An exploratory study on shariah non-compliance income in Tawarruq home financing in Malaysia

• Main Author: Muhammad Nasharudin Mu'Im, Nazri
• Format: Thesis
• Language: English; English; English
• Published: 2022
• Subjects: BP174 The practice of Islam; HG Finance
• Online Access: https://etd.uum.edu.my/10240/1/permission%20to%20deposit-embargo%2024%20months-828319.pdf; https://etd.uum.edu.my/10240/2/s828319_01.pdf; https://etd.uum.edu.my/10240/3/s828319_02.pdf; https://etd.uum.edu.my/10240/

The purpose of this study is to explore the factors that contribute to the SNCI in tawarruq home financing. Tawarruq-based home financing has been implemented by 10 out of 16 Islamic banks in Malaysia. This study uses the document analysis method from sources that may include previous studies, papers, journals, reports, and books that are related to the topic, as well as semi-structured interviews methods with three respondents—two practitioners and one academic—who all came from different institutions and held different positions that took part in the interview session. The data was then manually analyzed. The finding of the study show that every factor; the sequence of sale contract, contract disclosure, possession and delivery, wakalah agreement, ta’widh, renewal of financing, and purpose of financing can cause an SNC event that contributes to SNCI due to failure to comply with Shariah compliance, triggering the negative effect in Islamic banks, thus all these seven variables contribute positively to the SNCI. Furthermore, the finding of the study can also pinpoint the root causes that contribute to SNCI cases, which include people, systems, and processes. Finally, and perhaps importantly, this study offers some suggested recommendations that should be put into practice based on these 3 root causes.