Tawarruq as an alternative product for bai al-inah within the Islamic banking system: A case study of Somali Islamic banks

Galad Mohamed Barre
2022 Asian Economic and Financial Review  
The problem of liquidity raises a lot of questions regarding the products and services that Islamic banks offer to their customers. The purpose of this paper is to examine the applicability of tawarruq as a cash financing instrument and the possibility of using tawarruq as an alternative to bai al-inah in Somalia. This study focuses on awareness, the need for tawarruq, comparability, behavioral intention to use tawarruq, the relative benefit of tawarruq, and the function of Shariah scholars in
more » ... etermining whether tawarruq is acceptable in Somalia. This study adopted a quantitative research method by using descriptive analysis. A self-administered questionnaire was distributed to 150 customers of Islamic banks in Mogadishu, Somalia. Convenience sampling was used to select the respondents and data was analyzed by employing Statistical Package for the Social Sciences (SPSS) 23. It was found that the customers of Islamic banks in Somalia would like to see banks offering tawarruq as a product. The study shows new evidence that the majority of the respondents agreed or strongly agreed with all variables. It was also found that tawarruq is very attractive to the respondents compared to other Islamic banking products that banks offer. The findings of this study will help Islamic financial institutions in Somalia by showing the positive aspects of utilizing tawarruq as a method of cash financing. This survey contributes to the literature by enhancing the awareness of tawarruq in Somalia. The study also shows the demand for tawarruq among customers of Islamic banks for cash financing purposes in Somalia.
doi:10.55493/5002.v13i1.4697 fatcat:ee6yzghuzff5jdfqw7isw6qp2m