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- PublicationThe 2007-2009 financial crisis, global imbalances and capital flows: implications for reformTuralay Kenc; Sel Dibooglu; Kenc, Turalay (Elsevier B.V., 2010)
The paper discusses the currents that led to the 2007-2009 financial crisis. We discuss the crisis in a historical context and present evidence regarding the incidence and unit price of risk. Our results show that the unit price of risk prior to the subprime crisis is comparable to the price of risk prior to the great depression and similar to the price of risk at onset of the technology bubble. We then discuss global imbalances, the associated risks with regard to international optimal allocation of capital, and arrangements to minimize problems of global imbalances.
- PublicationThe 2nd International Halal Management Conference 2018 in the MaldivesAishath Muneeza (Redmoney, 2018)
Minister of Home Affairs Azleen Ahmed has launched the 2nd International Halal Management Conference (IHMC) on the 18th July 2018 at the Maldives National University (MNU). The IHMC was organized by the Maldives Center for Islamic Finance (MCIF) and the MNU along with Universiti Sains Islam Malaysia. More than 50 international speakers representing more than five countries participated in the conference.
- PublicationThe 2nd Maldives Islamic Banking and Finance (MIBFI) Conference emphasizes importance of establishing an Islamic finance center in MaldivesAishath Muneeza (Redmoney, 2015)
The 2nd Maldives Islamic Banking and Finance (MIBFI) Conference has acted as a forum where the Islamic banking and finance fraternity converge to discuss a plethora of issues. While the local players took center stage, the participation of foreign delegates complemented the Maldivian participants in engaging one another in discussions relating to the future prospects of the Islamic banking and finance industry in Maldives and beyond. This year's theme of the conference was 'Creating a center of Islamic Finance'.
- PublicationA comparison of transactions in conventional and Islamic economiesMabid Ali Mohamed Mahmoud Al-Jarhi (2000)
This paper compares the transactions costs in two economies, one conventional, the other Islamic. The conventional economy is characterized by borrowing to finance some current purchases, while the Islamic economy disallows interest-based lending and operates on the basis of universal banking that mixes commerce and commercial and investment banking. To finance current purchases, it provides customers with credit purchase agreements, which entail that the bank buy the commodities and assets from suppliers and resell them on credit to customers satisfying conditions of creditworthiness similar to those that conventional banks require for borrowers. The paper uses simple calculations to compare transactions costs in both economies. It argues that under competitive competition, credit purchase arrangements occasion lower transactions costs than borrow-and-purchase arrangements in the conventional economy. The most important implication is that a policy that lifts entry barriers in the Islamic banking market and allows banks to combine commerce with banking activities contributes to social welfare. The paper concludes with suggestions for further points of research.
- PublicationA critical assessment of the waqf law being prepared by IDB/IRTI and Quwait FoundationCizakca, Murat (2013)
There is a huge need in the Islamic world to revitalize the waqf system. The currently dilapidated state of waqfs in most countries should actually be considered as an opportunity to design a thorough reform taking into consideration not only the classical Islamic waqf law but also the latest practices and norms in the west. It is to be hoped that such a synthesis of the classical Islamic and modern western practices and norms in conformity with the Shariah will lead to an ideal waqf law that can be of vital importance for the restoration of this institution.
