...Running head: CONTRADICTION CONCEPTS IN AAIOFI WITH ISLAMIC BANKING Contradiction concepts in Islamic Banking in Malaysia Nor Alina bt Abdul Latip International Islamic University Malaysia Abstract This study investigates the concepts use in Islamic Banking in Malaysia and compares it with guidelines provide by Islamic teachings. It finds that most Islamic banks in Malaysia offer BBA in home financing and Ijarah in car financing as their products. The findings show that concepts of BBA and Ijarah practise in Islamic Institutions in Malaysia are differ from the actual Islamic teachings. The study also reveals that Islamic banks are restricted to the Malaysian requirements in providing their products. Page no Abstract 2 Introduction 4 Literature review 5 Methodology 7 Findings 7 Conclusion 13 1.0 INTRODUCTION Financial Accounting Organization for Islamic Banks and Financial Institutions is known as Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). It was established in 1991 (AAOIFI, 2007, p.8). AAOIFI standards are drawn from Islamic teaching. The standards free from three important concepts that are used in conventional institutions which are interest...
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...Introduction Unlike conventional economics which focuses on profit maximization, the Islamic economic system aims at the “study of human falah achieved by organising the resources of earth on the basis of cooperation and participation (Akram Khan, p.55).” In other words, the Islamic economic system aims at attaining Allah s.w.t’s pleasure, while pursuing economic activities within the boundaries of the Islamic shariah. The Islamic shariah puts a heavy importance on the well being of the community and social justice. Thus, this also means the prohibition of interest. The prohibition of interest is one of the main factors that put Islamic economics in distance with the conventional economics. Because of this difference in nature, Islamic Financial Institutions (IFIs) have different types of contracts as practiced by conventional financial institutions. One of the types of contracts entered by IFIs is the Ijarah contract. Ijarah contracts are also known as Islamic leasing. Basically, this study is done in order to understand more the nature of leasing according to Islamic principles, and at the same time, the differences of ijarah with conventional leasing. In addition, this study also aims to identify the types of ijarah practiced by IFIs in Malaysia and also to see how Malaysian IFIs disclosed their ijarah financing in comparison to their counterparts in Bahrain IFIs. This is because as one ummah, it is important to have a standardized standard that is Shariah compliant...
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...I. History of Islamic Banking in Malaysia Malaysia started Islamic banking in early 1980’s. Islamic Banking is especially true for Muslim world where currently Islamic banking strides at two separate fronts. At one side, efforts are also underway to convert the entire financial systems in accordance to Islamic laws (Shariah). At the other side, separate Islamic banks are allowed to operate in parallel to conventional interest based banks. Malaysia opted for the alternative gradual way of developing and implementing Islamic banking system. 1.1 Origin of Islamic Banking in Malaysia The roots of Islamic Banking in Malaysia should go back to 1963 when the government established Tabung Haji or Pilgrims Management and Fund Board. The organisatio was established to invest the savings of the local Muslims in interest free places, who want to carry out pilgrim (Haji). Tabung Haji utilizes Mudarabah (profit and loss sharing), Musharikah (joint venture) and Ijara (leasing) modes of financing for investment under the guidance of National Fatawah Committee of Malaysia. The first call for separate Islamic bank was made in 1980, in a seminar held in the National University of Malaysia. The members who attend had passed a decision requesting the government to create a special law to setup an Islamic bank in the country. Thereafter, the government had set up a National Steering Committee in 1981 to study legal, religious and operational aspects of organized an Islamic bank. The committee...
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...Lumpur, Malaysia, ISBN: 978-1-922069-19-1 Prospects of Islamic Banking in Bangladesh Md. Maruf Ullah and Md. Shahnur Azad Chowdhury In a developing country like Bangladesh, the Islamic banking system as a whole has a vital role play in the process of economic development. The study has been concentrated on “Prospect of Islamic Banking in Bangladesh”. The paper mainly emphasizes on analyzing the performance of Islamic banks and it has also identified some problems & opportunities and provided some suggestions. It has been tried to provide some information about future performance. The study also noted that there is a high demand for interest-free banking services from a segment of people in Bangladesh who have a strong desire to abide by the rules and principals set by Shariah. Along with religious requirement, economic exigencies provide a new outlook to the role of banking in promoting investment productive activities, influencing distribution of income and adding stability to the economy. Moreover, conventional banks offering Islamic banking as a parallel service are to add to their profitability, by attracting people who value the Shariah based system by enjoying the advantages of the special treatments from the Central bank. According to the survey, suitable and supportive legal framework would facilitate better growth of this sector. For a continued expansion of the Islamic Banking system, however, a number of issues that pose serious problems for Islamic banks will need...
