Fundamentals of Islamic Finance and Banking

Fundamentals of Islamic Finance and Banking

by Syeda Fahmida Habib
Released August 2018
Publisher(s): Wiley
ISBN: 9781119371007

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Book description

A comprehensive and fully up-to-date introductory textbook to Islamic finance and banking

Islamic finance and banking is being used increasingly globally — especially in the regions of Middle East and North Africa, South East and South Asia. To cater to the need of trained Islamic finance staff, a large number of Educational institutions are beginning to offer courses, majors and minors in Islamic finance and banking. The major challenge faced by these institutions are suitable textbooks for both undergrad and post-grad levels and especially with the relevant instructor resources (PPTs, test bank, practice activities and answer keys).

Luckily, Fundamentals of Islamic Finance and Banking is here to cover the most important topics related to Islamic finance and banking (IF&B) that are relevant for students of business, finance and banking. 

  • Offers an historical background of Islamic finance
  • Covers the principles of Sharia Law as pertinent to finance and banking
  • Provides in-depth discussion of the six key Islamic banking products: Murabaha, Mudaraba, Musharaka, Ijara, Salam and Istisna
  • Discusses the Islamic insurance (Takaful)
  • Gives an overview of Islamic investment, especially Sukuks
  • Concludes with the global standing of the Islamic Finance and Banking industry

Would-be colleges and universities offering this subject as a course within their finance and/or banking program can’t be without this invaluable guide.  

