1,167 research outputs found
Role of Central Bank in Islamic Finance
Full text linkThe rapid growth in Islamic finance industry urges us to not only look for alternatives in the Islamic commercial banking, but also focus on the regulator and its role and functions to enable it to work in conformity with Islamic principles. This study reviews limited, but precious academic literature on central banking and monetary management in an environment where Islamic finance is in vogue. Refinance ratio and Qard-e-Hasan ratio and Mudarabah between central bank and Islamic commercial banks are in line with Islamic principles and helps meet liquidity requirements in the banking sector. Mudarabah can be done with profit sharing ratio benchmarked on economy’s nominal income growth. We have presented the evidence on statistical equivalence of nominal Interest rates (being used in conventional banking) and Nominal GDP growth rate (we are recommending to use). The nominal GDP growth linked rate of remuneration can be used to benchmark for external loan arrangements including those from IMF, WB and IDA etc. We suggest central banks particularly in Muslim countries to use nominal income targeting as a rule for the conduct of monetary policy.Islamic Finance, Islamic Banking, Central Bank,Nominal Income Targetting, Inflation Targetting.
Monetary Policy & Monetary Regime in an Interest Free Economy: An Alternate Approach In Monetary Economics amidst Great Recession
Full text linkThis paper reviews limited, but precious academic literature on central banking and monetary management in Islamic finance. It discusses the building blocks of an Islamic monetary system. It discusses how savings would feature despite discontinuation of interest, how inflation will be checked with central banks not having at its disposal conventional OMO, how liquidity will be managed in banking sector when central bank wants to inject liquidity or mop up funds. How and to what extent the institution of Zakat would enable the government to meet its fiscal targets and does not crowd out private sector. How balance of payments and exchange rate stability can be managed in an interest free economy. If in the short term, the government or central bank needs alternative source of revenue other than Zakat, they can issue GDP linked bonds. This could replace T-bill and provide a base instrument for OMO and liquidity management in the banking and financial sector.Islamic corporate finance, pricing of capital, interest free finance, Interest, Interest free economy, Usury, Time value of money, Riba, Musharakah, Mudarabah, Ijara, Salam, Istisna, Qard-e-Hasan, Diminishing Musharakah
Proposal for a New Economic Framework Based On Islamic Principles
Full text linkThis book provides a holistic socio-economic framework working in conformity with the Islamic principles. Chapter 2 builds the ground for the proposed framework by discussing the foundations of the ethical precepts of Islam. It discusses the thesis of religion, answers some of the questions in the comparative study of religion and tries to resolve few of the misconceptions about the faith of Islam. Chapter 3 outlines the economic teachings of Islam with regard to earning and spending. It discusses at length the ideals Islam set before its adherents in the ethical sphere of life. The ethical principles are discussed based on the study of relevant Quranic text and the narrations of Prophet Muhammad (PBUH). Chapter 4 studies the comparative economic systems. It analyzes Capitalism, Socialism, Mixed Economy and Islamic economic system. Chapter 5 introduces the salient features of the proposed economic framework with special focus on fiscal reforms. It discusses the potential of the institution of Zakat to meet fiscal needs of the government and to assist it in doing away with deficit financing, fiscal bleeding, crowding out private sector and reducing deadweight loss by parting the way with private sector so as to ensure market economy operating on its own as far as possible and playing an active regulatory role. Chapter 6 introduces the monetary reforms. It discusses how savings would feature despite discontinuation of interest, how inflation will be checked with central banks not having at their disposal conventional OMO, how liquidity will be managed in banking sector when a central bank wants to inject liquidity or mop up funds. How and to what extent the institution of Zakat would enable the government to meet its fiscal targets and does not crowd out private sector with public borrowing. How balance of payments and exchange rate stability can be managed in an interest free economy. If in the short term, the government or central bank needs alternative source of revenue other than Zakat, they can issue GDP linked bonds. This could replace T-bill and provide a base instrument for OMO and liquidity management in the banking and financial sector. Chapter 7 introduces the currently practiced