International Journal of Islamic Economics and Governance

Insolvency Risks in Islamic Banks: Lessons from Comparative Case Studies of Failed Institutions

Ahmad Hidayat bin Md Nor — 2025-12-30

This study investigates the causes of insolvency in Islamic banks (IBs) through a qualitative multiple-case analysis of failed Islamic financial institutions (IFIs) in Turkey, Jordan, and South Africa. The selected cases İhlas Finans (IF), Islamic Bank Limited (IBL), Islamic Investment House (IIH), and Islamic National Bank (INB) are examined to identify key governance, regulatory, and Shariah-related weaknesses that contributed to their collapse. Data were collected from secondary sources, including regulatory reports, court records, and academic studies, and analyzed using thematic and comparative approaches. The findings reveal that inadequate governance, absence of comprehensive insolvency and recovery frameworks, and weak Shariah governance were central causes of institutional failure. Conflicts between national laws and Shariah principles further compounded the insolvency risks. The study contributes to the literature by providing a cross-jurisdictional understanding of insolvency risks in Islamic banking and proposing the need for structured resolution mechanisms aligned with Shariah principles. Policy recommendations are offered to enhance regulatory supervision, strengthen Shariah governance, and improve crisis preparedness within the Islamic banking sector.

Adoption of Blockchain and Cloud Computing in Morocco Insurance Sector: A SLR Approach

Maryam Saeed — 2025-12-30

This paper aims to investigate the challenges and prospects regarding adoption of Blockchain and Cloud Computing in the Moroccan Insurance Industry, in an Islamic country context, through a Systematic Literature Review (SLR). Several millennia prior to Christ, the concept of insurance was discovered (BC). Shifting or distributing risks was a tactic used by traders from Babylonia and China in the second and third millennia BC. Insurance is now the backbone of the economy, but increasing its ubiquity in developing countries is challenging. The recent emergence of IoT, Big Data, and InsurTech prompted the fourth insurance business revolution in the industrialized world. This study looks at the issues with Blockchain and Cloud Computing adoption and possible solutions to increase insurance coverage in Morocco. A PRISMA approach opt to find pertinent literature from Google Scholar or Emerald, by using number of keywords. The selected studies were evaluated against predefined inclusion and exclusion criteria. This analysis identified multiple barriers that hinder the adoption of Blockchain and Cloud Computing in Morocco’s insurance industry, and it also highlighted potential mitigation strategies. The findings offer actionable insights that could assist policymakers in improving service delivery across the sector. Morocco’s insurance sector faces Blockchain and Cloud adoption challenges, including security risks, infrastructure limitations, skill shortages, and regulatory gaps. Solutions focus on government support, collaboration, staff training, and secure, compliant technological implementation.

Advancing Sustainable Livelihoods and Societal Development: An Integrated Approach for Islamic Charity Organizations

AIJAZ BASHIR LONE — 2025-12-30

Islam provides different ways to fulfil the objectives of eradicating poverty and establishing social and economic justice. Some of the best-known tools to raise funds for poverty reduction and social and economic justice in Muslim communities are obligatory or voluntary, such as Zakat, Waqf, Sadaqah, Qard al-Hassan, etc. These funds are mostly collected by Islamic charity organizations (NGOs) to be distributed or spent on various causes. For example, funds are commonly employed through Islamic social finance in Muslim communities for a variety of reasons, including to reduce the vulnerability of the poor, promote sustainable livelihoods, achieve the common good, mitigate humanitarian crises, etc. The paper discusses these tools of Islamic social financing and the employment of funds through Islamic charity organizations for the common good. The paper also discusses the compatibility of the proposed structure and functioning of Islamic charity organizations to utilize the funds in a more efficient way to achieve a suitable livelihood and development in society.

