Regulating islamic financial institutions : The nature of the regulated

More than 200 Islamic financial institutions (IFIs) operate in 48 countries. Their combined assets exceed $200 billion, with an annual growth rate between 12 percent and 15 percent. The regulatory regime governing IFIs varies significantly across countries. A number of international organizations have been established with the mandate to set standards that would strengthen and harmonize prudential regulations as they apply to IFIs. The authors contribute to the discussion on the nature of prudential standards to be developed. They clarify the risks that IFIs are exposed to and the type of regulations that are needed to systematically manage them. They consider that the industry is still in a development process whose eventual outcome is the convergence of the practice of Islamic financial intermediation with its conceptual foundations. The authors contrast the risks and regulations needed in the case of Islamic financial intermediation operating according to core principles and current practice. They outline implications for approaches to capital adequacy, licensing requirements, and reliance on market discipline. They then propose an organization of the industry that wouldallow it to develop in compliance with its principles and prudent risk management, and facilitate its regulation.Labor Policies,Payment Systems&Infrastructure,International Terrorism&Counterterrorism,Financial Intermediation,Banks&Banking Reform,Financial Intermediation,Banks&Banking Reform,Environmental Economics&Policies,Economic Theory&Research,Banking Law

The role of Islamic finance in enhancing financial inclusion in organization of Islamic cooperation (OIC) countries

The core principles of Islam lay great emphasis on social justice, inclusion, and sharing of resources between the haves and the have nots. Islamic finance addresses the issue of"financial inclusion"or"access to finance"from two directions -- one through promoting risk-sharing contracts that provide a viable alternative to conventional debt-based financing, and the other through specific instruments of redistribution of the wealth among the society. Use of risk-sharing financing instruments can offer Shariah-compliant microfinance, financing for small and medium enterprises, and micro-insurance to enhance access to finance. And redistributive instruments such as Zakah, Sadaqat, Waqf, and Qard-al-hassan complement risk-sharing instruments to target the poor sector of society to offer a comprehensive approach to eradicating poverty and to build a healthy and vibrant economy. Instruments offered by Islam have strong historical roots and have been applied throughout history in various Muslim communities. The paper identifies gaps currently existing in Organisation of Islamic Cooperation (OIC) countries on each front, that is, Shariah-compliant micro-finance and financing for small and medium enterprises and the state of traditional redistributive instruments. The paper concludes that Islam offers a rich set of instruments and unconventional approaches, which, if implemented in true spirit, can lead to reduced poverty and inequality in Muslim countries plagued by massive poverty. Therefore, policy makers in Muslim countries who are serious about enhancing access to finance or"financial inclusion"should exploit the potential of Islamic instruments to achieve this goal and focus on improving the regulatory and financial infrastructure to promote an enabling environment.Access to Finance,Debt Markets,Banks&Banking Reform,Emerging Markets,Islamic Finance

An Introduction to Islamic Finance: Theory and Practice -2/E.

Islamic finance has experience remarkable growth over the last three decades and the global demand for financial product and services that comply with economic and financial principles of Islam is increasing day by day, for newcomers to this burgeoning market, An Introduction to Islamic Finance : Theory and Practice offer an excellent overview of the principal concept from two leading scholar in Islamic finance. In the wake of the recent financial crisis, An Introduction to Islamic Finance offer a comprehensive and practical guide for anyone seriously interested in understanding the Islamic finance alternative and the enermous potential it holds

Financial Inclusion: Islamic Finance Perspective

Enhancing financial inclusion or access to finance can make critical contributions to the economic development. Conventional mechanisms such as micro-finance, small-medium-enterprises (SME), and micro-insurance to enhance financial inclusion have been partially successful in enhancing the access and are not without challenges. Islamic finance, based on the concept of risk-sharing offers set of financial instruments promoting risk-sharing rather than risk-transfer in the financial system. In addition, Islam advocates redistributive risk-sharing instruments such as Zakah, Sadaqat, Qard-al Hassan, etc, through which the economically more able segment of the society shares the risks facing the less able segment of the population. These are not instruments of charity, altruism or beneficence but are instruments of redemption of rights and repayment of obligations. In addition, the inheritance rules specify how the wealth of a person is distributed among present and future generations of inheritors. This paper argues that conventional modes of enhancing financial inclusion can be replicated through instruments of Islamic finance allowing risk sharing and risk diversification. However, even after availability of micro-finance and SME financing, financial exclusion may not be fully overcome. Therefore, one needs to utilize, Islam’s instruments of redistribution where mandated levies and recommended avenue of spending may play their role. They help reduce the poor’s income – consumption correlation. The paper concludes that Islamic finance provides a comprehensive framework to enhance financial inclusion through the principle of risk-sharing and through Islam’s redistributive channels which are grossly under-utilized in Muslim countries. The redistributive instruments may be developed as proper institutions to optimize the function of such instruments. Applications of financial engineering can device innovative ways to develop hybrids of risk-sharing and redistributive instruments to enhance access to finance to promote economic development

