Sunday, February 12, 2017

Islamic finance in Europe (31)

Continuation
The author notes that:
For insurance products, Islamic jurists have developed a Shari’ah-compliant system.
This system based on:
§  mutual cooperation;
§  and mutual assistance
It commonly known as takaful.
In this system they aim to create a structure very similar to that of conventional mutual insurance.
Participants in the takaful pay a sum of money to a mutual cooperative fund.
The money called tabarru.
Thus, in the insurance case the tabarru is used for compensation of loss.

From the research paper of European Central Bank

(Authors: F.Mauro, P.Caristi, S.Couderc, A.D.Maria, L.Ho, B.K.Grewal, S.Masciantonio, S. Ongena and S.Zaher)

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