Situating an Informal Funds Transfer System in Islamic Legal Theory: The Origin of Hawala Revisited

Year 2022, Volume: 33 Issue: 1, 1 - 41, 30.06.2022

Ali Ekber Çınar

https://doi.org/10.26650/di.2022.33.1.1052681

Abstract

Research interest regarding hawala, an informal funds transfer system, has been growing since the outset of the twentyfirst century. As for its origin, a number of authors claims that it has an Islamic origin and likens it to either ḥawāla or suftaja, which are two legal instruments elaborated in Islamic legal texts. This paper challenges that claim, comparing the hawala with ḥawāla and suftaja. The comparison reveals that the hawala does not have a specific counterpart in Islamic legal theory. On the contrary, its validity, nature, and quality are sensitive to and dependent on some minor details, and it may take the shape of diverging legal instruments from the perspective of Islamic law. Therefore, assuming that the hawala hails from and operates according to Islamic law is erroneous, and new-fashioned studies adopting historical and sociological perspectives are necessary to shed light on unanswered questions about the issue.

Keywords

Hawala, informal funds transfer system, Islamic law, debt assignment, suftaja

Thanks

I would like to thank Intisar Rabb, Fethi Gedikli, Fatma Gül Karagöz, and Mustafa Feliciano who read earlier drafts of this paper and shared their insightful comments. I would also like to thank the audiences of the International Conference on Islamic Economics and Finance (ICISEF) 2021 at Sakarya University, 7th Islamic Law Graduate Student Symposium at Istanbul University, and 2021 Yaz Son Okuma Seminerleri at ISAR Research Center. Most notably, I am grateful to Hasan Hacak, Murteza Bedir, Süleyman Kaya, and Tahir Kılavuz for their critical and constructive comments. The responsibility for any remaining errors is mine.

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