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Contemporary Islamic Finance: Innovations, Applications and Best Practices

Book Description

A comprehensive look at the innovations, applications, and best practices of Islamic finance

Islamic-compliant finance is transacted in every major world financial center, and the need for information on the topic in light of its global reach has grown exponentially. As an expert in this field, author Karen Hunt-Ahmed understands the intricacies of this area of the capital markets. Now, along with the help of a number of experienced contributors, she skillfully addresses Islamic finance from the perspective of practitioners, examining issues in wealth management, contract law, private equity, asset management, and much more.

Engaging and accessible, Contemporary Islamic Finance skillfully explains the practices and innovations of Islamic finance in everything from banking and real estate to private equity, asset management, and many other areas. It is intended to be the go-to resource for both Muslims as well as non-Muslims with an interest in the subject. Divided into three comprehensive parts, it will put you in a better position to understand, and excel at, this important endeavor.

  • Introduces you to the history, legal structures, and basic financial contracts in the industry

  • Highlights the various issues facing contemporary Islamic finance practitioners, and details their significance in the contemporary financial and cultural environment

  • Includes case studies of United States-based transactions and related challenges and successes

Filled with in-depth insights and expert advice, this detailed analysis of Contemporary Islamic Finance will help you gain a firm understanding of how effective this proven approach can be.

