The worldwide colossal failures of financial institutions in the wake of the 2007-2010 financial turmoil the yesteryear advocates of liberalization and privatization converted almost overnight into vocal supporters of raising the safety walls around the interests of various stakeholders, especially the depositors. Admittedly, it was the heightened lure of leverage gains that led the financial institutions to expand credit beyond what the volume and quality of their capital assets warranted without crossing the limits of safety. The devastation led to a focus-shift so to say at the national and international level in finance specifically to capital adequacy that financial institutions must observe for their own safety as also in the wider social interest. Stringent and regular watch was needed; it was felt, to make adequacy work. The Basel Committee on Banking Supervision (BCBS), an organ of the Bank for International Settlements (BIS) developed what are known as Accords i.e. agreements defining capital and its adequacy for banks to limit the risks they could take within reasonable confines. It is interesting to find that Malaysia was in a sense predictive to revamp and strengthen its own regulatory framework. Also, the IFSB was alert to announce some new standards. This paper briefly takes stock of these developments with a view to assess how far Basel Accords are likely to be absorbed by the Islamic system.

Recently commodity murabaha has run into disrepute due to court decisions going against the use of this instrument in Islamic banks. This brief note argues that at fault has been the structure of contracts and the excessive use of the instrument. In principle, commodity murabaha is doubtless rooted deep in the Islamic Shari'ah.

Purpose - To reopen for discussion the issue of credit creation and control in the area of Islamic banking. Design/methodology/approach - In view of a rapid expansion of Islamic banking in recent decades, the answer to questions whether Islamic banks can create credit like mainstream banks and, if yes, what methods central banks could use to control it in their case is of paramount importance. An overview of the literature on the subject is provided and credit creation process is explained as background material for the discussion. Findings - The literature on the subject is scanty, controversial and inconclusive. One reason seems to be the mismatch between structural design of Islamic banks and the objectives they are supposed to meet. It is concluded that Islamic banks can create credit in the usual manner but central banks will have to design new tools for credit control applicable to Islamic banks. Research limitations/implications- It is not a rigorous analytical exercise as the main purpose of the paper is to reopen an important issue for discussion. It is an opinioned work and presents rather tentative answers to the questions raised. Practical implications - The findings of the paper may have serious implications for the current structure of Islamic banks and the legal framework for regulating their credit creation activities. Originality/value - The paper draws attention to a rather neglected issue in Islamic banking and offers guidelines to resolve it.

This brief note supplements the argument of an earlier paper Islamic Home Financing: Current Models and a Proposal from Social Perspective”; it explains that the Diminishing Balance Model for Islamic home financing is operable in a Shari’ah compliant way even without the Islamic Banking laws accommodating the notion of constructive ownership as envisaged earlier. It further clarifies how the new model scores over the models currently being used for the purpose.

This paper explains the circumstances that led Dubai to the current financial crisis that still lingers. It analyses the steps taken at various stages by the city state to ameliorate the situation including the bailout help the UAE Government eventually granted. It spotlights the role international rating agencies played in aggravating the situation and demands that their activities be brought under regulatory nets now being strengthened across the world in the context of ongoing global meltdown. Finally, it warns of challenges Dubai may be facing in years ahead and what could be done to pre-empt them. The argument is cast with a backdrop of the economic position of UAE in the Middle-East and happenings at the global level in the arena of finance; mainstream and Islamic.

This book, spread over 24 chapters, covers Economics with a greater orientation towards Islamic viewpoints. It is also suitable for students studying the subject in developing economies. The book combines the material of two earlier texts of the author—Macroeconomics (2009) and Fundamentals of Microeconomics (2011). The material has been refined and updated; new explanatory diagrams and illustrations have been included. Available in physical copy only (Call Number: BP 173.75 H344)

