This book discusses the nature and theories which govern systems of Islamic finance including its most distinctive features and its relationship with conventional financial institutions.
It explores the nature and role of money in modern economies and elaborates on the process of credit deposit creation, trade cycles and instruments for the creation of value in financial markets through the perspectives of Islamic finance. The author explains its characteristics, especially the rationale for the lack of interest-based financial activities. He examines the intrinsic ethical and humanistic frameworks that govern financial theories and practices and the models for the creation of value, risk-sharing and socially responsible investing, as well as the governance and regulation that these systems follow. The author also does a comparative assessment of conventional financial systems with Islamic finance with relevant examples, assesses the performance of Islamic systems and examines existing and expanding markets for Islamic finance.
Lucid and cogent, this book is useful for scholars and researchers of Islamic finance, Islamic studies, economics, banking and finance in general.
Author(s): Hasan Zubair
Edition: 2
Publisher: Routledge
Year: 2023
Language: English
Pages: 173
City: London
Cover
Half Title
Title Page
Copyright Page
Table of Contents
List of figures
List of tables
Preface to the second edition
Glossary
Chapter 1: Introduction to Islamic finance
1.1 Money and finance
1.2 Finance and wealth creation
1.3 Islam and finance
1.3.1 Why not take or give interest?
1.3.2 Risk-sharing
1.3.3 Time value of money
1.3.4 Avoidance of gharar
1.4 Why ban interest?
1.4.1 The rationale for prohibition
1.5 The rise of Islamic banking
1.6 Summary
Note
Chapter 2: Value of money, trade cycles and social consequences
Preview
2.1 Introduction
2.2 Key measures
2.3 A new measure mooted
2.4 The risk-sharing ruckus
2.5 Concluding observations
2.6 Summary
Chapter 3: Islamic finance: The basics
Preview
3.1 Introduction
3.2 The basics
3.3 Main features
3.3.1 The ban on interest
3.3.2 Factors and profit sharing
3.3.3 The ban on interest
3.3.4 Non-investible businesses
3.3.4.1 Involving speculation (maisir)
3.3.4.2 Those infested with gharar (indeterminacy)
3.3.4.3 Inviting unethical activities
3.4 Growth for development
3.5 System convergence
3.6 Islamic finance and the turmoil
3.7 The gold dinar echo
3.8 Summary
Chapter 4: Contracts and instruments
Preview
4.1 Introduction
4.1.1 Legal maxims
4.2 Participatory modes
4.2.1 Ratio determination
4.3 The instruments
4.3.1 Murabahah
4.3.2 Musharakah
4.4 Sharing and investment
4.5 Summary points
Glossary
Select references
Chapter 5: Financing consumer durables
Preview
5.1 Introduction
5.2 The MMP
5.2.1 Compounding
5.2.2 Waiver of compounding
5.2.3 The Bay Bitehamam Ajil variants
5.3 The ZDBM
5.4 Ownership transfer comparison
5.4.1 Relative efficiency
5.5 Concluding remarks
5.6 Summary
Chapter 6: Islamic financial markets character and instruments
Preview
6.1 Introduction
6.1.1 Money markets
6.1.2 Capital markets
6.1.3 Direct and indirect modes
6.2 Murabahah
6.2.1 The criticism
6.2.2 The markup issue
6.2.2.1 A guideline
6.3 The musharakah
6.3.1 Sharikat-ul-Milk
6.4 Other instruments
6.4.1 Leasing or ijarah
6.4.2 Hire purchase and rent sharing
6.4.3 Salam
6.4.3.1 Parallel salam
6.4.4 Istisna’
6.5 Combining the modes
6.5.1 The BBA structure
6.5.2 Tawarruq
6.5.2.1 Illustration 1
6.5.2.2 Illustration 2
6.6 Benevolent loan (qard hasan)
6.7 Summary
Chapter 7: Investment sukuk: Islamic bonds
7.1 Introduction
7.1.1 Meaning and origin
7.1.2 Differences
7.2 Bonds, equity shares, and sukuk
7.2.1 Structuring the sukuk
7.2.2 Mudarabah sukuk
7.2.2.1 Illustration 1
7.2.3 Musharakah sukuk
7.2.3.1 Illustration 2
7.2.3.2 Illustration 3
7.2.4 Ijara sukuk
7.2.5 Murabahah sukuk
7.2.5.1 Illustration 4
7.2.6 Salam sukuk
7.2.7 Istisna’ sukuk
7.2.7.1 Illustration 5
7.2.7.2 Illustration 6
7.3 Sukuk: current position
7.4 Benchmarking
7.5 Summary
Chapter 8: Risk and risk management
8.1 Introduction
8.2 Risk profit and finance
8.3 Islam and financial risks
8.3.1 Risk management
8.3.2 The requirements
8.3.3 Types of risk
8.3.3.1 Market risk
8.3.3.2 Credit risk
8.3.3.3 Fiduciary risk
8.3.3.4 Shari’ah noncompliance risk
8.3.3.5 Liquidity risk
8.3.3.6 Foreign exchange risk
8.3.3.7 Other risks
8.4 Enterprise risk management framework
8.4.1 Derivatives and risk mitigation
8.4.2 Exchange risk hedging
8.4.3 Options
8.4.4 Swaps
8.5 IFSB guidelines
8.6 Summary
Chapter 9: Islam and insurance (takaful)
9.1 Introduction
9.1.1 Insurance concept
9.1.2 Evolution: Brief history
9.2 Basic principles
9.2.1 Good faith
9.2.2 Insurable interest
9.2.3 Indemnity
9.2.4 Proximate cause
9.2.5 Beneficiary issue
9.2.6 Underwriting
9.3 Islam and insurance
9.3.1 Takaful versus insurance
9.3.2 Forms of takaful
9.4 Takaful : Illustrative models
9.4.1 Mudarabah model
9.4.2 The waqf model
9.4.3 Cooperatives
9.5 R isk valuation
9.5.1 Re-takaful
9.6 Summary
Chapter 10: Law regulation and governance
10.1 Introduction
10.1.1 Dominance of diversity
10.1.2 Law and Islamic finance
10.2 Need for regulations
10.3 Shari’ah -based framework
10.3.1 Illustration – Malaysia
10.3.2 Key issues
10.3.3 Shari’ah screening
10.3.3.1 Capital adequacy
10.3.3.2 On- and off-balance-sheet items
10.3.3.3 Risk-weighted approach
10.4 Basel Accords
10.4.1 Basel I (1988)
10.4.2 Basel II (2004)
10.4.2.1 Displaced commercial risk
10.4.3 Basel III (2010–2011)
10.4.4 Basel Accords and Islamic finance
10.5 Islam and governance
10.5.1 Definition and scope
10.5.2 Shari’ah governance
10.5.2.1 Participatory finance
10.6 Summary points
Appendix: Islamic finance: Brief history
Bibliography
Index
