Issues in Islamic banking and finance: Islamic banks, Shari’ah-compliant investment and sukuk

2015 ◽  
Vol 34 ◽  
pp. 185-191 ◽  
Author(s):  
Mansor H. Ibrahim
Keyword(s):  
Islamic Banking ◽  
Islamic Banks ◽  
Banking And Finance

Islamic Banking and Finance in Theory and Practice

2005 ◽  
Vol 22 (2) ◽  
pp. 69-86 ◽  
Author(s):  
Abdus Samad ◽  
Norman D. Gardner ◽  
Bradley J. Cook
Keyword(s):  
Financial System ◽  
Primary Objective ◽  
Theory And Practice ◽  
Islamic Banking ◽  
Relative Importance ◽  
Islamic Banks ◽  
Equity Financing ◽  
Banking And Finance ◽  
Financial Products ◽  
Islamic Bank

This paper’s primary objective is to identify the relative importance of various Islamic financial products, in theory and in practice, by examining the financing records of the Bank Islam Malaysia (Berhad) and the Bahrain Islamic Bank. Currently, seven available Islamic financing products are considered viable alternatives to interest-based conventional contracts: mudarabah (trust financing), musharakah (equity financing), ijarah (lease financing), murabahah (trade financing), qard al-hassan (welfare loan), bay` bi al-thaman al-ajil (deferred payment financing), and istisna` (progressive payments). Among these financial products, mudarabah and musharakah are the most distinct. Their unique characteristics (at least in theory) make Islamic banks and Islamic financing viable alternatives to the conventional interest-based financial system. The question before us is to determine the extent of mudarabah and musharakah in Islamic financing in practice. The data are as follows: the average mudarabah is 5% of total financing, and the average musharakah is less than 3%. The combined average of mudarabah and musharakah for the two Islamic banks is less than 4% of the total finance and advances. The average qard al- hassan is about 4%, while istisna` does not yet exist in practice. Murabahah is the most popular and dominates all other modes of Islamic financing. The average use of murabahah is over 54%. When the bay` bi al-thaman al-ajil is added to the murabahah, the percentage of total financing is shown to be 2.68%. This paper also explores some possible reasons why these two Islamic banks appear to prefer murabahah to mudarabah and musharakah.

scholarly journals Dispute Resolution for Islamic Banks in Indonesia

2021 ◽  
Vol 4 (SI) ◽  
Author(s):  
Atharyanshah Puneri
Keyword(s):  
Dispute Resolution ◽  
Alternative Dispute Resolution ◽  
Legal Framework ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking And Finance ◽  
Finance Industry ◽  
Positive Law ◽  
Islamic Financial Institutions ◽  
Dispute Resolution Mechanism

The rapid growth of Islamic banking and finance industry demanded an improvement in term of standards, frameworks, policy, technologies, resources, and guidelines in order to go beyond without compromising the core values of Islam itself. In the context of legal framework of Islamic banking and finance, it is most likely this industry needs to be highly regulated in order to avoid manipulation and abuse by the irresponsible parties. One of the crucial issue in the area of Islamic Banks in Indonesia is regarding about the dispute resolution mechanism for Islamic Banks. Based on Indonesian positive law, there are two alternative dispute resolution mechanisms that can be exercised by parties to settle disputes in cases involving Islamic Financial Institutions (IFIs) namely through litigation or non-litigation. Litigation comes under the jurisdiction of the Religious Court. Researcher in this study are look deeper into the dispute resolution mechanism for Islamic Banks in Indonesia, as well as going through some decided cases. And based on the study done, it was found that alternative dispute resolution mechanism is more effective to resolve Islamic Banks dispute rather than litigation. In the future, researchers may conduct more research to examine deeper about the dispute resolution mechanism for the whole Islamic Economics and Finance in Indonesia. Moreover, researchers need to look at the regulators' and legislators’ perception towards dispute resolution and legal environment.

scholarly journals The internal challenges facing Islamic finance industry

2016 ◽  
Vol 9 (2) ◽  
pp. 222-235 ◽  
Author(s):  
Abdulazeem Abozaid
Keyword(s):  
Product Development ◽  
Design Methodology ◽  
Islamic Finance ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Banking And Finance ◽  
Finance Industry ◽  
Development Methodology ◽  
Shariah Governance

