Financial innovation and engineering in Islamic finance:
Saved in:
| Main Author: | |
|---|---|
| Format: | Book |
| Language: | English |
| Published: |
Cham, Switzerland
Springer
[2017]
|
| Series: | Contributions to Management Science
|
| Subjects: | |
| Online Access: | Inhaltsverzeichnis |
| Physical Description: | xxiii, 225 Seiten Diagramme, Karten |
| ISBN: | 9783319529462 |
Staff View
MARC
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|---|---|---|---|
| 001 | BV044365141 | ||
| 003 | DE-604 | ||
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| 008 | 170622s2017 |||| |||| 00||| eng d | ||
| 020 | |a 9783319529462 |9 978-3-319-52946-2 | ||
| 035 | |a (OCoLC)1001564419 | ||
| 035 | |a (DE-599)BVBBV044365141 | ||
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| 041 | 0 | |a eng | |
| 049 | |a DE-355 |a DE-M382 |a DE-2070s | ||
| 084 | |a QK 010 |0 (DE-625)141631: |2 rvk | ||
| 100 | 1 | |a Alamad, Samir |e Verfasser |0 (DE-588)1131567528 |4 aut | |
| 245 | 1 | 0 | |a Financial innovation and engineering in Islamic finance |c Samir Alamad |
| 264 | 1 | |a Cham, Switzerland |b Springer |c [2017] | |
| 264 | 4 | |c © 2017 | |
| 300 | |a xxiii, 225 Seiten |b Diagramme, Karten | ||
| 336 | |b txt |2 rdacontent | ||
| 337 | |b n |2 rdamedia | ||
| 338 | |b nc |2 rdacarrier | ||
| 490 | 0 | |a Contributions to Management Science | |
| 650 | 4 | |a Finance | |
| 650 | 4 | |a Business enterprises / Finance | |
| 650 | 4 | |a Banks and banking | |
| 650 | 4 | |a Finance--History | |
| 650 | 4 | |a Financial engineering | |
| 650 | 4 | |a Financial Engineering | |
| 650 | 4 | |a Business Finance | |
| 650 | 4 | |a Banking | |
| 650 | 4 | |a Financial History | |
| 650 | 4 | |a Bank | |
| 650 | 4 | |a Unternehmen | |
| 776 | 0 | 8 | |i Erscheint auch als |n Online-Ausgabe |z 978-3-319-52947-9 |
| 856 | 4 | 2 | |m Digitalisierung UB Regensburg - ADAM Catalogue Enrichment |q application/pdf |u http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=029767679&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA |3 Inhaltsverzeichnis |
| 999 | |a oai:aleph.bib-bvb.de:BVB01-029767679 | ||
Record in the Search Index
| _version_ | 1804177616047964160 |
|---|---|
| adam_text | Contents
1 Introduction........................................................... 1
1.1 Background. ................................................... 1
1.2 Importance of Financial Innovation: Realising the Potential... 2
1.3 What Makes a Bank Islamic...................................... 4
1.4 Values Embedded in the Islamic Banking Products................ 4
1.5 If All Banks Adopted Islamic Values, Would There Have Been
a Banking Collapse?............................................ 6
1.6 Significance of this Book...................................... 6
1.7 Motivation of the Book......................................... 7
1.8 Objectives of this Book........................................ 8
1.9 Contribution of the Book....................................... 8
1.10 Potential Implications of this Book ........................... 9
1.11 Outline of the Book Chapters................................... 9
2 The Context of Islamic Banking and Finance............................ 15
2.1 Introduction. .............................................. 15
2.2 Defining Islamic Finance..................................... 15
2.3 The Prohibition of Riba in Islamic Finance.................... 17
2.4 The Ethical Basis of Islamic Finance.......................... 17
2.5 The Concept of Growth and Purification in Finance............. 18
2.6 Islamic Finance Instruments.................................. 18
2.7 Shariah Compliance and Governance (SCG) of Islamic
Financial Institutions (IFI).................................. 20
2.8 Duties and Responsibilities of the SSC........................ 22
2.8.1 Concept and Structure of Financial Products........... 22
2.8.2 Documentation......................................... 22
2.8.3 Shariah Advisory...................................... 22
2.8.4 Providing Shariah Legal Opinion....................... 23
2.8.5 Undertaking Shariah Compliance Audit.................. 23
2.9 Major Differences Between IFTs and Their Conventional
Counterpart................................................... 23
xiii
XIV
Contents
2.10 Financial Innovation and Engineering.................... 23
2.10.1 Scope of Financial Innovation and Engineering.... 25
2.10.2 Innovation and New Product Development
in Finance....................................... 25
2.11 Conclusion.............................................. 26
3 Analysis of Financial Innovation and Engineering
in the Literature............................................... 27
3.1 Introduction............................................ 27
3.2 Differences Between Islamic and Conventional Banking.... 28
3.3 The Difference Between Usury (Riba) and Interest........ 28
3.4 Emergence of Islamic Banking..................................... 29