Evidence has been mounting that the interest-based debt financing regime is under increasing distress. Evidence also suggests that the financial crises, whatever title they carried - exchange rate crisis or banking crisis – have been debt related crises in essence. At present, data suggest that the debt-to-GDP ratio of the richest members of the G-20 is expected to reach 120% mark by 2014. There is also evidence that out of securities worth US$ 200 trillion in the global economy, no less than three-fourth represent interest-based debt. It is difficult to see how this massive debt volume can be validated by the underlying productive capacity of the global economy. This picture becomes more alarming considering the anemic state of global economic growth. There is great uncertainty with regard to interest rates. Although policy-driven interest rates are at near-zero level, there is no assurance that they will not rise as the risk and inflation premia become significant. Hence, a more serious financial crisis may be in the offing and a general collapse of asset prices may occur. This paper argues that the survival of the interest-based debt regime is becoming less tenable, as is the process of financialization that has accompanied the growth of global finance over the last four decades. The above has resulted in an unprecedented increase in economic risks; generating (adverse) non-linearities in system’s behavior. Such a behavior is nothing but a demonstration of the verse, “Allah obliterates riba ….” of the Qur’an. As a result, the search is on for a paradigm shift towards a less volatile and more resilient financing regime. The paper proposes risk sharing based Islāmic financing as suitable alternative and also demonstrates empirically its better growth and stability characteristics by using advanced dynamic heterogeneous panel techniques.

This book is cover numerous topics such as demand and supply, market equilibrium, elasticity, consumer choice theory, cost theory, theory of production and many others including one chapter that deals with environmental issues.

This book is written to meet the needs of undergraduate students studying business and economics, though parts of it may be useful for students further along the learning curve. Apart from students, the book can also be used by professionals to refresh and update their knowledge and understanding of the subject, to help them carry out their responsibilities more efficiently. In addition, this book provides a comprehensive presentation of topics, including theoretical foundations financial instruments, banking operations, risk management, takaful, and issues relating to the law, regulation and governance. Available in physical copy only (Call Number: HG 187.4 H344)

This paper deals with three basic issues in Islamic banking: First, how the profit sharing ratios in mudarabah contracts are in principle determined? Second, do the actual sharing ratios result in an equitable division of profit between the banks on the one hand and the depositors on the other? Finally, can the central bank use the profit sharing ratio along with the rate of interest for credit control so as to mitigate leverage lure in a dual banking system? The paper provides a brief explanation as an answer to the first question. The response to the second is negative but is positive to the third. It suggests a policy tool the central banks can possibly use to prevent the sort of credit turmoil as the world is facing today in 2008 because of leverage lure. The tool may also help improve return to investors and thus establish some equity in the distribution of profits.

Over the past three decades, Islamic finance has been the fastest growing segment of the global financial system. Though it may be expected that education and training have kept pace with this fast growing market, this paper finds that the current state of Islamic finance education at the graduate level is in a very unsatisfactory state. Using Malaysia as an illustrative case, the paper looks at the range, sufficiency and quality of Islamic finance education. It evaluates the current state of Islamic finance education at the graduate level in the context of the overall graduate education in Malaysia and suggests policy measures to meet the future challenges of the Islamic finance education, particularly at the graduate level.

This paper raises the issue of an initial structure-objective mismatch in the launching of Islamic finance. The abolition of interest and promotion of growth with equity were goals of the conceived system. These goals expressed a long run vision to improve the condition of the Muslim communities across the world. However, the organizational form adopted for Islamic finance was of the existing commercial banks which provided essentially short-term loans on interest to trade industry and commerce. The choice thus involved an intrinsic mismatch between the structure and objectives of Islamic finance. The mismatch did carry some advantages, but on a more important side it exposed Islamic finance to commitments and influences which could not mostly align well with the goals the pioneers had in mind. Note that in focus here is not the reversal of the mismatch but its consequences that have forced the nascent Islamic system to convergence and competition with the mature conventional finance the West dominates. It is not the ground realities that are being adapted to Shari�ah norms; it is the norms that are being stretched to limit for meeting the demands of the conventional system. Ordinary Muslims who hoped to benefit from Islamic financing remain unattended. Thus, what Islamic finance can or cannot change will depend on where its ongoing integration with the conventional system leads it to. Currently, most merits claimed for the Islamic system defy evidence. The basic reforms financial systems require in the face of current crisis are the control of credit, leverage lure, and speculation. Islamic finance is in principle better equipped to achieve these ends.

