Islamic finance in its modern form is barely 30 years old yet it is a rapidly growing part of the financial sector and has survived the recent global banking crisis almost untouched. The size of the market is huge and demand for Islamic services exists wherever there is a significant Muslim community.
It is reckoned that nearly 500 financial institutions in more than 50 countries practice some kind of Islamic finance and the market has been growing at more around 10-15% per annum. Latest estimates place total assets at around US$1 trillion.
The main attraction of Islamic finance is that it offers Shariah compliant banking to its clients and is the closest yet that any banking institution has managed to get to genuinely ethical and moral banking. It is underpinned by pure principles, with integrity at the forefront and a genuine sharing of profit and losses as its credo. This has all been achieved with remarkable speed and the sector’s popularity continues unabated.
This Islamic finance course explains in clear terms the basic principles of this increasingly important sector and shows how these and its products differ from the conventional banking models. It is designed to teach delegates the principles of Islamic Banking and to highlight the differences between Islamic and conventional banking.
It explores the different products and services commonly found in both the GCC and the Islamic market globally and it assesses the relative advantages and disadvantages of each. By the end of the course delegates will have a full understanding of the products and principles involved in Islamic Banking and how they differ from Western banking models.
Exercise: Describe the element of offer and acceptance under Sharia.
Exercise: What is the difference between Mua’hida and Aqd?
Exercise: We will construct a typical Islamic balance sheet highlighting the key differences, especially the contractual and profit/loss sharing element.
Exercise: Although moral hazard probably makes this academic, consider who bears what losses in each of the different sources of Islamic funds
Case study: Explain the main differences between an Islamic bank and a conventional bank
Exercise: You have a client looking to replace commercial vehicles and not wishing to lay out substantial cash up front, how might this be achieved using Islamic banking techniques.
Exercise: Why is Musharaka not more popular given that it enshrines Islamic principles completely?
Exercise: Taking into account all of the above, name areas where you feel investment activity is unacceptable or prohibited.
Exercise: Using Dubai World as an example, consider how the recent problems might impact this important market.
Exercise: Takaful is a controversial subject amongst some scholars. Why is this?
Exercise: What is the difference between a Mudaraba and Wakala arrangement in a two tier Takaful model?