3.5 Islamic Banking and Finance: Critics and Defenders...... 31
3.6 Innovation....................................................... 32
3.6.1 Definition of Innovation......................... 32
3.6.2 Nature and Theory of Financial Innovation........ 33
3.6.3 Three Schumpeterian Schools of Innovation........ 34
3.6.4 Innovation Orientation........................... 35
3.6.5 The Relation Between Innovation and Financial
Crisis.................................................. 36
3.7 Product Development..................................... 37
3.7.1 Definition of Product Development......................... 37
3.7.2 Importance of Product Development......................... 37
3.7.3 Product Development Process............................... 37
3.7.4 Product Development in Islamic Banking.................... 38
3.7.5 Islamic Ethics and Financial Product Development
and Engineering.................................. 39
3.8 Regulatory Challenges................................... 40
3.9 Risks in Islamic Banking................................ 41
3.9.1 Credit and Market Risks................................... 42
3.9.2 Operational Risk Exposure of Islamic Banks................ 42
3.9.3 Impacts of Basel III on Islamic Banks..................... 43
3.9.4 Liquidity in Islamic Banks................................ 44
3.10 Corporate Governance............................................ 45
3.11 Islamic Economics and Ethics .................................... 46
3.12 Legal Stratagems (Hiyal) in Islamic Commercial Law...... 47
3.13 The Role of Islamic Finance in Tackling Financial Exclusion . . . 48
3.14 Conclusion...................................................... 49
4 A Historical Analysis of Financial Innovation in Islamic Economics
and Finance from Inception to the Sixteenth Century ........... 51
4.1 Introduction................. . . ...................... 51
4.2 Phases of the History of Islamic Finance and Its Innovation ... 52
4.2.1 Phase 1: Formation (622-661)............................. 52
Contents
XV
4.2.2 Phase 2: Growth and Stability
(Seventh-Tenth Century).............................. 57
4.2.3 Phase 3: Decline (Tenth—Thirteenth Century)....... 60
4.2.4 Phase 4: Partial Growth
(Thirteenth—Sixteenth Century)....................... 60
4.3 Conclusion.................................................... 64
5 A Historical Analysis of Financial Innovation in Islamic Economics
and Finance from the Sixteenth Century to Present................. 65
5.1 Introduction.................................................. 65
5.2 Phase Five: Youthfulness (Sixteenth to Nineteenth Century) ... 65
5.3 Phase Six: The Decline of the Ottoman State and Subservience
to the West (from the Beginning of the Nineteenth Century
to 1970)...................................................... 68
5.4 Phase Seven: Islamic Finance Revivalism (1950s—1960s) .... 70
5.5 Phase Eight: Interest-Free Islamic Banking (1970s-Present) ... 73
5.5.1 Emergence of Islamic Banking......................... 74
5.5.2 An Empirical Account on Islamic Banking
in the West.......................................... 77
5.5.3 Evolution of Islamic Banking in South East Asia,
Pakistan and Iran.................................... 81
5.5.4 Various Approaches to Shariah Governance............. 84
5.6 Conclusion.................................................... 86
6 Traditional Theory of Financial Innovation.......................... 91
6.1 Introduction.................................................. 91
6.2 Analysis of the Role Played by Financial Innovation
in Creating Financial Crises.................................. 92
6.3 Fundamental Elements Influencing the Financial Market...... 93
6.4 The Resilience of the Banking System: A Key Factor in the
On-Going Financial Crises..................................... 93
6.5 The Race by Financial Institutions to Develop Sophisticated
Financial Products............................................ 94
6.6 The Root Cause of Financial Crises............................ 95
6.7 What Is Financial Innovation?................................. 96
6.7.1 Financial Innovation in History...................... 97
6.7.2 What Drives Financial Innovation?.................... 98
6.8 Undesirable Consequences of Innovation........................ 98
6.9 Pro-Innovation Bias.......................................... 100
6.10 Three Schools of Innovation.................................. 101
6.10.1 The Corporate Entrepreneurial School: A Social
Perspective—Innovation as Grassroots Impetuses . . . 102
6.10.2 The Cultural School: A Cultural Perspective—Nature
of Innovation: Deep Craft........................... 103
XVI
Contents
6.10.3 The Capability School: An Economic Perspective-
Innovation as Institutionalised Capability......... 103
6.11 Conclusion................................................. 105
7 Financial Innovation Theory from an Islamic Perspective............ 107
7.1 Introduction............................................... 107