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...MP A R Munich Personal RePEc Archive The Islamic Inter bank Money Market and a Dual Banking System : The Malaysian Experience Bacha, Obiyathulla I. INCEIF the Global University in Islamic Finance 2008 Online at http://mpra.ub.uni-muenchen.de/12699/ MPRA Paper No. 12699, posted 13. January 2009 / 09:41 The Islamic Inter bank Money Market and a Dual Banking System: The Malaysian Experience. (1st Draft : June 2007) (1st Revision : September,2007) (This revision: March, 2008) Obiyathulla Ismath Bacha Dept. of Business Administration College of Economics and Management Sciences International Islamic University, Malaysia obiya@iiu.edu.my ………………………………………………………………………………………….. The author gratefully acknowledges Rahmatina Kasri for her research assistance, as well as that of participants of the 2nd International Islamic Financial Markets Conference, Bahrain, for the useful comments Abstract This paper examines the operation of an Islamic Inter-bank Money Market (IIMM), within a dual banking system. The paper argues that even though an Islamic money market operates in an interest-free environment and trades Shariah-compliant instruments, many of the risks associated with conventional money markets, including interest-rate risks are relevant. The empirical evidence, based on Malaysian data, points to Islamic money market profit rates/yields that are highly correlated and move in tandem with conventional money market rates. Given the dynamics of fund flows and...
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...People Perception of Islamic Banking Muhammad Sohail Bhatti Student MS Islamic Banking & Finance University of Management & Technology Abstract: This research was conducted to gauge the perception of general public about Islamic Banking in Pakistan. Questionnaires were distributed to customers of Islamic Banking and conventional banking. The results revealed that most of the people do not have adequate knowledge of the concepts of Islamic Banking. Some of the participants did not even know that “Riba” is forbidden in Islam. Less awareness about the Islamic banking concepts can be the main cause of negative perception among general public. This study also revealed that many people think that Islamic banks have not played their proper role in creating the awareness and knowledge about the concepts and working of Islamic banking. The study might help the Islamic Banks to reconsider their marketing strategies so that the negative perceptions of the general public may be changed to a positive one. Key Words: Islamic Banking, Perception Introduction: Islamic Banking is relatively new concept as compared to conventional banking. The history of conventional banking dates back to about two hundred years. Whereas Islamic banking is only in its infancy stage and started only about 17 years ago. People are so used to the conventional side of the banking that it is a little hard for them to understand the Islamic Banking concepts and the working and services offered by them...
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...Critical assessment of four financial instruments in the Islamic financial markets Raja Shahridatul Dewa Binti Raja Musa C070187 This project paper is a partial fulfillment of Module IB2001of Part 2 of Certified Islamic Finance Professional (CIFP) INCEIF September 2008 Critical assessment of four financial instruments in the Islamic financial markets Raja Shahridatul Dewa Binti Raja Musa Abstract There has been remarkable growth in the Islamic finance industry and seen double-digit growth in recent years. Increasing numbers of Islamic financial institutions are attempting to penetrate the international markets in meeting the global demands for Islamic finance. This calls for the development of innovative Islamic financial instruments which are shariah compliant that represent as alternatives to conventional instruments covering areas of Islamic banking, Islamic insurance, Islamic equities and Islamic bonds/sukuk. A parallel development of Islamic financial markets should also take place that look into the aspect of liquidity and cash flow management. At the same time legal and regulatory requirements are needed to ensure the smooth functioning of Islamic financial institutions. Given the uniqueness of the operations and transactions comprising contractual arrangements and instruments, it is critical for Islamic financial institutions to identify specific risks...
