Scintific Journal of "Islamic Finance Researches" (IFR)

Post-Transaction Processing Operations in the Blockchain Platform; a Model for Using Fintech in Islamic Finance

Document Type : Science - Research (Islamic Banking)

Authors

1 M.A. Student, Faculty of Economics, Kharazmi University, Tehran, Iran

2 Assistant Professor, Faculty of Economics, Kharazmi University, Tehran, Iran

Abstract

Large-scale financial operations are carried out every day in the financial markets. The stability and efficiency of this system rely on a solid infrastructure for the transfer and settlement of these transactions. This article analyzes the role that blockchain can play in improving these processes. Post-transaction processes enable buyers and sellers to exchange details, verify their activities, change ownership of documents, and exchange security. Studies have shown that the model of post-transaction processing operations based on blockchain can increase efficiency and improve their compliance with the principles of jurisprudence (fiqh) and Sharia, especially the “harmless rule” (la-zarar) and the Darya barrier (blocking the ways of evil). Also, the transparency of the blockchain network reduces the possibility of fraud and misconduct. On the other hand, the disadvantages of the current process such as delays in obtaining ownership transfer confirmation, inconsistent information, participation risk, operational risk, settlement ambiguity, the complexity of trust accounts, and costly intermediaries are minimized, which in turn leads to the improvement of compliance with Islamic jurisprudence.

Keywords

The Holy Quran.
Bank Negara Malaysia, BNM. (2017). Central Bank Digital Currency: A Monetary Policy Perspective.
Ministry of Information Technology MOIT. (2017). Digital Pakistan Policy.
Islamic Financial Services Board (IFSB). Islamic Financial Services Industry Stability Report 2016.
Swan, M. (2015). Blockchain: Blueprint for a New Economy. O’Reilly Media، Inc.
Hazik, M., & Hassnian, A. (2019). Blockchain, Fintech, and Islamic Finance–Building the Future in the New Islamic Digital Economy.
Dresher, D. (2017). Blockchain Basics. Apress, Frankfurt. DOI: 10.1007/978-1-4842-2604-9
Schwartz, R. A., & Francioni, R. (2004). Equity Markets in Action: The Fundamentals of Liquidity, Market Structure & Trading+ CD (Vol. 207). John Wiley & Sons.
Movahed, M, A. (2021). Islamic Financial Products: Principles, Instruments and Structures 2th ed.
Saiti, B., Hasan, A., & Ali, E. R. A. E. (2016). Islamic Interbank Money Market: Contracts, Instruments and Their Pricing. In Islamic Capital Markets. Palgrave Macmillan, Cham. 67-100.
Oseni, U.A. & Omoola, S.O., (2015). Banking on ICT: The Relevance of Online Dispute Resolution in the Islamic Banking Industry in Malaysia. Information & Communications Technology Law, 24 (2), 205–223.
Watanabe, H., Fujimura, S., Nakadaira, A., Miyazaki, Y., Akutsu, A., & Kishigami, J. J. (2015). Blockchain contract: A Complete Consensus Using Blockchain. In 2015 IEEE 4th Global Conference on Consumer Electronics (GCCE) 577-578.
Watanabe, H., Fujimura, S., Nakadaira, A., Miyazaki, Y., Akutsu, A., & Kishigami, J. (2016). Blockchain Contract: Securing a Blockchain Applied to Smart Contracts. In 2016 IEEE International Conference on Consumer Electronics (ICCE) 467-468.
Adams, M. (2016). Fintech: ASIC’s Approach and Regulatory Issues. In 21st Melbourne Money and Finance Conference ASIC, Further Measures to Facilitate Innovation in Financial Services, Consultation Paper. 260, 10-12.
Ansari, A. H., Jamal, P., & Oseni, U. A. (2012). Sustainable Development: Islamic Dimension with Special Reference to Conservation of the Environment. Advances in Natural and Applied Sciences, 6(5), 607-620.
Oseni, U. A., & Omoola, S. O. (2017). Prospects of an Online Dispute Resolution Framework for Islamic Banks in Malaysia: An Empirical Legal Analysis. Journal of Financial Regulation and Compliance.
Shubayr, M. U. (2004). Takyif al-fiqhi lil Waqa’i’Al-Mustajiddah wa Tatbiqatuhu Al-Fiqhiyyah.
Hassan, M. K. (2006). The X-efficiency in Islamic Banks. Islamic Economic Studies, 13(2).
Kadi, Y, A. (2016). Council of the European Union and Commission of the European Communities
Scintific Journal of
Volume 11, Issue 1 - Serial Number 21
February 2021
Pages 291-332
  • Receive Date: 11 May 2021
  • Revise Date: 23 September 2021
  • Accept Date: 26 October 2021