Islamic funds seek socially responsible roadmap

(Reuters) - The Islamic investment sector can widen its customer base by adopting a socially responsible model, according to industry experts, but distribution channels, a sophisticated investor base and incentive schemes need to be enhanced first.

Malaysian Airlines aims for landmark Islamic bond

(Reuters) - Malaysian Airlines (MAS) has proposed the world's first corporate perpetual sukuk, a debt-equity hybrid, its top official said, hoping to raise up to 2.5 billion ringgit ($798 million) from the Asian state's Islamic capital markets.

Bahrain's GFH agrees $110 mln sukuk restructuring

(Reuters) - Bahrain-based Islamic investment bank Gulf Finance House (GFH) has obtained approval to restructure a $110 million Islamic bond, extending repayment for six years, the company said in a statement on Sunday.

You're hired! Islamic finance seeks own Apprentice
(Reuters) - Islamic finance is on the hunt for an apprentice. Dome Advisory, an international sharia advisory firm is launching a nationwide search for talented students at UK universities who can come up with a business plan or research idea that will aid the development of Islamic finance.

Afghanistan mulls Islamic bonds, fearing Western cash cutback
(Reuters) - Afghanistan, which has only a semblance of a capital market, intends to sell Islamic bonds as it braces for a possible sharp fall in Western financial support as the war against the Taliban winds down, a senior central bank official said this week.

Australia's NSW revives Islamic finance push
(Reuters) - The government of the Australian state of New South Wales, home to the country's financial capital Sydney, will send a group to Dubai this week to discuss ways to develop the Islamic finance industry, officials said.

Islamic repo agreements struggle for traction
(Reuters) - Islamic repurchase agreements may struggle to gain wide acceptance as a tool for financial institutions because the industry lacks clear rules governing their use, participants at a major industry conference told Reuters.

AAOIFI urged to improve Islamic auditing system
(Reuters) - Auditors of Islamic financial institutions need better training to make sure they can conduct accurate assessments of products and practices, a major industry conference was told this week.

No windfall from Qatar ban on Islamic windows
(Reuters) - A year after Qatar ordered conventional banks to stop offering Islamic financial services, an expected windfall for its Islamic banks has yet to materialise. Nor is it clear that banks' customers are benefitting from the policy.

Analysis: Political divisions slow Islamic finance in Egypt
(Reuters) - AlexBank, one of Egypt's biggest commercial banks, says it expects to launch Islamic financial services next April. But the country's political divisions mean the regulatory environment in which the bank will operate is not clear.

Analysis - Slower takaful growth prompts strategy rethink
(Reuters) - Growth of the takaful or Islamic insurance business is slowing, industry statistics show, increasing pressure on the sector to boost efficiency, roll out new products and explore new markets.

New IFSB guidelines focus on Islamic bank risk
(Reuters) - The Islamic Financial Services Board (IFSB) has published new guidelines on liquidity and stress-testing, seeking to reduce the balance sheet risk of Islamic financial institutions in line with a tightening of standards in conventional banking.

Analysis: Islamic finance pressured to join accounting mainstream
(Reuters) - Rapid growth of Islamic finance is increasing pressure for the industry to enter the accounting mainstream, by seeking guidance from the International Accounting Standards Board (IASB), the global body which sets the tone for book-keeping in conventional finance.

Huge mandate for planned new Islamic Bank
(Reuters) - Gulf institutions plan to spur development of the Islamic finance industry by setting up a bank that would boost liquidity in sharia-compliant markets. But the mandate of the bank is so wide that it may struggle to have an impact early on.

AAOIFI proposes Islamic finance accounting changes
(Reuters) - The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has proposed more detailed accounting standards for real estate while increasing disclosure for Islamic banks' investment accounts.

Global Islamic finance assets hit $1.3 trillion - study
(Reuters) - Islamic financial assets around the world hit $1.3 trillion in 2011, a 150 percent increase over five years as the industry expands into new country's beyond core markets in the Middle East and Malaysia, a report on Thursday estimated.

