Islamic Capital Markets

Name: Islamic Capital Markets | Products and Strategies
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Products and Strategies

Kabir Hassan Michael Mahlknecht(Autor*in)

Wiley (Verlag)

Erschienen am 26. Juli 2011

480 Seiten

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Beschreibung

Islamic Finance has experienced rapid growth in recent years, showing significant innovation and sophistication, and producing a broad range of investment products which are not limited to the complete replication of conventional fixed-income instruments, derivatives and fund structures. Islamic Finance represents an elemental departure from traditional interest-based and speculative practices, relying instead on real economic transactions, such as trade, investment based on profit sharing, and other solidary ways of doing business, and aims to incorporate Islamic principles, such as social justice, ecology and kindness, to create investment products and financial markets which are both ethical and sustainable.
Products created according to Islamic principles have shown a low correlation to other market segments and are relatively independent even from market turbulences like the subprime crisis. Therefore, they have become increasingly popular with secular Muslims and non-Muslim investors, as highly useful alternative investments for the diversification of portfolios.
In Islamic Capital Markets: Products and Strategies, international experts on Islamic Finance and Sharia'a Law focus on the most imminent issues surrounding the evolution of Islamic capital markets and the development of Sharia'a-compliant products. The book is separated into four parts, covering:
* General concepts and legal issues, including Rahn concepts in Saudi Arabia, the Sharia'a process in product development and the integration of social responsibility in financial communities;
* Global Islamic capital market trends, such as the evolution of Takaful products and the past, present and future of Islamic derivatives;
* National and regional experiences, from the world's largest Islamic financial market, Malaysia, to Islamic finance in other countries, including Germany, France and the US;
* Learning from Islamic finance after the global financial crisis; analysis of the risks and strengths of Islamic capital markets compared to the conventional system, financial engineering from an Islamic perspective, Sharia'a-compliant equity investments and Islamic microfinance.
Islamic Capital Markets: Products and Strategies is the complete investors' guide to Islamic finance.

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DR M. KABIR HASSAN is a financial economist with consulting,research and teaching experience in development finance, money andcapital markets, Islamic finance, corporate finance, investments,monetary economics, macroeconomics and international trade andfinance. He has provided consulting services to the World Bank(WB), International Monetary Fund (IMF), Islamic Development Bank(IDB), African Development Bank (AfDB), USAID, Government ofBangladesh, Organization of Islamic Conferences (OIC), and manyprivate organizations and universities around the world. Dr Hassanreceived his BA in Economics and Mathematics from Gustavus AdolphusCollege, Minnesota, USA, and MA in Economics and PhD in Financefrom the University of Nebraska-Lincoln, USA respectively. He isnow a Professor in the Department of Economics and Finance at theUniversity of New Orleans, Louisiana, USA. He has more than 100papers published in refereed academic journals to his credit. DrHassan supervised 27 doctoral theses, and many of his students arenow well placed in the academia, government and private sectors. Heis editor of The Global Journal of Finance andEconomics and Journal of Islamic Economics, Banking and Finance,International Journal of Islamic and Middle Eastern Financeand Management, and co-editor of Journal of EconomicCooperation and Development. Dr Hassan has edited and publishedmany books along with articles in refereed academic journals. DrHassan is co-editor (with M.K. Lewis) of Handbook of IslamicBanking and Islamic Finance and The InternationalLibrary of Critical Writings in Economics (Edward Elgar, 2007).He is co-author Islamic Entrepreneurship (Routledge UK,2010), and co-author (with Rasem N Kayed and Umar Oseni) ofIslamic Finance (Pearson Publishing Company, 2012forthcoming). A frequent traveller, Dr Hassan gives lectures andworkshops in the US and abroad, and has presented over 100 researchpapers at professional conferences. His contact details are: mhassan@uno.edu; KabirHassan63@gmail.com;phone: 610-529-1247.
MICHAEL MAHLKNECHT is a consultant in the areas of riskmanagement, capital markets and Islamic finance. He regularly holdspresentations and gives university lectures on Islamic finance atthe Ecole de Management Strasbourg, the Philipps-Universitätof Marburg (Germany), the University of Rome Tor Vergata, and theTechnical University of Munich. Michael has written several paperson Islamic banking, insurance and capital markets, as well as onissues as diverse as graphical analysis methods, financial hedging,structured products, and credit risk management, which werepublished in various national and international magazines,including the Capco Journal of Financial Transformation, IslamicBusiness & Finance, Banker Middle East, and Private Equity andHedge Funds Middle East. Michael is the author of the introductoryGerman handbook Islamic Finance: Einführung in Theorie undPraxis (Wiley, 2008) and of the Executive Report IslamicCapital Markets and Risk Management (Incisive Media/RISK Books,2009). He currently lives in Hamburg, Germany and may be reachedunder his private e-mail address: hmmahlknecht@gmail.com

