The Evolution of Islamic Finance and Financial Institutions

Islam is more than a religion, it’s a culture, and as such has an effect on political, social, and economic aspects of life—this is especially true outside of the Western world. Followers of Islam believe in full submission to God and this submission is practiced in the secular realm (Taha, 114). Of the five pillars of Islam, one (the zakat) has a direct affect on economic policy and ethics. The culture of Islam has shaped economic and business guidelines In the Islamic World and continues to do so. Cultural ideals attributed to the Qur’an or the Prophet Muhammad, have been a vital source for economic and business practices that have helped to shape the history of many Islamic nations, and are guiding the creation of policies

MAIL (Mate Australian Islamic Loans) is an organisation created with young Australian Muslims in mind. It aims to help young Australians get Islamic compliant home loans and car financing without having to do any complicated research about the rules and regulations that allow loans to be Sharia compliant in Australia – this means that they can be assured that they can borrow the money they need without contravening their religious principles.

Becoming an expert in Islamic economics and finance field is one of my long-term goals in life. I started to organize and made a plan towards achieving that dream since senior high school. The concern towards Islamic economics and finance concept, and its application for society and the country began when I was reading a book entitled Islamic banking-theory and practice. After finishing reading the book, my interest in Islamic economic and finance topics rose and strengthen my own determination to become the expert of Islamic economics and finance. The main principle of Islamic economics and finance which offers the just and ethics in economic activity, poverty alleviation through income distribution mechanism, and prevention of economic and

To invest in Shariah-compliant listed equities to provide the capital growth over the medium to long term through the diversified, but growth-oriented portfolio.

Knowledge, attitude and practices, (KAP) , Islamic banking and Islamic shariah laws and other financial institutions play a vital role In the economies through its globally suplus fund to those with deficit

Islamic Capital Market is a major part of the overall Islamic Financial System especially in providing the component of liquidity to the otherwise illiquid assets. One of the most popular instruments used today in Islamic Capital Market is Sukuk. The structures of Sukuk based on Ijarah, Musharakah, Mudharabah and hybrid forms have evolved. Under any circumstances, these innovations have appeal to many Shari’ah issues and arguments. Therefore, this article aims at analyzing the challenges of realizing Maqasid al-Shari’ah in the Islamic capital market, focusing on sukuk instrument. In particular, this study evaluates on the approach of one of the most popular sukuk structure, namely, sukuk al-Ijarah in the light of the perspective of Maqasid

However, the flexibility and development cash waqf are debated by Muslim jurists and scholar due to certain conceptual argument concerning perpetuity and inalienability (Mohammad et al., 2005). Because of the property must be tangible property (maal) and capable of being used without being consumed. This situation was clarified by the Waqf Validating Act of 1913, which permitted a waqf of “any property” including the movables, i.e., shares in joint stock companies, notes and even cash (Suhrawardy, 1991). This figure illustrates the mechanism effect of waqf

After the researches, we had decided to choose the Islamic insurance, Takaful as our Islamic financial instrument and Conventional Insurance as the conventional product for comparison. The first fatwa that explicitly prohibited profitmaking insurance in its modern application and its related activities was made by Ibn Abdeen (a Syrian Scholar) in 1834. While opinions are vary among Muslim scholars, the overwhelming majority of them have concluded that conventional insurance contracts are unacceptable to Islam. There are a number of significant differences between both of these. Therefore, we will first compare by using the structured table as below.

There are challenges in the Malaysian sukuk market. An important component for the growth of Islamic capital markets is the conception of a secondary selling platform for the capital market instruments. This will supply investors with flexibility in supervising their liquidity requirements. The creation of a continuous supply of Islamic papers and instruments need to advertise them greater depth in the market. There also necessarily to be greater diversity in the type and maturity of the sukuk in the market for Islamic financial institutions and portfolio managers to supervise their funds effectively. The Malaysian government regularly issues sukuk with different maturities in order to produce a benchmark yield curve. Another challenge to the growth of the market cares pricing issues. For the Islamic security to be efficiently priced and believable, further initiatives need to be undertaken to originate its own indicator. It would then fluctuate depending on the demand and supply for that property. It will then give a true reflection of the price of the underlying asset (Aziz, 2007).

In this case study on investment-linked takaful, there are some shariah issues. The following are some but not limited Shariah issues at the conception of the contract, the fund management and at the level of distribution of profit.

The pairing of Islamic Finance and crowdfunding could quite possibly evolve the current American Islamic mortgage product from that whose emphasis is almost solely focused on interest aversion into a product that embraces Islamic fundamentals. Such an Islamic finance vehicle, consistent with the sharing economy methodology, would conform with ALL

The failures and bailed out of large banking and financial institutions during economic turmoil of 2008-2009, is an emblematic of the excessive and imprudent lending and securitisation activities. Most economist, politicians and commentators referred the crisis being a reminiscence of capitalism and its inherent greed. The conventional economics, which ignored “centrality of human beings and their well-being” (Asutay, 2007), has led to the emerging calls for economics well-being thus contributed to the rapid development in Islamic finance globally. Reilly (1990) commented that this “phenomenon is the search for a new and just economic and political structure to replace the unacceptable and/or unworkable socialistic or capitalistic systems” or in other words, a moral economy. The discussion hereafter is to look at how moral economy is defined, the articulations and implications and whether Islamic economics as being grounded on the axioms and foundational principles of Islam, can be considered as moral economy from both aspirational expectations and operational aspect of it, thus served as a distinctive moral economy system.

The Accounting and Auditing Organization for Islamic Financial Institutions established on Safar 1, 1410 Hijri (February 26, 1990) at Algiers and registered in Bahrain on Ramadan 11, 1411 Hijri (March 27, 1991) has so far (April, 2004) set the following Financial Accounting Standards, Auditing Standards, Governance Standards & Code of Ethics for Accountants & Auditors of Islamic Financial Institutions:

Similarly, Mobarek & Kalonov (2014) provided empirical evidence, using two frontier approaches, from many OIC countries to compare Islamic and conventional banking. They found that though conventional banks more efficient in their operations, Islamic banks had an upper hand when it came to financial stability. Their extensive study covered pre-crisis and crisis periods. The finding of Mobarek & Kalonov (2014) is validated by an earlier study conducted by Al-Hares, AbuGhazaleh, & El-Galfy (2013) in which they studied banks from 2003-2011. Al-Hares, AbuGhazaleh, & El-Galfy (2013) found that Islamic banks in Gulf Cooperation Council (GCC) were less efficient than

Millions of poor practicing Muslims around the world need access to Sharia (Islamic law) compliant financial tools. According to CGAP 2013, there are around 255 Islamic microfinance providers in the world (Figure 1 and 2). Studies conducted in Bangladesh, Sudan and Indonesia show that Islamic microfinance is growing at much faster rate than conventional microfinance. TechNavio forecasts the market to grow at a CAGR of 19.7 percent over the period 2013-2018. There is a huge opportunity for the growth of Islamic Microfinance in Pakistan as well. This sector is scattered and there is a need for concerted effort on part of the policymakers and financial institutions to provide diversity in products/providers and sustainable Islamic financing models. The government of Pakistan is keen on expanding the Islamic banking sector and it makes sense to focus on Islamic microfinance sector at the same time.