Table of Contents

  1. Cover Page
  2. Title Page
  3. Copyright
  4. Dedication
  5. Contents
  6. Acknowledgments
  7. CHAPTER 1: Introduction
    1. GLOBALIZATION AND MUSLIM SUBJECTIVITY
    2. HISTORY OF ISLAMIC FINANCE
    3. ISLAMIC BANKING: ORIGINS IN PRACTICE
    4. A CONTEMPORARY INDUSTRY
    5. MY HISTORY WITH ISLAMIC FINANCE
    6. CONVENTIONAL FINANCE VERSUS IBF
    7. AN OVERVIEW OF THE BOOK CONTENTS
    8. A FINAL NOTE
    9. NOTES
    10. REFERENCES
  8. PART I: The Contemporary Islamic Finance Landscape
    1. CHAPTER 2: Contemporary Islamic Economic Thought
      1. THE CONTINUUM OF THE PREMODERN ISLAMIC ECONOMIC THOUGHT
      2. CONTEMPORARY ISLAMIC ECONOMIC THOUGHT
      3. MAJOR THEMES AND CONCERNS
      4. THE SHADOW OF MAINSTREAM ECONOMICS
      5. SHIFT FROM ISLAMIC ECONOMICS TO ISLAMIC FINANCE
      6. GROWTH OF MORE SOPHISTICATED AND ROBUST LITERATURE
      7. CONCLUSION
      8. NOTES
      9. REFERENCES
    2. CHAPTER 3: The Legal Framework of Islamic Finance
      1. ISLAMIC LEGAL THEORY
      2. SOURCES OF ISLAMIC LAW
      3. SECONDARY PRINCIPLES OF ISLAMIC JURISPRUDENCE
      4. THEORETICAL LEGAL SYSTEMS
      5. BASIC RULES OF ISLAMIC FINANCE
      6. PROPERTY, TRADE, AND FINANCIAL ETHICS
      7. PROHIBITION OF RIBA
      8. PROHIBITION OF GHARAR
      9. LIMITATIONS ON FREEDOM OF CONTRACT
      10. STRUCTURES OF ISLAMIC FINANCE PRODUCTS
      11. SOCIAL AND ECONOMIC DEVELOPMENT
      12. INTERPRETATION OF ISLAMIC LAW
      13. DUAL REGULATORY SYSTEMS
      14. CHALLENGES IN CLOSING TRANSACTIONS
      15. ENFORCEABILITY OF CONTRACTS
      16. CONCLUSION
      17. NOTES
    3. CHAPTER 4: Globalization and Islamic Finance
      1. GLOBALIZATION THEORIES
      2. GLOBAL FLOWS
      3. GLOBAL CONSCIOUSNESS
      4. PROBLEMS CAUSED BY GLOBALIZATION
      5. CONCLUSION
      6. REFERENCES
    4. CHAPTER 5: Islamic Science and the Critique of Neoclassical Economic Theory
      1. TRADITIONAL OBJECTIVES OF HUMAN WORK
      2. NEOCLASSICAL THEORY, PSYCHOLOGICAL HEDONISM, AND THE ISLAMIC ALTERNATIVE
      3. THE QUANTUM ENIGMA AND THE ISLAMIC CRITIQUE OF ECONOMICS
      4. CONCLUSION
      5. NOTES
      6. REFERENCES
    5. CHAPTER 6: Juristic Disagreement
      1. INTRODUCTION
      2. TRANSLATION: EXISTING ISLAMIC BANKING AND THE OUTLINE OF THE POSITION OF THE MAJORITY OF ʿULAMĀ 25
      3. TRANSLATION: FATWĀ FROM DĀR AL-ʿULŪM, DEOBAND, INDIA 34
      4. TRANSLATION: RESPONSE FROM PAKISTAN 35
      5. GLOSSARY
      6. NOTES
      7. REFERENCES
      8. ACKNOWLEDGMENTS
    6. CHAPTER 7: Managing Liquidity Risk in Islamic Finance
      1. INTRODUCTION
      2. LIQUIDITY MANAGEMENT AND THE CRISIS
      3. CAUSES OF LIQUIDITY RISK
      4. CURRENT SOLUTION
      5. MAIN EXISTING LIQUIDITY MANAGEMENT INSTRUMENT: COMMODITY MURABAHAH
      6. SALAM SECURITIES AS MONEY MARKET INSTRUMENT
      7. SHORT-TERM IJARAH SUKUK AS MONEY MARKET INSTRUMENT
      8. INVESTMENT AGENCY AND LIQUIDITY MANAGEMENT
      9. MUSHARAKAH CERTIFICATES AS MONEY MARKET INSTRUMENT: THE SUDANESE EXPERIENCE
      10. MALAYSIAN ISLAMIC INTERBANK MONEY MARKET
      11. ISLAMIC INTERBANK MARKET AND RECIPROCAL LOANS
      12. ISLAMIC REPO
      13. THE WAY FORWARD AND REGULATORS' CONCERNS
      14. CONCLUSION
      15. NOTES
      16. REFERENCES
    7. CHAPTER 8: Elements of Islamic Wealth Management
      1. RECOGNITION OF A DIFFERENT PARADIGM
      2. WHAT IS WEALTH IN ISLAM?
      3. PIVOTAL ELEMENTS IN ISLAMIC WEALTH MANAGEMENT
      4. CONCLUSION
      5. NOTES
      6. REFERENCES
    8. CHAPTER 9: Sukūk and the Islamic Capital Markets
      1. INTRODUCTION
      2. SUKŪK
      3. SHARĪʿAH STRUCTURE
      4. TENOR AND STRUCTURES
      5. ISSUANCES SINCE NOVEMBER 2008
      6. STRUCTURAL MATTERS: SUKŪK AL -ʾ IJĀRA
      7. STRUCTURAL MATTERS: MUSHĀRAKA STRUCTURES
