...which is Islamic economy. Generally, the articles focused on Islamic Macroeconomics issues, the poverty problems regarding on inequality income and the power of zakat in order to alleviate the poverty. All the articles are done from year 2006 until 2010. This summary consists of 4 sections which is introduction, articles summary, criticize of the article summary and conclusion. The summary regarding Islamic macroeconomics will be explained in the next section. 2.0 ARTICLE SUMMARY 2.1 ISLAMIC MACROECONOMICS This subtopic is very important to understand deeply about the overview of the Islamic Macroeconomics. According to Choudury (2006), the paper aims to offer a new perspective on the nature of Islamic economics and the researcher wants to address the issue of the mainstream tradition without noticing the micro-interface of the theoretical nature of Islamic economics. Besides, the author wants to examine the nature of Islamic economics as an interdisciplinary paradigm that explains interaction over the domains of the moral guidance which is ‘Ilm, laws and the formative world-systems according to such discursive impulses and process (Shuratic). The author had focused his study on systemic unity of knowledge, meaning of ethics and morality are derived from the epistemological premise of unity of knowledge. The researcher had used the method of comparative study of received literature in the history of economic thought and contrasts the ethical foundations of Islamic economics...
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...* Principles of Islamic banking Islamic banking refers to a system or banking activity that is consistent with the Islamic jurisprudence [arab. fiqh] based on the principles of the Sharīʿah. Literally, it may be translated with “Path to the water of source”, rendering the “right” way that Allah has carved out for all Muslims. Main sources of the the Sharīʿah are the Qur’an and the Sunnah. Basic aims of the Sharīʿah are the spread of wisdom and welfare through transferring faith including beliefs and practices. In addition, in the past centuries Islamic religious scholars and jurists have been developing its practical application [arab. fatwa] to a system of instructions; some of them find their way into the constitutions of Arabic countries like Kuwait. Today Islamic jurisprudence is a code of conduct that on the one hand regulates the relationship between Allah and the mankind [arab. ʿibādāt] and on the other hand the economic and interpersonal relationship between individuals [arab. mu’amāt]. Since the entire legal framework of Islamic banking is codified in the Sharīʿah, every Islamic bank in the GCC region and the majority of the remaining Islamic banks worldwide have an in-house Sharīʿah -board that audits the compatibility of the banks’ products and services with the restrictions imposed by the Islamic law. In the following, the main principles of Islamic banking are explained. * Prohibition of riba, gharar and maysir (Qur’an 4:161) The first and most important feature...
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...Islamic Banking: Answers to Some Frequently Asked Questions 9 ISLAMIC DEVELOPMENT BANK ISLAMIC RESEARCH AND TRAINING INSTITUTE ISLAMIC BANKING: ANSWERS TO SOME FREQUENTLY ASKED QUESTIONS Mabid Ali Al-Jarhi and Munawar Iqbal Occasional Paper No.4 1422H 2001 Mabid Al-Jarhi and Munawar Iqbal 10 Islamic Banking: Answers to Some Frequently Asked Questions 11Mabid Al-Jarhi and Munawar Iqbal 12 Islamic Banking: Answers to Some Frequently Asked Questions 13 FOREWORD In the last quarter of a century, there has been a great interest in the Islamic banking system both at private and public levels. There is an earnest and widespread desire to understand the system. Academicians, bankers and general public, all, have some genuine questions and concerns. Policy makers in the monetary and financial sectors of the IDB member countries have also often asked the Islamic Research and Training Institute (IRTI) some basic questions of theoretical and practical importance about the elimination of interest from the national economies of Muslim countries and the transformation of the prevailing conventional system to an Islamic one. Some of these questions reflect a desire to understand the basic concepts of Islamic finance while others relate to the creation of an enabling environment through macroeconomic reform and structural adjustments that are needed to establish the Islamic financial system and the complications that arise when an effort is made to bring about the transformation...
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...MP A R Munich Personal RePEc Archive Impact of Interest Rates on Islamic and Conventional Banks: The Case of Turkey Erge¸ Etem Hakan and Arslan Bengul Gulumser c ¨ ¨¨ January 2011 Online at http://mpra.ub.uni-muenchen.de/29848/ MPRA Paper No. 29848, posted 4. April 2011 06:17 UTC Impact of Interest Rates on Islamic and Conventional Banks: The Case of Turkey Etem Hakan Ergeça* and Bengül Gülümser Arslanb Abstract Identifying the impact of the interest rates upon Islamic banks is key to understand the contribution of such institutions to the financial stability, designing monetary policies and devising a proper risk management applicable to these institutions. This article analyzes and investigates the impact of interest rate shock upon the deposits and loans held by the conventional and Islamic banks with particular reference to the period between December 2005 and July 2009 based on Vector Error Correction (VEC) methodology. It is theoretically expected that the Islamic banks, relying on interest-free banking, shall not be affected by the interest rates; however, in concurrence with the previous studies, the article finds that the Islamic banks in Turkey are visibly influenced by interest rates. JEL classification: G21; E52 Keywords: Interest-free banking, monetary policy I. Introduction Islamic banks1 are defined as financial institutions that rely on the principle of Profit and Loss Sharing (PLS) with the entrepreneurial partners in their relevant banking...
