Islamic Banking-A variation of Conventional Banking by Moham
From HodHood
Contents
Top 20 FREQUENT WORDS
islamic 104 banking 70 banks 59 financial 57 conventional 37 risk 31 profit 29 assets 24 financing 22 pre 18 activities 17 finance 17 profits 17 business 16 sharing 16 agreed 14 income 14 loans 14 products 14 considered 13 equity 13 ethical 13 investment 13
DOCUMENT KEY POINTS
- binding principles of financial transactions ethical principle is that the profits earned by a bank from its activities and returns made by a bank to the depositors shall be a from sharing of risk in the project and b profit share agreements and not pre agreed fixed interest payments which is considered as prohibited earnings because pre agreed interest agreement has no sharing of risk of investment of money
- in the case of islamic bank like activities too newer form of financial activities undertaken by banks are licensed separately islamic mutual funds islamic index funds islamic development bank islamic or takaful insurance etc
- underlying the entire tenet of the financial transactions of this form of banking are two requirements a reward in a moneybased transaction must be the result of profit shares from sharing in the risk of the outlay and not pre agreed and fixed reward regardless of the consequence of investment and that any financial transaction that is doubtful of ensuring long term societal well being is considered disallowed
- besides the reward to equity is larger the larger the risk of the bank shareholders of macquarie bank which is a highly risky investment bank earn twice as much as the shareholders of commonwealth bank of australia a less risky bank in a typical year
- table a simple classification of islamic banking using financial statements financial statement items conventional bank islamic bank panel a performance of a bank profit loss net interest income net income profit shares a financial services income financial services incomea capital gains capital gains less less operating expenses operating expenses amortisation of goodwill amortisation of goodwill charge for doubtful loans charge for doubtful loans gross profits gross profitsa income taxes income taxes net profits net profitsa C monash business review volume issue a april
- panel b financial position of a bank balance sheet assets loans and advances loans advancesb after provisions for npl after provisions for npl fixed assets fixed assets total assets total assets total risk weighted assetsc total risk weighted assetsc a liabilities and deposits other borrowing deposits other borrowing bonds notes subor debt bonds notes subor debtb floating rate notes floating rate notesb shareholder capital ordinary shares ordinary shares musharaka equity instruments equity instruments total equity total equity musharaka a income earned by an islamic bank is from profit shares services fee and the excess over all expenses
- both these countries appear to be doing the big ticket islamic banking and their major banks have begun to join in the chase for a slice of the business citigroup hsbc ubs dresdnerbank abn amro are the big ticket banks doing large ticket banking and importantly having the expertise to financially engineer new products that are exciting for the customers with deeper pockets but demanding islamic financial products
- apart from their compliance with the laws licensing operation laws prudential supervision laws international supervision rules these supra national bodies provide a degree of standardization in accounting treatments of numbers accounting and auditing standards organisation for islamic financial institutions aasoifi in financial service provision islamic financial services board which also works with the bis on basel ii and on capital adequacy
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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
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DOCUMENT REFERENCES
Number of Pages
8
Published Date
2007-10-23 09:47:46