7.2 Four Schools of Innovation.....................·........... 108
7.3 Definition of Innovation from an Islamic Perspective....... 109
7.4 The Islamic School of Financial Innovation................. 109
7.5 The Mechanics of Financial Innovation: The Role of
Jurisprudence.............................................. 110
7.6 The Application of Normativity Through Social Practices:
Bourdieu’s Theory.......................................... HI
7.7 Socially Useless Financial Innovation...................... 114
7.8 Economic Thought in the Qura’an and the Sunnah, Basic
Philosophy for Financial Innovation Theory................. 115
7.8.1 The Concept of Unity, Tawhid......................... 115
7.8.2 The Concept of Vicegerency, al Khilafah.............. 117
7.8.3 The Concept of Free Will and Responsibility,
al-lradah va al~Masu’wliyyah......................... 118
7.9 Islamic Economic Principles: The Fundamentals for an
Islamic Theory of Innovation.................................. 119
7.9.1 The Principle of Moderation (I’atidal) in Financial
Innovation......................................... 119
7.9.2 The Principle of Economic Efficiency in Financial
Innovation............................................ 120
7.9.3 The Principle of Social Justice (al-A ’adalah
al-ljtima lyyah) in Financial Innovation.............. 122
7.10 Application of the Basic Islamic Philosophy in Financial
Innovation.................................................... 123
7.11 The Origins of Shariah Supervision and Governance............. 123
7.12 Conclusion................................................. 125
8 Futures Contracts as an Underlying Product of Financial
Engineering in Islamic Finance . . . ............................. 127
8.1 Introduction.................................................. 127
8.2 Definition of Futures......................................... 128
8.3 Financial Futures............................................. 129
8.4 Hedging Mechanism Through Derivatives . ...................... 130
8.4.1 Objective of Hedging ................................. 130
8.4.2 Hedging Using Options . . . .......................... 130
8.4.3 Hedging Interest-Rate Risk with Financial Futures ... 131
8.5 Futures from an Islamic Perspective........................... 131
8.6 Problems Related to Futures Markets from an Islamic Finance
Perspective.................................................. 133
Contents xvii
8.7 Al-Gharar (Uncertainty) in the Futures Market................ 133
8.8 Conclusion................................................... 134
9 Options Contracts as an Underlying Product of Financial
Engineering in Islamic Finance...................................... 135
9.1 Introduction................................................. 135
9.2 What Is an Option............................................ 135
9.3 A Brief Historical Review of Options......................... 136
9.4 Types of Options............................................. 137
9.4.1 Call Option......................................... 137
9.4.2 Put Option.......................................... 137
9.4.3 Double Options...................................... 138
9.5 Why Options Are Popular...................................... 138
9.6 Useful Economic Purposes Served by Options................... 138
9.7 Market Analysis of Options................................... 139
9.8 An Assessment of Options from an Islamic Finance View .... 140
9.9 Options in the Islamic Literature............................ 140
9.10 Some Possible Shari ah Objections to Options................. 141
9.11 Khiyar as a Form of Option................................... 141
9.11.1 Main Typical Types of al-khiyarat (Options) as
Validated by the Sunnah............................. 142
9.12 Options and Islamic Jurisprudence............................ 142
9.12.1 Call Option......................................... 143
9.12.2 Put Option.......................................... 144
9.12.3 Index Option........................................ 144
9.12.4 Right as an Object of Sale.......................... 144
9.13 The Framework of Khiyar al-Shart and Daman (guarantee) . . . 145
9.14 Similarity Between Options and Bai al~ Arbun
(Down-Payment Sale)......................................... 148
9.15 Conclusion................................................... 149
10 Outlining a Framework for Financial Innovation and Engineering
in Islamic Finance................................................ 151
10.1 Introduction................................................. 151
10.2 Affiliated Risk with Options Contracts....................... 152
10.3 Al-Gharar (Uncertainty) in the Option Market................. 152
10.4 The Issue of Riba (Usury) Associated with Options............ 153
10.5 The Rationale of Prohibiting Conventional Options............ 154
10.6 Muslim Economists Point of View.............................. 155
10.7 Options from usul al-Fiqh (The Sources of Law)