Goldman advisor says completed work on sukuk
(Reuters) - Dar Al Istithmar, the advisor to Goldman Sachs' planned $2 billion sukuk programme, said it had finished obtaining the approval of Islamic scholars for the issue and that the next move was up to Goldman.

Standard launched for Islamic profit rate swap
(Reuters) - In an effort to help Islamic financial institutions hedge risk, global standard-setting bodies have launched a standard contract template for Islamic profit rate swaps (PRS).

Arcapita Chapter 11 exception, not rule for Gulf
(Reuters) - Bahraini investment house Arcapita's move to file for bankruptcy protection in the United States, while a milestone for debt restructuring in the Gulf, is unlikely to prompt other regional firms to follow suit.

Tunisia sets up Islamic finance working group
(Reuters) - The Tunisian government has set up a working group that will study how to develop Islamic finance in the country, a finance ministry official said.

Insight: "Rock star" scholars a risk for Islamic finance
(Reuters) - Decades of parsing turgid legal documents have not dampened the enthusiasm of octogenarian Islamic scholar Sheikh Hussein Hamed Hassan. He gets agitated as he searches for a paper among piles of documents strewn across his posh Dubai office.

Islamic Banking: a Growing or Shrinking Consumer Market in Kuwait?

Islamic Banking: a Growing or Shrinking Consumer Market in Kuwait?
By Faten Jabsheh, Weam Behbehani, and Shaima Al-Shamali

Abstract: "The steady expansion of Islamic banks (IBs) has been the hallmark of the Muslim financial landscape of the 1980s and 1990s. With a network that covers over 60 countries and an asset base of over $166 billion, Islamic banks are currently playing an increasingly significant financial and developmental role in their respective economies. Islamic banking has gained increased attention in the GCC (Gulf Cooperation Council) over the past number of years, capturing a growing 13% share of total Islamic banking assets around the world. This paper questions the growth of Islamic banking activity in the GCC, and focuses on developing prospects for one GCC country, namely Kuwait. Using detailed survey instruments regarding the provision of various Islamic banking services, the results of this study affirm the hypothesis that Islamic banking is claiming a growing market share and consumer market in Kuwait."

Islamic Banking: a Growing or Shrinking Consumer Market in Kuwait?

Background Material: Islamic Interbank Benchmark Rate (IIBR)

You can find additional information on the recently launched Thomson Reuters' Islamic Interbank Benchmark Rate (IIBR) through the various links below.  This includes the main Islamic Benchmark website as well as various PDF documents included below.


Further details can be found on the following topics:
- Background
- Definition, methodology & criteria
- Timing of publication
- Contributor Panel
- Governance

Specific PDF documents include:
IIBR fact sheet
IIBR FAQ
IIBR Governance Procedures 
Terms of Reference - Shariah Committee
Terms of Reference – Islamic Benchmark Committee
Shariah Opinion (English)
Shariah Opinion (Arabic)

Background Material: Islamic Interbank Benchmark Rate (IIBR)

Thomson Reuters launches the world's first Islamic Interbank Benchmark Rate (IIBR)

Thomson Reuters launches the world's first Islamic Interbank Benchmark Rate (IIBR)

This is a welcome development for the Islamic Finance industry:


'Thomson Reuters today launched the world's first Islamic finance benchmark rate, designed to provide an objective and dedicated indicator for the average expected return on Shariah-compliant short-term interbank funding: The Islamic Interbank Benchmark Rate (IIBR).'

Further details in the official press release.

Thomson Reuters launches the world's first Islamic Interbank Benchmark Rate (IIBR)

Harvard Islamic Finance Project DataBank

The Harvard Islamic Finance Project (IFP) website contains reports of IFP events for the past sixteen years and the Databank with over 9,000 records which include bibliographic information along with abstracts on articles, books, book chapters, conferences and theses relevant to the field of Islamic finance and economics. In addition to these resources, a collection of Quranic verses and hadith as well as a glossary of terms related to Islamic finance are included.


