Part G Islamic Finance, 51 Corporate and Regulatory Issues

Standards And Guidelines ◽

The Uk

This chapter examines corporate and regulatory issues which have arisen within the UK with respect to the authorization and business of Islamic financial institutions. It discusses the constitutional structure of Islamic banks; regulatory standards and guidelines; deposit-taking; collective investment schemes; and Islamic home finance.

The Regulation of Islamic Finance in the United Kingdom

Ecclesiastical Law Journal ◽

10.1017/s0956618x10000827 ◽

2010 ◽

Vol 13 (1) ◽

pp. 69-77 ◽

Cited By ~ 1

Author(s):

Jonathan Ercanbrack

Keyword(s):

United Kingdom ◽

Financial Institutions ◽

Islamic Finance ◽

Islamic Banks ◽

Financial Industry ◽

Religious Dimension ◽

The United Kingdom ◽

This article examines the unique risks associated with Islamic financial institutions and the secular state's reticence to directly regulate their religious dimension. It argues that the state's method of regulating the Islamic financial industry ignores special reputational risks associated with the religious and cultural distinctiveness of Islamic banks.

International Journal of Financial Accountability, Economics, Management, and Auditing (IJFAEMA) ◽

Islamic finance and the global financial crisis: an empirical study

10.52502/ijfaema.v3i3.52 ◽

2021 ◽

Vol 3 (3) ◽

pp. 62-69

Author(s):

Fadwa Errami ◽

Jamal Abnaha

Keyword(s):

Financial Institutions ◽

Global Economy ◽

Islamic Law ◽

Global Financial Crisis ◽

The United States ◽

Muslim World ◽

Islamic Finance ◽

Islamic Banks ◽

The Global Financial Crisis

Islamic finance can no longer be dismissed as a passing fad or as an epiphenomenon of Islamic revivalism. Islamic financial institutions now operate in over 70 countries. Their assets have increased more than fortyfold since 1982 to exceed $200 billion. In 1996 and 1997, they have grown at respective annual rates of 24 and 26 per cent.1 By certain (probably overly optimistic) estimates, up to half of the savings of the Islamic world may in the near future end up being managed by Islamic financial institutions. The first Islamic banks were created in the 1970s, at the time when the aggiornamento of Islamic doctrine on banking matters was taking shape. At the time, Islamic banks were typically commercial banks operating on an interest-free basis. Today, as a consequence of broad changes in the political–economic environment, a new generation of Islamic financial institutions, more diverse and innovative, is emerging as the doctrine is undergoing a new aggiornamento. Perhaps the most important development has been the growing integration of Islamic finance into the global economy. There is now a Dow Jones Islamic Market Index, which tracks 600 companies (from inside and outside the Muslim world) whose products and services do not violate Islamic law. Foreign institutions such as Citibank have established Islamic banking subsidiaries, and many conventional banks – in the Muslim world but also in the United States and Europe – are now offering ‘Islamic products’ that are sometimes aimed at non-Muslims.

Musharakah Mutanaqisah home financing: issues in practice

Journal of Islamic Accounting and Business Research ◽

10.1108/jiabr-08-2015-0036 ◽

2018 ◽

Vol 9 (1) ◽

pp. 91-103 ◽

Cited By ~ 7

Author(s):

Alam Asadov ◽

Zulkarnain Bin Muhamad Sori ◽

Shamsher Mohamad Ramadilli ◽

Zaheer Anwer ◽

Shinaj Valangattil Shamsudheen

Keyword(s):