Table of contents

  1. Cover
  2. List of Figures
  3. List of Tables
  4. Acknowledgements
  5. About the Author
  6. Preface
  7. About the Website
  8. CHAPTER 1: Introduction to Islamic Finance and Islamic Economics
    1. INTRODUCTION
    2. CREATION OF MONEY AND CONVENTIONAL FINANCE AND BANKING
    3. DEFINITION OF ISLAMIC FINANCE AND BANKING
    4. ECONOMICS AND ISLAM
    5. ISLAM AND THE WELFARE ECONOMY
    6. EVOLUTION OF ISLAMIC FINANCE
    7. RAPID GROWTH OF THE ISLAMIC FINANCE AND BANKING INDUSTRY
    8. ISLAMIC FINANCE AND BANKING IN MUSLIM COMMUNITIES AND COUNTRIES
    9. ISLAMIC FINANCE AND BANKING IN NON-MUSLIM COUNTRIES
    10. SUB-SECTORS IN THE ISLAMIC FINANCE AND BANKING INDUSTRY
    11. CURRENT STATUS OF MODERN ISLAMIC FINANCE AND BANKING
    12. TIMELINE OF DEVELOPMENT OF CONTEMPORARY ISLAMIC FINANCE AND BANKING
    13. KEY TERMS AND CONCEPTS
    14. CHAPTER SUMMARY
    15. END OF CHAPTER QUESTIONS AND ACTIVITIES
  9. CHAPTER 2: Shariah Law and the Shariah Supervisory Board
    1. INTRODUCTION TO THE ISLAMIC LAW – SHARIAH
    2. SOURCES OF SHARIAH
    3. SCHOOLS OF ISLAMIC JURISPRUDENCE
    4. ETHICS IN SHARIAH-COMPLIANT BUSINESS AND FINANCE
    5. MAJOR SHARIAH PROHIBITIONS AND PRINCIPLES AND THEIR IMPLICATIONS
    6. SHARIAH SUPERVISORY BOARD (SSB)
    7. CORPORATE AND SHARIAH GOVERNANCE
    8. SHARIAH GOVERNANCE PROCESS
    9. KEY TERMS AND CONCEPTS
    10. CHAPTER SUMMARY
    11. END OF CHAPTER QUESTIONS AND ACTIVITIES
  10. CHAPTER 3: Islamic Banking versus Conventional Banking
    1. INTRODUCTION TO ISLAMIC BANKING
    2. ISLAMIC BANKING VERSUS CONVENTIONAL BANKING
    3. RISKS OF BANKS – GENERIC AND SPECIFIC TO ISLAMIC BANKS
    4. FINANCIAL INTERMEDIATION
    5. DISTRIBUTION OF ISLAMIC BANKING PRODUCTS
    6. CONVENTIONAL VERSUS ISLAMIC FINANCIAL INTERMEDIATION
    7. BALANCE SHEET OF AN ISLAMIC BANK – SOURCES AND USES OF FUNDS BY AN ISLAMIC BANK
    8. CONTRACTS IN SHARIAH LAW
    9. CONTRACTS OF EXCHANGE IN SHARIAH-COMPLIANT COMMERCE AND FINANCE
    10. COMMON ISLAMIC BANKING PRODUCTS
    11. FINANCIAL ACCOUNTING IN ISLAMIC BANKING
    12. CHALLENGES FACED BY ISLAMIC BANKS
    13. ISLAMIC FINANCE AND THE FINANCIAL CRISIS
    14. INTERNATIONAL ISLAMIC REGULATORY AND STANDARD SETTING BODIES
    15. KEY TERMS AND CONCEPTS
    16. CHAPTER SUMMARY
    17. END OF CHAPTER QUESTIONS AND ACTIVITIES
  11. CHAPTER 4: Murabaha
    1. INTRODUCTION TO MURABAHA
    2. CONDITIONS RELATED TO MURABAHA
    3. CALCULATION OF MURABAHA PROFIT
    4. THE MURABAHA PROCESS
    5. PRACTICAL APPLICATIONS OF MURABAHA
    6. TAWARRUQ, REVERSE MURABAHA OR COMMODITY MURABAHA
    7. CHALLENGES AND PROBLEMS ASSOCIATED WITH MURABAHA
    8. COMPARISON OF MURABAHA WITH CONVENTIONAL LOANS
    9. KEY TERMS AND CONCEPTS
    10. CHAPTER SUMMARY
    11. END OF CHAPTER QUESTIONS AND ACTIVITIES
  12. CHAPTER 5: Mudaraba
    1. INTRODUCTION TO MUDARABA
    2. USE OF MUDARABA FOR FINANCIAL INTERMEDIATION OF ISLAMIC BANKS
    3. PROFIT CALCULATION IN MUDARABA
    4. PROVISIONS AND RESERVES RELATED TO MUDARABA
    5. MUDARABA AS A LIMITED RECOURSE DEBT FINANCE
    6. TYPES OF MUDARABA
    7. SHARIAH CONDITIONS RELATED TO MUDARABA
    8. CHALLENGES AND PROBLEMS RELATED TO MUDARABA
    9. PRACTICAL APPLICATIONS OF MUDARABA
    10. COMPARISON OF MUDARABA WITH INTEREST-BASED CONVENTIONAL BANKING
    11. ACCOUNTING ISSUES RELATED TO MUDARABA
    12. KEY TERMS AND CONCEPTS
    13. CHAPTER SUMMARY
    14. END OF CHAPTER QUESTIONS AND ACTIVITIES
  13. CHAPTER 6: Musharaka
    1. INTRODUCTION TO MUSHARAKA
    2. TYPES OF MUSHARAKA
    3. SHARIAH RULES AND GENERAL PRINCIPLES GUIDING MUSHARAKA CONTRACTS
    4. PROBLEMS RELATED TO MUSHARAKA
    5. PRACTICAL USES OF MUSHARAKA
    6. COMPARISON OF MUSHARAKA WITH INTEREST-BASED FINANCING
    7. COMPARISON OF MUSHARAKA WITH MUDARABA FINANCING
    8. KEY TERMS AND CONCEPTS
    9. CHAPTER SUMMARY
    10. END OF CHAPTER QUESTIONS AND ACTIVITIES
  14. CHAPTER 7: Ijara
    1. INTRODUCTION TO IJARA
    2. IJARA IN ISLAMIC BANKS
    3. TYPES OF IJARA
    4. IJARA, REGULAR IJARA OR OPERATING LEASE
    5. IJARA WA IQTINA, IJARA MUNTAHIA BITTAMLEEK OR FINANCIAL LEASE
    6. IJARA THUMMA AL BAY
