Integration of waqf portfolio into Islamic financial system : An innovative approach to developing waqf as a product and a business model in the financial market

Abstract EN

Waqf is a very powerful financial instrument whose resilience can be witnessed throughout history so that it managed to survive during economic recessions, financial crises, and even the brutal colonization the Muslim Ummah was subject to.

During colonial era, every effort was made to abolish/destroy waqf because it was the only and consistent source of income for many entities.

One way to take waqf to the next level of innovation and to make it more fruitful is to integrate waqf portfolio into the Islamic financial system.

This is the best way that can transform waqf into an active market player and prominent component in the Islamic finance composition.

It can be said that waqf is the sleeping giant and the day it wakes up it will take over substantial market share and become the dominant and the controller of many business portfolios of the market place.

History shows that waqf was the dominant body in many countries such as Turkey, Egypt, Tunisia, Algeria, Syria, Iraq, Palestine etc.

This significant role of waqf is again expected to get impetus in the near future where waqf will take over its prominent position as a leading institution that provides finance, welfare and prosperity to the Ummah.

The present paper is discussing the approach of achieving this objective.

Design/Methodology/approach: The paper follows comparative analysis method by looking at the waqf and the way of its implementation in the financial system in an innovative way to meet the objectives of Shari’ah in general, and finance and economics in particular.

Findings: The result of the paper shows that cash waqf has a very dynamic structure that can penetrate in any financial structure of the Islamic financial system, banking, Takaful, Islamic capital market and other business activities in the market place.

The contribution of cash waqf in its new format will result in playing a significant role in meeting the objectives of Shari’ah in terms of finance and economics where the value of justice, equity, cooperation and solidarity will flourish in the society and create a holistic environment that brings the society to the level of brotherhood and prosperity.

Reserch Limitations/Implications - Pracical Implications: This paper can be useful in understanding how cash waqf is of a dynamic nature and can be shaped out and implemented in different sophisticated financial structures in the Islamic finance.

Originality/Value: The paper provides a good knowledge about the principles of cash waqf and how it can be offered to the market in a sophisticated range of products in Islamic finance.