Financial Institutions ◽

Current Mode ◽

Fair Value ◽

The Body ◽

Islamic Finance ◽

Islamic Banks ◽

Periodic Review ◽

Content Type ◽

Finance Industry ◽

Purpose This paper aims to examine the practical issues in the Musharakah Mutanaqisah (MM) financing and subsequently, recommends possible solutions to mitigate these issues and improve the current practice. Design/methodology/approach This paper analyses the theory and current practices of MM offered by Islamic banks. Findings It is suggested that Islamic financial institutions consider revaluation of property’s value to its fair value, especially during termination of MM contract and annual or agreed periodic review of the market value of the assets to determine the “rental” payments by the customer. It is also recommended that Islamic financial institutions should share all associated costs in performing the contract. Research limitations/implications Research findings reported in this paper contribute to the body of knowledge on MM in general and to the Islamic finance practices in Malaysia and abroad. Indeed, the Malaysia Central Bank (i.e. Bank Negara Malaysia) should form a special committee to look into the issues highlighted in this paper and recommend strict guidelines for Islamic financial institutions to improve their practices. Practical implications Islamic banks should extend the use of MM contract in automobile and trade financing where rent or profit could be easily identified and value of the asset is more certain. The regulators and Islamic financial standard setting authorities need to oversee the Shari’ah board decisions on MM contracts and keep the gates in the interest of ensuring a more viable and authentic Islamic finance industry. Originality/value This paper briefly views the current mode of MM contracts, specifically for home financing, and highlights the incompliance to Shari’ah requirements in exercising these contracts in practice.

Shar¯ı‘ah Resolution and Islamic Finance: A Review

Journal of Islamic Business and Management (JIBM) ◽

10.26501/jibm/2021.1101-003 ◽

2021 ◽

Vol 11 (01) ◽

pp. 29-39

Author(s):

Zakir Hossen Shaikh ◽

◽

Adel M Sarea ◽

Abdelrahman Al-Saadi ◽

Iqbal Thonse Hawaldar ◽

...

Keyword(s):

Financial Institutions ◽

Qualitative Method ◽

New Products ◽

Detailed Examination ◽

Central Banks ◽

Islamic Finance ◽

Islamic Banks ◽

Legal Response ◽

Purpose: The purpose of this study is to look into the Shar¯ı‘ah resolution framework in Islamic finance and see how it may be improved. This paper is based on a detailed examination of previous research into the need for a worldwide Shar¯ı‘ah Resolution mechanism to be applied across all IFIs. Methodology: A detailed analysis of past studies on the necessity of a Shar¯ı‘ah Resolution framework to be implemented globally by all IFIs was used to develop the qualitative method. Findings: Measuring the level of fatwá disclosure by specific Islamic banks through central banks Shar¯ı‘ah judgements will add to the existing literature while also filling a gap. Significance: This study is noteworthy because it lays the framework for future researchers on the topic. Using a central bank to assess the extent to which certain Islamic banks have disclosed fatwá. Limitations: These articles’ implications may aid in the explanation of Shar¯ı‘ah-related concerns in Islamic finance. Shar¯ı‘ah resolution in Islamic finance will be a significant Shar¯ı‘ah resource for new products supplied by Islamic financial institutions, as well as any existing goods given to new clients and industry practitioners. Implications: The fatwá is the legal response to the present difficulties that have arisen in the community. fatwá are used to disseminate knowledge to Muslims in order to alleviate their difficulties and misconceptions. Any fatwá-related knowledge will have an impact on individuals, societies, and organizations . As a result, this paper examined the role of fatwás in sharing information and determining how far fatwás can educate society in resolving problems.

Facilitating Affordable Housing in the UK Market Through Socially-Oriented Islamic Financial Institutions

ICR Journal ◽

10.52282/icr.v5i4.371 ◽

2014 ◽

Vol 5 (4) ◽

pp. 489-513

Author(s):

Yusuf Jha

Keyword(s):

Financial Institutions ◽

Affordable Housing ◽

Financial Support ◽

Islamic Finance ◽

Land Trusts ◽

Private Funding ◽

The Uk ◽

Effective Use ◽

Funding Gap

In the context of the growing global shortage of affordable housing, policy discourse in the last decade has centred on ways to get the private sector involved through a variety of public-private partnerships. This paper focusses on two such contemporary applications of community centred alternatives in Community Land Trusts (CLTs) and Shared Ownership Co-operatives (SOCs) and explores ways in which mainstream Islamic Finance can engage and support them. By focusing on the “private funding gap” that exists between mainstream finance and these community centered programs, the paper posits that Islamic Finance Institutions (IFIs) are well placed to provision financial support to such initiatives through the effective use of cash based endowments or awqaf. Such a re-structuring process within Islamic Finance proposes not only to allow IFIs effectively to assist in providing affordable housing but also promises to enable them to fulfil their originally stated socio-economic ideals better.