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...of Mudarabah & a new approach to equity financing in Islamic finance Salman Ahmed Shaikh International Association of Islamic Banks 1. July 2011 Online at http://mpra.ub.uni-muenchen.de/19697/ MPRA Paper No. 19697, posted 19. September 2011 12:50 UTC A Critical Analysis of Mudarabah & A New Approach to Equity Financing in Islamic Finance Journal of Islamic Banking & Finance, ISSN 1814-8042 By Salman Ahmed Shaikh Project Director, Islamic Economics Project islamiceconomicsproject@gmail.com www.islamiceconomics.viviti.com Abstract Financial intermediation serves a valuable purpose, but it can also be structured using equity modes of financing. This can relieve the financee and increase diversity of entrepreneurial undertakings as in debt based commercial financing, there is little room for diversity with obligatory and stipulated servicing of debt. Using Islamic equity modes of financing poses the challenge of the agency problem and moral hazard. The extent of this agency problem in Mudarabah and its impact on economic payoffs between counterparties is analyzed in this study with a simulation model. Based on review of alternate solutions proposed, the author presents two possible covenants which could make Mudarabah mode of financing more acceptable and widely usable in financial intermediation. This would also further the egalitarian objectives of an Islamic economic order. Keywords: Interest free economy, Islamic Economic System, Mudarabah, Agency Problem, Moral Hazard...
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...ISLAMIC FINANCE: CAN IT BE A REMEDY FOR FINANCIAL CRISES? I. INTRODUCTION The financial system is at the heart of the modern economy. When this system works well, it enables to allocate resources that maximize the productivity of the economy. On the contrary when it does not work properly, the whole economy starts to decline. Because financial system must be considered as an in-built part of real economy in terms of credit mechanism. The recent global financial crisis began in August 2007 and after this time it spread gradually to the financial markets in the world. Although it is not severe as in its beginning phase but recovery is not but its aftershock is still going on. There has been numerous research conducted by many economists and analysts. According to the many of these studies, risky transactions, lack of surveillance, and greed that underlie this financial crisis. The relationship between Islamic finance and the financial crises has been discussed by many authors in some of these research. All those works has been done after the beginning of the global financial crisis. Thanks to its strength aspects include risk sharing mechanism, strict Sharia governance rules, tighter supervision and transparency policy, almost all of these works have been concluded that Islamic finance may make significant contributions to prevent financial crises like the current one. Also the reality of the limited impact of the current global financial crisis on Islamic Finance-based institutions...
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...All you need to do is to answer all the questions for the different discussions (200 words each) Topic 1: What factors affect the consumer's perceptions of fast food and its services? Summary: The two studies by M.K. Brady et al and Kim et al are concerned with the same question: what factors affect the consumer’s perceptions of fast food and its services? But while Kim et al. focuses on American college students to find out what factors that segment finds favourable in a fast-food service, M.K. Brady et al takes their study to the international level to find out how different cultural values can affect the consumer’s behavioural intentions relative to the fast-food industry and its services. Both articles agree that the majority of America customers prefer to trade-off between quality of services and expenditure required (expense-conscious). The American consumer tends to judge consumption of goods and services with a ‘neutral’ and logically based mindset; always asking the question of “is it worth my money?” Kim et al claims that due to relatively inexpensive, quick and convenient service, fast-food is becoming more and more popular among college students in North America. How could restaurants attract this emerging market? Further discussing in particular the college student market, and selecting Wendy’s, Burger King and McDonald’s as target examples will figure out the way to attract college students in fast-food services restaurant. Several factors are taken into consideration...