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...2013 SHARIAH GOVERNANCE FOR ISLAMIC CAPITAL MARKET: A STEP FORWARD Nawal Kasim Accounting Research Institute, Faculty of Accountancy UniversitiTeknologi MARA, Shah Alam, Malaysia Sheila Nu NuHtay Institute of Islamic Banking and Finance International Islamic University Malaysia, Gombak, Malaysia Syed Ahmed Salman PhD. Candidate and research assistant at Institute of Islamic Banking and Finance, International Islamic University Malaysia, Kuala Lumpur Sponsored or supported by: ARIHICoE Research Grant Abstract Since the last few decades, Islamic finance industry has developed tremendously penetrating not only the Muslim countries but surprisingly the non-Muslim countries as well. It has been acknowledged by the scholars on the need for this development to cater for the Islamic banking, Takaful and Islamic capital market industries. These three main industries are interrelated and dependent on each other in order to ensure that the whole Islamic financial system is in compliance with the Islamic principles. Among these three streams of the service industry, the Islamic capital market plays a crucial role to support the other two. Since Islamic banks and Takaful operators have to invest to provide the benefits to the investors and policy holders which are compatible with the conventional counterparts, the Islamic capital market is assumed to be the backbone for the two to survive and grow in the Islamic finance industry. Country such as Malaysia has issued the Shari’ah Governance...
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...The needs to revisit the gold dinar as a monetary stability has been voiced out by many scholars and ulama’s since 1970s. The resistance towards the interest economy could be the major motivation for the comeback of gold dinar. The prohibition of interest is not only mentioned in the Quran but the Bible and Torah. The gold prices are indeed relatively stable compared to other commodity prices, exchange rate movement and the stock market index. Manipulation of currencies and the impact toward one economy could be reduced because of the fact that gold does not inflate in value as it is a commodity and, thus has an intrinsic value. The counterfeiting would be checked if gold coin were used. By sing dinar and elimination of interest, Islamic country would have a stable currency and monetary systems, money supply growth can be expected not to overshoot growth in the real sector, thus eliminating the inflationary pressure in the economy. If all these exchange rates are eliminated by means of a single currency like...
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...Crisis in year 1997. CIMB bank, as a major player in this industry, has faced a lot of challenges from local and international. As a growing bank in that time, CIMB bank has struggled hardly to become the best financial institution in Malaysia. In recent years, the government has liberalized the banking industry, which allows more foreign financial institutions to start their business here. This has increased the level of competition within the industry and in fact, has affected the position of CIMB bank as one of the leading banks in local market. Owing to certain problems mentioned above, we have chosen CIMB bank as the topic to perform in-depth research and analysis on the organization. Our main objective is to advise the Board of Directors of CIMB bank on the impact and implications of current developments and challenges on its organization and make appropriate recommendations to ensure the continued relevance, competitiveness and growth of the organization. CIMB bank has many retail branches across the ASEAN and operates under several corporate entities such as CIMB Investment Bank, CIMB Islamic, CIMB Securities International and etc. Besides, CIMB bank business model basically covers several areas which are Consumer Banking, Insurance & Takaful, Corporate & Institutional Banking and CIMB Thai. (CIMB, 2012) The vision of the CIMB bank is to be the Premier Investment Bank in Malaysia post liberalisation and deregulation. Mission of CIMB bank is investing in our people...
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... Journal of Financial Reporting and Accounting, Vol. 13 Iss 2 pp. 247 - 266 Permanent link to this document: http://dx.doi.org/10.1108/JFRA-02-2015-0029 Downloaded on: 08 December 2015, At: 10:31 (PT) References: this document contains references to 66 other documents. To copy this document: permissions@emeraldinsight.com The fulltext of this document has been downloaded 248 times since 2015* Users who downloaded this article also downloaded: Mohamed Sherif, Nor Azlina Shaairi, (2013),"Determinants of demand on family Takaful in Malaysia", Journal of Islamic Accounting and Business Research, Vol. 4 Iss 1 pp. 26-50 http:// dx.doi.org/10.1108/17590811311314276 Khalid Al-Amri, (2015),"Takaful insurance efficiency in the GCC countries", Humanomics, Vol. 31 Iss 3 pp. 344-353 http://dx.doi.org/10.1108/H-05-2014-0039 Nor Aziah Abu Kasim, (2012),"Disclosure of Shariah compliance by Malaysian takaful companies", Journal of Islamic Accounting and Business Research, Vol. 3 Iss 1 pp. 20-38 http:// dx.doi.org/10.1108/17590811211216041 Access to this document was granted through an Emerald subscription provided by emeraldsrm:509129 [] For Authors If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight...
