Explaining Islamic finance product development and Shari'ah law compliance, this book shows you the structures & applications of Islamic transactions created for the modern financial world.
Understand the core principles of Islamic finance instruments, their applications and structures, their placement in the context of modern financial developments and the growth of Islamic financial institutions.
This new book explains the fundamentals of Islamic finance product development and compliance with Islamic law. The expert authors lead you through the complex structures and applications of Islamic transactions in the modern financial environment, including those providing liquidity and risk management for Islamic financial institutions.
Topics covered include:
Partnership models and equity finance vehicles
Sales, leasing and asset-linked, debt-like transactions
Structuring leases
Pre-paid sales and their operation as futures contracts
Manufacturing and working capital, and project finance arrangements including securitised and syndicated project finance deals
Real estate finance applications
Asset management products, indices and investment funds
Sukuk and debt-like products, including structuring Islamic securitizations, rating Sukuk and legal and regulatory issues
The development of the Islamic capital market, and the structures available for Islamic banks to manage liquidity
Risk management and derivative-like products
The emerging regulatory environment for Islamic finance products and transactions, and how the industry is responding to this.
"I wish that this had been the first book I read on Islamic finance." - David E. Upton, PhD, CFA®, AIF®, Virginia Commonwealth University
Table of Contents
Structuring Islamic Finance Transactions Contents
Foreword David E. Upton Recent history of Islamic finance Faith, ethics, law and finance Compatibility Shari’a boards and fatawa Intellectual curiosity and personal growth Internationalisation of finance Conclusion
Introduction: the origins and nature of the Islamic financial market Abdulkader Thomas, based upon the work of Bryan Kraty, Stella Cox and Lawrence Oliver with Mustafa Hussain Introduction The growth of the Islamic finance industry Islamic finance principles Core mechanisms Islamic finance instruments What is money? What does this mean for banking and finance? Systemic challenges Notes about the book
Chapter 1 Examining the role of Islamic law Abdulkader Thomas Introduction Maqasid al Shari’a Sources of law Islamic schools of law The concerns of Shari’a Contracts The rule of possession (qabd) Forbidden contracts and accountability Conclusion
Chapter 2 Understanding the Shari’a process Abdulkader Thomas Introduction Shari’a boards Preparing for the process Two case studies: exceptions to the rule
Chapter 3 Equity finance vehicles: mudaraba and musharaka Abdulkader Thomas with M. Ikram Thofeek Introduction Limited liability and corporate personality Mudaraba Syndication by mudaraba Retail fund aggregation Non-bank financial institutions Musharaka Musharaka deposits Deposit profit distribution methods Other forms of bank account Declining-balance partnership Shares and certificates Pre-emption Conclusion
Chapter 4 The murabaha and simple sales transactions Abdulkader Thomas and Bryan Kraty, with Sudin Haron, Mustafa Hussain, and Stella Cox Introduction Murabaha Murabaha and cash management Murabaha in a banking context Murabaha in trade financing Murabaha versus bai’ bithaman al muajjal The case of Malaysia Less widely applied sales concepts Problematic sales types Letters of credit Conclusion Checklist: murabaha transaction steps
Chapter 5 Lease finance and ijarah Abdulkader Thomas and Bryan Kraty, with Mustafa Hussain, and Stella Cox Introduction Lease finance and ijarah Islamic lease structure Ijarah-wa-iqtina’a Project finance applications Main differences between Islamic and conventional leases Conclusion
Chapter 6 Salam Abdulkader Thomas and Bryan Kraty, with Mustafa Hussain, and Stella Cox Introduction Salam Checklist: Salam/istisna’a financing transaction steps Parallel salam and liquidity management Commodity financing Working capital applications Conclusion
Chapter 7 Complex transactions: istisna’a, pre-export or manufacturing finance working capital and project finance Abdulkader Thomas with Bryan Kraty Introduction Istisna’a Ju’ala as a sub-set of istisna’a Securitised and syndicated project finance transactions Syndicated and securitised pre-export and export finance transactions Syndicated and securitised corporate finance transactions
Chapter 8 Real estate Abdulkader Thomas with appreciation to Mohammed Asaria Introduction Mudaraba and musharaka Istisna’a and intifa’a Murabaha Musharaka and declining-balance partnership Ijarah and leveraged ijarah Securitisation of real estate Conclusion
Chapter 9 Islamic asset management Stella Cox and Lawrence Oliver with Abdulkader Thomas Introduction Islamic principles Creating an Islamic asset base Islamic fund management Structure, marketing and distribution Jurisdiction of registration and regulation Disclosure Islamic global asset management Addressing the issues Conclusion
Chapter 10 Opportunities with sukuk and securitisations Abdulkader Thomas, with appreciation to Mohammad Asaria and Tamara Box Sukuk – legal structure Sukuk securitisation Receivables securitisation Rating Shari’a securitisations Historical data and rating risk Legal and regulatory issues with Shari’a-compliant securitisations Tax and accounting issues Jurisdiction and trustee issues Shari’a securitisation opportunities Conclusions and challenges for sukuk and Islamic securitisations
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