بسم الله الرحمن الرحيم
Islamic Finance: Theory & Practice
Tariqullah
Khan<http://sites.google.com/site/sukkook/tk-cv09-0809.pdf?attredirects=0>
"Risk sharing in Islamic finance - an analysis of issues with special
reference to Pakistan", a Doctoral Thesis submitted in fulfilment of the
requirements for the award of Ph.D. by the Department of Economics,
Loughborough
University <http://www.lboro.ac.uk/>, United Kingdom, September - 1996,
Supervisor: John R.
Presley<http://scholar.google.com/scholar?q=presley+islamic&hl=en&btnG=Search>
CONTENTS
Chapter 1 -
Introduction<http://sites.google.com/site/sukkook/Chapter1.pdf?attredirects=0>
Chapter
2 - Islamic Finance in Theory: Evolution and Economics of Profit
Sharing<http://sites.google.com/site/sukkook/Chapter2.pdf?attredirects=0>
Chapter
3 - Islamic Finance in Theory: Evolution and Economics of
Mark-Up<http://sites.google.com/site/sukkook/chapter3.pdf?attredirects=0>
Chapter
4 - Islamic Finance in Practice: Relative Significance of Profit-Loss
Sharing and Mark-Up in Islamic
Banking<http://sites.google.com/site/sukkook/chapter4.pdf?attredirects=0>
Chapter
5 - Islamic Finance in Practice: Market Performance of Profit-Loss-Sharing
with Special Reference to the Pakistani Modaraba
Companies<http://sites.google.com/site/sukkook/chapter5.pdf?attredirects=0>
Chapter
6 - Profit-Loss Sharing in Retrospect: Firm Level
Considerations<http://sites.google.com/site/sukkook/chapter6.pdf?attredirects=0>
Chapter
7 - Profit-Loss Sharing in Retrospect: Open Economy Considerations with
Special Reference to
Pakistan<http://sites.google.com/site/sukkook/chapter7.pdf?attredirects=0>
Chapter
8 - Towards A Contractual Model of
Profit-Loss-Sharing<http://sites.google.com/site/sukkook/chapter8.pdf?attredirects=0>
Chapter
9 - Conclusions and
Implications<http://sites.google.com/site/sukkook/Chapter9.pdf?attredirects=0>
Bibliography<http://sites.google.com/site/sukkook/Bibliography.pdf?attredirects=0>
CONTENTS IN
DETAIL<http://sites.google.com/site/sukkook/Contents.htm?attredirects=0>
ABSTRACT
The Islamic law prohibits charging and paying of interest but allows earning
profits on the basis of participation in the market. This legal injunction
has motivated the establishment and successful operation of a number of
Islamic financial institutions. The emergence and rise of these institutions
is an important academic and practical development of our time. The theory
of Islamic finance evolved on the basis of profit and loss sharing (PLS)
principle underlying participatory Islamic financial contracts. However, the
practice of Islamic finance does not conform to the theory and
overwhelmingly relies on the mark-up principle which underlies deferred
trade. The PLS is in striking contrast to the interest mechanism, but the
mark-up is not.
The present research inquires the causes underlying the negligence of the
mark-up mechanism at the time when the theory was developing. Looking at the
preferences of users and suppliers of funds, the causes of the overwhelming
use of mark-up in the practices of Islamic finance are also analyzed.
Pakistan has remained at the forefront of financial Islamization. The
research also draws on this practical experience with a view to explore how
the market rewards risk. The study also analyzes the prospects of financial
Islamization in a real world scenario in which most Muslim countries rely
substantially on foreign financial resources.
The central conclusion of the study is that the mark-up and PLS mechanisms
have their own merits and weaknesses. The merit of the mark-up is that it
facilitates the acquisition of assets. The merit of the PLS is that it links
financiers’ interests with the outcome of projects. The study concentrates
on the analysis of the inherent characteristics of the PLS and mark-up as
parent principles of Islamic finance rather than the institutional
environment in which these are practiced. It implies that given the market
environment, the strength of Islamic finance lies in the integration of the
prime merits of mark-up and PLS and in developing a comprehensive set of
Islamic financial instruments.
ACKNOWLEDGEMENTS
I have undertaken this research while working at the Islamic Research and
Training Institute, the Islamic Development Bank. Without an opportunity to
work at these institutions I will not have been able to complete the work.
My foremost gratitude goes to my institutions for providing me the
opportunity to work as a researcher. Among many people who have contributed
to the progress of this research in different ways, the following deserve
special mentioning: John R. Presley, my research supervisor, whose
initiative, encouragement and guidance made it possible for me to present my
work in the present form, my colleagues Monzer Kahf and Boulem Ben Djilali
with whom I worked on beneficial joint papers, M. Fahim Khan, who motivated
me to register for a research degree and encouraged me in pursuing it, M.
Nejjatullah Siddiqi who helped me in focusing on the issues pursued in this
research, Nevzat Yalcintas, Korkut Ozal, Munawar Iqbal, Hasmet Basar, Sami
Homoud, Ausaf Ahmad, Abdallah Gul, Hussain Kamel Fahmi, M. A. Zarqa, M. Ali
Al Qari, Leyachi Feddad, Mahmoud Gulaid, and Osman Babikir from whose
comments and observations I benefited. To all these wonderful friends, I owe
my sincere gratitude. Views, interpretations, and omissions and errors are
my sole responsibility.
Tariqullah Khan
LIST OF KEY TERMS
Islamic Finance; Islamic Banking; Islamic Financial Institutions; Islamic
Financial Instruments; Islamic Financial Markets; Profit and Loss Sharing
(PLS); Financial Murabahah (Mark-up); Financial Islamization; Islamic
Principles of Finance; Islamic Corporate Finance
http://sites.google.com/site/sukkook/
والحمد لله الذي بنعمته تتم الصالحات
Wa Al’hamdulil’laahi Allathee bini'amatihi tatimmu As-salihaat
praise is to be to Allah Who by His blessings all good things are perfected
Thank You;
Iman Sameer Al-Bage, MA (Pending) in Islamic Economics
Da’awa University Institute for Islamic Studies
Website: http://kantakji.com/elearn_center/islamic.htm
Email: [email protected]
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