    7. SHARIAH RULES AND GENERAL PRINCIPLES GUIDING IJARA CONTRACTS AND THEIR CHARACTERISTICS
    8. DOCUMENTATION RELATED TO THE IJARA CONTRACT
    9. MAIN DIFFERENCES BETWEEN IJARA AND A CONVENTIONAL LEASE
    10. DIFFERENCES BETWEEN IJARA AND A CONVENTIONAL LOAN CONTRACT
    11. DIFFERENCES AND SIMILARITIES BETWEEN IJARA WA IQTINA AND DIMINISHING MUSHARAKA
    12. PRACTICAL APPLICATIONS OF THE IJARA CONTRACT
    13. KEY TERMS AND CONCEPTS
    14. CHAPTER SUMMARY
    15. END OF CHAPTER QUESTIONS AND ACTIVITIES
  15. CHAPTER 8: Salam
    1. INTRODUCTION TO SALAM
    2. IMPORTANT CHARACTERISTICS OF THE SALAM CONTRACT
    3. HISTORY OF THE SALAM CONTRACT AND ITS SHARIAH ACCEPTABILITY
    4. BENEFITS OF THE SALAM CONTRACT
    5. ROLE OF ISLAMIC BANKS IN SALAM AND THE PARALLEL SALAM CONTRACT
    6. SALAM AND PARALLEL SALAM DIAGRAM AND PROCESS
    7. PRACTICAL APPLICATION OF SALAM
    8. PROBLEMS RELATED TO SALAM CONTRACTS
    9. COMPARISON OF SALAM CONTRACT WITH CONVENTIONAL BANKING
    10. KEY TERMS AND CONCEPTS
    11. CHAPTER SUMMARY
    12. END OF CHAPTER QUESTIONS AND ACTIVITIES
  16. CHAPTER 9: Istisna
    1. INTRODUCTION TO ISTISNA
    2. SHARIAH RULES AND GENERAL PRINCIPLES GUIDING ISTISNA CONTRACTS AND THEIR CHARACTERISTICS
    3. ROLE OF ISLAMIC BANKS IN ISTISNA AND PARALLEL ISTISNA
    4. PROBLEMS RELATED TO ISTISNA AND PARALLEL ISTISNA
    5. COMPARISON OF ISTISNA WITH INTEREST-BASED FINANCE, SALAM AND IJARA
    6. DIFFERENCE BETWEEN SALAM AND ISTISNA
    7. COMPARISON OF ISTISNA WITH IJARA
    8. PRACTICAL APPLICATION OF ISTISNA
    9. KEY TERMS AND CONCEPTS
    10. CHAPTER SUMMARY
    11. END OF CHAPTER QUESTIONS AND ACTIVITIES
  17. CHAPTER 10: Takaful
    1. BACKGROUND OF TAKAFUL
    2. MODERN TAKAFUL INDUSTRY AS AN ALTERNATIVE TO CONVENTIONAL INSURANCE
    3. PARTIES IN TAKAFUL
    4. SHARIAH RULES AND GENERAL PRINCIPLES GUIDING TAKAFUL CONTRACTS AND THEIR CHARACTERISTICS
    5. THE DEVELOPMENT OF TAKAFUL
    6. CHALLENGES FACED BY THE MODERN TAKAFUL INDUSTRY
    7. TYPES OF TAKAFUL
    8. OPERATIONAL STRUCTURE OF TAKAFUL
    9. TAKAFUL MODELS
    10. UNDERWRITING SURPLUS OR DEFICIT AND TECHNICAL PROVISIONS
    11. CONVENTIONAL MUTUAL INSURANCE AND TAKAFUL
    12. SIMILARITIES AND DIFFERENCE BETWEEN TAKAFUL AND CONVENTIONAL INSURANCE
    13. RETAKAFUL
    14. KEY TERMS AND CONCEPTS
    15. CHAPTER SUMMARY
    16. END OF CHAPTER QUESTIONS AND ACTIVITIES
  18. CHAPTER 11: Islamic Investments and Sukuks
    1. INVESTMENT MARKETS AND PRODUCTS
    2. ISLAMIC INVESTMENTS
    3. ISLAMIC ASSET AND FUND MANAGEMENT
    4. RISKS AND CHALLENGES INHERENT IN THE ISLAMIC CAPITAL MARKETS
    5. SHARIAH GOVERNANCE AND THE SHARIAH SUPERVISORY BOARD IN ISLAMIC INVESTMENT
    6. COMPARISON OF ISLAMIC INVESTMENTS WITH CONVENTIONAL INVESTMENTS
    7. INTRODUCTION TO SUKUKS
    8. CHARACTERISTICS OF THE ISLAMIC INVESTMENT PRODUCT – SUKUK
    9. TYPES OF SUKUKS
    10. CONTROVERSY RELATED TO SUKUKS
    11. RATING OF SUKUKS
    12. TRADING OF SUKUKS ON THE SECONDARY MARKETS
    13. COMPARISON OF SUKUKS WITH CONVENTIONAL BONDS
    14. KEY TERMS AND CONCEPTS
    15. CHAPTER SUMMARY
    16. END OF CHAPTER QUESTIONS AND ACTIVITIES
  19. CHAPTER 12: Global Standing of Islamic Finance and Banking
    1. BACKGROUND OF MODERN ISLAMIC FINANCE AND BANKING
    2. CONVENTIONAL VERSUS ISLAMIC FINANCE
    3. GLOBAL GROWTH OF THE ISLAMIC FINANCE AND BANKING INDUSTRY
    4. ISLAMIC FINANCE AND BANKING AND THE MUSLIM COMMUNITY
    5. BANKING AND ISLAMIC BANKING IN THE MIDDLE EAST AND THE GCC
    6. BANKING AND ISLAMIC BANKING IN SOUTH AND SOUTH-EAST ASIA AND BEYOND
    7. ACHIEVEMENTS AND OPPORTUNITIES IN GLOBAL ISLAMIC FINANCE AND BANKING
    8. CHALLENGES FACED BY ISLAMIC FINANCE AND BANKING
    9. SOCIAL RESPONSIBILITIES OF ISLAMIC FINANCE
    10. GOING FORWARD
    11. KEY TERMS AND CONCEPTS
    12. CHAPTER SUMMARY
    13. END OF CHAPTER QUESTIONS AND ACTIVITIES
  20. Glossary
  21. References
  22. Index
  23. End User License Agreement

Product information

  • Title: Fundamentals of Islamic Finance and Banking
  • Author(s): Syeda Fahmida Habib
  • Release date: August 2018
  • Publisher(s): Wiley
  • ISBN: 9781119371007