Purpose The paper aims to highlight the challenges facing Islamic finance industry and outline the prospectus of what constitutes a sound Islamic banking product in terms of both its Shariah control and product development methodology. Design/methodology/approach The paper analytically addresses the internal challenges facing Islamic finance industry by highlighting, first, the deficiencies in the existing Shariah supervisory work and, then, the deficiencies in the product development methodology followed in Islamic banks. Findings Islamic banking and finance is facing some internal challenges which require immediate action. Although facing the external challenges may be beyond the capacity of the industry players, Islamic banks have no excuse to overlook or turn a blind eye to their internal challenges which can be overcome by enacting Shariah governance for both products and Shariah control and reforming the methodology of product development. Originality/value This paper highlights an issue that has not received the needed attention, and it proposes the necessary solutions to the problems it identifies.

scholarly journals Are We Alive When Islamic Banks Dominate?: Case Study In Indonesia

2016 ◽  
Vol 5 (3) ◽  
Author(s):  
Raditya Sukmana ◽  
Heri Kusworo
Keyword(s):  
Market Share ◽  
Time Series Data ◽  
Series Data ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking And Finance ◽  
Market Shares ◽  
Banking Market ◽  
Double Exponential Smoothing ◽  
And Performance

Islam promotes justice in every aspect of life including in banking and finance. Shariah has to be the foundation for any banking transactions to ensure that any single party is not being unfairly treated or exploited. Interest based bank is certainly create unfairness and exploitation. In any cases only single party which get a lot of benefit. Hence islamic banking industry need to be developed so that its market share will increase significantly until it can reach the domination of the national banking assets. This paper aims to forecast when such condition will occur. Adopting a popular forecasting tool such as double exponential smoothing, this study will inform us when islamic banking market share will reach 50% out of total banking asset. The monthly data examined starts from January 2004 to may 2011. We use a single time series data which is islamic banking market shares whereby it is calculated from the islamic banking asset divided by total banking asset. the structure of this paper is as follows: after the introduction which describe the history and performance of Indonesian islamic bank, it discusses about the data and method used in this paper. Next section is on the description and analysis on the result obtained. Lastly is the conclusion where it recommends some policies required from the obtained result in which the optimist scenario would say that the domination of Islamic banks may occur in our grandchild generation

scholarly journals Islamsko bankarstvo i modeli financiranja u poslovanju islamske banke

2017 ◽  
Vol 6 (2) ◽  
pp. 65
Author(s):  
Nemanja Budimir
Keyword(s):  
United Arab Emirates ◽  
Islamic Law ◽  
Banking System ◽  
The Philippines ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Banking And Finance ◽  
Minority Religion ◽  
Conference Organization ◽  
The Uk

Islamic banking is now a widespread notion in both Islamic countries and the West. It denotes a bank form and finances that seek to provide services to clients without interest. Proponents of Islamic banking say that the main objective is the "fish", which is prohibited by Islamic law. This attitude toward interest contributed to the unification of several Islamic schools, with the aim of finding ways for the development of an alternative banking system that would be compatible with the rules of Islamic Laws, and in particular to the rules relating to the prohibition of interest. Since the mid-1970s, the number of Islamic banks is on the rise. Islamic banks are not only based in countries where Islam is the prevalent religion, such as Egypt, Jordan, Sudan, Bahrain, Kuwait, United Arab Emirates, Tunisia, Mauritania and Malaysia, but also in countries such as the UK, Germany and the Philippines where Islam is a minority religion. The International Islamic Bank, the Islamic Development Bank, whose shareholders are members of the Islamic Conference Organization are acting as sponsors for Islamic banking and finance throughout the Islamic world.

scholarly journals ISLAMIC BANKING AND FINANCE AS AN ETHICAL ALTERNATIVE: A SYSTEMATIC LITERATURE REVIEW

2017 ◽  
Author(s):  
Othmar Manfred Lehner
Keyword(s):  
Literature Review ◽  
Systematic Literature Review ◽  
Growth Rates ◽  
Business Models ◽  
Western World ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Finance System ◽  
Banking And Finance ◽  
Global Growth