Point of View............................................... 156
10.7.1 Istihsan............................................ 156
10.7.2 Al-maslaha al-mursala (Common Good)................. 156
10.8 Financial Contracts with Embedded Khiyar al-Shart............ 157
10.9 Managing Price Risk with khiyar al-shart..................... 158
^yij[ Contents
ЮЛ 0 Istijrâr Sale with Khiyar al-Shart........................... 159
ЮЛ 1 Exclusions from Option Contracts............................. 160
10Л2 Conclusion................................................... 161
11 Case Study: Analysis of Selected Shariah Compliant Financial
Products,....................................................... 163
11Л Introduction................................................. 163
11.2 Scope of the Documentary Analysis............................ 164
11.3 Findings of the Case Study Through Documentary Analysis . . . 165
11.3.1 Documentary Analysis of an Investment Product. . . . 165
11.3.2 Documentary Analysis of a Home Finance Product. . . 167
11.3.3 Documentary Analysis of a Derivative Product......... 170
11.3.4 Documentary Analysis of Sukuk (Equity Based
Islamic Certificate) Issue........................... 172
11.4 Summary of the Documentary Analysis Findings................. 175
11.5 Conclusion................................................... 175
12 Discussion and Conclusion......................................... 177
12.1 Introduction................................................. 177
12.2 Discussion................................................... 177
12.3 Book Contribution............................................ 181
12.4 Policy Implications.......................................... 182
12.5 Case Study of a New Shariah Compliant Financial
Innovation (Takaful Student Finance)......................... 184
12.5.1 Background of the Financial Innovation............... 184
12.5.2 The Analytical Process That Led to a Solution for the
Alternative Student Finance.......................... 185
12.5.3 Takaful as a Solution for the Alternative Student
Finance.............................................. 186
12.6 Conclusion................................................... 188
12.7 Avenues for Future Research................................ 191
Glossary............................................................. 193
References........................................................... 199
Index
219
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| id | DE-604.BV044365141 |
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| indexdate | 2024-07-10T07:50:54Z |
| institution | BVB |
| isbn | 9783319529462 |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-029767679 |
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| spelling | Alamad, Samir Verfasser (DE-588)1131567528 aut Financial innovation and engineering in Islamic finance Samir Alamad Cham, Switzerland Springer [2017] © 2017 xxiii, 225 Seiten Diagramme, Karten txt rdacontent n rdamedia nc rdacarrier Contributions to Management Science Finance Business enterprises / Finance Banks and banking Finance--History Financial engineering Financial Engineering Business Finance Banking Financial History Bank Unternehmen Erscheint auch als Online-Ausgabe 978-3-319-52947-9 Digitalisierung UB Regensburg - ADAM Catalogue Enrichment application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=029767679&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis |
| spellingShingle | Alamad, Samir Financial innovation and engineering in Islamic finance Finance Business enterprises / Finance Banks and banking Finance--History Financial engineering Financial Engineering Business Finance Banking Financial History Bank Unternehmen |
| title | Financial innovation and engineering in Islamic finance |
| title_auth | Financial innovation and engineering in Islamic finance |
| title_exact_search | Financial innovation and engineering in Islamic finance |
| title_full | Financial innovation and engineering in Islamic finance Samir Alamad |
| title_fullStr | Financial innovation and engineering in Islamic finance Samir Alamad |
| title_full_unstemmed | Financial innovation and engineering in Islamic finance Samir Alamad |
| title_short | Financial innovation and engineering in Islamic finance |
| title_sort | financial innovation and engineering in islamic finance |
| topic | Finance Business enterprises / Finance Banks and banking Finance--History Financial engineering Financial Engineering Business Finance Banking Financial History Bank Unternehmen |
| topic_facet | Finance Business enterprises / Finance Banks and banking Finance--History Financial engineering Financial Engineering Business Finance Banking Financial History Bank Unternehmen |
| url | http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=029767679&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA |
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