Opalesque Islamic Finance Intelligence - Sixteenth Issue

We have compiled a great mix of content for this edition of OIFI (download the PDF version), and we start with our Editorial's anecdotal perspective of the MENA region.  Having repeatedly received inquires regarding consumer appetite for Islamic finance products, our Featured Resource section compiles various country studies on consumer awareness, behaviour and perception.

Mudaraba applied in the context of microfinance is the theme for the Featured Structure segment, as scrutinized by practitioner Azhar Nadeem. Hdeel Abdelhady provides an operational perspective to Islamic finance in Lex Islamicus - with particular emphasis on governance and Shariah Board reports (SBRs).

Having spent time in Matsushima (one of the three famous "views" of Japan) in the north of Miyagi prefecture, it is a welcome coincidence that the Kulliyyah Korner features the research of Kyoto-based Nagaoka Shinsuke. Our best goes to him and everyone in Japan.

The Industry Snapshot offers a further analysis of Education based on the EPL concept (Education, Perception, Liquidity), as seen by strategist Joy Abdullah. This is followed by Douglas Clark Johnson who shares his perspective on Bahrain in our Opinion Column.

We hope you enjoy the sixteenth edition of OIFI and as always we are glad to hear from our readers and welcoming all comments & feedback. Remember that you can visit our online archive (see reference link) for access to our ever-growing databank of Opalesque Islamic Finance Briefing as well as all of the back issues of Opalesque Islamic Finance Intelligence.

Download the complete issue of Opalesque Islamic Finance Intelligence here.

Alternatively you can read each article separately in the OIFI Archive:
Editor’s Note: In the Name of Egypt
Featured Resource: The Islamic Finance Consumer
Featured Structure: Islamic Business Contracts and Microfinance A case of Mudaraba
Lex Islamicus: Operational Excellence is the Key to Unlocking Lasting Value in Islamic Finance
Kulliyyah Korner: On the Theoretical Dichotomy of Islamic Finance
Industry Snapshot: E.P.L. in Islamic Finance - Education (Extra Time)
Opinion Column: Bahrain: Time to be Truly Business-Friendly

Opalesque Islamic Finance Intelligence - Sixteenth Issue

Call for Papers - Eight International Conference on Islamic Economics & Finance

Eight International Conference on Islamic Economics & Finance
"Sustainable Growth and Inclusive Economic Development From An Islamic Perspective"
Doha, Qatar
December 25-27, 2011


Call for Papers:  The global economy continues to face the perennial problems of poverty, persistent youth unemployment, excessive inequalities of income and wealth, high levels of inflation, large macroeconomic and budgetary imbalances, exorbitant debt-servicing burdens, inadequate and aging public utilities and infrastructure, skyrocketing energy prices, and growing food insecurity. The reoccurring regional and global financial crises further intensify and magnify these problems particularly for the underprivileged segments of the world population. As a result, many countries are at the risk of failing to achieve the Millennium Development Goals (MDGs) set by the United Nations. However, some countries also present optimistic experiences to share, and from which useful lessons can be drawn for shaping the future economic scene in other countries.

The Eighth International Conference on Islamic Economics and Finance is jointly being organized by the Qatar Foundation’s Faculty of Islamic Studies (QFIS) through its Islamic Economics and Finance Center, the Islamic Development Bank Group through its Islamic Research and Training Institute (IRTI), and the International Association for Islamic Economics with the support of other stakeholders. The Conference will provide a platform for dialogue and discussions between policymakers, academics, researchers, graduate students, and practitioners to address the problems of poverty alleviation, inclusive economic growth, and macroeconomic stability from the perspective of the Islamic Economics and Finance discipline. The Conference will be held for three days during December 25 – 27, 2011 in Doha, Qatar.
Theoretical and empirical research papers are invited in Arabic and English languages for submission to the Conference in the following and related areas, subject to the conditions described in this announcement.

Tickets and Hotel: One author of each accepted paper will be paid by IRTI round-trip economy class air tickets, and hotel stay, including food during the conference.

Dates to Watch: 
Submission of abstracts with CVs April 15th
Decision of Academic Committee May 5th
Submission of First Draft of Papers July 15th
Decision of Academic Committee August 15th
Submission of Final Draft October 10th

Download Call for Papers:
http://www.qfis.edu.qa/files/pdf/Eigth%20Int%20Conf%20Call%20for%20Papers.pdf

With sincere thanks to Dr. Taruqullah Khan for highlighting this information.

