Defining Islamic guidelines for extended warranties: Fatwa analysis and practical applications

Mustafa Mat Jubri Shamsuddin — Wed, 01 Jan 2025 00:00:00 +0100

This study addresses the challenge of defining comprehensive Islamic guidelines for extended warranties, a topic marked by inconsistent practices and conflicting scholarly opinions. Focusing on fatwa analysis and practical applications, the research bridges the gap between Islamic principles and modern market needs. The study employs a qualitative methodology, conducting extensive library research on academic literature and analyzing 28 fatwa rulings from 1999 to 2024. Findings reveal a spectrum of scholarly opinions, with consensus on standard warranties included in original sales, but divergence on separately purchased extended warranties. The research identifies key parameters for Shariah compliance, including integration with the original sale contract, transparency of terms, and avoidance of excessive uncertainty (gharar) and gambling-like elements (maysir). Practical applications are proposed, including takaful-based models and service-oriented warranties focusing on periodic maintenance. These align with Islamic principles of cooperation (ta'awun) and consumer protection while addressing market demands. The study emphasizes the importance of purchase timing and suggests integrating extended warranties into initial product pricing as a viable approach in Islamic finance. Additionally, it explores the potential of sustainability-focused warranty structures to align with Islamic ethics and contemporary environmental concerns, offering a framework for the practical implementation of Shariah-compliant extended warranties in various market contexts.

Stress Test of Credit Risk using Montecarlo Simulation : Indonesian Sharia Rural Banks

Uvy Dian Rizky, Abdul Mongid — Mon, 06 Jan 2025 00:00:00 +0100

This study examines the influence of macroeconomic shocks on credit risk within Indonesian sharia rural banks for a period of January 2010 to March 2020. This study employs Monte Carlo simulations and the Error Correction Model (ECM). The results indicate that GDP growth, inflation, and exchange rate are significantly influence the Non-performing financing (NPF) in the long term, while interest rate have a considerable impact on the NPF in the short term. Meanwhile, financing or credit growth has no substantial impact on the NPF in either the long term or short term. The stress test results indicate that Indonesian Islamic rural banks have a high probability of default with a forecasted NPF rate of 10.91%, a differential maximum NPF of 0.33 % at a confidence level of 95%. Therefore, it is suggested that the banks should note that the exchange rate has a strong effect on NPF, and anticipate the high probability of default with sufficient capital to cover losses.

Journal of Emerging Economies and Islamic Research

Defining Islamic guidelines for extended warranties: Fatwa analysis and practical applications

Stress Test of Credit Risk using Montecarlo Simulation : Indonesian Sharia Rural Banks