The determinants of the choice of Islamic banks in Tunisia

International Journal of Bank Marketing ◽

10.1108/ijbm-11-2014-0170 ◽

2016 ◽

Vol 34 (5) ◽

pp. 710-730 ◽

Cited By ~ 26

Author(s):

Moez Ltifi ◽

Lubica Hikkerova ◽

Boualem Aliouat ◽

Jameleddine Gharbi

Keyword(s):

Financial Institutions ◽

Demographic Characteristics ◽

Islamic Finance ◽

Islamic Banks ◽

Content Type ◽

Islamic Bank ◽

Gender And Age ◽

Selection Of

Purpose – The purpose of this paper is to determine the explanatory factors for the selection of Islamic banks and evaluate the moderating role of demographic characteristics. This study seeks to better understand these determinants in Tunisia, a country with a developing Islamic finance system and a culture different from those in other Muslim countries studied in the literature. Design/methodology/approach – The authors developed a two-sided approach: a quantitative survey and 12 semi-structured interviews based on four customer segments identified by the quantitative study. For the survey, data were collected from 180 Islamic bank clients in Tunisia. The factors adopted for the selection of an Islamic bank are service quality, trust, and compliance with Sharia (Islamic) law. The authors identified and measured the selection criteria using a factor analysis, regression analysis, and demographic characteristics analysis. Findings – Customers consider several factors while choosing an Islamic bank: the quality of service offered by the financial institutions, trust, and (especially) compliance with Sharia law. Moreover, gender and age appear to be the only moderators between the selection of an Islamic bank and these determinants. Practical implications – This study offers Islamic banks a better understanding of how Tunisian customers select financial institutions. These banks must consider the different determinants of choice in order to create value for consumers and prepare their marketing strategies. The authors identify four customer segments based on gender and age by which the banks may improve their positioning and market share, thus contributing to the development of Islamic financial institutions in Tunisia. Originality/value – This is the first study of its kind in Tunisia, where the market share of Islamic finance remains low. The study enriches the Islamic marketing literature on the quality of Islamic financial institutions’ service, trust, and compliance with Sharia law. It also tests demographic characteristics as moderators. The results and implications of this research can be applied to countries similar to Tunisia.

[ALMUSHARAKAH AL-MUTANAQISAH AND APPLICATION IN MALAYSIA] AL-MUSHARAKAH AL-MUTANAQISAH WA TATBIQATUHA FI MALIZIYA

Malaysian Journal Of Islamic Studies (MJIS) ◽

10.37231/mjis.2021.5.1.158 ◽

2021 ◽

Vol 5 (1) ◽

pp. 142-152

Author(s):

Abada Tawfik Ahmed Bahnasy

Keyword(s):

Central Bank ◽

Financial Institutions ◽

Historical Background ◽

Advisory Council ◽

Islamic Finance ◽

Islamic Banks ◽

Practical Application ◽

Modern Methods ◽

The Common

This paper aims to introduce one of the common contracts in the field of Islamic finance, which is the diminishing musharakah contract or the diminishing musharakah ending with ownership. Which is considered one of the modern methods that Islamic banks deal with, and it is a new investment method that was not known to the oldest jurists, and it is one of the Shariah financing formulas to counter interest-based dealings with interest-based banks. This paper demonstrate this contract after the introduction with historical background on it. Then explain its reality in theory and how to apply it in Islamic banks or traditional banks that offer Islamic products. This paper did not address the discussion of shariah issues in detail - due to the large number of jurisprudential differences in them - as well as the limited space for the paper. This paper focused on the practical application of this contract in Malaysian Islamic banks. Then the research concluded with the conclusion that this contract is considered one of the most suitable contracts that Islamic financial institutions can offer as a product in which the operational problems and Shariah problems are reduced. Especially after the decision of the Sharia advisory council of the Central Bank of Malaysia (SAC - BNM) at its 56th session on February 6, 2006, where it decided that "Musharakah Mutanaqisah (MM) financing is a form of contract recognized in the Islamic financial system".

