Table Of Content
© Islamic Development Bank, 2007
Islamic Research & Training Institute
First Published 1427H (2007)
Islamic Research and Training Institute
P.O. Box 9201, Jeddah 21413, Saudi Arabia.
e-mail: [email protected]
King Fahad National Library Cataloging-in-Publication Data
Ali, Salman Syed, 1961−
Islamic Banking and Finance: Fundamentals and Contemporary Issues /
Salman Syed Ali and Ausaf Ahmad.
306 + (x) p.; 24x17 cm. − Jeddah 19143.
Includes references and glossary.
ISBN 9960-32-162-2
1. Finance – Islamic. 2. Banking – Islamic. 3. Law – Financial
4. Financial Service Industry – Islamic.
I. Ahmad, Ausaf. II. Title III. Conference Proceedings
332.121 – dc20
The views expressed in this book are not necessarily those of the Islamic Research
and Training Institute of the Islamic Development Bank or the Universiti Brunei
Darussalam. References and citations are allowed but must be properly
acknowledged.
iv
Contents
Foreword vii
Acknowledgements ix
An Overview 1
Salman Syed Ali and Ausaf Ahmad
Fundamentals
1 Islamic Banking and Finance: Philosophical Underpinnings 13
Mabid Ali Al-Jarhi
2 The Case Against Riba: Is It Compelling? 25
Umer Chapra
3 Option Contracts and The Principles of Sale of Rights in Shari[ah 51
Mohammed Burhan Arbouna
4 Unresolved issues in Islamic Banking and Finance: Deposit 81
Mobilization
Sayyid Tahir
5 Financial Distress and Bank Failure: Relevance for Islamic Banks 99
Salman Syed Ali
Contemporary Issues
6 Factors of Success of Islamic Banks: An Empirical Study 121
Monzer Kahaf
v
7 The Attitude of Bank Customers and Professional Bankers 169
Towards Islamic and Conventional Banks in Bangladesh
Mahmood Ahmad
8 Equity Fund’s Islamic Screening: Effects on its Financial 197
Performance
Abul Hassan and Antonios Antoniou
Legal Issues
9 Legal Aspects of Islamic Banking—Malaysian Experience 215
Norhasima Yassin
10 Legal Aspects of Islamic Project Finance and Asset Securitization 239
in Indonesia: A Vehicle for the Development of Islamic Banking
Reza Adirahman Djojosugito
11 Islamic Bonds; Indonesian Experience 261
Cecep Maskanul Hakim
History and Training Issues
12 Islamic Banking in Brunei and The Future Role of Centre for 277
Islamic Banking Finance and Management (CIBFM)
Hjh Salma Hj Abdul Latiff
Glossary 301
vi
Foreword
Islamic finance is growing in various parts of the world. It has moved
from a mere theoretical concept to a practical reality. A natural consequence
of this progress is the opening up of new challenges as well as more avenues
for its advancement. Islamic finance is therefore confronting some new and
some old, but re-formulated, challenges on the intellectual and practical
plains. On the intellectual side, refinements in the philosophical
underpinnings of the Islamic finance and the financial system are the core
issues. While on the practical side, the diversity of regulatory, supervisory and
legal environments faced by Islamic financial institutions; the issues of a
proper accounting framework; corporate governance; and making available of
a complete spectrum of Islamic financial products have evolved as some of
the new challenges. These challenges require going back and forth between
the drawing board and the reality. Consequently, this approach is reflected in
a good number of conferences and research assignments undertaken by IRTI.
The present volume is a collection of selected papers from a conference
jointly organized by IRTI and Universiti Brunei Darussalam in 2004. The
conference was unique in its inclusion of some educational lectures on
Islamic law (fiqh) of finance for orientation purpose along with sessions
devoted to presentation of research papers in Islamic banking and finance.
Both categories of presentations were important in their own right. However,
the editors felt that the information content of the first category (the
orientation lectures) will find its own currency and circulation because
lectures by nature are repeated and their information content shared more
widely. It is the research papers category that may need support of editing
and publishing for broader circulation and knowledge preservation. The
editors have therefore put together mostly this second category of papers in
this volume. I hope that the readers will find these useful; and that the papers
will help in creating further knowledge in the field.
Bashir Ali Khallat
Acting Director
Islamic Research and Training Institute
vii
viii
Acknowledgements
We would like to acknowledge the joint efforts of IRTI and Universiti
Brunei Darussalam in organizing the conference which generated these
papers.
Particular thanks to Ms. Hjh Salma, Dr. Shamim Siddiqui and other
members of the local Organizing Committee from Universiti Brunei
Darussalam who were responsible for the local arrangements. We also like to
acknowledge with appreciation the Academic Committee of the conference
comprising of IRTI and UBD staff who refereed the large number of papers
submitted for the conference. Most importantly, thank is due to all the
authors who contributed with their papers to the conference.
We also acknowledge with thanks the tedious work of Mr. Sajjad Qurban,
Mr. Amanul Hoque, Mr. Mohammad Asiri and many others at IRTI who
helped us at different stages of typesetting and final production of this
volume.
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