By Rushdi Siddiqui
August 29, 2010
"One of the silver linings from the dark cloud of the credit crisis is, thankfully, fewer Islamic finance conferences..."
30.8.10
Meeting fatigue in Islamic finance
By Rushdi Siddiqui
August 29, 2010
"One of the silver linings from the dark cloud of the credit crisis is, thankfully, fewer Islamic finance conferences..."
28.8.10
Towards a Theory of Islamic Financial Reporting
Towards a Theory of Islamic Financial ReportingAnaf Masood, The Boston Consulting Group and
Mohammad Iqbal Tahir, GIFT Business School
January 2008
"This paper has two major streams. It seeks to devise an entity that will allow Muslims to raise the necessary finance to conduct large-scale commerce. Simultaneously, it presents ideas for a reporting scheme that suits this new structure. The need for a connection between the business form and its disclosure scheme is illustrated by reviewing the results of the attempts by the Accounting and Auditing Organization for Islamic Financials Institutions (AAOIFI) at setting accounting standards for a Mudaraba, a uniquely Islamic enterprise. The position of the Western corporation in Islamic law is then examined. It is found that Islam can only accept a separate legal entity that has unlimited liability. To overcome this constraint, a corporate structure that primarily channels investment through Islamic financial institutions is proposed.
The paper also identifies the quality and type of disclosures that any Islamic entity will need to make and then applies these criteria to create a reporting system for the proposed Islamic company. Among the central requirements, apart from financial information, are Zakat and Shariah compliance. It is pointed out in the paper that the proposed Islamic structure promotes a scheme of shareholder-regulated disclosure that can be used to achieve the necessary reporting standards. Even Shariah compliance can be handled for the most part internally through the Islamic bank's Shariah Supervisory Boards. It is, however, felt that Zakat is best policed by an independent agency, which would selectively audit returns submitted by the company. This method also has the advantage of accommodating the as yet unresolved difference about whether Zakat is a personal obligation or one owed by the corporate entity. Through the ideas contained in this paper, Muslims should be able to share in the benefits of modern, large-scale commerce without having to compromise their religious teachings."
26.8.10
Islamic Banking: How Has it Diffused?
IMF Working Paper - African Department
Imam, Patrick A. and Kpodar, Kangni
August 2010
Summary: "This paper investigates the determinants of the pattern of Islamic bank diffusion around the world using country-level data for 1992 - 2006. The analysis illustrates that income per capita, share of Muslims in the population and status as an oil producer are linked to the development of Islamic banking, as are economic integration with Middle Eastern countries and proximity to Islamic financial centers. Interest rates have a negative impact on Islamic banking, reflecting the implicit benchmark for Islamic banks. The quality of institutions does not matter, probably because the often higher hurdle set by Shariah law trumps the quality of local institutions in most countries. The 9/11 attacks were not important to the diffusion of Islamic banking; but they coincided with rising oil prices, which are a significant factor in the diffusion of Islamic banking. Islamic banks also appear to be complements to, rather than substitutes for, conventional banks."
24.8.10
London – the European hub for Islamic finance
London – the European hub for Islamic financeby Gillian Walmsley
London Stock Exchange
"As the profile of Islamic finance continues to grow and with current market conditions highlighting the resilience of some features of the Islamic market model, several financial centres are becoming alive to the possibilities for fostering Islamic finance and attracting new investors to their markets".
22.8.10
Analysis of Stock Screening Principles in Islamic Mutual Funds Industry
Analysis of Stock Screening Principles in Islamic Mutual Funds IndustrySalman Ahmed Shaikh MS
Lecturer, University of East, Pakistan
January 2010
"There are certain principles that need to be followed to become shariah compliant. This paper will discuss how a company can become a shariah compliant KMI-30 company by using economic models and established deductive knowledge in Economic, Finance and Portfolio theory".
20.8.10
Islamic Banking and Finance: Fundamentals and Contemporary Issues
Islamic Banking and Finance: Fundamentals and Contemporary IssuesIRTI Seminar Proceedings
Salman Syed Ali, Ausaf Ahmad
2007
The paper "deals with the fundamentals of and the issues faced by Islamic finance at the theoretical level. It addresses various contemporary issues empirically and discusses some legal issues in the practice of Islamic banking and finance."
18.8.10
Islamic Finance: Growth and Prospects in Singapore
Islamic Finance: Growth and Prospects in Singapore
Habibullah Khan & Omar K. M. R. Bashar
U21Global
June 2008
Abstract: "Islamic finance has been growing rapidly since its launch in the 1970s. The major market for this industry is typically the Middle East and it is gaining popularity in the UK, USA and Southeast Asia. Malaysia is the leading Islamic finance industry in Southeast Asia while its neighbor Singapore is relatively a new market player. Singapore revised its regulatory framework and tax structure and gradually introduced various Shariah-compliant financial products in the last couple of years. This paper argues that despite having small domestic market and competition from Malaysia, Singapore can still position itself in a niche market in the region. Through its strategy of integrated financial and economic development, Singapore can create new opportunities for Islamic finance and related financial products in the region."