Shariah Non-Compliance Treatment in Malaysian Islamic Banks

International Journal Of Management and Applied Research ◽

10.18646/2056.64.19-016 ◽

2019 ◽

Vol 6 (4) ◽

pp. 220-233

Author(s):

Hani Nabila Omar ◽

Rusni Hassan

Keyword(s):

Financial Institutions ◽

Banking Sector ◽

Implementation Process ◽

Islamic Finance ◽

Islamic Banking ◽

Islamic Banks ◽

Secondary Sources ◽

The Past ◽

Depth Interview ◽

Islamic finance in Malaysia has been growing rapidly in the past 30 years. In 2019, there is a total of 16 Islamic banks listed and supervised by Bank Negara Malaysia (BNM), with 5 out 16 banks are foreign entities. In view of the rivalry with the conventional banking sector, Islamic banks offer new innovative Islamic products and financial projects which may lead to greater risk of Shariah Non-compliance (SNC) exposure to the Islamic Financial Institutions (IFIs) in its effort to stay competitive. This paper attempts to explore the current practices of Islamic banks in treating (SNC) and the extent of compliance with BNM rules and guidelines, particularly BNM Operational Risk Integrated Online Network (ORION) requirement on SNC reporting event. This paper adopts a qualitative research method by conducting semi-structured in-depth interview with the Islamic banking professionals targeting five Islamic banks. Both primary and secondary sources are used for data collection. The finding shows that these Islamic Banks adhere to the BNM rules and requirements, with some minor differences in the implementation process. The findings would contribute positively in terms of enriching and contributing to the existing literature on the SNC practices by Islamic Banks whilst at the same time establishing the levels of compliance of the banks under investigation.

Part III Financial Sectors and Activities, 23 Islamic Financial Services

10.1093/law/9780198793809.003.0023 ◽

2018 ◽

Author(s):

Walker George ◽

Purves Robert ◽

Blair Michael

Keyword(s):

Financial Institutions ◽

Financial Services ◽

International Standards ◽

Islamic Finance ◽

Regulatory Regime ◽

Financial Services Regulation ◽

Legal Effect ◽

The Uk ◽

Public Offer

This chapter discusses the regulatory regime for Islamic financial services. It begins by providing a background on Islamic finance firms (IFFs), which are governed by the Shari'a, and the services they offer. It then considers the scope and limits of Islamic financial services regulation before analysing the regulation of IFFs in the UK by the Financial Conduct Authority and the Prudential Regulation Authority as well as the regulation of Islamic capital markets. It also looks at international bodies that have been established to set and develop regulatory and Shari'a standards for IFFs, focusing in particular on the Accounting and Auditing Organisation for Islamic Financial Institutions and the Islamic Financial Services Board. The chapter concludes with an assessment of Islamic finance regulation in other jurisdictions; the legal effect of international standards on IFFs; Shari'a principles, including those relevant to Islamic finance; and the listing and public offer of Shari'a-compliant securities.

The Innovations of Hibahasan Instrument of Islamic Finance and Islamic Estate Management in MalaysiaAhmad Khilmy Abdul Rahim

Webology ◽

10.14704/web/v18si03/web18023 ◽

2021 ◽

Vol 18 (SI03) ◽

pp. 112-126

Author(s):

Ahmad Khilmy Abdul Rahim ◽

Azizi Abu Bakar ◽

Mohd Murshidi Mohd Nor

Keyword(s):

Financial Institutions ◽

Advisory Council ◽

Islamic Finance ◽

Islamic Banking ◽

Islamic Banks ◽

Muslim Community ◽

Saving Account ◽

Financial Framework ◽

Estate Management

The application of hibah as an instrument in estate management is gaining popularity among the Muslim community in Malaysia. “Hibah is a unilateral contract” that elevate welfare and charity. The Islamic financial institutions in Malaysia, including Islamic banks as well as Islamic wealth institutions apply varities of hibah instruments in the products accessible by them. Hibah is a cooperating shariah contract in the Malaysia‟s Islamic banking and financial framework. The aim is to incentivize clients for storing their cash into the institution as well as remunerate for clients to pay their financing by agreeing planned. The use of hibah is based on the stated fundamentals and objectives of the “Shariah Advisory Council (SAC) of Bank Negara Malaysia”. Nowadays, hibah instrument has been applied in various forms using Islamic financial institutions especially in Malaysia. This article discusses and analyzes in general the application of contemporary forms of hibah such as Trust Hibah (Hibah Amanah), Conditional Hibah (Hibah Mu'allaqah), Hibah with discussion (Hibah Bi al-Thawab), hibah in saving account (Wadiah) and rental (al-Ijarah) accounts and hibah in Takaful benefit.