INCEIF Knowledge Repository (INCEIF University)
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Understanding Shariah financial planning
No full textThe concept of Islamic or Shariah financial planning is based on the incorporation of Shariah (Islamic law) rules and elements into the process of financial planning. Shariah rules and principles are positioned as the core of the application of financial planning, with Shariah rules and principles being observed and enforced throughout the process. Shariah financial planning may be defined as “a process of assisting clients in determining their financial goals and priorities and the resources to meet them optimally within the parameters of the Shariah.” Another definition is “the process of meeting life goals through the management of finances in accordance with the Shariah.
Liquidity management in institutions offering Islamic financial services
No full textThis paper discusses a global overview of liquidity management in institutions offering Islamic financial services. It also investigates the challenges and issues which impact on an effective liquidity management process. The main challenge and issue with liquidity management is to make it a globally accepted process by having global standardisation. This would promote transparency as well as familiarity within the Islamic finance industry. Our findings show that there are still many gaps to be filled, especially in the area of Shari'ah-compliant liquidity management schemes, cross-border liquidity market and infrastructures, availability of adequate short-term financial instruments, robust standards of documentation, product, process and accounting, uniformity in tax, legal and regulatory frameworks, an integrated payment and settlement system, as well as integrated liquidity monitoring and supervision. It is well accepted that liquidity management is the life-blood of a business process. Therefore, it is crucial to have a globally accepted process in order to develop a high-quality liquidity management framework. As such, creating awareness through education, having the right perceptions about Islamic finance, and having sufficient cross-border liquidity will bring liquidity management to the next level
Charity and finance in the world of Islam: waqfs, origins and evolution
No full textMuslims, for centuries, have fulfilled their social responsibilities and served their societies with an institution called waqf. Thus, waqfs have constituted the most important NGOs and civil society institutions in the Islamic world. Wealthy Muslims establish waqfs based upon a statement of Prophet Muhammad known as "sawab ba'd al wafat". The Prophet is reported to have said tge following: "When a person dies all his deeds come to an end and his account book, daftar al amal, is closed, except for three: Knowledge, from which people can benefit, ongoing charity, a pious offspring". Waqf is the institution which allows Muslims to fulfil all these three tasks, often simultaneously, and enables them to earn good deeds even after they pass away
Islamic capitalism and the West
No full textThe relationship between Islam and capitalism has long fascinated social scientists. There is strong evidence that Islam had developed its own capitalism. Consider, for instance, that the bulk of the Shariah, Islamic jurisprudence, was written down by men most of whom were merchants. More importntly, even the Prophet Mohammad (S.A.w) himself was a merchant, who firmly believed in free markets and refused to interfere in prices. Moreover, of the four righteous Caliphs, Abu Bakr was a cloth merchant and Uthman was an importer of cereals
Islamic finance: structure-objective mismatch and its consequences
No full textThis 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
The yen-dollar rate and Malaysia-US bilateral trade: an empirical note
No full textWith much emphasis on the yen-dollar exchange rate in accounting for macroeconomic performance of a dollar-pegged country, the present paper estimates Malaysia-US bilateral trade incorporating the yen as a determinant. The presence of long-run bilateral exports and imports functions is validated via a bounds testing procedure. Estimating long-run exports and imports functions as well as their short-run dynamics using autoregressive distributed lag (ARDL) modeling, we find evidence for significant role played by yen in both the long run and the short run. Accordingly, in analyzing exports and imports performance of a dollar-pegged country, the yen-dollar exchange rate should not be ignored
Shari'ah and legal issues of musharakah mutanaqisah
No full textDeemed as a better alternative to bay bithaman ajil (BBA - sale of goods on a deferred payment basis) a study on the issues of musharakah mutanaqisah (MM) is timely for a more equity-oriented and Islamic universal banking philosophy. Some may view diversification of product space to fulfil the expectation of Shari'ah compliance as driving factors behind the offering of MM. However, one seldom comes across roses without thorns. And, the worrisome thorn in the side of Islamic finance is the limited use of MM, notwithstanding its appeal as a Shari'ah-based innovation
Cash waqf: a new financial product
No full textThis book will be a valuable addition to the growing literature on this finance subject. In the book, an attempt is made to explain the concept of cash-waqf, its mechanism, operations and management in the light of Shariah. As the book deals with both theory and application of the cash-waqf concept in Muslim countries as well as in non-Muslim countries, it will serve as a basis for further research work
Effect of mergers on efficiency and productivity: some evidence for banks in Malaysia
No full textThe study investigates the extent to which mergers lead to efficiency. The data covers the period 1993-2004, which includes the pre- and post-merger years. This study attempts to evaluate technical efficiency, efficiency change, technical change, and productivity of commercial banks, finance companies, and merchant banks by using a non-parametric Data Envelopment Analysis (DEA) and Malmquist Index approach as the framework for the analyses. It is found that: (i) on an average, productivity across banking institutions increased at an annual rate of 5.8% over the study period; (ii) the results also indicate that almost all of the productivity growth comes from technical change rather than improvement in efficiency change, which contributes to 6.1% of productivity growth, while the latter accounted for 0.2% decline; and (iii) the merger process led to productivity improvements whereby it is observed that the productivity of Malaysia's banking sector has been improved after the implementation of merger program