Developing Shariah-Compliant Products for Islamic Banking Market in Nigeria: Can Bay’u Al-Inah (Buy-Back Sale) be Experimented?
DOI:
https://doi.org/10.33003/fujafr-2024.v2i1.82.134-146Keywords:
Bay’u Al-inah, Islamic banking, Market share, Nigeria, Shariah-complaintAbstract
The uniqueness of Islamic banking system is in the shariah-compliant products designed to serve the market. Among the products, is the controversial bay’u al-‘inah whose acceptability remains a subject of debate among shariah experts. As Islamic banking market is still evolving in Nigeria, it becomes imperative to analyze the potentials of bay’u al-inah’s adoption. This study therefore examined bay’u al-inah product with the objective of establishing whether the product could be adopted to improve market share of Islamic banks. Data were collected with a structured questionnaire which was used to obtain data from customers of Jaiz bank and Lotus bank in Kwara State. Six Hundred (600) copies of questionnaire were administered to respondents. Ordered Logistic Regression was conducted for the data analysis. The study found that bay’u al-inah personal financing (Coeff =0.51, p<0.05), home financing (Coeff =0.82, p<0.05), and working capital financing (Coeff =0.16, p<0.05),) have positive and significant relationship with market share which was measured with number of customers’ accounts. It was concluded based on the findings that, bay’u al-inah has great potentials for attracting more customers to Islamic banks and boosting the market share of Islamic banks in Kwara State, Nigeria. the study recommends that, subject to the assessment and approval of shariah committee of experts, bay’u al-inah be adopted by Islamic banks in Kwara State and Nigeria as whole.
References
Abdullah, A. (2017). A comparison between Malaysia and Indonesia in Islamic banking industry. Research Journal of Business and Management (RJBM), 4(3), 276-286.
Abdul Razak, D. (2011), Diminishing partnership as an alternative islamic home financing in Malaysia: Issues and perceptions. Unpublished PhD dissertation, Universiti Sains Malaysia
Abdul Razaq, D. & Tazwar, F. (2018). Islamic home financing practices in selected OIC countries: An assessment in the light of maqasid al-shariah. Journal of Islamic Management Studies, 2(1), 1-11.
Abozaid, A. (2010). Contemporary islamic financing modes between contract technicalities and shariah objectives. Islamic Economic Studies, 17(2), 56-75.
Abubakar, Y.S. & Ogunbado. A. F. (2016). Using bay al-inah in issuance of sukuk in primary market: A look into scholars’ view. Kuwait Chapter of Arabian Journal of Business and Management Review, 6(3), 54-62.
Adil, M. B. (2006). Developing a financial model for Islamic credit card for the UK, Masters Dissertation: University of Salford.
Asni, F. (2021). Management of fatwa standardization on the practice of bay’ ‘inah contract in Malaysia: an analysis according to usul al-Fiqh and mura’aht al-Khilaf method. Qualitative Research in Financial Markets, 13(1), 118-139
Asni, F., Ramle, M.R., Yasin, D.H.F., Ahmad, K.M. & Abd Rahman, B.H (2022). Analysis of Hadith and Athar Arguments in Bay’ ‘Inah Contract Based on The Tarjih Method. International Journal of Academic Research in Business and Social Sciences, 12(6), 1733 – 1746.
Asni, F., & Sulong, J. (2019). Analysis of the Development of Islamic Home Financing History in Malaysia. International Journal of Academic Research in Business and Social Sciences, 9(6), 817–828.
Aziz, A. (2013). Perlaksanaan prinsip al-Bay'Bithaman Ajil dalam pembiayaan perumahan: analisis di Bank Kerjasama Rakyat Malaysia dan Bank Muamalat Malaysia Berhad (Master dissertation, University of Malaya).
Bank Negara Malaysia [BNM] (2013). Implementation of Shariah Advisory Council of Bank Negara Malaysia’s Resolution on Bai’ ‘Inah” (BNM/RH/CIR 008_21, issued on 1 November 2013), pages: 1-8.
Jamaludin, A. (2018). Why in Favor of Tawarruq not Bai’ Al-Inah in Personal Financing Product? International Journal of Islamic Banking and Finance Research, 2(1), 83-90.
Jimoh, A. T., Ijaiya, M. A., Attah, J. A, Abdulmumin, B. A. & Etudaiye-Muhtar, O. F. (2022). Comparative analysis of technical efficiency of Islamic banks in selected low-income countries of Africa and Asia. Journal of Business Management and Accounting, 12(2), 81-102
Johnson, S., & Kwak, J. (2012). Is Financial Innovation Good for the Economy?’ in J. Lerner and S. Stern (eds.). Chicago: University of Chicago Press.