Despite huge global growth rates and a rapidly increasing importance ofIslamic banking and finance, research in this area still needs to be classified asnascent. Recent economic events have led to an increasingly critical attitudetowards the conventional banking and finance system, whereas Islamic banking isconsidered to be an ethical alternative not only in Muslim economies but alsoprogressively in the “western” world. As their business models have their originsin religious and ethical ideals, Islamic banks struggle to observe the foundationalShariah principles while simultaneously meeting applicable guidelines such asBasel III and flexibly adapt to the ever changing customer demands. Due to theincreasing importance of Islamic banking and finance, this article aims to analyseand summarise various aspects of current research and sets out to identify both,congruence and inconsistencies between the implied promise of an “ethical”alternative and the actual market.

scholarly journals Motives Behind the Transfer of a Bank From Conventional Banking to Islamic Banking in Pakistan

2021 ◽  
Vol 3 (2) ◽  
pp. 193-202
Author(s):  
MUHAMMAD ASIF ◽  
UMAIR AHMED ◽  
MUHAMMAD ZAHID ◽  
AMIR KHAN
Keyword(s):  
Data Collection ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Risk And Return ◽  
Independent Variables ◽  
Banking And Finance ◽  
World Economic ◽  
And Performance ◽  
Shari’A Compliance ◽  
Customer Need

The increasing awareness on Islamic banking and finance has created a huge demand for Shari’a based or Shari’a compliant products. Banks, especially are trying to capture this huge market by either converting themselves into a full fledge Islamic banks or opening a window for the Islamic based transactions. This study highlights the reasons why traditional banks turned towards Islamic model. The phenomenon of traditional banks turning into Islamic form was reinforced by the success of these banks averting the recent world economic crises. For data collection 80 respondents were selected, a proxy of five variables were undertaken as measurement. Variables of the study were:Transfer to Islamic Banking(TIB) was taken as dependent variable whileShari’a compliance(SC), Risk and Return(RR), Customer need(CN) and Performance of Islamic banks(PI) were taken as independent variables for which adopted questionnairewas used for data collection. The result of this research is that the banks are transferring from conventional banking to Islamic banking is just because of Shari’a Compliance, performance of Islamic banks and customer need for Islamic product.

Islamic Banking and Finance in Theory and Practice

2005 ◽  
Vol 22 (2) ◽  
pp. 69-86
Author(s):  
Abdus Samad ◽  
Norman D. Gardner ◽  
Bradley J. Cook
Keyword(s):  
Financial System ◽  
Primary Objective ◽  
Theory And Practice ◽  
Islamic Banking ◽  
Relative Importance ◽  
Islamic Banks ◽  
Equity Financing ◽  
Banking And Finance ◽  
Financial Products ◽  
Islamic Bank

This paper’s primary objective is to identify the relative importance of various Islamic financial products, in theory and in practice, by examining the financing records of the Bank Islam Malaysia (Berhad) and the Bahrain Islamic Bank. Currently, seven available Islamic financing products are considered viable alternatives to interest-based conventional contracts: mudarabah (trust financing), musharakah (equity financing), ijarah (lease financing), murabahah (trade financing), qard al-hassan (welfare loan), bay` bi al-thaman al-ajil (deferred payment financing), and istisna` (progressive payments). Among these financial products, mudarabah and musharakah are the most distinct. Their unique characteristics (at least in theory) make Islamic banks and Islamic financing viable alternatives to the conventional interest-based financial system. The question before us is to determine the extent of mudarabah and musharakah in Islamic financing in practice. The data are as follows: the average mudarabah is 5% of total financing, and the average musharakah is less than 3%. The combined average of mudarabah and musharakah for the two Islamic banks is less than 4% of the total finance and advances. The average qard al- hassan is about 4%, while istisna` does not yet exist in practice. Murabahah is the most popular and dominates all other modes of Islamic financing. The average use of murabahah is over 54%. When the bay` bi al-thaman al-ajil is added to the murabahah, the percentage of total financing is shown to be 2.68%. This paper also explores some possible reasons why these two Islamic banks appear to prefer murabahah to mudarabah and musharakah.

