Hibah (Gift) for a Reward as an Islamic Financing Mechanism

Abstract

This article aims to innovate the concept of hibah (gift) for a reward to be a viable Islamic personal
financing mecahnism. This research relies on content analysis, by using Islamic legal methods and
maxims. Firstly, it investigates the legality of hibah for a reward according to Islamic law. The
concept is analysed within the framework of legal opinion within prominent Islamic legal schools.
It concludes that the concept of hibah for a reward is a Shariah-based mechanism in Islamic
commercial law. Theoretically, it could be used as an Islamic personal financing mechanism. This
article highlights the importance of real economy in Islamic financing industries. The novelty of
this research focuses on the concept of hibah for a reward as an Islamic personal financing
mechanism that would be an alternative to the current contoversial mechanisms such as bai’ al-
‘inah (sale and buy back) and tawarruq munazzam (organised commodity cost-plus sale).