Glossary. Hibah: Gift or an act of giving away one s property with the immediate effect of the transfer of ownership without any return.

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1 Glossary Bay al-dayn: Sale of debt. The provision of financial resources is required for production commerce and services by way of sale/purchase of trade documents and papers. Bai al-dayn is a short-term facility with a maturity of not more than a year. Only documents evidencing debts arising from bona fide commercial transactions can be traded. Bay inah: Sale contract followed by repurchase by the seller at a different price. Bay muajjal: Sale contract based on deferred payment at a certain price. It is a contract involving the sale of goods on a deferred payment basis. Fatwa: A religious decree. Faraid: The knowledge or rules on estate distribution according to Islamic principles. Fiqh: Islamic jurisprudence, the science of the Shari ah. It is an important source of Islamic economics. Hibah: Gift or an act of giving away one s property with the immediate effect of the transfer of ownership without any return. Ijarah: Lease or service contract that involves benefit/usufruct of certain asset or work for an agreed payment or commission within an agreed period. Khalifah: The civil and religious leader of a Muslim state considered to be a representative of Allah on earth. Maqasid-al-Shari ah: The goals and objectives of Islamic law an evidently important and yet somewhat neglected theme of the Shariah. The Editor(s) (if applicable) and The Author(s) 2017 M. Zulkhibri and A. G. Ismail (eds.), Financial Inclusion and Poverty Alleviation, Palgrave Studies in Islamic Banking, Finance, and Economics, 307

2 308 Glossary Maslahah: Public interest. Mutawalli: One entrusted with something (the trustee of a waqf). Mudarabah: Profit sharing contract. As a financing technique adopted by Islamic banks it is a contract in which all the capital is provided by the Islamic bank while the business is managed by the other party. The profit is shared in pre-agreed ratios, and loss, if any, is borne by the investor. Murabahah: Sale contract with a disclosure of the asset cost price and profit margin to the buyer. Musharakah: An investment partnership in which profit sharing terms are agreed in advance and losses are pegged to the amount invested basically Private Equity. Musaqah: A type of partnership in which the owner of an orchard agrees to share a stipulated portion of the produce of the orchard s trees with a worker in exchange for the latter s irrigation of the garden. Muzara ah: Share-cropping; an agreement between two parties in which one agrees to allow a portion of his land to be used by the other in return for a part of the produce of the land. Qard Hassan: Benevolent loan. Qawaid Fiqhiyyah: Principles of Islamic law. Riba: One of the three fundamentals prohibitions in Islamic finance (the other two being Gharar and Maysir). This term literally means an increase or addition. Technically it denotes any increase or advantage obtained by the lender as a condition of the loan. Any risk-free or guaranteed rate of return on a loan or investment is riba. Riba, in all forms, is prohibited in Islam. Sadaqa: Usually refers to voluntary donations. Salam: Sale contract based on order of certain asset with certain specifications. Full payment is made in cash at the time of conclusion of the contract whereas the delivery of the asset is deferred to a specified time. Shari ah Supervisory Board: Committee of Islamic scholars available to an Islamic financial institution for guidance and supervision in the development of Shari ah compliant products. Sukuk: Islamic securities/bonds. Takaful: A scheme which is based on the spirit of cooperation and helping each other by providing financial assistance to participants when needed and all participants mutually agree to give contribution for the said purpose.

3 Glossary 309 Tawarruq (Commodity Murabahah): Purchasing an asset with deferred price either on the basis of Musawamah or Murabahah, then selling it to a third party to obtain cash. Wa ad: Promise. Wadiah: Safe keeping contract in which a party entrusted his property to another party for safe keeping and to be returned upon request. Wakalah: Agency contract. Waqf (Awqaf plural): A form of the endowment by an owner of a property for public benefit and well-being which is allowed by Shari ah. Zakat/Zakah: Alms-giving is the practice of charitable giving by Muslims based on accumulated wealth and is obligatory for all who are able to do so. It is considered to be a personal responsibility for Muslims to ease economic hardship for other Muslims and eliminate inequality for followers of Islam.

