A comprehensive Literature Servey of Islamic Finance and Ban

Top 20 FREQUENT WORDS

islamic 331 banking 116 banks 112 financial 106 finance 45 markets 42 international 38 countries 37 western 35 instruments 32 financing 30 nra 30 standards 30 investment 29 institutions 28 funds 27 business 24 pakistan 22 based 21 conventional 21 equity 21 principles 21 shariah 21

DOCUMENT KEY POINTS

this growth is influenced by factors including the introduction of broad macroeconomic and structural reforms in financial systems the liberalization of capital movements privatization the global integration of financial markets and the introduction of innovative and new islamic products
we also introduce islamic financial instruments in order to compare them to existing western financial instruments and discuss the legal problems that investors in these instruments may encounter

specifically if that is the sole justification for interest it seems more reasonable to allow next year s economic conditions to determine the extent of the reward as opposed to predetermining it in the form of interest
in terms of interest being a reward for savings they argue that interest could only be justified if it resulted in reinvestment and subsequent growth in capital and not solely as a reward for forgoing consumption

the difference between the two is that in the latter the agent contributes to the capital for the project and thus may receive a higher share of the profits and losses of the business venture
therefore modern islamic banking was derived from these earlier forms of business relationships with the disparity being that today lenders are brought together in a centralized location the bank so that their money can be lent to entrepreneurs for investment in new business ventures

some islamic bankers argue that islamic finance may even have a role to play in underpinning the stability of the international economy dudley under the islamic financing system investments or finance is targeted to the specific needs of an entity
in good times raising funds is easy while in bad times the cost of raising funds is high therefore the risk to the financing institution is increased

on the other hand ijara wa iqtina is comparable to the western financial or capital lease where the lessee has the option of owning the asset at the termination of the lease
purchases the asset such as a building piece of equipment or even an entire project and leases it to the clients for an agreed on lease rental together with client agreement to make lease payments towards the purchase of the asset from the lessor

western banks offering islamic instruments such as citicorp in the usa and kleinwort benston in london are now more active in islamic leasing and the leasing funds have been raised from both muslim and non muslim investors collett many investors especially islamic banks have been attracted to leasing by the promise of higher yields than murabaha trade finance

mark up contracts may open a a a back door to interest siddiqi and khan some researchers also argue that there is a formal equivalence between markup contracts and debt but the equivalence is not based on the payment of interest aggrawal and yousef they argue that the salient feature of debt as described in the debt literature hart and moore

history and growth of islamic banking islamic banking has established itself as an emerging alternative to conventional interest based banking and is expanding rapidly over the last two decades in both muslim and non muslim countries
the product is an equity repo which is similar to a murabaha or cost plus profit transaction brooks the typical maturity of the islamic equity repo is three months

some of the western banks that have established dedicated islamic banking subsidiaries or have substantial dealings in the field include citibank bank of america commerzbank deutche bank merrill lynch abn amro bnp paribas pictet cie ubs standard chartered barclays hsbc royal bank of canada american express goldman sachs kleinwort benson anz grindlays and flemings
some non muslims are also participating in islamic banking because they consider it to be commercially sound brooks traditionally specialized islamic banks have been well positioned to attract deposits from muslims and non muslims but these institutions have generally lacked the technical ability to invest efficiently

it has also attracted the attention of western central banks like the federal reserve board and the bank of england along with international financial institutions like the imf and the world bank and prestigious centers of learning like harvard and rice universities in the united states and the london school of economics and loughborough university in the united kingdom
prospects for the future are expected to be better particularly if the instability that now prevails in the international financial system continues to accentuate and leads to a realization that the instability cannot be removed by making cosmetic changes in the system but rather by injecting into the financial system greater market discipline of the type that the islamic financial system stands for

pakistan was the first country to revive the institution of hisbah the office that controls the markets which provides municipal services and settles disputes
penetration rates of islamic banking services in muslim countries are in malaysia in saudi arabia and in kuwait

