Reconciling the dual banking system: application model for salam contracts in Malaysia
Views & Download
The Islamic financial system in Malaysia has emerged as a viable and vibrant component of the overall financial system. Nevertheless, salam based Islamic Banking products are anything but popular in the context of the Malaysian banking industry, despite boasting more than 40 Islamic financial products available, ranging from retail based products to project financing. This is partially due to the misconstructions over the viability of salam contracts. These misconceptions largely discount the social value for such contracts overlooking the fact that salam based contracts bridge the gap between the financers and recipients fostering platforms for substantial economic trust, providing for a price hedge for the buyer and cost hedge for the recipient. These benefits are not only available under the principles guiding Islamic banking and its ancillary products, but rather, offers a relatively large optimistic outlook for conventional banking as well, owing primarily but not limited to, its social value.
Salam , Contracts , Islamic banks , Dual banking , Malaysia
Hassan, R., Muneeza, A., & Wisham, I. (2011). Reconciling the dual banking system: application model for salam contracts in Malaysia. Malayan Law Journal, 5, pp. lix-lxxix.
LexisNexis Malaysia Sdn Bhd