4 Index A Academicians 298 Access 42 45, 47 53, 55, 56, 58, 59, 62, 64, 71, 72, 84, 86, 88 90, 92, 97, 101, 106, 112 Access to finance 145, 160, 163 Account 44, 53, 56, 67 Accountability 215 Administration 204, 215 Africa 56, 64, 65 Akhuwat 144, , , 193 Al-Azhar University 273 Alcohol 290 Algorithms 226 Allah 203, 272, , 301 Altruism 222, 225, 226, 236, 237 Annual levy 220 Antecedents 288, 289, 291, 299 Apathy 225, 230, 231, 236 Asia 56, 64, 65 Asset manager 279 Associations 275 Asymptotically 125 Attitude 289, 291 Autonomy 88, 112, 116, 128, 129, 132, 133 Awqaf institutions 273, , 281, 282 B Bandung 84, 94, 97, 104, 111, 122, 132, 135, 136 Bangko Sentral Pilipinas 162 Bangladesh , 208, , 251, 252, 266 Banking 43, 71, 74, 75 Bay-al Salam 89 BAZNAS 83, 84, 94, , 121, 135, 253 Behavioral 289, , 297, 299 Benchmarks 35 The Editor(s) (if applicable) and The Author(s) 2017 M. Zulkhibri and A. G. Ismail (eds.), Financial Inclusion and Poverty Alleviation, Palgrave Studies in Islamic Banking, Finance, and Economics, 311

5 312 Index Benevolence 143, , 170, 174, 220, 225, 236, 237 Benevolent 163, 167, 170, 172 Blessings 294 Broad money 7, 11, 17, 24, 26, 32, 35, 38 Bureaucratic 8, 9, 13, 17, 32, 38 Business community 298 C Campaign 293 Capital 105 Capital market 6 Cash transfer 246 Cash waqf 280 Characteristics 48, 53 56, 58, 62, 64, 66, 67, 69, 71, 72 Charitable 221, 222 Charitable instruments 272 Charity 203, 272, 280 Charles Darwin 3 Cluster 253 Clustering 226 Community 90, 100, 106, 110, 136, 204, , 214 Compliance 229, 241 Concentration 42, 49, 71, 74 Confirmatory Factor Analysis 298 Constraints 43, 47, 48, 50 56, 58, 59, 62, 64, 67, 69, 71, 72 Construction 288, 289, , Consumers 52 Consumption 204, 205, 213 Cooperative model 90 Cooperatives 100, 275 Coordination 83, 136 Correlations 226 Corruption 5, 7 9, 11, 13, 17, 27, 32, 34, 38 Covariates 97, 98, 124, 125 Creator 220, 224, 225, 238 Credibility 182, 183 Credit 7, 8, 10, 12, 17, 18, 21, 23, 24, 26, 27, 29, 31 38, 84 86, 88, 90, 91, 93, 96, 97, 101, 106, 108, 116 Credit decision 97 Cronbach s Alpha 298 D Debt-based 45 Decree 109, 136 Democratic 8, 9, 13, 32, 38 Dendogram 234 Determinants 123 Deterrent 282 Developing countries 87, 89 Developing economies 52, 142, 145 Development 10, 23, 42, 44, 45, 47, 48, 51, 53, 58, 63, 66 72, 74, 142, 171, 194, 203, 205, 214 Disclosure practices 224 Disease 258 Disrepair 277 Distribution 204, 206, 213 Distributive agent 248 Dividends payout 49 Dominant 224, 237 Donor , 224, 225, 234 Dummy variable 99, 112, 127 E East Africa 286 Econometric 134, 135