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...“Islamic Accounting : Their Position in International Standard Harmonization” Rendy Anggita Putra “Islamic Accounting : Their Position in International Standard Harmonization” 1. Abstract According to (Susela, 1999) said the development of accounting theories is are affected by several factors including political and economic interests of certain people or group in community. Therefore, it can be also called if the accounting is a significant tool to illustrate the interests and perspectives of the various stakeholders. Islamic industry of finance has obtained tremendous growth in last few years, both in number of assets that manage by industry and in the diversity of financial products. A global system that can rule the industry will become significantly important for the Islamic finance sector in order to meet the needs of continued growth (Vinnicombe, 2012). Harmonization of Shari’a accounting standards has continue to be made by the AAOIFI as it is also done by the International Accounting Standards Board (IASB) for conventional accounting harmonization. In its development, financial reporting in Islamic accounting adds some different additional reports than conventional accounting to accommodate the unique transactions of Islamic economics. In that regard, this paper have objective to explore the main important values of Shari’a accounting and reporting standards of Islamic Accounting and try to find the answers of Islamic accounting positions among the process...
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...analysis of Mudarabah & a new approach to equity financing in Islamic finance Shaikh, Salman Ahmed International Association of Islamic Banks 01. July 2011 Online at http://mpra.ub.uni-muenchen.de/19697/ MPRA Paper No. 19697, posted 19. September 2011 / 12:03 A Critical Analysis of Mudarabah & A New Approach to Equity Financing in Islamic Finance Journal of Islamic Banking & Finance, ISSN 1814-8042 By Salman Ahmed Shaikh Project Director, Islamic Economics Project islamiceconomicsproject@gmail.com www.islamiceconomics.viviti.com Abstract Financial intermediation serves a valuable purpose, but it can also be structured using equity modes of financing. This can relieve the financee and increase diversity of entrepreneurial undertakings as in debt based commercial financing, there is little room for diversity with obligatory and stipulated servicing of debt. Using Islamic equity modes of financing poses the challenge of the agency problem and moral hazard. The extent of this agency problem in Mudarabah and its impact on economic payoffs between counterparties is analyzed in this study with a simulation model. Based on review of alternate solutions proposed, the author presents two possible covenants which could make Mudarabah mode of financing more acceptable and widely usable in financial intermediation. This would also further the egalitarian objectives of an Islamic economic order. Keywords: Interest free economy, Islamic Economic System, Mudarabah, Agency Problem, Moral Hazard...
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...Finance | The Rise of the Sukuk in Indonesia’s Islamic Finance Industry Islamic banking is one of the fastest-growing segments in international finance. Indonesia is home to the world's largest Muslim population (around 210 million), yet its share in Islamic finance is still low. Neighbouring Malaysia, with less than a tenth of Indonesia's population, has effectively turned itself into a global leader for sharia-compliant banking. But Indonesia's new Financial Services Authority (OJK) looks determined to help the country catch up. Sukuk will remain the heavyweight Islamic asset class in Indonesia (and globally) for the foreseeable future, buoyed by the immense capital needed for infrastructure development At a time when conventional investment products in developed economies have lost appeal due to their unattractively low yields, investors around the world are turning to sukuk, a kind of bond that is permitted under the Koran. Compared to conventional securities, sukuk usually offer higher returns and are considered fairly safe because they are backed by tangible assets. For Indonesia, this is an opportune context to carve out for itself a greater share of the global market. Realising the potential that Islamic finance holds for Indonesia's emerging economy, such as funding massive infrastructure development (See Indonesian Infrastructure: Tremendous PPP Opportunities), deepening the country's capital markets and making them more resilient to global downturns, the government...
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...Islamic Banking in Western China Group Paper 3 Group 4 November 6, 2014 Banking in some form has been around for thousands of years. It started small with loans of food or some other valuable product in local villages and has now evolved into the global industry we know today. There is a newer kind of banking that has seen a surge of acceptance from across the world, and that new kind of banking is known as Islamic banking. Islamic banking is a fairly new alternative to western banking, starting in the 1970’s. It is based on Shariah, the fundamental Islam religion. This is a socially responsible way to do banking and allows religion to guide decisions. Interest based transactions are not allowed because they violate Islamic law (Varriale, 2014). Instead, they share profits and losses with the lenders and borrowers of the banks. A few concepts, musharaka, murabaha, and mudaraba, are used in place of interest. Musharaka is when a borrower repays their loan through principal payments and a predetermined percentage of profits. Mudaraba is when a borrower agrees to pay the bank a handling fee if the investment is successful (R.J.C. and A.O.S., 2009). Murabaha is when the bank buys an asset for a customer and then sells it to them on a deferred basis, avoiding an interest-bearing loan. They also offer leasing agreements (R.J.C. and A.O.S., 2009). Islamic banking also requires tangible assets to back up the financial products. This is a much more conservative approach...