Users can register and access the Databank free of cost at http://ifp.law.harvard.edu. The IFP also features an option for users to submit their own published work or any relevant items via "Submit Your Work" option on the menu bar.


Many thanks to Muhammad Hassaan Yousuf for highlighting this resource.

Harvard Islamic Finance Project DataBank

Economic Performance of the OIC Countries and the Prospect of an Islamic Common Market

Economic Performance of the OIC Countries and the Prospect of an Islamic Common Market
By Kabir Hassan

Abstract: "This paper examines economic performance of the OIC member countries and analyzes the prospect of Islamic common market by analyzing trade data within a gravity model framework. There is scope of trade creation for OIC member countries if all impediments to trade and business can be eliminated. The paper also examines various sub-regional grouping within the context of gravity model, and finds that D8 comprising eight bigger OIC member countries is trade creating. For example, two countries in D8 block would trade 22 times more among themselves than two otherwise-similar country in outside the block would. The paper suggests a number of policy parameters which if followed will lead to more trade among member countries. The issue of Islamic common market should be examined further in light of new data and changed global perspectives. This paper is complements and extends Hassan (2002) and Hassan and Islam (2001), where similar conclusions were derived and policies were suggested."

Economic Performance of the OIC Countries and the Prospect of an Islamic Common Market

5th International Islamic Capital Market Forum (IICMF)

Risk Sharing: A Way Forward To Public Good
5th International Islamic Capital Market Forum (IICMF)
Kuala Lumpur on 10th November 2011

The IICMF is an effort by the SC to promote the Islamic capital market and serves as a capacity and knowledge building forum that addresses current issues, including strengths, challenges, risks and opportunities in the Islamic finance industry. The 5th IICMF will focus on a risk-sharing system as an alternative to the present fractional banking system from the perspectives of the economics, legal and Shariah.

The details on the event can also be viewed at http://www.sc.com.my/eng/html/icm/iicmf/iicmf_2011.pdf

5th International Islamic Capital Market Forum (IICMF)

Samples of Islamic Finance Contracts

Samples of Islamic Finance Contracts
By Monzer Kahf

"The purpose of providing sample contracts of Islamic Financing is to show how these contracts are formulated and how the Islamic Financing principles are reflected in legal terms."

Samples of Islamic Finance Contracts

Intertemporal Test of Beta Stationarity Performance of Islamic Sector Structured Mutual Funds

Intertemporal Test of Beta Stationarity Performance of Islamic Sector Structured Mutual Funds
By Mahmoud Haddad, Ghassem Homaifar, Said Elfakhani and Hikmat Ahmedov

Abstract: "The purpose of this research paper is to examine social Islamic mutual funds’ financial performance. Since Islamic mutual funds have only been around for the past two decades, most of the research on this topic is fairly new. In this study we apply the single factor model of Schwert and Seguin (1990) to a sample of Islamic mutual funds. The Islamic mutual funds market is one of the fastest growing sectors within the Islamic financial system. Several studies have investigated the characteristics of individual Islamic mutual funds (see Elfakhani, et al (2006), Elfakhani ,et al (2005), and Hassan, et al (2005). We are not aware of any studies that have applied the Schwert and Seguin methodology to Islamic mutual funds. Such an application is important because it allows for studying the impact of market volatility on the time variation of monthly betas and the corresponding returns. Using the S&P 500 and the FTSE Global Islamic indices on sector structured Islamic mutual funds, our results suggest that the volatility of the market and that of the Islamic mutual funds portfolio behave differently with inter and intra market proxies. There is also evidence that the volatility persistence of each Islamic mutual fund portfolio and its systematic risk are significantly related. Hence, the systematic risks of different portfolios tend to move in a different direction during periods of increased market volatility. As a result, we gain an insight into the return dynamics and the process by which Islamic mutual funds prices are determined."