6 Index 313 Economic growth 4, 6, 8, 10, 24, 25, 36, 286 Economic indicators 247 Economic perspective 272 Education institutions 273 Elasticity 10, 11, 24 Emerging market 86, 87, 142 Empirical 4 9, 11, 14, 24, 26, 37, 38, 294 Employment 286 Empower 82 85, 89, 95, 99, 102, 105, 108, 121 Empowerment 83 87, 89 93, 95, 96, 98, 99, , 106, 110, 112, 115, 116, 121, 122, , 130, , 249, 250, , 267 Endogeneity 16, 96, 97, 116, 259 Endowment 272, 278 Entrepreneurship 89, 107 Eradicate 4 6, 35, 36 Euclidean 226 Exogenous 96, 112 External debt 252 Extrinsic 221 F Family 86, 90, 102, 114, , , 129, 135, 137 Finance 290 Financial commitment 293 Financial constraints 276 Financial depth 42 Financial development 4 7, 9 14, 18, 20, 21, 24 26, 30 35, 37, 38 Financial exclusion 145, 147, 148, 156, 157, 159, 160, 192 Financial inclusion 43 45, 51, 52, 86, 89, 144, 162, 163, 173, 192, 193 Financial intermediation 44, 47, 48, 58, 67, 69, 71, 72, 75 Financial literacy 163, 166 Financial markets 4, 7 Financial perceptions 52 Financial services 42 45, 51, 52, 54 Financing 45, 47, 48, 50 53, 56, 58, 59, 62, 64, 65, 67, 69, 71, 72, 214 Financing constraints 47, 49, 50, 53, 56, 58, 62, 64, 65, 68, Fiqh 248 Firm-specific 47, 48, 53, 54, 56, 58, 62, 64, 66, 67, 69, 72 Fixed assets 50 Fixed effects 14 16, 22 24, 35, 36, 59, 259 Food 205, 207, 209, 214 Food bank 207, Food security 204, , Forward contract 207, 214 Foster Greer Thorbecke 250 Framework 203, 204, 214 Frugal 232, 236 G Gender 83, 88, 89, 92, 97, 99, 101, 133, 135 General Method of Moments 14 Gini 10, 17 Gini coefficient 250, 251 Global Findex Database 142, 145, , 192, 194 Good deeds 272

7 314 Index Goodness-of-fit 59 Government 43, 55, 62, 64, 72, 204, 205, 208, 213, 252, 254, 257, 265, 286, 287, 292 Grameen Bank 90 Growth rate 10 H Hausman 16, 22, 23, 35 Headcount 250 Healthcare , 301 Heterogeneous 98, 106, 143, 169, 173 Hierarchical 226 High-income nations 287 High-networth 220 Homoscedasticity 259 Hospital , , Household 84 86, 89, 90, 91, 95, 96, 99, , 112, 114, 115, , 127, 128, , 205, Human beings 272 Human capital development 286 Human corruption 206 Human development 247, 252, 260, 264, 265 Human Development Index 46, 58, 247, 253, 257, 265 Humankind 249 Hunger 213 I Ibadah 293 Ihsan 143, , , 177 Ijarah 89, 165 Ill-managed 277, 281 Immovable 272, 278 Import 10 Inclusive financial development 11, 33 Income-gap 250 India , 236 Indigenous 203 Indonesia 82 85, 90, 93, 95, , 111, 132, 134, 137, 246, 249, 250, , 258, Inequality 6, 42, 58, 68, 74, 142, 145, 162, 171, 192 Infaq 83, 84, 107, 109, 135 Informal education 254, 257 Innovative solutions 282 Institutional framework 273 Institutional infrastructure 4, 5, 11, 25, 37 Institutions 3 6, 8, 9, 11, 13, 14, 16, 20, 22, 24 26, 30, 31, 33 35, 37, 38 Instruments 14, 16, 24 26, 35 Integrated framework 204 Integration 88, 109 Intercept 14, 15 Interest rate 50 Internal funds 49, 53, 72 Interviews 93 Intrinsic 221, 222, 226 Investment 44, 48, 50, 53, 64, 72, 272, 274, 275, 278, 279, 282 Islam 142, 144, 159, 160, , 169, 174, , 192, 203, 208, 212, 246, 248, 252, 262 Islamic banking 290 Islamic charity 223, 276 Islamic countries 45, 47, 48, 55, 56, 59, 62, 64, 65, 67, 68, 71, 72