Call for Papers - Eight International Conference on Islamic Economics & Finance

Islamic Securitisation: Part II - A Proposal for International Standards, Legal Guidelines and Structures

Islamic Securitisation: Part II - A Proposal for International Standards, Legal Guidelines and Structures
Mohammad Saad Lahlou, University of Westminster, School of Law
Joseph Atangan Tanega, University of Westminster, School of Law
June 2007

Abstract: "The authors propose that international standards for cross-border Islamic Securitisations be established to help overcome legal uncertainties. Given the principles of Sharia law, templates for a number of Islamic financial instruments are examined together with some examples of successful international transactions."

Islamic Securitisation: Part II - A Proposal for International Standards, Legal Guidelines and Structures

Islamic Securitisation: Part I - Accommodating the Disingenuous Narrative

Islamic Securitisation: Part I - Accommodating the Disingenuous Narrative
Mohammad Saad Lahlou, University of Westminster, School of Law
Joseph Atangan Tanega, University of Westminster, School of Law
May 2007

Abstract: "The article examines the fundamental principles, substance versus form, and operational elements of Islamic finance as applied to Islamic securitisation. We review some central aspects of the ideological and spiritual tradition of Sharia compliance as applied to a typical asset backed securities transaction."

Islamic Securitisation: Part I - Accommodating the Disingenuous Narrative

The Relationship between Jakarta Islamic Index and Other Selected Markets

The Relationship between Jakarta Islamic Index and Other Selected Markets: Evidence from Impulse Response Function
Irfan Syauqi Beik, Lecturer and Researcher at the Department of Economics, Bogor Agricultural University, Indonesia
Wisnu Wardhana, Postgraduate Student of the International Islamic University Malaysia, Researcher of ISEFID (Islamic Economic Forum for Indonesia’s Development)

Abstract: "The financial crisis, which was triggered by the subprime credit in the United States, is probably the most severe crisis for the last century. It has affected many countries in the world including Indonesia. In spite of worsening financial market in recent months, Indonesia has a great potency to be a hub for international Islamic finance. This paper attempts to analyze Indonesia’s Islamic Stock Market, namely Jakarta Islamic Index (JII), in relation with other Islamic as well as conventional stock markets in Malaysia and the United States, especially during the subprime crisis which started in early 2006. This research uses daily closing data of stock price indices obtained from Bloomberg database from January 1, 2006 until December 31, 2008. It employs time series analysis of cointegration and impulse response function. The results show that there is no long run relationship between Indonesia’s capital market and both Malaysia and the US markets. For investors, the results will give them choices for their investment portfolio. Meanwhile, in Indonesia’s perspective, this should be an opportunity for promoting its capital market as the potential destination for profitable investment. In the short run, the JII is significantly affected by the shock or disturbance taking place in the other markets. However, the results also indicate that the JII is the least volatile and more stable market."

The Relationship between Jakarta Islamic Index and Other Selected Markets

Islamic Hedging: Gambling or Risk Management?

Islamic Hedging: Gambling or Risk Management?
Saadiah Mohamad, Universiti Teknologi MARA, Malaysia
Ali Tabatabaei, Universiti Teknologi MARA (UiTM)
August 2008

Abstract: "Although there is a lack of consensus regarding derivatives and the development of sharia-compliant funds to mimic hedge funds in order to tap the global surplus liquidity especially the Gulf petrodollar, sharia scholars are generally agreeable that hedging is permissible and necessary as a risk management tool. However, there is still considerable debate regarding the kind of instruments that could be sharia-compliant. This paper looks at the main forms of hedging and examines the debate surrounding the use of derivatives in Islamic financial markets. The paper then looks at alternatives for sharia-compliant hedging mechanisms and in particular examines an Islamic financial derivative of Bai Salam that can mimic a short sale in a conventional option, but with potential for becoming a more superior risk management tool."

Islamic Hedging: Gambling or Risk Management?

Central banking and monetary management in islamic financial environment

Central banking and monetary management in islamic financial environment
Hanif, M. Nadim and Sheikh, Salman
July 2010

Abstract: "Continuous growth in Islamic finance calls for studying the framework in which the monetary policy maker (i.e., central bank) performs its functions. Central banks in Muslim countries are using various instruments for monetary policy purpose including interest rate. As a result, Islamic financial institutions (IFIs) are facing issues in benchmarking the price of financial instruments. Acceptable solution to benchmarking lies in the presence of a real economic activity in the base of any proposal and its feasibility for business performance when put against conventional banking. This paper presents empirical evidence of statistical equivalence of nominal GDP growth rate and official interest rate for ‘advanced,’ ‘all,’ and some Muslim countries. We propose nominal GDP growth rate as benchmark for pricing domestic financial transactions of IFIs as well as for pricing external bilateral/ multilateral loans. The paper also suggests nominal income targeting as monetary policy regime and provides a liquidity management mechanism for banking system in Islamic financial environment."

Central banking and monetary management in islamic financial environment