Intertemporal Test of Beta Stationarity Performance of Islamic Sector Structured Mutual Funds

Financial Guarantee as an Innovation Tool in Islamic Project Finance

Financial Guarantee as an Innovation Tool in Islamic Project Finance
By M. Kabir Hassan & Issouf Soumaré

Abstract: "This paper proposes a model to study the arrangement of Islamic project finance with the participation of the government as a provider of loan guarantees. The owner-shareholders (musharaka certificate holders) initiate a project and raise funds by issuing Islamic profit-loss sharing mudaraba certificates. The government intervenes in providing financial guarantees in order to enhance the creditworthiness and increase the mudaraba capital capacity of the project. Our work raises several policy implications related to the structuring of Islamic project finance and the participation of both government and multilateral public agencies such as the Islamic Development Bank. It provides a unifying framework for the improvement of access to funds for Islamic projects and gives a rationale for government intervention in the arrangement of these projects."

Financial Guarantee as an Innovation Tool in Islamic Project Finance

Strategic Trends in the Islamic Banking and Finance Movement

Strategic Trends in the Islamic Banking and Finance Movement
By Monzer Kahf

Strategic Trends in the Islamic Banking and Finance Movement

Survey: Perspectives on Trends in Islamic Finance

Hello Global Islamic Finance Resources community,


We are a team of MBA students working on a research project revolving around trends of the Islamic Finance industry. We are hoping to gather some feedback and opinions from the GIFR community on some identified trends that we believe exhibit increasing prominence in shaping the industry for the future. We have prepared a short questionnaire that would take approximately 10 to 15 minutes to complete. Your responses would go a long way in assisting us in our research.


Thanks in advance!

Survey: Perspectives on Trends in Islamic Finance

Survey: Perspectives on Trends in Islamic Finance

Message from the President and CEO, INCEIF

Message from the President and CEO, INCEIF

Maqasid al Shari’ah in the Prohibition of Riba and their Implications for Modern Islamic Finance

Maqasid al Shari’ah in the Prohibition of Riba and their 
Implications for Modern Islamic Finance
By Monzer Kahf

"This paper aims at re-visiting, from the angle of modern finance, the objectives of Shari’ah in regard to the prohibition of Riba and examining the consistency of such Fatawa with these objectives and whether there are any Shari’ah-intrinsic alternatives that satisfy the same finance purposes which such Fatawa thought to achieve."

Maqasid al Shari’ah in the Prohibition of Riba and their Implications for Modern Islamic Finance

Job Opportunities in Islamic Banking & Finance

Job Opportunities in Islamic Banking & Finance
AIMS - Academy for International Modern Studies
July 2011

This is a periodic compilation of job postings and openings from a multitude of sources (all relevant to Islamic banking & finance), which can be found on the AIMS website. Hoping to highlight other similar sources in the future and feedback in this regard is also very welcome. 

Job Opportunities in Islamic Banking & Finance

Can Islamic finance play key role in growth and prosperity?

Can Islamic finance play key role in growth and prosperity?
By Mushtak Parker
Arab News
July 2011

"In perhaps one of her more potentially important speeches in recent times, Zeti Akhtar Aziz, governor of Bank Negara Malaysia, the central bank, stressed that the increasing internationalization of Islamic finance and the burgeoning trade and economic linkages between the emerging countries present an important opportunity for the industry to make a meaningful and enhanced contribution toward economic growth and prosperity of these countries."

Can Islamic finance play key role in growth and prosperity?

A Different Kind of Consolidation in Islamic Finance

A Different Kind of Consolidation in Islamic Finance
By Rushdi Siddiqui
July 2011

One of the most over-used words in Islamic finance is not standardization, scholars, regulations, etc., but 'consolidation'. Islamic banks, Islamic leasing companies, Takaful companies need to consolidate to reach size and achieve scale.