8 Index 315 Islamic Development Bank 274, 275 Islamic economists 248 Islamic finance 45, 72, 83, 84, 88 Islamic financial system 82 Islamic law 83, 102, 104, 105 Islamic microfinance 85, 89, 90, 122, 123, 134 Islamic scholars 248 Islamic tradition 272 Istibdal 277, 278 Istisna 165 J Java 84, 94, 109, 110, 136 Ju ala 165 Juristic 248 Justice 248 Juxtaposition 236, 237 K Kernel 99, 125, 128 King Abdul Aziz Endowment 273 Knowledge 204, 212 Kuwait Awqaf Public Foundation 274 L Law 104, 109, 123, 136 Leasehold 277, 281 Least squares 259, 267 Leverage 50 Liberalization 53 Life expectancy index 254, 255, 257, 261, 264, 267 Linear 97 Loan 143, 163, , 172, 177, 178, 180, 182, 183, Local governments 83 Lorenz curve 251 Low-income 62, 64, 68, 71, 72 M Macroeconomic models 248 Madinah 209 Malaysia 223, , 237, 248, 251, 287 Management board 279 Market imperfections 42 Masjids 231, 232, 236, 240 Maximum likelihood estimator 58 MENA 142, 147, 156, 157, 162, 163, 192, 193 Mental 206, 292 Microcredit 84, 85, 90, 91, 99, 114, 122, Microfinance 52, 83 90, 92, 95, , , , 127, 128, 134, 135, 144, 160, 163, , 190, 193, 205, 249, 252, 253, 262, 263 Middle East 56 Millennium Development Goals 247, 252 Ministry of Awqaf and Islamic Affairs 274 Mismanaged 288 Model-based methods 226 Moneylenders 104 Moral 222 Moral duties 288, 291, 292, , 299 Moral norms 292, 293, 299 Mosques 180, 189, 288 Movable 278 Mudarabah 89, 162, 164, 165, 192 Muhamad (pbuh) 110, 208, 294

9 316 Index Multicollinearity 62, 259 Multiple regression 294 Murabahah 89, , 192 Musharakah 89, 162, 164, 165, 192 Musharakah sukuk 279, 280 Muslim 82, 84 88, 93, 102, 105, 106, 137, , 148, , 168, 173, 174, 192, 194, , 208, 209, , 251, 263, 266, 272, 274, 288, 291, 292, 296, 298, 299, 301 Muslim countries 246, 247, 251, 273, 277, 281, 282 Muslim world 5 Mustahiq 246, 247, , , Mutawalli 275, 276, 281 Mysikat program 121, 135 N National heritage 277 Natural resources 82 Negative 222 Nigeria North Africa 56, 64, 65 Null hypothesis 23, 36 O OIC member countries 142, 156, 160, 162, 163 OLS approach 59 OLS regression 260 Ordinal preferences 97 Organization of Islamic Cooperation 288 Ottoman Empire 208 Ownership 47, 50, 53, 56, 59, 62, 64, 65, 67, 71, 72 P Pakistan 144, 153, 163, 164, 177, 178, , 187, 195, 248, 251 Panel data regression 255 Paradigm 106 Parameters 10 Partitioning 226 Patriarchy 99, 122, 133, 134 Philanthropy 220, 222, 272 Philosophy 248 Pooled OLS 14, Poor 3 8, 10 13, 24, 30, 34, 38, , 212, 213, 215, , 253, Population 142, 145, 148, , 162, 173, 179, 192, 194 Positive 104, 114, 121, 122, 126, 128 Poverty 4 11, 13, 16 18, 20, 21, 24, 31 38, 82, 83, 85 88, , 108, 110, 135, 142, 144, 145, 162, 163, , 179, 181, 183, 190, , 246, 247, , 262, 266 Poverty alleviation 272 Poverty Index 250 Poverty line 250, 262 Poverty rate 82, 105 Poverty trap 5, 11 Preferences 220, 221, , 230, 234, 237, 238 Primary data 84, 94 Private enterprises 275 Probability 58, 62, 74, 222, 223, 238 Probit 97, 98, 112, 114, 123, , 133, 134 Probit model 58, 59, 63, 65, 68, 71 Productivity 213, 214 Professional 105, 109, 136, 298

