Islamic Finance

The ongoing global financial crisis, which was triggered by US subprime mortgage crisis since 2007 and has spread to some EU countries, is just a repeat of previous financial crises. The new financial crisis usually has wider, deeper and more devastating impacts on the economy and the people than those of previous ones. In the history of capitalism, there have actually been crises almost continuously for the past 200 years except for during one short period, 1945-1971, under Bretton Woods Agreement.

This paper compares profit sharing and debt contracts in presence of moral hazard. Its originality relatively to the existing studies consists in performing the comparison between the two contracts in a more general context. Firstly, the internal funds of the agent (entrepreneur) are enabled to vary between 0% and 99%. Secondly, an incentive mechanism is incorporated to the sharing contract in the context of a two-period relationship. Both contracts are shown to be feasible for sufficiently high internal funds of the entrepreneur.

This study aims to investigate the survival time of Islamic and conventional banks in the Gulf region, taking into account the impact of the global financial crisis and by employing the discrete-time duration models. The empirical application is comprised of fifty-six commercial banks taken from five countries over the period of 1995 to 2011. In addition, to examine the differences between banks, a range of explanatory variables from both the micro- and macro-level are included in several models.

The core principles of

This paper discusses the standardization debate in Islamic finance. ‘Islamic’ structured products particularly Wa’d-based total return swaps are used as a case study to discuss the importance of standardization. The growth of the Islamic finance industry has been hampered by the lack of consensus (ijma`) among the Sharī`ah scholars’ who belong to diverse sects or schools of thought (madahib). This diversity has resulted in disagreements about the acceptability of specific features of Islamic financial products.

This study aims to determine the stability of Islamic banking and its comparison with conventional banking in Indonesia. In this case, the level of bank stability is measured individually using one of accounting-based bank soundness measurement called the Z-score indicator. Using the parametric statistical t-test, the study shows that the level of stability comparison between Islamic banks and conventional banks are significantly different. This research uses the sample data of 12 Islamic banks and 71 conventional banks in Indonesia during the period of 2004-2009.

Nearly fifteen years after the establishment of the first Islamic bank Indonesia, a new law was introduced in 2006 that in effect empowers the Religious Court in the country to oversee, hear and decide on disputes relating to matters of Islamic finance and Islamic economics. In its way to the enactment, the Parliament preferred the word ‘Islamic economics’ than the word ‘Islamic banking’ which was initially put in the draft law.

Poverty is a multi-faceted phenomenon. Many have studied the concept in diverse prisms and employed a variety of theories to understand it. Previous Islamic studies found

We investigate the differences in banks' responses to monetary policy shocks across bank size, liquidity, and type, i.e., conventional versus Islamic, in Pakistan between 2002:III to 2010:I. We find that following a monetary contraction, small banks with liquid balance sheets cut their lending less than other small banks. In contrast large banks maintain their lending irrespective of their liquidity positions. Islamic banks, though similar in size to small banks, respond to monetary policy shocks as large banks.