Financial Inclusion: Islamic Finance Perspective

Enhancing financial inclusion or access to finance can make critical contributions to the economic development. Conventional mechanisms such as micro-finance, small-medium-enterprises (SME), and micro-insurance to enhance financial inclusion have been partially successful in enhancing the access and are not without challenges. Islamic finance, based on the concept of risk-sharing offers set of financial instruments promoting risk-sharing rather than risk-transfer in the financial system. In addition, Islam advocates redistributive risk-sharing instruments such as Zakah, Sadaqat, Qard-al Hassan, etc, through which the economically more able segment of the society shares the risks facing the less able segment of the population. These are not instruments of charity, altruism or beneficence but are instruments of redemption of rights and repayment of obligations. In addition, the inheritance rules specify how the wealth of a person is distributed among present and future generations of inheritors. This paper argues that conventional modes of enhancing financial inclusion can be replicated through instruments of Islamic finance allowing risk sharing and risk diversification. However, even after availability of micro-finance and SME financing, financial exclusion may not be fully overcome. Therefore, one needs to utilize, Islam’s instruments of redistribution where mandated levies and recommended avenue of spending may play their role. They help reduce the poor’s income – consumption correlation. The paper concludes that Islamic finance provides a comprehensive framework to enhance financial inclusion through the principle of risk-sharing and through Islam’s redistributive channels which are grossly under-utilized in Muslim countries. The redistributive instruments may be developed as proper institutions to optimize the function of such instruments. Applications of financial engineering can device innovative ways to develop hybrids of risk-sharing and redistributive instruments to enhance access to finance to promote economic development

Stakeholders Model of Governance in Islamic Economic System

The paper discusses the design of an efficient and optimal corporate governance structure of a firm within Islamic economic system. The objective of this paper is to identify factors, which will influence corporate governance within an Islamic economic system and to examine if corporate governance model will be ‘shareholder’- or ‘stakeholder’- centered? The paper argues that the governance model in Islamic economic system is a stakeholder-oriented model where governance structure and process at system and firm level protect rights of stakeholders who are exposed to any risk as a result of firm’s activities. Whereas conventional system is struggling with finding convincing arguments to justify stakeholders’ participation in governance, the foundation of a stakeholder model is found in Islam’s principles of property rights, commitment to explicit and implicit contractual agreements and implementation of an effective incentive system. The paper also discusses the implication of a stakeholder model on depositors, Islamic financial institutions, and regulators

Understanding Islam: Development, Economics and Finance

In this paper, the foundational rules governing human, economic and financial development in Islam, as understood from the Quran and from the life and traditions of the Prophet Muhammad (pbuh), are summarized. These rules pave the path to development as the basis of institutional structure, which in turn, underpin the path of economic and social progress. The essential elements in the life of a Muslim—the unity of creation, freedom and freedom of choice, economic and human development, economic system and financial practice—are developed

Nitrogen management studies in maize (Zea mays L.) hybrids

A field experiment was conducted to study the effect of different nitrogen management methods on yield, yield components and quality attributes of maize hybrids (single cross-6142 and double cross-4444) under irrigated conditions. Nitrogen dose is met either by PM (poultry manure) or urea according to each treatment. PM was incorporated at the time of presowing irrigation whereas fertigation method at knee height stage and foliar spray at flowering were use for the application of urea. Results showed that plant height, cob diameter, number of grains per cob, grain yield and biological yield were significantly affected by the hybrids. Significantly, higher plant height, cob diameter, number of grains per cob, grain yield and biological yield were produced by single cross-6142. There was no significant difference occur between both hybrids on seed oil and protein contents. N management by the application of T3 (60% N from PM + 38.5% N from urea through fertigation + 1.5% N from urea through foliar application) produced significantly more plant height, cob diameter, number of grains per cob, grain yield, biological yield, seed protein and seed oil contents. The interaction of single cross-6142 and T3 (60% N from PM + 38.5% N from urea through fertigation + 1.5% N from urea through foliar application) was found superior in production of more plant height, cob diameter and number of grains per cob. However, interaction between maize hybrids and N application methods for grain yield, biological yield, seed protein and oil contents was reported nonsignificant. It can be concluded that single cross hybrid-6142) and T3 (60% N from PM, 38.5% N from urea through fertigation and 1.5% N from urea through foliar application) could be used successfully for improving maize yield under the irrigated conditions

Effect of tillage and organic mulches on growth, yield and quality of autumn planted maize (Zea mays L.) and soil physical properties

see the effect of organic mulches and tillage practices on growth, yield and quality of autumn planted maize and soil physical properties. Four types of tillage practices i.e. conventional tillage, zero tillage, bar harrow tillage, subsoiler tillage and two types of mulching material i.e. wheat straw mulch and saw dust mulch was used. The mulching material was partially incorporated in the field after germination of crop. The experiment was carried out in randomized complete block design (RCBD) with three replications. Control treatment was kept for comparison. All other practices were kept uniform throughout the crop period. Data about growth and yield components were collected and analyzed statistically by fisher analysis of variance and treatment significance was measured by significant difference test at 5v% level. The results showed that zero tillage + wheat straw mulch gave maximum 1000-grain weight (341.67 g) and grain yield (6.33 t ha-1) and it was followed by conventional tillage + saw dust mulch (4.92 t ha-1). Higher protein content was recorded in Subsoiler tillage (10.26 %). Conducive soil physical conditions were observed in the zero tillage practices over the other tillage practices. On the basis of these results it could be proposed that the tillage and mulching is a very important practice to increase the yield of crop. Among different practices, zero tillage with wheat straw mulching gave maximum yield and net benefits