Unity of Ownership in the Islamic Framework and its Implications for the Financial Markets (Money and Capital)

Document Type : Science - Research (Islamic Finance Jurisprudence)

Authors
Hosein Meisami 1
Sayyed Abbas Mosavian 2
1 Assistant Professor at Monetary and Banking Research Institute of the Central Bank of the Islamic Republic of Iran, Tehran, Iran.
2 Professor at Institute of Islamic Culture and Thought, Qom, Iran.
10.30497/ifr.2019.2268
Abstract
The Unity of Ownership is one of the critical issues in the field of Islamic banking and finance that may have some considerable implications for the money and capital markets. Thus, this study, while explaining the unity of ownership concept and offering a jurisprudential analysis of it, tries to answer its basic question: “What are the effects of the Unity of Ownership between the partners of contracts on the money and capital markets?”
   Using an analytical-descriptive approach, this paper aims to prove the hypothesis that “the Unity of Ownership will prevent the enforcement of some conventional rules of the Islamic contracts”. The results show that Unity of Ownership carries some specific implications for the financial market relations. As an example, we can refer to the financial transactions by the government,  Central Bank and state banks being exempted from the forbidden riba; the secondary market would not be applicable to treasury bills for the government’s debts to the Central Bank and state banks; and in the capital market, if the issuer and seller of debt sukuks are the same, the issued sukuks for financing the purchase of commodities by the intermediary company will face transactional challenges and lose their jurisprudential legitimacy.
Keywords
Unity of Ownership
Money Market
Capital Market
Riba JEL Classification: D53
E52
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Volume 9, Issue 1 - Serial Number 17
November 2019
Pages 145-174

  • Receive Date 30 January 2017
  • Revise Date 24 February 2017
  • Accept Date 25 February 2017