David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Jack Alan Reynolds
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Journal of Business Ethics 117 (3):601-613 (2013)
We argue that although halal certification could potentially reduce the high transaction costs related to buying Islamic financial products, in practice these costs are just replaced by transaction costs relating to the certification itself. It takes considerable time (2–3 months) and money (USD 122.000) to obtain a halal certification. Partially, this is because the market is highly concentrated and non-contestable. About 20 individual Sharia scholars control more than half the market, with the top 3 earning an estimated USD 4.5 million in fees per year. Moreover, this market seems plagued with problems, most notably a strong incentive for excessively lenient certification, lack of consensus on what is considered halal and sub-standard governance practices. We discuss solutions to these problems and conclude that a neutral non-profit government entity should assume the role of halal certifiers.
|Keywords||Islamic finance Certification Transaction costs|
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References found in this work BETA
Geoffrey Williams & John Zinkin (2010). Islam and Csr: A Study of the Compatibility Between the Tenets of Islam and the Un Global Compact. [REVIEW] Journal of Business Ethics 91 (4):519 - 533.
Rafik I. Beekun & Jamal A. Badawi (2005). Balancing Ethical Responsibility Among Multiple Organizational Stakeholders: The Islamic Perspective. [REVIEW] Journal of Business Ethics 60 (2):131 - 145.
Daylian M. Cain, George Loewenstein & Don A. Moore (2007). The Dirt on Coming Clean: Perverse Effects of Disclosing Conflicts of Interest. International Corporate Responsibility Series 3:81-99.
Citations of this work BETA
Albert D. Spalding & Eun-Jung Katherine Kim (2015). Should Western Corporations Ban the Use of Shari’a Arbitration Clauses in Their Commercial Contracts? Journal of Business Ethics 132 (3):613-626.
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