Islamic Banking and Finance. Since Islamic economic principles have more prominently been used in banking and finance, much of the discussion centers on Islamic banking and finance in lieu of analyzing the existing practices and then in the next chapter, preferable alternatives in areas where shortcoming is observed and need for improvement is felt are suggested. Chapter 8 discusses the financial system in the proposed framework with the role of institutions and the discussion on comprehensive need fulfillment mechanisms to serve every major need of a sophisticated contemporary financial system. Some important novel changes are recommended, such as introduction of options in mortgage financing, which will allow the bank to separate the tenancy and sale contract in a distinctive way. This will still ensure that it locks the sale with the borrower or with the third party without making both contracts dependent on each other. It will benefit the bank as well as the borrower, who will have an option but not an obligation to buy the asset at maturity. The modified role of bank entering in a Mudarabah contract as a “Rabb-ul-maal” (investor) will ensure that the bank takes on operational risk. It will enable the resources to go into productive avenues rather than in financial instruments. This modification will generate employment and productive activities in the economy in a more direct manner. The division of Mudarabah corporate and Mudarabah consumer will target two very distinct markets and will result in channeling of funds from saving surplus units to saving-deficient units. Reforms in equity markets and alternatives for insurance are also suggested. Chapter 9 introduces feasibility and structure of Micro credit as an alternative for interest based micro finance. It discusses how the potential obstacles in the form of lack of trust, funding commitment, lack of collateral arrangement, lack of documentation etc would be handled.Interest Free Economy, Islamic Economy, Islamic Economic System, Islamic Monetary Policy, Islamic Fiscal Policy, Interest, Zakat, Riba, Usury, Development, Redistribution, Economic Systems, Financial System, Financial Intermediation, Saving, Investment.
An Analytical Review of Different Concepts of Riba (Interest) in the Sub-Continent
Full text linkThe traditional concept of Riba (interest) is an excess amount on loan, which creditor receives from debtor on the repayment of loan. There is almost a consensus on the sprit of this concept that it is traditional thought or school; but along with that some other point of views also exist, which present Riba, in somewhat different ways, will be termed as non-traditional approach in this paper. Both of these schools are agreed on the point that, Riba is just restricted to debt, and the increment on it is Riba; but the main difference among these is that: former approach claims that, each and every addition on loan, regardless of purpose and time duration of loan is Riba; but, the later approach demand’s some room for that on different grounds. Actually both of them do not have any sound base. When the concept of unearned income (the income, which is not the result of human labor), is a recognized fact in Islamic economics in different forms, like: ijara (rent), Mudoraba and Mazara’a (Share Cropping); then definitely no logical reason is left to avoid excess income on loan. Both approaches are just unable to give a concrete concept of Riba.Riba, Interest, Rent, Share Cropping
Corporate finance in an interest free economy: An alternate approach to practiced Islamic Corporate Finance
Full text linkThis paper suggests an alternate approach to corporate finance in an interest free economy by looking beyond practiced Islamic finance and suggesting alternatives for corporate finance in sourcing funds i.e. i) Ijara with embedded options, ii) limited liability partnership, iii) equity modes like Musharakah and Mudarabah iv) income bonds and v) convertible income bonds. It also suggests alternatives for corporate finance in using funds i.e. i) Islamic income funds, ii) Islamic REITs, iii) Treasury Bonds, iv) income bonds v) convertible income bonds, vi) foreign currency reserves, vii) making strategic expansion, and viii) equity investments in other companies. It also suggests methods of valuation by suggesting an alternate means of pricing capital in interest free economy and use of appropriate discount rate i.e. Nominal GDP growth rate in public finance and corporate finance in CAPM, dividend discount model, project valuation, calculating NPV, valuing income bonds and stocks. It also discusses how the problems of scarcity of capital will be solved and alternatives for insurance in an interest free economy.Islamic corporate finance, pricing of capital, Islamic public finance, scarcity of capital, Interest free economy, Interest free finance, Zakat, Usury, Time value of money, CAPM, Project evaluation, NPV, FCF