Autor*in

Kabir Hassan

Financial Economist

Michael Mahlknecht

Delta Hedge

Inhalt

Intro
Islamic Capital Markets
Contents
About the Contributors
Preface
PART I GENERAL CONCEPTS AND LEGAL ISSUES
1 Rahn Concepts in Saudi Arabia: Formalization and a Registration and Prioritization System
1.1 Introduction
1.2 The Mortgage Law
1.2.1 General Observations
1.2.2 Specific Provisions
1.3 Conclusion
Notes
2 The Shariah Process in Product Development and Approval in ICM
2.1 Introduction
2.2 Product Development, Financial Engineering, and Innovation in Islamic Finance
2.2.1 Principles to be Considered in Product Development, Innovation, and Financial Engineering
2.2.2 Area of Product Development, Innovation, and Financial Engineering
2.2.3 Failure of Innovation and Financial Engineering
2.3 The Shariah Framework in Product Development and Approval
2.3.1 Sources of Shariah Law
2.3.2 Maqasid al Shariah
2.3.3 Legal Maxims
2.3.4 Regulators and Standard-Setting Organizations: Regulations, Standards, and Parameters for Islamic Finance (AAOIFI, IFSB, and Others: Shariah Standards, Corporate Governance, and Prudential Regulations)
2.4 The Types of Product in Islamic Finance
2.4.1 Shariah-Based Products
2.4.2 Shariah-Compliant Products
2.5 Process of Product Development in Shariah-Based Products
2.5.1 Example of Product Development in Shariah-Based Product: Ijarah Muntahiah Bittamlik (Leasing Ending with Ownership)
2.6 Process of Product Development in Shariah-Compliant Products
2.7 The Framework and Process Flow of Product Approval in Islamic Finance
2.7.1 The Flow of the Process of Approval of the New Product: From the Product Owner to the Market Place
2.7.2 Mechanism for Obtaining Rulings
2.7.3 Position of the IFI with Regard to the Resolutions of SSB and IFSB Principles Governing the SSB
2.8 The Methodology Used in the Approval Process
2.8.1 The General Rules and Standards Governing the Product Approval in Islamic Finance
2.8.2 Methodology and Standards of fatawa in Islamic Finance Prior to Issuing a fatwa and Resolutions
2.8.3 Methodology of fatawa in Islamic Finance in Issuing the Islamic Ruling
2.8.4 Methodology of Presenting fatawa in Islamic Finance
2.8.5 Methodology of Empowering the fatwa in Islamic Finance
2.9 Product Approval in Securities in Islamic Capital Markets
2.9.1 Shariah Criteria for Listed Securities
2.9.2 Primary Activities Criteria
2.9.3 The Product Approval of Securities in Mixed Companies
2.9.4 Image as Criteria for Listed Securities
2.9.5 Quantitative and Qualitative Approach in Screening Process in Capital Market
2.9.6 Image with Benchmark
2.9.7 Image without Benchmark
2.9.8 Fundamentals of Shariah Assessment on Image Analysis
2.9.9 Relationship of Image and Principle of Shariah
2.10 Applying the Shariah Advisory Council Methodology
2.10.1 Case 1: Wawasan Holding
2.10.2 Case 2: Gemada Berhad
2.11 Other Methodology of Shariah Screening Process for Securities
2.11.1 FTSE Shariah Index Screening Methodology
2.11.2 Yasaar Shariah Index Screening Methodology
2.11.3 DJIM Shariah Screening Process
2.12 Conclusion
Notes
3 Integration of Social Responsibility in Financial Communities
3.1 Introduction
3.2 The Conflicting Ideologues within Islamic Finance
3.3 Core Motivations of Conventional Business Models and Their Social Responsibility Mandates
3.4 Islam, Business, and Social Responsibility
3.4.1 "Taqwa-Centricity" (God Consciousness) and Human Beings as Vicegerents on Earth
3.4.2 Primary Responsibilities: To Educate and Establish Justice
3.4.3 Ability-Based Focus
3.4.4 Individual vs. Institutional Responsibility
3.4.5 Existing Paradigms of Social Responsibility Discourse in Islam
3.5 Case for Broader Social Responsibility Mandate
3.5.1 IFIs' Special Obligation
3.5.2 Religious and Financial Obligations
3.5.3 New Realities
