Ijarahcontract: a practical dilemma

Fahad Zafar

Journal of Islamic Accounting and Business Research, 2012, vol. 3, issue 1, 67-69

Abstract: Purpose - This purpose of this paper is to highlight the weakness in vehicleIjarahcontract. Design/methodology/approach - A real life example of a vehicleIjarahcontract was studied in which a customer gets a car from an Islamic bank and then misuses the system. Findings - The case study provides a path for more research onIjarahcontract for vehicle leasing. Islamic bankers should take into account the amount of down payment requested besides the fulfilment of other criteria. Vehicle Ijarah contract is only appropriate when the amount of deposit or down payment requested is below 40 per cent threshold, otherwise a diminishingMusharakahcontract should be preferred. Research limitations/implications - The research is only on one case reported in one of the Islamic banks in Pakistan. The solution is also by only oneShariahscholar. The future research should be on similar contract at entire Islamic Banking Industry. Views of all topShariahscholars should be taken to mitigate such kind of risks for Islamic banks. Practical implications - This paper would trigger management of all Islamic banks to alter the structure of their vehicleIjarahcontracts. Social implications - Islamic bankers would be warned against making a vehicleIjarahcontract with individuals wanting to contribute more than a down payment, just for the sake of cheating the system. Originality/value - This paper is of great importance to the management of Islamic banks as this would raise flag against any future losses due to loopholes in the structuring of contracts.

Keywords: Car Ijarah; Islamic car leasing; Ijarah dilemma; Banks; Islam; Leasing; Road vehicles (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:jiabrp:17590811211216078

DOI: 10.1108/17590811211216078

Access Statistics for this article

Journal of Islamic Accounting and Business Research is currently edited by Dr Mohammad Hudaib and Prof Roszaini Haniffa

More articles in Journal of Islamic Accounting and Business Research from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().