The concept and application of daman al-milkiyyah (ownership risk)‎ : Islamic law of contract perspective

Abstract EN

Purpose – The purpose of this paper is to elucidate the concept of dam an al-milkiyyah (ownership risk) and to assess its application in contemporary Islamic financial products and services.

Design/methodology/approach – The methodology adopted is that of descriptive research.

Findings – From an Islamic law of contract perspective, the concept of dam an al-milkiyyah is central to legitimate profit-making transactions and hence must be adhered to in practical applications of Islamic finance.

Research limitations/implications – This study should help motivate further investigation into the position of dam an al-milkiyyah among different parties in existing Islamic financial products and services.

Practical implications – Policymakers and regulators should ensure that Islamic financial products and services are structured in a way that does not allow parties to profit without adequately bearing the liability for potential loss.

Social implications – The condition of dam an al-milkiyyah as a source of legitimate profit reflects the idea that the role of finance in Islam is to promote and ensure social benefits.

Originality/value – This paper emphasizes the importance of daman al-milkiyyah as a fundamental condition for profit in Islamic financial transactions.