- PublicationA critical assessment of the waqf law being prepared by IDB/IRTI and Quwait FoundationCizakca, Murat (Vakiflar Genel Mudurlugu, 2014)
There is a huge need in the Islamic world to revitalize the waqf system. The currently dilapidated state of waqfs in most countries should actually be considered as an opportunity to design a thorough reform taking into consideration not only the classical Islamic waqf law but also the latest practices and norms in the west. It is to be hoped that such a synthesis of the classical Islamic and modern western practices and norms in conformity with the Shariah will lead to an ideal waqf law that can be of vital importance for the restoration of this institution
- PublicationA fiqhi analysis of tradability of Islamic securitiesFarrukh Habib; Ahcene Lahsasna; Mohamad Akram Laldin (ISRA, 2015)
Secondary markets are vital for the development of Islamic capital markets (ICMs) (Aziz, 2007). They facilitate the reselling of securities among investors, thus adding liquidity to these instruments (Mishkin, 2004: 26-27). Besides this basic role, secondary markets assist in reducing average cost of capital; bringing about a rational representation of the pricing of securities in primary as well as secondary markets; facilitating the exchange of investment risks; evaluating the performance of private and public sector, and mitigating information asymmetry (Ahmed, 1995; Al-Eshkar, 1995; El-Gari, 1993; Mishkin, 2004). However, secondary market trading of Islamic securities involves various issues. One of the greatest concerns is the lack of standardization, or at least harmonization, of ICM products. There are also conflicting resolutions, standards and individual fatwas (Islamic legal opinions) on the tradability of Islamic securities within the industry. It is feared that this creates confusion in the industry and may hinder the overall development of the ICM (Cox, 2005; Shaharuddin et al., 2012). Given the importance and concerns regarding the ICM, this study aims at investigating the vital issue of tradability of Islamic securities from the fiqh (Islamic jurisprudence) perspective.
- PublicationA mini guide to Islamic contracts in financial servicesAhcene Lahsasna (CERT Publications Sdn. Bhd., 2012)
The fundamental of Islamic finance industry is where its operations need to comply with Shari’ah principles. There is an underlying Shari’ah-complaint contract for every product offered by financial institutions. Islamic banking today is dealing with a lot of contracts in daily transactions with regard to the financing, deposit and investment products. A contract can be regarded as the root of an Islamic business as it determines the components of a business transaction.
- PublicationA proposed framework for human capital development in the Islamic financial services industryAgil Natt; Syed Othman Alhabshi; Mohd-Pisal Zainal (2007)
The paper "A proposed framework for human capital development in the Islamic financial services industry" presented at Knowledge Economy and Management Congress, Istanbul, Turkey.
- PublicationA proposed framework for human capital development in the Islamic financial services industryAgil Natt; Syed Othman Alhabshi; Mohd-Pisal Zainal (Istanbul Medeniyet University, 2009)
This paper discusses the challenges in measuring the gaps and developing human capital to cater for the booming of Islamic financial services industry. While the need for highly trained manpower in the Islamic financial services industry is well-acknowledged, the root of the problem is primarily due to skills mismatch within the Islamic finance industry. This paper proposes a holistic approach to human capital development as the fundamental solution to the skills mismatch within the financial services industry, Islamic and conventional alike. The significant contribution of this paper lies in the competency model which is universal in nature. Programmes run by institutions such as INCEIF, IIUM, IIU Islamabad, IRTI are complementing each other in producing well-balanced and competent manpower for the Islamic financial services industry. Strong government support, effective regulatory agencies, good corporate governance are among the necessary prerequisites. The marriage between the industry and the academia should take the leadership role. We have at the end of the paper proposed a practical action plan. We conclude with a strong call for immediate action to leverage our richly endowed resources so that the Islamic financial services industry could once again lead the world and not remain as a follower.
- PublicationA risk sharing banking modelAbbas Mirakhor; Obiyathulla Ismath Bacha (2015)
Islamic banking has thus far mimicked conventional banking with the result that the same problems and outcomes have surfaced, even though it is operating within an interest free framework. This apparent "convergence" has led to disaffection both among consumers of Islamic banking services and policy makers. This paper proposes a risk sharing model for Islamic banks that can potentially pull Islamic banking away from this path dependency. Under the proposal an Islamic bank's assets would be securitized by the issuance of sukuk type instruments that have the same underlying contract and average "duration" as customer financing. Small assets may have to be pooled into tranches of similar maturity before being securitized. Medium and larger assets would have papers issued directly against them. Thus, instead of depositors, an Islamic bank would have thousands of sukuk holders, all of whom share the profits and losses arising from their respective tagged asset. Other than Wadiah based safe custody accounts and current accounts against which the bank holds cash, all other depositors would be "sold" sukuk for the amount, duration and risk level that they prefer. The model has several advantages such as, minimizing systemic risk through risk dissipation and reducing the liquidity mismatch inherent to banking. The securitized papers provide new liquidity instruments and can enhance liquidity within the Islamic finance sector. Where the macro economy is concerned, the proposal enhances system stability by reducing risk concentration within the banking system, substantially widens financial inclusion by way of small denomination sukuk and minimizes the contingent liabilities of governments by avoiding the use of deposit insurance.
