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Contents
List of Illustrations
Preface
Glossary and Transliteration
1 Introduction
Finance without Interest?
1.1 Distinguishing Features of Islamic Finance
ProhibitionDriven
Finance
Jurists, Shari'a Boards and Innovation
Lawyers and Regulatory Arbitrage
1.2 Islamic Transactions Law as Common Law
Precedents, Analogies and Nominate Contracts
TradeoV Between EYciency and Legitimacy
1.3 Limits and Dangers of Shari'a Arbitrage
Risk of MisPricing
Legal and Regulatory Risks
2 Jurisprudence and Arbitrage
2.1 Islamic Law and Jurisprudence
The Canon: Qur'an, Tradition and Consensus
Juristic Inference (Ijtihad ) and Benefit Analysis
2.2 From Classical to Contemporary Jurisprudence
Jurisprudence, Revival and Codification
Institution of Fatwa and Islamic Finance
2.3 Arbitraging Classical Jurisprudence
Shari'a Arbitraging Classical Property Law
Arbitraging Classical Contract Conditions
Arbitrage, Ruses and Islamic Finance
3 Two Major Prohibitions: Riba and Gharar
3.1 The Prohibition of Riba
Canonical Texts on Riba
Economic Substance of the Prohibition of Riba
3.2 The Prohibition of Gharar
Definition of Gharar
Economic Substance of Prohibition
Insurance and Derivatives
3.3 Bundled vs. Unbundled Credit and Risk
4 SaleBased
Islamic Finance
4.1 Basic Rules for Sales
Trust Sales: Murabaha, Tawliya, Wad. i'a
Currency Exchange (Sarf )
4.2 SameItem
SaleRepurchase
('Ina)
SameItem
Trading in 'Ina and Tawarruq
Custody Sale (Bay' Al'
uhda) and Sukuk Alijara
4.3 Cost of Funds: Interest Rate Benchmarks
Opportunity Cost for Conventional FundProviders
Viability of Islamic Benchmark Alternatives
5 Derivativelike
Sales: Salam, Istisna' and 'Urbun
5.1 PrePaid
Forward Sale (Salam)
Parallel Salam
Conventional and Synthesized Forwards
5.2 Commission to Manufacture (Istisna' )
5.3 DownPayment
Sale ('Urbun)
'Urbun as Call Option
6 Leasing, Securitization and Sukuk
6.1 General Lease Conditions
Flexible Rate Financing
Subleasing, Repairs and Insurance Costs, etc.
6.2 AssetBacked
Securities
Leasing and Securitization
Receivable Securitization and Sale of Debt
Bundling AssetBased
and DebtBased
Securities: A Paradox
6.3 Asset Backed Leasing Bonds (Sukuk)
Credit Rating Issues
Reward Pledges and Gifts Revisited
6.4 Usufruct Sukuk
6.5 Sukuk AlSalam
7 Partnerships and Equity Investment
7.1 Classical types of Partnership
Silent Partnership: Theoretical Workhorse of Islamic Finance
Valid and Defective Silent Partnerships
7.2 Common Stock Owneship
"Islamic Screens" and Their Shortcomings
Cleansing Returns
Positive Screens and the Islamic Brand Name
8 Islamic Financial Institutions
8.1 Banking and Islamic Banking
Theoretical Structure: TwoTier
Silent Partnership
Deposits vs. Loans: Trust and Guaranty
8.2 Insurance and Takaful
8.3 Two Sides of the Two Debates
Shari'a Arbitrage vs. Islamic Prudential Regulation
8.4 Generic Agency Characterization of Financial Institutions
9 Governance and Regulatory Solutions in Mutuality
9.1 RentSeeking
Shari'aArbitrage
and Absence of Mutuality
Potential for Mutuality in Islamic banking
Need for Mutuality in Takaful
9.2 A Call for Mutuality in Banking and Insurance
Mutuality in Banking
Mutuality in Insurance
10 Beyond Shari'a Arbitrage
10.1 Shari'a Arbitrage and Criminal Finance
10.2 Shari'a Arbitrage at the Limit
Benchmarking Ad Absurdum
Hedge Fund Instruments -- Shari'aArbitrage
Style
10.3 Self Destructiveness of Shari'aArbitrage
Declining Shari'aArbitrage
Profit Margins
Dilution of the "Islamic" BrandName
10.4 Towards a New Islamic Finance Identity
Macroeconomic Substance: Privatization Sukuk
MosqueBased
Network of Financial Mutuals
Positive Screens, Ethical Investment
Conclusion
Notes
Bibliography
Index
Library of Congress Subject Headings for this publication:
Banking law (Islamic law).
Business enterprises -- Finance -- Law and legislation -- Islamic countries.
Securities -- Islamic countries.
Finance -- Religious aspects -- Islam.
Economics -- Religious aspects -- Islam.