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...1. Islamic banking is banking activity that is consistent with the principles of Sharia- Islamic law and participates actively in achieving the goals and objectives of an Islamic economy. Sharia prohibits the interest-based transactions and Investing in businesses that provide goods or services considered contrary (vrazrez) to Islamic principles, for example alcohol, pork, gambling (igra na birze,azartnaja igra), or businesses that produce media such as gossip columns or pornography. The aim of this is to engage in only ethical investing, and moral purchasing. 2. Interest-free banking seems to be of very recent origin. The earliest references to the organisation of banking on the basis of profit sharing rather than interest are found in 1946. In the next two decades interest-free banking attracted more attention, partly because of the political interest it created in Pakistan and partly because of the emergence of young Muslim economists. In The early 1970s were held several conferences on Islamic Economics and banking. The involvement of institutions and governments led to the application of theory to practice and resulted in the establishment of the first interest-free banks. The Islamic Development Bank, an inter-governmental bank established in 1975, was born of this process. It was set up with the mission to provide funding to projects in the member countries. The efforts undertaken in the 1980’s to Islamize the economy at national level are considered as pioneering...
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...Islamic Banking Malek Alraddadi 02-24-2014 FIN-610 Introduction This study debates upon the history of Islamic banking. What are the ethical issues involved in the implementation of Islamic banking. Since the birth of Islam what type of steps are taken and by whom these measurements were taken. Besides this this paper also declares the response and customers point of view regarding Islamic banking with the help of different studies. History of Islamic banking The term Islamic banking got regular in the 1960's, however the systems and thoughts of the framework were suggested and operated since the beginning of Islam. Numerous studies and explores have indicated that Islamic money components were utilized within the Muslim world all around the Middle Ages; in leading exchange and business exercises. Charging investment on credits was not regular in those days. The first run through investment bearing credits were generally utilized within the Muslim world, particularly in the Middle East, was throughout the Ottoman Empire's governed in the fifteenth century. Mehmet Ebusuud Efendi, the senior Islamic minister of the Ottoman Empire, issued a fatwa (decision) permitting the charging of investment and thinking of it halal (allowable) as long as it was underneath 10%. Despite the fact that it was clear in The Holy Quran that investment was strictly disallowed, practically nobody could challenge the senior Islamic priest's decision since testing him might mean testing the...
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...25, Number 1 The Evolution Of Islamic Finance In Southeast Asia: The Case Of Malaysia (1) Rika Nakagawa, Institute of Developing Economies, Japan ABSTRACT The purpose of this paper is threefold: to explain why the Islamic financial system was introduced in Malaysia; to outline how the Malaysian government has promoted this system; and to analyze the development of the Islamic financial system with a specific focus on the banking sector. In Malaysia, the first Islamic bank, Bank Islam Malaysia Bhd., was established in 1983. One turning point of the Islamic financial system in the country was the Financial Sector Master Plan presented by the central bank in 2001. The government, in accordance with the plan, has taken a strong initiative in the development of an Islamic financial system. As a result, the country has succeeded in promoting a comprehensive Islamic financial system, banking and insurance sectors and capital markets. In the banking sector, this paper reveals that the profit-sharing system does not seem to be popular in this country although the reward system is central to Islamic Finance. In order for further development of the Islamic financial sector, the reasons why the percentage of contracts under the profit-sharing system is small need to be analyzed. Keywords: Islamic Finance in Malaysia, Financial Sector Master Plan, New Economic Policy, Bank Islam Malaysia Bhd., Islamic Banking Scheme INTRODUCTION I n the globalized economy, large amounts of capital are...
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...The Financial System Structure in Malaysia Financial System Financial Institutions Financial Market Banking System 1. Bank Negara Malaysia 2. Banking Institutions • Commercial Banks • Finance Companies • Merchant Banks • Islamic Banks 3. Others • Discount Houses • Representative Offices of Foreign Banks Non-Bank Financial Intermediaries 1. Provident and Pension Funds 2. Insurance Companies (including Takaful) 3. Development Finance Institutions 4. Savings Institutions • National Savings Bank • Co-operative Societies 5. Others • Unit Trusts • Pilgrims Fund Board • Housing Credit Institutions • Cagamas Berhad • Credit Guarantee Corporation • Leasing Companies • Factoring Companies • Venture Capital Companies Money & Foreign Exchange Market 1. Money Market 2. Foreign Exchange Market Capital Market 1. Equity Market 2. Bond Market • Public Debt Securities • Private Debt Securities Derivatives Market 1. 2. 3. Commodity Futures KLSE CI Futures KLIBOR Futures Offshore Market 1. Labuan International Offshore Financial Center (IOFC) 5.2 Banking System The banking system consists of Bank Negara Malaysia (Central Bank of Malaysia), banking institutions (commercial banks, finance companies, merchant banks and Islamic banks) and a miscellaneous group (discount houses and representative offices of foreign banks). The banking system is the largest component of the financial system,...
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