Lerner, J. (2006). The New Financial Thing: The Origins of Financial Innovations. Journal of Financial Economics, 223-255.
Li, C. (2016). Islamic finance in Asia: Recent developments and regulatory issues. Asia Focus, Asia Programme, Federal Reserve Bank of Sanfrancisco. Retrieved 5th December 2019 from https://www.frbsf.org/banking/files/Asia-Focus-Islamic-Finance.pdf
Maulidizen, A. (2019). Bay’u al-ʻinah:Concept and implementation according to mazhab and contemporary scholars. Al-banjari, 18(1), 1-24.
Mbogoh,G.M(2013). The effect of financial innovation on financial performance of insurance companies in Kenya. Unpublished MBA project submitted to university of Nairobi kenya
Muhammad, A., Raza, S. A., & Puah, C.H. (2015). Factors affecting intention to use Islamic personal financing in Pakistan: Evidence from the modified TRA model. MPRA Paper No. 66023. https://mpra.ub.uni-muenchen.de/66023/
Nursyamsiah, T., & Kayadibi, S. (2012). Application of Bay‘u al-‘Inah in Islamic Banking and Finance: From the Viewpoint of Siyasah Shar‘iyyah. The Multifaced global crises of riba: Resilience, response and reform. Conference Paper, 3rd Annual World Conference on Riba Paxson, D., & Wood, D, (1998). Encyclopedic Dictionary of Finance. Oxford: Blackwell.
Sawari, M. F., Abdullahi, N.A.N., Shamsuddin, M.M. & Abdul Aziz, A. (2018). Issues of bai’ al-‘inah in the contemporary islamic financial products and its solutions according to the shariah principles. South East Asia Journal of Contemporary Business, Economics and Law, 15(5), 95-103.
Shaharuddin, A. (n.d).The Bay' al-Inah Controversy in Malaysian Islamic Banking.
Shahwan, S., Mohammad, M. O., & Rahman, Z. A. (2013). Home financing pricing issues in the Bay’Bithaman Ajil (BBA) and Musharakah Mutanaqisah (MMP). Global Journal AlThaqafah, 3(2), 23-36
Shuib, M. S., Mohamad, M. T., & Sulaiman, A. A. (2013). Kemungkiran pemaju dalam produk pembiayaan perumahan secara Islam: analisis pendekatan penyelesaian. Jurnal Pengurusan, 38, 141-149.
Silber, W. (1983). The Process of Financial Innovation. American Economic Review Papers and Proceedings, 89-95.
Yusoff, A. F. J. & Yahaya, M. Z. (2020). Innovations of Islamic Personal Financing Mechanisms in Malaysia. International Journal of Innovation, Creativity and Change, 14(9), 797-813.
Yusoff, A. F., Zain, M. N., Yaacob, S.E, Hanafi, H., Abdul Ghani, N. A., Idrus, A. M. & Radzi, M. S. R. (2016). Islamic Personal Financing Instruments in the Malaysian Banking Industries: Issues and Alternatives. Journal of Contemporary Islamic Law, 1(1), 24-38.
Downloads
Published
Issue
Section
License
Copyright (c) 2024 FUDMA Journal of Accounting and Finance Research [FUJAFR]
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The FUDMA Journal of Accounting and Finance Research (FUJAFR) operates a copyright policy that ensures a balance between author rights and wide dissemination of scholarly work.
1. Author Copyright Retention
Authors retain full copyright of their published work without restriction. Submission to FUJAFR does not transfer ownership of copyright to the journal.
2. License to Publish
By submitting a manuscript and upon acceptance, authors grant FUJAFR:
- The right to publish, reproduce, and distribute the article
- The right to identify itself as the original publisher of the work
This grant is non-exclusive, meaning authors are free to reuse their work in other contexts, provided proper acknowledgment of the original publication in FUJAFR is made.
3. Licensing of Published Content
All articles are published under the:
Creative Commons Attribution-NonCommercial License (CC BY-NC 4.0)
Under this license:
- Users may share and adapt the work for non-commercial purposes only
- Proper attribution to the author(s) and the journal is required
- Any commercial use requires explicit permission from the copyright holder
4. Author Reuse Rights
Authors are permitted to:
- Archive their published articles in institutional repositories or personal websites
- Share their work for educational and research purposes
- Reuse portions of their work in future publications (e.g., books or other articles), provided proper citation of the original publication is included
5. Third-Party Content
Authors are responsible for obtaining permission to use any third-party copyrighted material (e.g., images, tables, datasets) included in their manuscripts. Proper acknowledgment must be provided where required.
6. Attribution Requirement
All users of FUJAFR content must provide appropriate credit, including:
- Author name(s)
- Article title
- Journal name (FUJAFR)
- Year of publication
