardship in one’s commitment to Islamic rulings. It has been used as a legal device in Islamic jurisprudence to actualize a legitimate objective. Particularly, it plays a significant role in financial engineering, as it alleviates financial predicaments with remedies. Design/methodology/approach – The study adopted qualitative method of research by using content analysis approach. Inductive reasoning is applied to drive legal provisions from Sharīʿah sources that would be used as basic principles to develop an objective measure for using � hiyal in Islamic banking and finance. Findings – This study attempted to identify the distinctive features of legitimate � hiyal for the purpose of developing a Sharīʿah framework. It is observed that a � hīlah would be considered permissible in Islamic finance if it meets the prescribed criteria of (1) Sharīʿah objectives, (2) user’s motivation, (3) means, (4) benefit and (5) concessionary rules. This proposed framework may serve as an ‘objective measure’ that will determine whether a � hīlah based financial engineering aims to actualize a genuine economic need or to circumvent the prohibition ofribā. Practical implications – The proposed standard of � hiyal will enable Sharīʿah advisors, economists, financial engineer, legal experts and policy makers to develop comprehensive guidelines for using � hiyal in Islamic financial engineering. Originality/value – Islamic financial institutions rely heavily on � hiyal to operate in a predominant conventional financial system. The application of these legal stratagems in Islamic finance has been the center of an intense debate between Islamic economists and jurists. The former argues that over-reliance on � hiyal not only divorces morality from technicality but also defeats the noble purposes of Islamic economics. This paper provides a synthesis of the diverse views on the subject to facilitate a minimum level of convergence among scholars on the permissibility of � hiyal.
format	Article
author	Syed, Ehsanullah Agha Omar Mohamad, Mustafa
author_facet	Syed, Ehsanullah Agha Omar Mohamad, Mustafa
author_sort	Syed, Ehsanullah Agha
title	Hiyal in Islamic finance: a recognition of genuine economic need or circumvention of Riba?
title_short	Hiyal in Islamic finance: a recognition of genuine economic need or circumvention of Riba?
title_full	Hiyal in Islamic finance: a recognition of genuine economic need or circumvention of Riba?
title_fullStr	Hiyal in Islamic finance: a recognition of genuine economic need or circumvention of Riba?
title_full_unstemmed	Hiyal in Islamic finance: a recognition of genuine economic need or circumvention of Riba?
title_sort	hiyal in islamic finance: a recognition of genuine economic need or circumvention of riba?
publisher	Emerald Group Publishing Ltd.
publishDate	2017
url	http://irep.iium.edu.my/62913/ http://irep.iium.edu.my/62913/ http://irep.iium.edu.my/62913/ http://irep.iium.edu.my/62913/1/62913_Hiyal%20in%20Islamic%20finance%20a%20recognition%20of%20genuine%20economic_article http://irep.iium.edu.my/62913/2/62913_Hiyal%20in%20Islamic%20finance%20a%20recognition%20of%20genuine%20economic_scopus.pdf
first_indexed	2023-09-18T21:29:09Z
last_indexed	2023-09-18T21:29:09Z
_version_	1777412393577480192

Hiyal in Islamic finance: a recognition of genuine economic need or circumvention of Riba?

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