Shelter is one of the basic needs for human beings. Its availability for the people is an Islamic imperative. In view of the appalling living conditions of a substantial proportion of the population in most countries around the world, especially Muslim, Islamic banks have entered the field with various schemes for home financing. In this infant industry, this effort is understandably guided by the profit motive, but a social dimension has to surface in the course of time. Unfortunately, the models banks currently use for home financing remain under the juridical gaze, more so as the practice is not always found to be transparent. This paper looks at Islamic home financing models in a broader societal context. It evaluates the efficacy of the current financing structures practised and suggests a new approach. The proposed model is shown as superior to the existing ones. It meets the norms of equity, fair play and openness and does not, presumably, violate any other Islamic norm. Finally, the paper makes some policy suggestions to integrate Islamic home financing into the broader social goals of an Islamic economy.

This research aims to correct a misconception about the Zubair Diminishing Balance Model (ZDBM), which is free of return compounding and wherein the transfer of ownership to the customer perfectly matches the payment rate.

Shelter is one of the basic needs for human beings. Its availability for the people is an Islamic imperative. In view of the appalling living conditions of a substantial proportion of the population in most countries around the world, especially Muslim, Islamic banks have entered the field with various schemes for home financing. In this infant industry, this effort is understandably guided by the profit motive, but a social dimension has to surface in the course of time.Unfortunately, the models banks currently use for home financing remain under the juridical gaze, more so as the practice is not always found to be transparent. This paper looks at Islamic home financing models in a broader societal context. It evaluates the efficacy of the current financing structures practised and suggests a new approach.The proposed model is shown as superior to the existing ones. It meets the norms of equity, fair play and openness does not, presumably,violate any other Islamic norm. Finally, the paper makes some policy suggestions to integrate Islamic home financing into the broader social goals of an Islamic economy

This chapter adds to the series of writings on Islamic home financing presented and published by the author on the subject of compounding versus and Islamic Shari'ah-consistent requirement for computation to avoid continuos compounding. It spells out certain normas Islamic banks must observe in home financing, and demonstrates that the conventional time value formula in Excel does not the stated norms. Available in physical copy and ebook (Call Number: HG 3368 A6 R595L)

This paper adds to the series of writings on Islamic home financing presented and published by the author since February 2010. It spells out certain norms Islamic banks must observe in home financing and demonstrates that the conventional model based on an Excel formula does not meet the stated norms. It may well be emphasized that in Islam the question of observing these norms arises before, and not after, the selection of the formula; additional juristic requirements may only follow subsequently. Is it not then strange many Islamic banks are using the formula to determine the periodic instalment payments in their home financing programs? The paper finds, for example, the popular Musharakah-Mutanaqisa Partnership (MMP) Islamic home financing model to be non-compliant with the stated norms. It presents a new model―the Zubair Diminishing Balance Method (ZDBM) ― and argues that the alternative is not only fully observant but is superior to the MMP model on some other counts as well.

This content of this book are spread over eleven chapters, covering four major themes: introduction to macroeconomics, tools and models, monetary and fiscal policies and income distribution. Available in physical copy only (Call Number: HB 172.5 H344)

This paper explains the notion of market in historical perspective and the role markets play in free enterprise economies. It lists the major market failures and the role governments are expected to play in regulating and supplementing markets including the promotion of CSR from Islamic perspective. The discussion is limited to product and factor markets.

Financial engineering is fast becoming popular not only in business management schools but also as a speciality in higher level institutes of technology. In essence, it applies economic principles to the dynamics of financial securities comprising the instruments used in the money and capital markets. Financial engineers educate us on utilizing securities and other materials with a view to erecting the risk-return trade-offs with reference to the pricing of securities, hedging, trading or portfolio management. The techniques they use cover areas which broadly include investment banking, securities' valuation and trading, information systems management, corporate strategic planning, swaps and derivative transactions.

The year 2008, recorded some elating developments in the area of Islamic finance worldwide. The size of Shari’ah compliant assets rose to around $500 billion. The market share of Islamic Financial Institutions stood, it is estimated, at 12 percent in Malaysia and at 17 percent in the GCC countries where it is currently expanding much faster than anywhere else. Some leading rating agencies believe that the market potential of Islamic financial services is a close to $4 trillion, of which no more than 10 percent has so far been realized (Al-Amine, 2008, p. 1). The current financial meltdown is diverting global attention to Islamic finance as a better and safer alternative. Thus, the future of Islamic finance looked bright at the turn of the year.