- PublicationA rolling regression analysis of international transmission of inflation in MalaysiaMansor H. Ibrahim (SAGE, 2009)
The paper assesses the transmission of foreign inflationary disturbances for Malaysia. Using quarterly data from 1971 to 2003, we form a four-variable vector error correction model (VECM) consisting of domestic prices, US prices, Ringgit exchange rate and relative interest rate. Apart from the full-sample analysis, recursive and rolling regressions are adopted to examine potential changes in inflation transmission from the US to Malaysia. As a basis for inferences, we rely on the speed of adjustments estimates as well as the significance of lagged first-differenced terms of the VECM. The results unequivocally suggest significant spillover of US inflationary disturbances to Malaysia in the short run regardless of the estimation periods. However, the speed of adjustment estimates for domestic prices tend to decline or turn insignificant when recent observations are added. Our findings demonstrate that inflation transmission across nations ought not to be cast in the light of exchange rate regimes alone. Indeed, the degree of capital mobility may have played a more dominant role.
- PublicationA small island aspires to introduce sukukAishath Muneeza (Redmoney, 2012)
The Maldives has embarked on the huge task of developing Islamic finance parallel to its existing conventional finance market. After establishing its very first Islamic bank in March 2011, the country also witnessed the issuance of its first Islamic equity in 2011. The first company in Maldives that was listed as a company issuing Shariah compliant equity was Amana Takaful Maldives. The country is subsequently moving towards the development of a sukuk market.
- PublicationA unique Islamic microfinance schemeAishath Muneeza (Wahed Invest, 2017)
Microfinance is a new concept in the Maldives. In 2015, the first Islamic microfinance scheme was introduced under the name of "FaseyhaMadadhu" with assistance from Islamic Development Bank. The products developed under this scheme were unique as it was shaped by looking at local needs. This paper will discuss these products and the features of it. It is hard to find literature about the subject matter as this is a newly introduced scheme and the first-hand experience of the author in structuring and implementing the scheme has been relied extensively. It is anticipated that the outcome of this paper will pave the way for those jurisdictions that aim to introduce Islamic microfinance
- PublicationA unique waqf development modelAishath Muneeza (Wahed Invest, 2017)
Ever heard of an occasion where property has been used to generate revenue to a waqf fund? Well, here's one. It's called the Dharul Eeman project and is being tried and tested in the Maldives. We hope that its success story will be an inspiration to other countries who wish to adopt a similar approach to enrich their cash waqf funds. This project is proof that innovation is the key to developing an Islamic economy. This model is unique as the general norm is to develop properties to generate income from waqf lands; but in this case the Ministry of Islamic Affairs is intending to develop a land in order to generate income for a cash waqf fund which will be used to build, repair and maintain mosques all over the nation.
- PublicationAbsolution (ibra') from discretion to regulation: the Malaysian experienceSaleem, Muhammad Yusuf (University of Sharjah, 2016)
The paper is a critical examination of the recent judicial and regulatory developments in Malaysia which saw the transition of absolution (ibra') from a discretionary power of the creditor to a mandatory rebate governed by the Central Bank's regulations. It compares and contrasts the Malaysian Regulations on ibra' with the resolutions issued by the Council of the Islamic Fiqh Academy and offers a critical evaluation of juristic opinions on ibra' and da' wata'jjal. The jurisprudential methods of analogy (qiyas) and juristic preference (istihsan) are employed to examine the application of ibra' to long-term home financing contracts. The paper argues that claiming full credit price upon termination of contract due to early settlement or default is not fair to the customers of Islamic banks. The paper concludes that a mandatory ibra' provided by the regulatory authorities such as central banks is different from the controversial conditional ibra' stipulated by the contracting parties.
