Key Trends in Islamic Funds

Most recent report from EurekaHedge on the growth and distribution of Shariah-Compliant Funds. Very comprehensive state of the industry (with nice charts).

Please scroll up for new link from EurekaHedge website (courtesy Bernardo).

Key Trends in Islamic Funds

The Concept of Promise and Bilateral Promise in Financial Contracts : A Fiqhi Perspective

The Concept of Promise and Bilateral Promise in Financial Contracts : A Fiqhi Perspective
Assoc. Prof. Dr. Mohamad Akram Laldin, Executive Director, ISRA
ISRA Research Paper (No. 4/2009)

"The topic of promises needs clarification and precise determination. It is vitally important because promises are relevant to a great number of contemporary issues. The paper thus reviews the types of promises in the Shari’ah and juristic opinion as to whether promises are legally binding. It concludes by highlighting nine (9) Shariah parameters that must be applied in allowing promises. It argues that if fulfilling promises is a binding obligation, then promises should be not be used indiscriminately; rather, parameters must be laid down to govern their use. Among the suggested parameters are that promises should not displace and impede the objectives of contracts. For example, partnership contracts are intended to make the contracting parties share in the profit and loss; therefore, promises should not be used to negate this essential feature. For the remaining 8 parameters, download the paper!"

The Concept of Promise and Bilateral Promise in Financial Contracts : A Fiqhi Perspective

The Islamic Inter bank Money Market and a Dual Banking System : The Malaysian Experience

Bacha, Obiyathulla (2008): The Islamic Inter bank Money Market and a Dual Banking System : The Malaysian Experience. Published in: International Journal of Islamic and Middle Eastern Finance and Management 3 1 (2008): pp. 210-226.

Although this paper works on correlation and causation, it is not clear that whether unit root tests have been performed and whether this analysis should be in terms of differences rather than levels. Also, large discrepancies between the Islamic Interbank rate and the Conventional rate are definitely worth some further discussion.

The Islamic Inter bank Money Market and a Dual Banking System : The Malaysian Experience

CW: Cleaning a Passive Index: How to Use Portfolio Optimization to Satisfy CSR Constraints

Cleaning a Passive Index: How to Use Portfolio Optimization to Satisfy CSR Constraints
Moshe A. Milevsky, Andrew R. Aziz, Allen Goss, Jane Thomson, David Wheeler
December 2004

CW: Cleaning a Passive Index: How to Use Portfolio Optimization to Satisfy CSR Constraints

IFSB - Capital Adequacy Standards

GN-1: Guidance Note In Connection with the Capital Adequacy Standard: Recognition of Ratings by External Credit Assessment Institutions (ECAIs) on Shari`ah-Compliant Financial Instruments
March 2008

"The objective of this Guidance Note is to outline criteria which the Islamic Financial Services Board (IFSB) recommends national supervisors should take into account when determining which external credit assessment institutions may have their ratings used to calculate capital adequacy ratios under the IFSB’s December 2005 Capital Adequacy Standard. The IFSB also hopes that the Guidance Note will promote a wider debate on key points of rating methodology for Shari`ahcompliant instruments."

IFSB - Capital Adequacy Standards

Insurable Interest in Takaful Pracitices: An Analysis

Insurable Interest in Takaful Pracitices: An Analysis
Nusaibah Mohd Parid, Researcher, ISRA
ISRA Research Paper (No. 3/2009)

"This paper seeks to examine the application of insurable interest to takaful practices in general, with special reference to section 152 of the Insurance Act 1996. It is found that the unique features of takaful do allow for the application of insurable interest, but section 152 should be adopted in the Takaful Act only with certain modifications and guidelines, as have been discussed in the paper. However, it was found that there are still some unresolved issues in current takaful practice that require significant attention, issues related to the fundamental principles underlying takaful practices, such as the contract itself. It must be stressed, once again, that this paper only intends to bring forward a perspective or view on insurable interest in takaful practice, especially from the perspective of the Shari’ah, which can be further discussed, examined and modified, if necessary."

Insurable Interest in Takaful Pracitices: An Analysis

Risk Management For Islamic Financial Institutions: A Rating Perspective

Risk Management For Islamic Financial Institutions: A Rating Perspective

Standard & Poor's

January 2008

Risk Management For Islamic Financial Institutions: A Rating Perspective

Is the Ban on "Organised Tawarruq" The Tip of The Iceberg?

Is the Ban on "Organised Tawarruq" The Tip of The Iceberg?
Rafe Haneef, Research Fellow, ISRA
ISRA Research Paper (No. 2/2009)

"The paper discusses and analyses the perspectives of both opponents and proponents of tawarruq with the view of ascertaining the soundness of the Fiqh Academy ruling. Interestingly, the tawarruq ruling epitomizes the growing divide between proponents and opponents of the contemporary Islamic finance industry as a whole. Generally, those who oppose tawarruq also abhor murabahah lil amir bi shira’, Ijarah muntahiah bittamlik, contemporary sukuk al-mudharabah, musharakah and wakalah and many other contemporary Islamic finance products. The critics view the ban on tawarruq as the tip of the iceberg. The critics want the whole iceberg, the contemporary Islamic finance industry itself, to be exposed and transformed in its totality. Many of the critics believe that the transformation can only be realized by banning all the contemporary contracts mentioned above and rejuvenating the classical mudharabah and musharakah contract. Hence, it is important to discuss the tawarruq ban within the overall Islamic Finance context."

Is the Ban on "Organised Tawarruq" The Tip of The Iceberg?