10 Index 317 Propensity 84, 98, , 132, 134, 137 Property , 276 Property rights 8, 25 Prophet 246, 272, 294 Prophets Mosque 273 Provinces 84 Public awareness 232, 234, 236 Public endowment 272 Q Qard 89, 143, 144, , , 176, 192, 193 Qard-al Hasan 89, 143, 144, , , 176, 192, 193 Qard Hassan 143, 144, , 168, 169, 174, 192, 193 Quantile distribution 256 Quantitative 49, 58, 62, 72 Quasi-experimental 90, 135 Questionnaire 55, 84, 95, 96, 111, 123 Qur an 104, 246, 293 Quranic 166 R Random effects 14 16, 22, 23, 35, 259 Random sampling 84 Ratio 228, 229 Recipients 206, 207, 212, 213 Redistribution 42, 45 Reduced form 96 Regression 14, 22, 26, 30, 31, 58, 59, 62, 64, 66, 67, 69 Regulation 52 Regulatory 221, 234 Religiosity 222 Religious , 291, , Religious authorities 273 Religious obligation 206 Remittances 10, 17, 35 Respondents 298 Risk sharing 89 Robustness 98, 123, 133, 135 Rural areas 204, 205 S Sadaqa 82, 85, 109, 135, 143, 144, 162, 163, 165, , 178 Salam 165, 207, 209, 214, 215 Score 11, 20 Seasonal 205, 213 Secular 203 Self-actualization 222, 225, 237 Shabbiness 277 Shared prosperity 142, 144, 162, 192, 193 Shareholder 49, 62 Shari ah 100, 143, 157, , 163, 165, 166, 168, 175, 176, 178, 192, 203, 204, 207, 209, 220, 233, 234, 236, 241 Shari ah-compliance 45 Shortage of funds 278 Significant 101, 109, 112, 114, 116, , 125, 126, 128, 135, 286, , 297, 299 Singapore 273, 274, 278 Small and medium enterprises 83 Small firms 48, 50, 59 Social exclusion 51 Social expenditures 252 Social norms 292

11 318 Index Social security 248 Social solidarity 142, 144, 190, 192 Social transfer payment 87 Socioeconomic 248, 292 Socioeconomic system 272 South Asia 8, 9, 212 Sovereign 87 Spiritual 206, 272 Sporadic 83 Stability 8, 9, 13, 23, 27, Statistics 83, 114 Structural poverty 249 Subsidize 145 Sukuk 272, , 282 Supply-side 51, 52, 69 Surplus 232, 233, 236, 241 Sustainable economic growth 286 Sustainable growth 4 Switching regression 98 T Taxes 83, 87, 137 Tax implications 222 Tax rebate 223, 229, 236 Theory of planned behavior 289, Transaction costs 8 Transparency 221, 225, 233, 236 Trust 221, 222, 224, 225, 234 Trustees 281 U Uganda 286, 288, 289, Uganda Muslim Supreme Council 301 Ummah 223, 238, 272, 278 Unbankable 83 Unbanked 143, , 159, 162, 173, 192 Unconditional 82, 114, 133 Unconditional cash transfers 82 Unregistered waqf land 281 Urboon 165 Utilization 5 V Vector 10, 26 Venture capital 51 Voluntary 208, 220 Vulnerable 82, 105 Vulnerable people 205 W Wakala 165 Waqf , 288 Waqf development 272, 274, 275, 282 Waqf land and properties 273, 275, 276, 278, 279, 281 Waqf property management 276 Welfare , Welfare system 203 Well-being 286 Western worldview 295 Women 83 87, 89 92, 93 97, 99, 101, 102, 104, , , , Working capital 209, 214 World Bank 87, 142, 144, 163, 178 World Bank s Enterprise Surveys 54 World Development Indicator 144 World Health Organisation 286 World Waqf Foundation 274 Worldwide 87

12 Index 319 Y Young firms 64 Z Zakah 280, 282 Zakat 82 85, 87, 101, 105, 109, 110, 135, 136, 143, 144, 162, 163, 165, , 178, 203, 204, , , Zakat evasion 223 Zakat institution 224 Zakat management 226, 229, Zero interest rate 214

Challenges in Islamic Finance

Challenges in Islamic Finance Dr. Ahmet Sekreter Business and Management Department, Ishik University, Erbil, Iraq Email: ahmet.sekreter@ishik.edu.iq Abstract Doi:10.23918/icabep2018p29 The growth of Islamic