- PublicationAccounting & auditing for Islamic financial institutionsMohamed Ibrahim, Shahul Hameed (IIUM Press, 2009)
This book covers accounting for murabaha, bay' bi al-thaman al-ajil, mudarabah, musharakah, ijarah, salam, istisna', zakah, sukuk and other investments. This book is not only prescriptive but also critical of current practice, which should challenge students to critically think of improving this new discipline. Available in physical copy only (Call Number: HF 5616 I74 S525)
- PublicationAccounting for Islamic financial transactions: a case study on financial reporting practicesZulkarnain Muhamad Sori (IBA Press, 2018)
This hypothetical case study was developed based on the financial statements of Bahrain Islamic Bank and Bank Islam Malaysia Berhad. The banks were registered in two different countries namely Bahrain and Malaysia that adopted Financial Accounting Standards (FAS) issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and International Financial Reporting Standards (IFRS) (the standards are locally adopted and named as Malaysian Financial Reporting Standards (MFRS)) issued by International Accounting Standards Board (IASB) respectively. The key issues explored in this case are: the motivation for recording and reporting Islamic financial transactions; types and purposes of financial statements prepared by Islamic financial institutions (IFIS) in the two different financial reporting regimes; Shari'ah perspectives of key accounting assumptions such as substance over form, time value of money, fair value and principles of probability. Understanding the Shari'ah perspective of key accounting assumptions would help preparers and users of financial statements to appreciate the effect of accounting policy adopted for financial reporting.
- PublicationAccounting for leasing: the case of Islamic car financingShamsher Mohamad Ramadili Mohd; Zulkarnain Muhamad Sori (IBA Press, 2018)
This case was developed based on a real-life experience dealing with an Islamic car financing contract (i.e. Al-ljarah Thumma Al-Bay |AITAB] contract - Sale and Leaseback) between a Malaysian Islamic Financial Institution and their customer. It is well recognised that AITAB is governed by the Malaysian Hire Purchase Act 1967, that oversees conventional (nor Islamic) car financing, yet it is used for both financing modes. The contract requires clarification on the following: understanding of the nature of the contract used and the relevant transactions involved; revenue recognition (current and future); capitalisation of relevant costs in the asset's value; fair value of leased asset; recognition of financial assets and liabilities; and disclosure requirements from the bank and customer perspectives. Users of the case are assumed to be familiar with the various regulatory requirements and theoretical foundation of the "Accounting for Islamic Financial Transactions" from IFRS/MFRS (International Financial Reporting Standards/Malaysian Financial Reporting Standards) and the AAOFI (Accounting and Auditing Organization for Islamic Financial Institutions) reporting perspectives.
- PublicationAccounting for musharakah mutanaqisah home financingMahmoud Al Homsi; Alam Asadov; Zulkarnain Muhamad Sori (UMK Press, 2019)
This chapter provides the discussion on accounting issues for musharakah mutanaqisah (MM) home financing in the case of Malaysia. Though the MM mode of financing has addressed the 'ambiguities and risk issues in conventional mortgage financing and the controversy that surrounds other financing packages like al Bai Bithaman Ajil and Bay al Inah (Mydin-Meera & Abdul-Razak, 2009), there are some practical issues in operating this mode of financing, as Islamic banks operate this type of contract more closely to conventional practice, thereby lacking the spirit of the contract itself ...
- PublicationAccounting for the property acquisition: the case of musharakah mutanaqisahZulkarnain Muhamad Sori (IBA Press, 2018)
This case was developed based on a real-life experience related to an lslamic equity home financing contract (ie. Musharakah Mutanaqisah) between a Malaysian Islamic Bank and their customer. The Musharakah Mutanaqisah (MM) Financing mode has gained popularity in house financing in Malaysia, where the bank and customer enter into a contract of joint property ownership and the customer's ownership of the asset gradually increases throughout the financing period and fully owns the asset after the last financial settlement. This case aims to: illustrate the process of property acquisition using the MM financing mode; account the various transactions involved in MM financing; account capitalisation of acquisition costs; recognise and disclose financial assets/liabilities; and determine Fair value of the MM assets. Users of the case are assumed to be familiar with the various regulatory requirements and theoretical foundation of the "accounting for Islamic Financial transactions" from reporting perspectives of IFRS/MFRS (International Financial Reporting Standards/Malaysian Financial Reporting Standards) and the AAOIFI (Accounting and Auditing Organization for lslamic Financial lnstitutions).
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