this changed however when the soviet union entered the market and a number of ethnic groups saw the benefit of ties with other countries such as turkey saudi arabia and the us
by the late s the country went to great lengths to implement constitutional and institutional changes which indicated that all forms of foreign loans investments and participation were forbidden so that the government agency or company is not allowed

it is perhaps one of the best offshore models of islamic banking when the bahrain monetary authority had shariah advisers to help with auditing regulating and developing short term financial instruments that would provide liquidity for islamic financial products

for their financing and investment activities in scheme a while only investment deposits can be utilized for such purposes in scheme b

therefore stocks of companies whose primary business is not permissible according to shariah are excluded such as companies that receive a major portion of their revenues from alcohol tobacco and pork related products interest based financial institutions such as banks brokerage and insurance companies and entertainment companies including most hotels gaming pornography and music

ongoing management and shareholder reports are necessary to provide fund principals and investors with timely information related to shariah issues the fund its practices and performance
zakah payments may be administered and directed to the same organizations receiving donations and charity from impure portfolio income and may be used for any good purpose

in some cases the capital value guarantee is formally written in laws and regulations in other cases it is based on implicit understanding among the authorities banks and the public
as a result the expected rate of return for each type of deposit is the same for all banks irrespective of banks different levels of profitability

table islamic banking in practice shift in the focus of banking supervision paradigm version islamic banking issue of islamic banking in practice robustness to absorb external higher lower shocks
prudential standards relevant to be assessed crucial on a bank by bank and country by country basis information disclosure higher lower requirements

since most islamic banks are small some countries have announced a program of mandatory merger of islamic banks and strengthening of their capital to make them viable in an international environment which has become characterized by mega banks

system a islamic banking law in place a separate shar ah boards for banks required also the central bank has a shar ah supervisory board a substantial public sector control supervision and regulation is effected by other government policies a evolution of financial instruments underway a compliance with the capital adequacy and supervisory oversight standards of the basel committee not clear a major bank merger is planned to strengthen bank capital turkey regulated by the central bank of turkey turkeyi cumhuriyet merkez bankasi tcmb

in addition to this burden islamic banks are unlikely to benefit from a critical mass of similar institutions with which an islamic interbank market can be developed thus requiring islamic banks to hold higher levels of liquidity than western banks with a consequent negative impact on their ability to compete

the bill is to bring the islamic banks and other special finance houses under the same body of legislation as conventional interest bearing banks gorvett as a result islamic banks in turkey are now expected to hold an extra percent of liquidity in form of treasury bills and to invest an additional percent from their own capital
in addition regulators in western countries can and do argue that because islamic banking is relatively new and because their assets are often long term and illiquid the islamic banks should carry more rather than less capital

the future of islamic equity funds is bright in part because of a new wave of privatization under way in muslim countries such as egypt and jordan and in high growth islamic countries such as indonesia and malaysia where the demand for islamic financial products is growing rapidly

a definition that is similar to the concept of social efficiency under which financial markets in general and stock markets in particular should be efficient in the sense that they support social justice fairness and the well being of society samuels and yacout this is not a strong feature of traditional western views of efficiency

banks regulation is different at different countries and range from under regulation which allowed the defunct bank of credit and commerce international to set up so easily in abu dhabi to over regulation such as in yemen freeland the further growth and development of the islamic financial system will depend largely on the nature of innovations introduced in the market

Please note, This is an auto generated summary based on sentances position in the document and other factors

DOCUMENT WORD ANALYSIS

Main Category

AlHuda Material\islamic banking

KeyWords

islamic banks banking financial finance investment conventional institutions funds risk financing deposits assets services management international countries equity profit products

DOCUMENT REFERENCES

Number of Pages

45

Published Date

2001-10-12 14:30:50

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A comprehensive Literature Servey of Islamic Finance and Ban

Contents

Top 20 FREQUENT WORDS

DOCUMENT KEY POINTS

DOCUMENT WORD ANALYSIS

Main Category

KeyWords

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DOCUMENT REFERENCES

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Published Date

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