Books

Islamic Banking: Theory and Practice [2014]

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https://hanifmir.blogspot.com/2020/04/islamic-banking-theory-and-practice-2012.html

Fundamentals of Islamic Finance (2020) [Amazon.com]

This book is the result of a decade teaching of Islamic finance course to business graduates (Bachelor and Master classes). This book is written with a clear focus on learning of Islamic banking & finance by accounting, banking, business and finance students/professionals. Resources available, so far, on the subject have focused on the legal side, and very negligible work is available on the financial front for a common user. This book is written in financial perspective, and the author has focused upon financial impacts, generated by the application of Islamic financial laws. However, a summary of Islamic commercial laws in each chapter has been provided. This book is divided into five parts. Part-1 presents an update on Islamic finance, why and how Islamic banking started; What is current status; Meaning and prohibition of Riba (Interest & Usury) as reported in revealed books (Bible and Qur'an); business models under Islamic financial services industry; principles of Islamic financial system, similarities and differences with conventional finance industry, and challenges being faced by the nascent industry. Part two is about asset-backed financing provided by IFIs. It includes trading (selling) modes of financing including Murabaha, Salam, and Istisna'a; it also includes rental-based financing product—Ijarah financing. At the start of part two, a summary of Shari’ah rulings about sales is reported.  Chapter two is about the Murabaha (cost plus profit) the most widely used financing tool by Islamic Financial Institutions (IFIs) world over and Bai-Muajjal (deferred sale). Murabaha is a useful tool to replace overdraft and short-term interest-based financing. The chapter discusses the basic rules of Murabaha, necessary steps involved and comparative study with conventional short-term loans including bank overdraft facility. Chapter three is about Bai-Salam; a form of sale contract whereby IFIs purchase goods for spot payment with deferred delivery. It is a recommended contract in the financing of agricultural needs of farmers. Chapter four is about Istisna'a financing. This mode of financing is designed to transact business through an order to manufacture and/or supply. It is a sales contract except the existence of subject matter. This tool of financing is useful for infrastructure projects. Chapter five is about Ijarah; a rental contract whereby IFIs lease an asset for a specific rent and period to the client. Ijarah is useful in replacement of conventional lease financing. Part three of the book deals with profit and loss sharing modes of financing including Musharakah, diminishing Musharakah and Mudarabah. A special section is devoted to discussing the causes of lesser application of Musharakah in operations of IFIs, in addition to Shari’ah rulings and financial impact. Chapter seven is about Diminishing Musharakah; a form of gradually declining partnership between an IFI and clients; generally used to finance real estates. Under diminishing Musharakah, the basic Shari’ah rulings, Islamic house financing, comparative study of conventional and Islamic mortgages and installment calculation under different assumptions for house financing are presented. Chapter eight is about Mudarabah. Under this scheme of financing, IFIs are expected to provide capital to financially weak but skillful people to do the business and share the outcome with IFIs. Part three concludes with a chapter on deposits management. Chapter nine presents various types of deposits collected by IFIs and profit-sharing mechanism. Concepts of daily product and weight-age based profit systems are elaborated. Part four of the book presents special topics in Islamic Finance. In this part areas of liquidity management, Islamic insurance, currency system, substance & form, and challenges to Islamic finance industry are elaborated. Under Islamic capital market (liquidity management) two dedicated chapters have been included; each for equities and sukuk. Shari’ah compliance of equity securities, evaluation of Shari’ah universe of stocks’ methodology, trading rules, and valuation mechanism discussed under equity chapter. Chapter-11 on sukuk includes origin, development, types and sukuk process along with Shari’ah rulings. Chapter 12 elaborates briefly the concept of Islamic insurance covering multiple areas including Shari’ah guidelines, takaful (insurance) models, and role of insurance company, in addition to illustrative financial calculations. Chapter-13 addresses the issue of preference for ‘legal form over economic substance’ by critically evaluating the selected Islamic finance contracts including Murabaha, Ijarah, mortgages, Mudarabah deposits and sukuk. Last chapter identifies the challenges [potentially hurdles in sustainability, growth and expansion of the industry]. The fifth edition is the outcome of very encouraging response by the academic community to earlier editions. In this edition, due attention has been given to present material in a reader-friendly mode in addition to a thorough review of content, exercises and figures. Title of the book changed by adding prefix of ‘fundamentals’ to reflect the nature of work (as text book). In this edition, the chapter on Islamic finance: an update is revised thoroughly; and by insertion of specific contents including principles and business models of Islamic financial system, in addition to brief presentation of challenges. Besides, Islamic capital market is re-written by including an evaluation of methodologies used in creation of Shari’ah universes of stocks. Also, a new chapter included to present the application of ‘form over substance’ principle to industry practices. Updated figures on the global volume of assets, application of financial products; regional shares, etc. are also part of this edition. Also, more examples included in the text to make the concept clear. Financial reporting calculations deleted, discussed elsewhere in accounting books. An increased number of multiple-choice questions and mini cases are also forming part of the updated edition. This book is useful for MBA/BBA students as a three-credit hour course as well as for banking/finance students and practitioners of Islamic banking & finance. It is also useful for accounting & finance professionals, trainers in Islamic banking, regulators, investors, corporate managers and the general public, interested in understanding Islamic financial system. I hope this book will serve its purpose through imparting knowledge of Islamic banking & finance among accounting, business and finance graduates as well as practitioners of Islamic financial system, investors, and the general public. I am thankful to Allah SWT (God) for granting me health, courage, wisdom and knowledge to complete this task. I am also thankful to everyone who assisted me at any stage of my life including my parents, teachers, and family. My wife and kids deserve special thanks for their patience during completion of this book.

