The Need for Shari’ah-Compliant Awq?f Banks

Hanan Gabil, Benaouda Bensaid, Tahar Tayachi and Faleel Jamaldeen ()
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Hanan Gabil: Finance Department, College of Business, Effat University, Jeddah 22332, Saudi Arabia
Benaouda Bensaid: Faculty of Islamic Sciences, Istanbul Sabahettin University, 34303 Kucucekmece Istanbul, Turkey
Tahar Tayachi: Finance Department, College of Business, Effat University, Jeddah 22332, Saudi Arabia

JRFM, 2020, vol. 13, issue 4, 1-16

Abstract: Bridging global economic inequalities calls for effective financial alternatives such as awq?f banks to better attend to the needs of the poor and underprivileged. This is expected to address the root causes of poverty and ensuing economic gaps, improving much of the living standards whether pertaining to education, health, shelter, employment or basic social services while reducing the state’s economic and financial burden. We envision awq?f banks as institutions which are established through cash awq?f and which operate multiple awq?f funds alongside an assortment of financial instruments. The main use of their awq?f funds are the issue of low-cost credit to the poor, economically disadvantaged and underprivileged, instead of focusing solely on generating and maximizing shareholder profits. This is to support the economy through of steady and sustainable growth, effectively raising the lower bar on per capita income and lifting multitudes out of poverty and need. This paper explores how low-cost credit can be provided to the poor or lower income demographics through awq?f banks, while addressing relevant issues such as Shari’ah compliance, services rendering, investment and awq?f distribution. This paper also examines current studies on awq?f in relation to finance and banking, the basic functions, and characteristics of the Shari’ah-compliant awq?f bank, as well as evaluations of awq?f banks. Current studies show that there is a legitimate need for Shari’ah-compliant awq?f banks which not only providing services for its beneficiaries but also manage investments and awq?f funds that contribute to overall national development and economic growth. This study would be of high relevance to experts, practitioners, financial managers, regulators, and policy makers in the fields of awq?f, banking and finance.

Keywords: awq?f bank; cash awq?f; awq?f management; Islamic Endowment (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2020
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