Habibullah Khan & Omar K. M. R. Bashar
U21Global
June 2008
Abstract: "Islamic finance has been growing rapidly since its launch in the 1970s. The major market for this industry is typically the Middle East and it is gaining popularity in the UK, USA and Southeast Asia. Malaysia is the leading Islamic finance industry in Southeast Asia while its neighbor Singapore is relatively a new market player. Singapore revised its regulatory framework and tax structure and gradually introduced various Shariah-compliant financial products in the last couple of years. This paper argues that despite having small domestic market and competition from Malaysia, Singapore can still position itself in a niche market in the region. Through its strategy of integrated financial and economic development, Singapore can create new opportunities for Islamic finance and related financial products in the region."
16.8.10
Case Study: Pilgrims Management & Fund Board
Towards Islamic Banking: A Case Study of Pilgrims Management & Fund Board, MalaysiaKhalid Rahman
Director Institute of Policy Studies
Islamabad, Pakistan
"Experiments have been undertaken all over the world and may prove helpful in overcoming our inhibition after removing unjustified apprehensions. The task has become all the more important particularly in the context of recent Supreme Court Shariat Appellate Bench Judgment since this will help make a whole hearted beginning. This, however, requires studying in detail the institutions claiming to be operating on interest-free basis, focusing particularly on the level of success they have achieved, compatibility with Shari’ah in their working and impact on society."
14.8.10
The Changing Face of Islamic Banking
by Professor Sudin Haron
KLBS - Working Paper Series 011
November 2007
Abstract: "more and more parties have joined the bandwagon including non-Muslim institutions. This development has created a new dimension in Islamic banking system. Initially, Islamic banks were seen as institutions that operate based on religious doctrine. Today, many proponents believed that this doctrine is no longer applied by Islamic financial institutions. Majority appears to regard Islamic bank as a normal business entity with a profit maximization principle."
12.8.10
Can Banks Survive without Interest?
Can Banks Survive without Interest?By Muhammad Ayub
Senior Joint Director, Islamic Banking Department
State Bank of Pakistan, Karachi
10.8.10
Derivatives in Islamic Finance
Derivatives in Islamic FinanceAndreas A. Jobst
International Monetary Fund (IMF) - Monetary and Capital Markets Department (MCM)
Islamic Economic Studies, Vol. 15, No. 1
August 2007
Abstract: Despite their importance for financial sector development, derivatives are few and far between in countries where the compatibility of capital market transactions with Islamic law requires the development of shariah-compliant structures. Islamic finance is governed by the shariah, which bans speculation, but stipulates that income must be derived as profits from shared business risk rather than interest or guaranteed return. This paper explains the fundamental legal principles of Islamic finance, which includes the presentation of a valuation model that helps illustrate the shariah-compliant synthetication of conventional finance through an implicit derivative arrangement. Based on the current use of accepted risk transfer mechanisms in Islamic structured finance, the paper explore the validity of derivatives from an Islamic legal point of view and summarizes the key objections of shariah scholars that challenge the permissibility of derivatives under Islamic law. In conclusion, the paper delivers suggestions for shariah compliance of derivatives.
8.8.10
Islamic Finance: Debt versus Equity Financing in the Light of Maqasid al-Shari'ah
Islamic Finance: Debt versus Equity Financing in the Light of Maqasid al-Shari'ahEddy Yusof, Ezry Fahmy, Kashoogie, Jhordy and Anwar Kamal, Asim
International Islamic University Malaysia (IIUM)
April 2009
Abstract: "A hot topic among Islamic economists is the debt versus equity debate. Which of the two are more in line with justice and equality? Which of them is more productive in fulfilling the greater objectives of the Shariah? This paper is divided into sections. After the introduction, it is followed by problem statement as well as objective of the study. After that, section 4 briefs the research questions for answering the analysis in this paper. Section 5 deals with discussion obtained from literature review whichhighlights important issues regarding Maqasid Al-Shari’ah in term of justice and equality vis-àvis the current practice as well as ideal model of Islamic banking and finance. Finally, this paper ends up with conclusion."
April 2009
Abstract: "A hot topic among Islamic economists is the debt versus equity debate. Which of the two are more in line with justice and equality? Which of them is more productive in fulfilling the greater objectives of the Shariah? This paper is divided into sections. After the introduction, it is followed by problem statement as well as objective of the study. After that, section 4 briefs the research questions for answering the analysis in this paper. Section 5 deals with discussion obtained from literature review whichhighlights important issues regarding Maqasid Al-Shari’ah in term of justice and equality vis-àvis the current practice as well as ideal model of Islamic banking and finance. Finally, this paper ends up with conclusion."
6.8.10
Commodity murabaha: does it violate Islamic norms? Note
Commodity murabaha: does it violate Islamic norms? NoteHasan, Zubair (November 2008)
INCEIF
Abstract: "Recently commodity murabaha has run into disrepute due to court decisions going against the use of this instrument in Islamic banks. This brief note argues that at fault has been the structure of contracts and the excessive use of the instrument. In principle, commodity murabaha is doubtless rooted deep in the Islamic Shari’ah."
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