 Muhammad Hanif

August 2020

Islamic Capital 

Market (2020) 

[Amazon.com]

Islamic banking was started in the last quarter of the 20th century to cater the needs of Muslims around the world, although it is not limited to Muslims only. It has shown tremendous growth and expansion worldwide. The global volume of assets under the Islamic financial system has reached the figure of US$ 2.5 trillion by the end of 2018 (potential size is above US$ 9.0 trillion), depicting average yearly growth around 16% from 2010-18 [GIFR-2019]. Within eight years, the industry volume of assets is more than double. Islamic finance expands in allied financial sectors, including insurance, capital market operations (equity and Sukuk) and microfinancing in addition to the traditional banking sector. However, dominant share in assets under Islamic financial system is concentrated in the banking sector. According to IFSB (report-2019) share of banking in global Islamic financial services industry [volume 2.19 trillion] is 71.7%, followed by capital market operations with 27% [Sukuk 24.2% & Islamic funds 2.8%] and Islamic insurance (Takaful) 1.3%. Although it was started as merely an alternative option for Halal financing, now it has become a complete financial solutions industry and expanding day by day. There are multiple Sukuk [Islamic bonds] issues, including private and public sectors, alike. Islamic indices based on Shari’ah compliance filters are developed globally in Muslim and non-Muslim countries. Firms engaged in screening of Shari’ah compliant equities include DJIM, S&P, MSCI, FTSE and Bloomberg in addition to multiple country-specific Islamic indices. Important regions which contribute in global Islamic financial services industry include GCC (42.3%), Asia (28.2%), MENA-ex GCC (25.1%) and balance (4.4%) from rest of the world [IFSB-2018].This book is result of a decade of teaching Islamic banking & finance course to under graduation & Master in Business classes. The book is written with a clear focus on learning the concept of Islamic capital market and investments by accounting, banking, business and finance students & professionals. Chapter-1 introduces the basics of capital market. Shari’ah perspective on capital market is introduced in chapter-2, along with developments in the area of Islamic capital market. Chapter-3 presents critical review of Shari’ah screening methodology of multiple agencies. Chapter-4 is dedicated to elaborate discussion on sukuk certificates Chapter 5-7 address financial calculations in the areas of required returns, asset valuation and portfolio selection. Chapter-8 introduces mutual funds. Portfolio performance evaluation is presented in chapter-9, while last chapter discusses financial analysis of a company. In this edition, due attention has been given to present material in reader friendly mode, in addition to thorough review of content, exercises and figures. Increased number of multiple-choice questions and mini cases also form part of updated edition. This book is useful for business as well as for banking/finance graduates and practitioners of Islamic banking & finance. It is also useful for accounting & finance professionals, trainers in Islamic banking, regulators, investors, corporate managers and general public, interested in understanding Islamic finance.