Application of Tawarruq in Islamic Banking in Malaysia: Towards Smart Tawarruq

Abstract

The objective of the paper is to discuss the application of tawarruq in Islamic banking generally. The modus operandi of tawarruq in Islamic banking is an essential discussion in jurisdiction like Malaysia, where most Islamic banks use tawarruq to structure Islamic banking products. This paper employs a systematic literature review on best practice models and mechanism of current tawarruq application. The outcome of the research helps to understand the modus operandi of tawarruq transactions practically with a view towards understanding its future prospects in the era of Fintech. It is envisaged that this research will assist the growing understanding of the existing application of tawarruq in Islamic banking as well as its future development using technology.

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