Publication:
Legal and Shari'ah non-compliance risks in Nigerian Islamic finance industry: a review of the literature
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Date
2021
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Abstract
The purpose of this paper is to review the literature on Islamic finance vis-a-vis legal and Shari'ah non-compliance risks in its transactions and judicial dispute resolution in Nigeria. This is with a view to putting forward direction for future studies on the duo of legal and Shari'ah non-compliance risks and their impact in Islamic finance. This review is designed as an exploratory study and qualitative methodology is used in examining relevant literature comprising of primary and secondary data while identifying legal risk and Shari'ah non-compliance risks of Nigeria’s Islamic finance industry. Using the doctrinal approach together with content analysis, relevant Nigerian laws and judicial precedents applicable to Islamic finance practice and related publications were examined in determining the identified risks. Undeveloped laws, the uncertainty of Shari'ah governance and enforceability issues are identified as legal gaps for Islamic finance under the Nigerian legal system. The gaps are inimical to and undermine investor confidence in Nigeria’s Islamic finance industry. The review reveals the necessity of tailor-made Shari'ah-based regulations in addition to corresponding governance and oversight for a legally safe and Shari'ah-compliant Islamic finance practice. It brings to light the imperative for mitigating the legal and Shari'ah non-compliance risks associated with Islamic finance operations as crucial for Islamic finance businesses, Islamic finance institutions and their sustainable development. Based on content analysis, the review is wholly doctrinal and does not involve empirical data. Legal safety and Shari'ah compliance are not to be compromised in Islamic finance operations. The review would assist relevant regulators and investors in Islamic financial enterprises to understand and determine the impact and potential ramifications of legal safety and Shari'ah non-compliance on Islamic Finance Institutions.
Keywords
Nigeria , Islamic finance , Legal framework , Shari'ah risk , Legal risk , Conflict of laws , Shari'ah non-compliance risk , Literature review , Judicial dispute resolution
Citation
Mustapha, Z., Kunhibava, S., & Muneeza, A. (2021). Legal and Shari'ah non-compliance risks in Nigerian Islamic finance industry: a review of the literature. International Journal of Law and Management, 63(2), 275-299. http://dx.doi.org/10.1108/IJLMA-03-2020-0075
Publisher
Emerald Publishing Limited
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