3.5.4 Different from Charities
3.6 Current Challenges and Recommended Approach to Islamic Social Responsibility
3.6.1 Regularize a Framework of Mandatory and Recommended Social Responsibilities
3.6.2 Mandatory Forms of Social Responsibility
3.6.3 Recommended Forms
3.7 Disclosure as a Means of Accountability
3.8 Lessons from Current Socially Responsible Business Practices
3.8.1 Key Lessons from Current Practices
3.9 Concluding Thoughts
Notes
References
Further Reading
4 The Dispute Resolution Framework for the Islamic Capital Market in Malaysia: Legal Obstacles and Options
4.1 Introduction
4.2 The Legal Framework of the Islamic Capital Market in Malaysia
4.2.1 Relevant Legislations Regulating ICM in Malaysia
4.2.2 Guidelines and Practice Notes
4.3 The Nature of Disputes Among Market Players
4.4 Constraints and Concerns Over the Current Legal Framework
4.4.1 Jurisdiction of the High Court vs Shariah Court of Appeal
4.4.2 Shariah Dispute Resolution in the Malaysian ICM
4.4.3 Inadequacy of the Existing Legal Reforms
4.5 Dispute Resolution Models for the Capital Markets
4.5.1 The Saudi Arabian Model
4.5.2 United Arab Emirates Dispute Resolution Framework for the Capital Market
4.5.3 A Hybrid Model for the Malaysian Islamic Capital Market
4.6 Conclusion
Case Studies
Notes
References
5 The Small World of Islamic Finance: How Good Governance can Assist in Taking the Islamic Finance Industry to the Next Level
5.1 Introduction
5.2 Shariah Scholars in the GCC - A Network Analytic Perspective
5.3 Good Governance-Related Points
5.4 Summary
References
6 The Alpha and Omega of Abrahamic Finance
6.1 Introduction
6.2 Jewish Funds
6.3 Catholic Funds
6.4 Socially Responsible Investing (SRI) Funds
6.5 Islamic Funds Redux
6.6 Alpha: Quantitative Results of Abrahamic Funds
6.7 Amana and the Benchmarks
6.8 Conclusion
Appendix: The Abrahamic Family Tree
Notes
References
PART II GLOBAL ISLAMIC CAPITAL MARKET TRENDS
7 Islamic Derivatives: Past, Present, and Future
7.1 Introduction
7.2 Formal Shariah Objections and Solutions
7.2.1 Forwards and Futures
7.2.2 Options
7.2.3 Swaps and Currency Transactions
7.3 Substantive Shariah Objections and Resolutions
7.3.1 Existence, Ownership, Possession
7.3.2 Speculation, gharar, and maysir
7.3.3 Trading Obligation for Obligation
7.4 Islamic Swaps and Currency Transactions
7.4.1 Cross-currency Swap
7.4.2 Profit Rate Swap
7.4.3 FX Option
7.4.4 Total Return Swap
7.5 ISDA/IIFM Tahawwut Master Agreement, Published 1 March 2010
7.6 Conclusion
Notes
8 Overcoming Incentive Problems in Securitization: Islamic Structured Finance
8.1 Introduction
8.2 Incentive Problems of Conventional Securitization
8.3 The Rise of Islamic Finance
8.4 The Case of Islamic Securitization
8.4.1 Definition of Islamic Securitization
8.4.2 Current Market Situation
8.4.3 Sukuk - The Good Side of Securitization?
8.4.4 Economic Challenges
8.4.5 Legal Challenges - Regulatory Consolidation and Supervisory Harmonization
8.5 Conclusion
Notes
References
9 The Evolution of Takaful Products
9.1 Insurance under Islam
9.2 Organizational Structures and Operational Models
9.2.1 Mudaraba Model
9.2.2 Wakala Model
9.2.3 Hybrid Model
9.2.4 Waqf Model
9.3 Product Development and Prospects
9.3.1 Products
9.3.2 Prospects
Notes
References
10 A New Model for Options in Islamic Law
10.1 Looking for Islamic Derivatives: A Legal Oxymoron?
10.2 Options, Western Law, and Islamic Justice
10.3 Khiy¯a r ash-shart. and al-'urb ¯ un as Islamic Analogues to Options: Critical Elements
10.4 In Search of a Shariah-Based Substitute: The ij ¯a ra wa-hiba Structure
10.5 Trading ij ¯a ra wa-hiba Options? Clearing House, Issuance of S. uk ¯ uk al-manfa'a, and Lack of Speculation
10.6 Pricing S. uk ¯u k al-manfa'a in Relation to the Rental Rate of Return