THE USE OF SOCIAL NETWORK THEORY ON ENTREPRENEUR’S LINKAGES DEVELOPMENT
Full text linkTo embark on any housing project, a developer needs to have support from various parties. The housing and construction industries are interrelated; they are in a relationship where construction plays a major part in the development process. Housing developers need to have strong support from the contractor, consultant, and suppliers (CCS) in completing their project. Studying the CCS selection methods can enhance the knowledge on the application of the social network theory (SNT) in the housing industry. Questionnaires were posted to 600 private housing developers (PHDs) and 54 were returned. Findings conclude that social factors were given mediate priority in consultant and contractor selection but non-social factors were more dominant in material supplier’s selection. Before start-up, PHDs get more advice from their strong ties (family/relatives/close friends) in selecting the most suitable CCS; while at the start-up and later stage, PHDs get more advice from weak ties (individual/s from the same industry and their acquaintances). PHDs place their personal trust more on the strong ties providing information related to CCS.Social Network Theory (SNT); housing developers; consultant; contractor; and supplier
LC compensators for power factor correction of nonlinear loads
No full textThis material is posted here with permission of the IEEE. Such permission of the IEEE does not in any way imply IEEE endorsement of any of Brunel University's products or services. Internal or personal use of this material is permitted. However, permission to reprint/republish this material for advertising or promotional purposes or for creating new collective works for resale or redistribution must be obtained from the IEEE by writing to [email protected]. Copyright @ 2004 IEEEA method is presented for finding the optimum fixed LC compensator for power factor correction of nonlinear loads where both source voltage and load current harmonics are present. The LC combination is selected because pure capacitive capacitors alone would not sufficiently correct the power factor. Optimization minimizes the transmission loss, maximizes the power factor, and maximizes the efficiency. The performance of the obtained compensator is discussed by means of numerical examples
An evaluation of housing finance in Saudi Arabia : the Real Estate Development Fund's policies and alternative options.
Full text linkConservation in an Islamic context a case study of Makkah
Full text linkThe Holy Qu’ rān contains many injunctions for Muslims to respect and conserve the natural environment but few address the built environment. Habitat at the time of the Prophet (PBOH) was in the vernacular and relatively impermanent. The first habitat was the cave, the second the tent and then simple flat roofed buildings of post and lintel construction made of mud and rubble. Later buildings were not indigenous but reflected the architectural styles and techniques of Muslim pilgrims from beyond the Arabian Peninsula. Permanent exotic buildings were later erected as reminders of holy places and events. This work advances a case to restore and preserve historic and religious sites in Makkah, Saudi Arabia. Makkah is the destination for millions of Muslim pilgrims who annually pay homage to Allah during the occasions of Hajj, Ramadan and Umra. The tranquillity and peaceful ambience that one associates with the holiest of Islamic experiences have, over the years, given way to jostling crowds of people who must be expediently housed, fed, transported, and protected. Due to the lack of planning and the insensitive but profitable development of the city, Makkah is in grave danger of becoming a bustling metropolis instead of a sanctuary where pilgrims gather to perform their religious rites and reaffirm their dedication to Allah. The author calls for professional planning and international cooperation to guide future development for this expanding and sensitive area. The author's ideas are grounded in practical and aesthetic study, therefore, the political, environmental and economic issues are examined in relationship to religious, historic and artistic values. The author makes proposals for a future Makkah that would provide pilgrims with the physical comforts, security, and serene environment they deserve—without destroying the city they came to visit. The author discusses preservation and conservation in the western world and the need for their acceptance in Muslim countries, the former being an aesthetic and intellectual concept sustained by law and the latter being the prescribed free expression of the individual unhindered by material considerations. Both worlds are rapidly being overwhelmed by materialism, but body, mind and spirit combine in making us aware of our surroundings and the way in what we see around us has come into being
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