Human Capital Development for Takaful Sector in Malaysia: Addressing the New Challenges

Muhammad Musa — 2025-12-30

A tremendous growth has been witnessed by the Islamic Finance industry worldwide over the last decade, however, Takaful sector still requires attention for increasing its market share and for strengthening its position in the industry over its conventional counterparts. The human capital pool quality is crucial for Takaful sector performance. This study investigates the human capital role in the organizational performance of the Takaful sector of Malaysia through the mediating role of social capital under the theoretical foundation of resource-based theory and equity theory. The primary data is collected through a structured questionnaire from the 350 employees working in the Takaful sector in Malaysia using a judgement sampling technique. Structural Equation Modelling (SEM) is applied using Smart PLS software. The study finds that human capital factors has a statistically significant impact on the Takaful companies' performance. Furthermore, the study confirms that social capital as a mediator only mediates the relationship between skills and knowledge and Takaful companies' performance. The proposed framework provides a major contribution towards present practices and challenges in the human and social capital field which leads to the Takaful companies’ performance in Malaysia. This study is helpful to policy maker, practitioner and researcher as it will be useful for revamping human capital development strategies in promoting the market.

The Islamic Country Nigeria Borrows on Riba: Introducing Esham as an Instrument of Borrowing

Oluwaseun S. Saidu — 2025-12-30

The Nigerian government continues to adopt conventional financial instruments of government borrowing. The use of these instruments both in the past and in the present has not yielded the desired results as it continues to wallow in debt with little or no development to show for it. This borrowing escapade by the government would not have been problematic if Nigeria were a religiously neutral state. However, Nigeria is home to over a hundred million Muslims and her constitution guarantees freedom of religion whilst she regularly sponsors pilgrimages to the haramain and sharafain every year. It is therefore visible to the blind and audible to the deaf that Nigeria is an Islamic country and therefore should use Islamic instruments of borrowing. The objective of this paper is to highlight the abhorrent use of non-Islamic means of borrowing by the Nigerian Government and to introduce a relatively new instrument of borrowing for use within the Nigerian state. The benefit of using an Islamic means of borrowing therefore becomes evident in that, the overarching maqsad of the shari’ah being obedience to Allah, blessings from the heavens and the earth will naturally trickle in (The Qur’an, 7: 96) This is not withstanding the concomitant pragmatic and pecuniary benefits associated with non-usurious transactions. Methodically, the paper adopts legal reasoning, scriptural reasoning, constitutional analysis and public evidence.

A Thematic Analysis of Fatwas on Bitcoin and Cryptocurrency

Muhammad Asif — 2025-12-30

The global expansion of Bitcoin and cryptocurrencies brings unanswered questions of the Islamic finance that are legal in nature. The existing research is divided into two camps, namely, total prohibition, or conditional acceptance. It is a thematic analysis of 32 public fatwas (2014-2024) of 12 Islamic jurisdictions in the first systematic analysis. The application of cryptocurrencies and their Shariah acceptability are analyzed. This paper applies the six-stage model offered by Braun and Clarke and it establishes five key jurist themes. The former theme is the ambiguity of the issue of whether cryptocurrencies are to be treated as mal (property) or thamaniyyah (money). The second theme talks about gharar, i.e., excessive uncertainty that is caused by volatility, lack of transparency and regulatory instability. The third theme concerns speculation by trading which is similar to maysir (gambling). The fourth theme is about mafsadah, which is harm to society and includes illicit use, environmental costs and inequality. Lastly, the fifth theme is on interpretations and deviations which form conditional permissibility in the presence of regulation and transparency, which minimises the risks of jurisprudence. The findings indicate that juristic disagreement is not an issue of inconsistency but the use of the various kinds of reasoning on novel financial technologies. The study paves the way in the study of Islamic-finance, by transforming the disjointed textual load of fatwa into a juristic map, which articulates the reasons behind the variance of rulings, as opposed to how they vary. This paper can be used by Shariah boards, regulators, and developers of digital assets to take action on implementing maqasid al-Shari, in the regulation of digital assets.