10.7 ij ¯a ra wa-hiba Options and the Path towards Legitimacy References
PART III NATIONAL AND REGIONAL EXPERIENCES
11 Building up an Islamic Capital Market: The Malaysian Example
11.1 Introduction
11.2 The Beginnings of Shariah-Based Finance in Malaysia
11.2.1 The Securities Commission Malaysia
11.2.2 The Shariah Advisory Council (SAC)
11.3 The Islamic Capital Market in Malaysia
11.3.1 The Capital Market Master Plan
11.3.2 The Current State
11.3.3 Malaysian Sukuk
11.3.4 Malaysian Shariah-Compliant Equities and Fund Management
11.3.5 Government, Regulation, and Taxation
11.3.6 Promoting International Linkages
11.3.7 Development of Skills in the Islamic Capital Market
11.4 Conclusion
Notes
12 Islamic Finance in Germany: Trends, Opportunities, and Potential
12.1 Introduction and Background
12.1.1 Brief Background on Islamic Finance
12.1.2 Development and Market Potential of Islamic Finance
12.1.3 Economic Relevance of Germany
12.1.4 Immigrants and the Muslim Community in Germany
12.1.5 Products and Services Focused on the Muslim Community in Germany
12.1.6 Status Quo of Islamic Finance and Shariah-Compliant Products in Germany
12.1.7 One Clear Objective is to Attract Major Muslim Investors
12.2 Research and Studies on the Muslim Population in Germany
12.2.1 Research and Studies on Financial Services and Islamic Finance
12.3 Analysis of the Attitudes and Preferences of the Muslim Population in Germany Towards Financial Products
12.3.1 Research Questions and Assumptions
12.3.2 Methodology and Approach
12.3.3 Description of the Dataset
12.3.4 Quantitative Results
12.4 Conclusion and Practical Implications for Financial Institutions in Germany
12.4.1 An Offer of Shariah-Compliant Products According to Needs
12.4.2 Improvement of Financial Education and Consultancy
12.4.3 Elaboration of Marketing Activities
Notes
References
13 Islamic Finance in France: An Emerging Market?
13.1 Legal Aspects
13.1.1 The Positions of Public Authorities
13.1.2 The Trends
13.2 Economic Dimensions
13.2.1 The Demand Side
13.2.2 The Supply Side
Notes
References
14 Islamic Finance in the United States
14.1 Introduction
14.2 The United States as a Destination for Shariah-Compliant Investment
14.2.1 The Development of an Ijara-Istisna'a Contract for Real Estate Construction
14.2.2 The First Entrants
14.2.3 The Entry of Private Equity
14.2.4 Growth Accelerates
14.2.5 Conclusion
14.3 Wholesale Islamic Finance within the United States
14.4 Mutual Funds and Exchange Traded Funds
14.5 Legal, Tax, and Regulatory Issues in Islamic Finance
14.6 Sukuk Issued by US-Based Companies
14.7 Conclusion
Notes
15 An Analysis of Global Trends and Regional Pockets in the Application of Islamic Financial Contracts in Malaysia and the Gulf Cooperation Council
15.1 Regional Pockets and Global Trends
15.2 The Influence of the Shariah Framework
15.3 The Function of Shariah Boards
15.4 The Role of Shariah Boards in Malaysia
15.5 The Role and Function of Shariah Boards in the GCC
15.6 Convergence Between the GCC and Malaysia
15.7 Slight Divergence in Interpretations
15.8 The Impact of the Regulatory Dimensions of the Jurisdictions
15.9 The Role of the Creation of International Hubs in Harmonizing Views
15.10 Conclusion
Notes
16 Developments in Islamic Finance Practice: The Experience of Australia
16.1 Introduction
16.2 State of the Australian Economy in the World
16.2.1 The Australian Economy
16.3 Potential Problems in the Development of Islamic Finance in Australian Market
16.3.1 The Acceptance of Interest
16.3.2 A Wait-and-See Approach
16.3.3 The Size of the Muslim Community
16.3.4 Doubt Concerning Shariah-Compliant Finance and Investment Products
16.3.5 Lack of Understanding on Islamic Finance
16.3.6 Risk Analysis and Balance Sheet Management
16.3.7 Absence of a Standard Rate of Return
16.3.8 Difficulty in Classifying Risk Sharing Funds