scholarly journals An Islamic banking perspective on consumers’ perception in Pakistan

2017 ◽  
Vol 9 (4) ◽  
pp. 337-358 ◽  
Author(s):  
Umair Riaz ◽  
Musafar Khan ◽  
Naimat Khan
Keyword(s):  
Positive Influence ◽  
Marketing Strategies ◽  
Primary Data ◽  
Future Research ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Religious Motivation ◽  
Content Type ◽  
Banking And Finance ◽  
Innovative Products

Purpose The aim of this study is to examine the perceptions of consumers on Islamic banking and finance in Pakistan. Islamic finance is an emerging phenomenon, and its survival depends on the availability, affordability and awareness. This paper attempts to fill the gap in the literature by exploring the perceptions of consumers and bankers in an attempt to gain insights so that the availability of products and awareness can be increased. Design/methodology/approach The study uses a regression model by using perception as a dependent variable and awareness, knowledge and religious motivation as independent variables. Primary data is collected using 150 questionnaires distributed amongst finance students in several universities and employees of Islamic banks in the Khyber Pakhtunkhwa (KPK) Province of Pakistan. Findings The findings reveal that overall consumers’ perception is positive about Islamic banking and finance in Pakistan. Statistical analysis shows that awareness, knowledge and religiosity level have a positive influence on the perception of consumers about Islamic financing products and services in Pakistan. To improve the awareness and understanding, Islamic banks could make better marketing strategies and could increase their presence by mosque visits and conferences. Cooperation between the industry and scholars could help in providing more innovative products to the consumers. Research limitations/implications There has been a limited amount of work carried out on the perceptions of consumers about Islamic banking in Pakistan. The present study represents the start of a larger context for examining Islamic banking practices in Pakistan. The findings of the study can be used as a reference in future research projects in the areas of perceptions and awareness. Originality/value Little research has been conducted to study this problem from the perspectives of consumers and Islamic banking employees. Most of the research associated with Islamic banks fails to pay attention to these stakeholder groups in one study.

scholarly journals Risk management and corporate governance failures in Islamic banks: a case study

2020 ◽  
Vol 11 (9) ◽  
pp. 1921-1939 ◽  
Author(s):  
Salah Alhammadi ◽  
Simon Archer ◽  
Mehmet Asutay
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Business Model ◽  
Financial Institutions ◽  
Islamic Banking ◽  
Islamic Banks ◽  
Content Type ◽  
Banking And Finance ◽  
Ongoing Evaluation

Purpose The purpose of this paper is to show how the choice and ongoing evaluation of a firm’s business model, as a matter of strategic guidance, are key aspects of corporate governance (CG), with particular reference to risk management (RM) in Islamic banks. Design/methodology/approach This research uses a case study approach, with a single case, which was chosen as it fits very well the purpose of this research. The data collection was based largely on documentary evidence. Company data were collected from company annual reports, press releases and legitimate web sites. The ORBIS Bank Focus database was also used to produce a comparative financial analysis. Findings The study findings illustrate how an apparently successful business model may fail due to an inherent instability that could have been identified through the application of careful risk analysis (including stress testing) in the choice and ongoing evaluation of the business model, which robust CG and strategic guidance require. In particular, Arcapita’s problems illustrate the dangers to Islamic financial institutions (IFI) from business models that involve undue exposure to liquidity risk. Practical implications The issues raised in the paper are important in that Islamic banking and finance is an integral part of the global banking and finance industry. Investors and regulators are now requesting corporate management to provide improved service to shareholders and other stakeholders alike. IFI rely on the confidence of investors and market participants, just like conventional institutions and when this confidence erodes, it may prove difficult to regain. Social implications The global credit crisis of 2008 caused significant difficulties to firms, especially financial institutions, even with substantial government intervention in the economy, which raised some issues of CG and ethics. Originality/value This paper extends the knowledge of the potential effects of weaknesses in CG and RM, with specific reference to strategic guidance in the choice and ongoing evaluation of a firm’s business model, especially in relation to the Islamic banking sector. It also provides a telling illustration of the need for the enhancements of the Basel Committee’s prudential requirements set out in the various Basel III documents.

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