      8. STRUCTURAL MATTERS: SUKŪK AL-MU ĀRABA
      9. MATTERS OF CLARIFICATION
      10. OBSERVATIONS IN CONCLUSION
      11. NOTES
    9. CHAPTER 10: Shari'a-Compliant Mutual Funds
      1. MUSHARAKA VERSUS MUDARABA
      2. “GENERAL NEED”
      3. STAKEHOLDER VERSUS SHAREHOLDER
      4. PURIFICATION
      5. CONCLUSION
    10. CHAPTER 11: The Evolution of Shari'ah-Compliant Indexes and Why They Outperform Conventional Indexes over the Long Term
      1. INTRODUCTION
      2. THE EVOLUTION OF SHARI'AH-COMPLIANT INDEXING
      3. INDEX DESIGN AND DEVELOPMENT
      4. PERFORMANCE: SHARI'AH-COMPLIANT INDEXES VERSUS CONVENTIONAL INDEXES
      5. FUTURE OUTLOOK AND TRENDS
    11. CHAPTER 12: Takaful
      1. TAKAFUL EXPLAINED 1
      2. INSURANCE INDUSTRY TODAY
      3. CAN TAKAFUL MAKE A DIFFERENCE?
      4. IS TAKAFUL A GAME CHANGER?
      5. CONCLUSION
      6. NOTES
    12. CHAPTER 13: Islamic Human Resources Practices
      1. ROLE OF RELIGION IN SHRM
      2. ROLE OF RELIGION IN A POST-9/11 ENVIRONMENT
      3. CONCLUSION
      4. REFERENCES
    13. CHAPTER 14: An Integrated Islamic Poverty Alleviation Model
      1. POVERTY: CONCEPTS AND VIEWS
      2. ISLAM AND POVERTY ERADICATION
      3. CONVENTIONAL MICROFINANCE AND ISLAMIC MICROFINANCE
      4. AN INTEGRATED MODEL OF ISLAMIC MICROFINANCE, ZAKAT, AND AWQAF
      5. SUMMARY
      6. NOTES
      7. REFERENCES
    14. CHAPTER 15: How Does an Islamic Microfinance Model Play the Key Role in Poverty Alleviation?
      1. INTRODUCTION
      2. LITERATURE REVIEW
      3. EXISTING ISLAMIC MICROFINANCE PRACTICES AROUND THE GLOBE
      4. IMFIs: THE EUROPEAN PRACTICES AND POTENTIALS IN EUROPE
      5. HOW SHOULD THE IMFIs OPERATE IN EUROPE?
      6. CONCLUSION
      7. NOTES
      8. REFERENCES
  9. PART II: Case Studies
    1. CHAPTER 16: Islamic Finance in an Almost Postcrisis and Postrevolutionary World
      1. HISTORY
      2. EUROPE
      3. GOVERNMENT MOTIVATIONS AND APPROACHES
      4. THE ARAB SPRING
      5. CONCLUSION
    2. CHAPTER 17: Stepping Forward, Backward, or Just Standing Still?
      1. THE SUBJECT TRANSACTION
      2. REFLECTIONS
      3. CONCLUSIONS
      4. NOTES
    3. CHAPTER 18: Islamic Mortgages
      1. MAJOR FINANCING MODES
      2. CHOOSING ONE MODE OVER ANOTHER
      3. FINANCIAL PERFORMANCE
      4. INVESTOR RISK
      5. PRICING RISK
      6. SUMMARY
      7. NOTES
    4. CHAPTER 19: Shari'a Quality Rating
      1. INTRODUCTION
      2. METHODOLOGY: THE MAIN INGREDIENTS
      3. ACCOUNTING STANDARDS
      4. TRAINING AND HUMAN RESOURCES
      5. ZAKAT
      6. CORPORATE SOCIAL RESPONSIBILITY
      7. CONCLUSION
    5. CHAPTER 20: Islamic Mutual Funds' Performance in Saudi Arabia
      1. PREVIOUS LITERATURE ON ISLAMIC MUTUAL FUNDS
      2. THE HYPOTHESIS AND DATA
      3. METHODOLOGY
      4. EMPIRICAL RESULTS
      5. CONCLUSION
      6. NOTES
      7. REFERENCES
    6. CHAPTER 21: Shari'ah -Compliant Real Estate Investment in the United States
      1. THE PROPERTY UNDER CONSIDERATION
      2. DILIGENCE
      3. COMPLIANCE DETERMINATION
      4. THIRD-PARTY FINANCING
      5. THE IJARA STRUCTURE
      6. JOINT VENTURE MATTERS
      7. FINANCING MATTERS
      8. TAX STRUCTURING
      9. CONCLUSION
    7. CHAPTER 22: Risk and Derivatives in Islamic Finance
      1. ISLAMIC DERIVATIVES AND RISK MANAGEMENT
      2. BASIC FEATURES OF SHARIAH-COMPLIANT DERIVATIVES
      3. SHARIAH ANALYSIS OF DERIVATIVES INSTRUMENTS
      4. HEDGING, SPECULATION, GAMBLING, AND DERIVATIVES
      5. SHARIAH-COMPLIANT SWAPS
      6. CONCLUSION
      7. NOTES
    8. CHAPTER 23: Islamic Microfinance
      1. CONVENTIONAL MICROFINANCE PRODUCT OFFERINGS
      2. ISLAMIC MICROFINANCE PRODUCT OFFERINGS
      3. CASE STUDIES
      4. CONCLUSION
      5. NOTES
  10. About the Editor
  11. Index