16.3.9 Problem of Accounting Standards
16.3.10 International Perspective
16.4 Prospects of Islamic Finance in Australia
16.4.1 Opportunities for Introducing Islamic Banking
16.4.2 Prospects of Islamic Banking and Finance in the Academic Sphere
16.5 Summary, Findings, and Recommendations
16.5.1 Summary and Findings of the Study
16.5.2 Suggestions and Policy Recommendations for the Study
References
PART IV LEARNING FROM ISLAMIC FINANCE AFTER THE GLOBAL FINANCIAL CRISIS
17 The Current Financial Market Crisis: Lessons Learned, Risks and Strengths of Islamic Capital Markets Compared to the Conventional System
17.1 Introduction
17.2 Causes of the Global Financial Crisis
17.3 Some Implications of the Global Financial Crisis
17.3.1 Implications for the Global Economy
17.3.2 Implications for Islamic Finance
17.4 Can Such Crises Occur Under an Islamic Financial System?
17.4.1 Islamic Theory of Finance and the Global Financial Crisis
17.4.2 The Current Financial Crisis Would not have Occurred Under an Islamic Financial System
17.4.3 A Systemic Trade-off Between Risks and Returns
17.5 The Prohibition of "Bad" Risks in Islamic Finance
17.5.1 Types of "Bad" Risks
17.5.2 Individual vs. Systemic Effects of "Bad" Risks
17.6 Lessons Learned
17.6.1 Reputational Risk and the Recreation of Trust
17.6.2 Real vs. Virtual Transactions: sukuk and the Escape from the Debt Trap
17.6.3 The Need for Clearing Houses
17.7 Conclusions and Outlook
17.7.1 Main Challenges for Real-life Islamic Finance
17.7.2 Convergence Between Conventional and Islamic Financial Industry
Notes
References
18 An Islamic Perspective of Financial Engineering
18.1 Introduction
18.1.1 Financial Engineering and Financial Innovation
18.2 Financial Engineering: Definition and Concept
18.2.1 Value of Innovation
18.2.2 Shariah and Creativity
18.2.3 Regulatory Arbitrage
18.2.4 State of Financial Innovation
18.3 Principles of Islamic Financial Engineering
18.3.1 Principle of Balance
18.3.2 Principle of Acceptability
18.3.3 Principle of Integration
18.3.4 Principle of Consistency
18.4 Strategies for Product Development
18.4.1 Imitation
18.4.2 Mutation
18.4.3 Satisfaction
18.5 Challenges in Financial Engineering in Islamic Finance
18.5.1 Fragmented Approach to Shariah
18.5.2 Product Development Process in Islamic Financial Institutions
18.5.3 Specialized Institutions and Advanced Markets
18.6 Concluding Remarks
Note
References
19 Shariah-compliant Portfolio Management: Processes, Methodologies, and Performances
19.1 Introduction
19.2 Shariah-compliant Portfolio Management Process
19.2.1 Shariah Issues in Investment Policy Analysis
19.2.2 Shariah Issues in Financial Analysis
19.2.3 Shariah Issues in Portfolio Construction
19.2.4 Shariah Issues in Performance Analysis and Portfolio Revision
19.3 Shariah Guidelines
19.3.1 Shariah Compliance of Asset Classes
19.3.2 Shariah Screening
19.3.3 Purification
19.4 Fund Performance
Notes
References
20 Islamic Microfinance: The Way Forward
20.1 Modes of Islamic Microfinance
20.1.1 Replication of Conventional Models
20.1.2 Indigenous Models
20.2 Instruments of Islamic Microfinance
20.2.1 Instruments for Mobilization of Funds
20.2.2 Instruments of Financing
20.2.3 Instruments of Risk Management
20.3 Islamic Microfinance Projects Across the Globe
20.3.1 Middle East North Africa (Mena)
20.3.2 South Asia
20.3.3 South East Asia
20.3.4 Rest of the World
20.4 Product Development in Islamic Microfinance Sector
20.4.1 Shariah Compliance
20.4.2 Divergent Perceptions
20.4.3 Agency Problems
20.5 Meeting Funding Requirements of Islamic Microfinance Sector
20.5.1 Linkage with Banks
20.5.2 Rating Services
20.5.3 Islamic Microfinance Fund
20.5.4 Securitization
Notes
References
Further Reading
Index

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