Islamic Banking and Finance

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