Possible applications of Tawarruq (commodity Murabaha) as a cash financing tool in Islamic Banks Institutions in Somalia

Purpose – This paper aims to examine the acceptability of tawarruq (commodity murabaha) as a cash
financing tool in Somalia.
Design/methodology/approach – this study uses two original selected constructs of relative advantage,
and compatibility from diffusion of innovation theory (DOI) and three additional constructs customer
awareness, the need for tawarruq and Role of Shariah scholars. A total of 144 questionnaires were
distributed among the participants of the study. The survey was conducted in Somalia, with respondents
of Islamic banks customers. The DOI theory's theoretical model was put to the test using structural
equation modeling.
Findings – The findings show that relative advantage, compatibility, and the need for tawarruq have a
positive and significant influence on usage of tawarruq product as a cash financing tool, whereas
customer awareness and role of shariah scholars has an insignificant influence on adoption of tawarruq
as a method of cash financing.
Practical implications – The findings of this study can be beneficial to all Islamic financial institutions
in Somalia by applying tawarruq contract to facilitate cash financing.
Originality/value – This research is a pioneering attempt to examine applicability of tawarruq product
as a cash financing tool by using diffusion of innovation theory (DOI) as a base line theory, and it
presents a unique contribution to the field with regard to Somalia and also this study shed lights on the
appetite of Islamic banks’ customers of tawarruq as a cash financing method.