Category Archives: Introductory material

www.EthicaInstitute.com: Islamic finance training online

www.EthicaInstitute.com offers comprehensive online training in Islamic finance, access to the largest Islamic finance Q&A database on the Internet, live webinars and much more.

Visit: www.EthicaInstitute.com

A Brief Introduction to the Fiqh of Contemporary Sharī`a- Compliant Finance – Taha Abdul-Basser

A Brief Introduction to the Fiqh of Contemporary Sharī`a- Compliant Finance – Taha Abdul-Basser

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In response to the positions of contemporary fuqahā’ on several conventional
financial transactions, the sharī`a-compliant finance sector has developed a set of transactions that are named after and based on the traditional nominate transactions but serve the purpose of the conventional transaction that they are meant to replace.

Contemporary fuqahā’ aided in the innovation of these contracts—either by collaborating with financial engineers during the design process or by responding to the inquiries of financial engineer who came to them for approval of the contracts after they had been designed.

Sharī`a-compliant financial institutions—in the areas of project finance, trade
finance, consumer banking, home finance and insurance—have developed substitutes for interest-based debt financing and conventional insurance contacts. In the case of interest- based debt financing, the sector has developed three major classes of sharī‘a-compliant financing: bay‘-based financing (e.g. al-murābaha li l-āmir bi l-sharā’), shirka-based financing (e.g. al-mushāraka al-mutanāqisa) and ijāra-based financing (e.g. al-ijāra wa- al-iqtinā’ or al-ijāra al-muntihī bi l-tamlīk).

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Islamic banking: A model for fairness

Islamic banking: A model for fairness. Case study of the Islamic Bank of Britain

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Tired of hearing about fat cat bank bonuses when you have been a bank’s loyal saver for decades and received nothing?

Well, there is a new bank in Britain offering out a share of its profits, not just to shareholders, but those who deposit savings into its coffers.

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How Islamic banking operates within sharia law

How Islamic banking operates within sharia law

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Saving and investing in line with religious principles is important for many Muslims and an increasing range of financial products is now available to meet Sharia rules.

There are 1.8 million Muslims in Britain and surveys show that about three-quarters are interested in the idea of running their savings and investments in keeping with principles laid out in the Koran. While Sharia products are in their infancy in the United Kingdom, the uptake is very rapid.

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Innovation and authenticity in Islamic Finance: M. Umer Chapra

Innovation and authenticity in Islamic Finance: M. Umer Chapra

This paper—delivered at the Eighth Harvard University Forum on Islamic Finance in April 2008—tries to determine the primary cause or causes of the financial crises that have plagued almost every country around the world over the last three decades. Of particular significance are the 1998 LTCM breakdown and the current subprime mortgage crisis in the United States. It argues that one of the major causes of these crises is the lack of adequate market discipline in the financial system. This leads to excessive lending, high leverage and ultimately the crisis. Risk-sharing, which Islamic finance wishes to introduce, can help instill greater discipline in the system and curb lax lending. Effective operation of such a system in Muslim countries will, however, not be possible without the establishment of a number of shared institutions that do not exist at present. It is also necessary to adopt a number of specific measures to make credit available to small- and micro-entrepreneurs in order to make the existing financial system more equitable.

Read the paper here