A Different Kind of Consolidation in Islamic Finance

Development of Islamic Banking with Reference to UAE

Development of Islamic Banking with Reference to UAE
Fayaz Ahamed
June 2010

Abstract: Banks play an important and active role in the economic development of a country. The global financial system (GFS) is a financial system consisting of institutions and regulators that act on the international level, as opposed to those that act on a national or regional level. Islamic banking is a classical concept. Islamic banking system has emerged as a competitive and a possible substitute for the conventional banking system during the last three decades. Islamic Banking is no longer limited to specialized institutions and has expanded both geographically and in product richness, with structured credit finance receiving most of the attention. Greater importance of the General Council for Islamic Banking and Finance Institutions (GCIBFI), the Islamic Financial Service Board (IFSB), the Islamic International Rating Agency (IIRA) and the Accounting and Auditing Organization of Islamic Finance Institutions (AAOIFI), will add consistency in accordance to Islamic laws [shariah] interpretations by religious boards and the primacy of bankable governing law as a matter of form remain essential to further growth of Islamic banking.


Islamic banking transactions are governed by the codes of the shariah, which prohibits interest and regulates that income, must be resulting as return from capitalist investment. This present study analyses the Islamic banking operations currently practiced in Global banking system. This paper explains the fundamental legal principles of Islamic Banking, which includes a brief review of the current state of Islamic banking development and provides the analysis of Islamic Banks with their acquired results. The paper suggests a Global organization that would allow Islamic banks to develop in compliance with its Islamic laws [shariah] principles.

Development of Islamic Banking with Reference to UAE

Have Islamic Banks Been More Resistant than Conventional Banks to the 2007-2008 Financial Crisis?

Have Islamic Banks Been More Resistant than Conventional Banks to the 2007-2008 Financial Crisis?
By Khawla Bourkhis and Mahmoud Sami Nabi

Abstract: "The recent global financial crisis has induced a series of failure of many conventional banks and led to a renewal of Minsky (1986)’s critics about the inherent instability of the fractional-reserve banking. In this context, many economists advocate for the return to narrow banking and/or for favoring the development of Islamic banking supposed to be more resilient to the financial crises. This paper attempts to answer empirically the two following questions: i) Have Islamic banks (IBs) been more resistant than their conventional peers (CBs) to the 2007-2008 financial crisis? ii) Could the presence of Islamic banks in a conventional banking system enhance the overall systemic stability? The main findings are the following. Before the financial crisis, IBs were more profitable than CBs. Then, in 2007-2008, only the large IBs remained more profitable than the large CBs. However, IBs became less profitable in 2009 when the crisis’s pass-through to the real economy had sufficiently increased. Moreover, we show that CBs were more resistant to the crisis than IBs. Hence, IBs illustrated a degree of resilience and stability during the first (financial) wave of the crisis. However, they have been impacted during the second (real) wave because of their higher exposure to real estate and their limited reliance on risk sharing instruments. Nevertheless, we find a positive externality of large IBs on the soundness of large CBs which could be justified by their asynchronous reactions to the crisis."

Have Islamic Banks Been More Resistant than Conventional Banks to the 2007-2008 Financial Crisis?

The International Role of Islamic Finance

The International Role of Islamic Finance
QFinance
By Andreas Jobst

Executive Summary

• Islamic finance has become mainstream, with more than US$800 billion of assets worldwide. However, it still faces distinct developmental challenges from economic and legal constraints associated with sukuk, banking-specific issues, and fragmented financial regulation.

• Although Islamic capital markets and banking have defied the impact of the financial crisis, some negative effects were felt in 2008 and are likely to inhibit further expansion.

• Despite current challenges, most of which arise from the infancy of the industry, Islamic finance has promising long-term prospects.

The International Role of Islamic Finance