Default Amount Determination in Islamic and Conventional Banking: Evidence from Banking Disputes
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Witrofoledy Saladin
Marhanum Che Mohd Salleh*
Ahmad Khaliq
The determination of claim amounts in financing default remains a critical issue, particularly in Islamic banking, where default claim calculations must comply with both legal and Shariah requirements. Despite the growing development of Islamic finance, limited studies have examined whether the methods used to determine claim amounts differ from those applied in conventional banking. This study aims to comparatively analyze the calculation of claim amounts in Islamic and conventional banking disputes. Using a qualitative approach, this study adopts document review and case analysis methods involving eleven Islamic financing cases and ten conventional banking cases adjudicated by Malaysian courts. The analysis focuses on the approaches adopted by financial institutions and the courts in determining the amounts claimed in financing recovery disputes. The findings reveal that the amounts claimed by Islamic banks in default cases are significantly higher compared to conventional banks. The difference is attributed to variations in contractual structures, financing mechanisms, and methodologies applied in calculating outstanding obligations. The study highlights the need for greater transparency and consistency in claim calculation practices, particularly within Islamic banking to ensure alignment with Shariah principles and legal expectations. This research contributes to the understanding of Islamic banking default case resolution by providing comparative insights into claim determination practices and offers implications for Islamic financial institutions, regulators, legal practitioners, and policymakers.
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