Understanding islamic finance

With a total population of more than a billion Muslims worldwide and an estimated industry size of $250 billion, Islamic finance is serious business for Muslims and non-Muslims alike. In recent decades, Islamic finance has emerged as one of the most important trends in the financial world, with many western banks, such as Citibank, Lloyds, and Barclays, entering, or attempting to enter, the market. Understanding Islamic Finance is the first practical introduction to Islamic finance, combining the theory and practice of Islamic finance with related economic principles. The book covers the fundamentals of the Islamic world view, the philosophy and features of Islamic financial systems, Islamic modes of business and finance, and the role of Islamic finance in economic development.

"List of Boxes and Figures.

Foreword.

Preface.

Acknowledgements.

PART I FUNDAMENTALS.

1 Introduction.

1.1 Economic Scenario in the Neoclassical Framework.

1.2 Conventional Debt: A Recipe for Exploitation.

1.3 Growth per se May not Lead to Socio economic Justice.

1.4 Social Welfare Activities of the States.

1.5 The Main Culprit.

1.6 The Need of the Hour.

1.7 Economics and Religion.

1.8 Islamic Principles Can Make the Difference.

1.9 Regulating Trade and Business.

1.10 Islamic Finance Passing Significant Milestones.

1.11 Could it Work to Achieve the Objectives?

1.12 About this Book.

2 Distinguishing Features of the Islamic Economic System.

2.1 Introduction.

2.2 Islamic Sharī,'ah and its Objectives.

2.3 Why Study Islamic Economics?

2.4 Islamic Economics: What should it be?

2.5 Paraphernalia of Islamic Economics.

2.6 Summary.

3 The Main Prohibitions and Business Ethics in Islamic Economics and Finance.

3.1 Introduction.

3.2 The Basic Prohibitions.

3.2.1 Prohibition of Riba.

3.3 Business Ethics and Norms.

3.4 Summary and Conclusion.

4 The Philosophy and Features of Islamic Finance.

4.1 Introduction.

4.2 The Philosophy of Islamic Finance.

4.3 Debt versus Equity.

4.4 Islamic Banking: Business versus Benevolence.

4.5 Exchange Rules.

4.6 Time Value of Money in Islamic Finance.

4.7 Money, Monetary Policy and Islamic Finance.

4.8 Summary.

PART II CONTRACTUAL BASES IN ISLAMIC FINANCE.

5 Islamic Law of Contracts and Business Transactions.

5.1 Introduction.

5.2 Mā,l (Wealth), Usufruct and Ownership.

5.2.1 Defining Various Related Terms.

5.3 General Framework of Contracts.

5.4 Elements of a Contract.

5.5 Broad Rules for the Validity of Muā,malā,t.

5.6 Wadah (Promise) and Related Matters.

5.7 Types of Contracts.

5.8 Commutative and NonCommutative Contracts.

5.9 Conditional or Contingent Contracts.

5.10 Summary.

6 Trading in Islamic Commercial Law.

6.1 Introduction.

6.2 Bai' Exchange of Values.

6.3 Legality of Trading.

6.3.1 Trade (Profit) versus Interest: Permissibility versus Prohibition.

6.4 Types of Bai'.

6.5 Requirements of a Valid Sale Contract.

6.6 Riba Involvement in Sales.

6.7 Gharar A Cause of Prohibition of Sales.

6.8 Conditional Sales and ""Two Bargains in One Sale""

6.9 Bai' alArbū,n (Downpayment Sale).

6.10 Bai' al Dayn (Sale of Debt).

6.11 Al Inah Sale and the Use of Ruses (Hiyal).

6.12 Options in Sales (Khiyar).

6.13 Summary.

7 Loan and Debt in Islamic Commercial Law.

7.1 Introduction.

7.2 The Terms Defined.

7.3 Illegality of Commercial Interest.

7.4 Loaning and the Banking System.

7.5 Guidance from the Holy Qurā,n on Loans and Debts.

7.6 The Substance of Loans.

7.7 Repayment of the Principal Only.

7.8 Time Value of Money in Loans and Debts.

7.9 Instructions for the Debtor.

7.10 Instructions for the Creditor.

7.11..."