Islamic Finance

Paper Summary:

This paper explains that the bedrock of Islamic finance is that all forms of interest are considered forbidden known as haram and its financial model works on the basis of risk sharing. The paper further explains that, under Islamic banking, the customer and the bank agree to share the risk of any investment and divide the profits between them. The paper then describes the primary categories within the Islamic finance: ijara, ijaa-va-iqtina, mudraba, murabaha and mushraka. The paper also explains how Islamic finance differs from regular finance and explains how Islamic finance works.

Table of Contents:
What is Islamic Finance
How Is Islamic Finance Different from Regular Finance and Why
How Does Islamic Finance Work: The Types Of Investments Available And How They Work
Working Principles of Islamic Finance
Types of Investment Available and How They Work
Institutions Offering Islamic Finance Products
International Wholesale Islamic Banking and Insurance Providers
Exhibit: Islamic Financing Form
Exhibit: Name of the Institution

From the Paper:

"It is a fact that finance is considered as a huge restraint on development in major regions of the Third World. Sometimes there is lack of sufficient money available to fund important projects and the price of loanable funds is normally high, showing the paucity of savings. In low-income economies, it is hardly a surprise that savings rates are small, as most disposable income is needed to be used for making purchases of necessities of daily living, and a lot of families just cannot bear to make financial provisioning for the future, although this makes them insecure and helpless."

Sample of Sources Used:

• Alam, Niaz. (2004, Oct 26) "Islamic Finance- Issues and Opportunities." Ethical Investment Research Service. Retrieved 12 August, 2007 from http://www.eiris.org/files/research%20publications/islamicfinance04.pdf
• Aziz, Zeti Akhtar. (2006, Feb 7) "Building a robust Islamic Financial System" 2nd International Conference on Islamic Banking, Kuala Lumpur. Retrieved 12 August, 2007 from http://www.bis.org/review/r060208e.pdf
• El-Gamal, Mahmoud Amin. (2000, Jun) "A Basic Guide to Contemporary Islamic Banking and Finance." Rice University. Retrieved 12 August, 2007 from http://www.nubank.com/islamic/primer.pdf
• Khorshid, Aly. (2004) "Islamic Insurance: A Modern Approach to Islamic Banking". Routledge Curzon. New York.
• N. A. (2005, Jun 29) "Q&A: Islamic Finance" BBC News. Retrieved 11 August, 2007 from http://news.bbc.co.uk/1/hi/business/3548656.stm

More papers on Islamic Finance:

• Research Proposal # 105931 : "Management Tools in Islamic Finance"
• Essay # 89289 : "Islamic Economics"
• Research Paper # 60988 : "Islamic Banking in the United Kingdom"

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