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...Research Proposal on Islamic Banking Table of Contents TOC \o 1-2 1) Research Title PAGEREF _Toc \h 3 2) Introduction to the Research Topic and Main Research Question PAGEREF _Toc1 \h 3 3) Literature Review Outline and Detailed Research Questions PAGEREF _Toc2 \h 5 3.1) Introduction PAGEREF _Toc3 \h 5 3.2) Background of Islamic Banking PAGEREF _Toc4 \h 5 3.3) Features of Islamic Banking PAGEREF _Toc5 \h 6 3.4) Determination of Whether Islamic Banking is a Matter of Semantics PAGEREF _Toc6 \h 8 3.5) Detailed Research Questions PAGEREF _Toc7 \h 10 4) Ethical Considerations PAGEREF _Toc8 \h 10 References PAGEREF _Toc9 \h 12 Bibliography PAGEREF _Toc10 \h 17 1) Research Title “Islamic Banking: A Matter of Semantics?” 2) Introduction to the Research Topic and Main Research Question Islamic banking is denoted as a banking system, which is mainly governed by the principles that have been formulated by the Islamic Shariah (Hasan, 2012). In general, the term Islamic banking is not only typically based on evading internet-based transactions that are strictly prohibited under the law of Shariah, but also discards any sort of unsocial or unethical practices (Ahmed, 2011). With this concern, it can be affirmed that Islamic banking is regarded as the procedure of transforming predictable money lending into transactions that are fundamentally based upon real as well as tangible services (El-Gamal, 2006). This banking...
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...International Journal of Islamic Financial Services Vol. 1 No.1 ISLAMIC INSTRUMENTS FOR MANAGING LIQUIDITY Yahia Abdul-Rahman This paper provides a practitioners perspective on the overwhelming need for prudent management of liquidity and development of Islamic money market instruments. Islamic banking and financing is gaining momentum world-wide. Many of the international RIBA banks are now focusing on LARIBA banking and financing to gain a significant market share of the funds and the deals which insist on LARIBA dealings. Many estimate the LARIBA funds looking for halal investing and banking to be from $ 50 billion to $80 billion. Most of these funds are now handled in Europe; mainly in the London financial markets. In 1996, Citibank has started "Citibank Islamic" in Bahrain and is now providing limited Islamic financing windows out of its international operations in New York & San Francisco. Islamic banks world-wide have not yet come up with the competitive financial instruments and products which allow them to provide valid avenues to the LARIBA owner of funds and which compete in quality and security with instruments offered by other RIBA banks and investment companies in the world. Yahia Abdul-Rahman 1. The Problem of Liquidity Management Liquidity is the ease by which an asset can be exchanged for another with little or no loss of value; usually cash. Liquid assets are those held in cash or are invested in instruments which can be converted rapidly into cash...
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...INTRODUCTION Offshore bank is a bank that located outside the country of residence of the depositor. Offshore banking has often been related with the underground economy and organized crime, via tax evasion and money laundering; though legally offshore banking does not prevent assets from being subject to personal income tax on interest. Even though, offshore banks may decide not to report income to other tax authorities, and have no legal obligation to do so as they are protected by bank secrecy, this does not make the non-declaration of the income by the tax-payer or the evasion of the tax on that income legal. September 11, 2011 onwards there were many calls for more regulations on international finance, in particular concerning offshore banks, tax havens, and clearing houses such as Clear stream, based in Luxembourg, being possible crossroads for major illegal money flows. These attempts have been criticized at regulation by defenders of offshore banking. They claim the process is provoked not by security and financial concerns but by the desire of domestic banks and tax agencies to access the money held in offshore accounts. They mention the fact that offshore banking offers a competitive threat to the banking and taxation systems in developed countries, suggesting that Organization for Economic Co-operation and Development (OECD) countries are trying to stamp out competition. There are many advantages as well as disadvantages of offshore banking. Offshore banks provide access...
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...which is Islamic economy. Generally, the articles focused on Islamic Macroeconomics issues, the poverty problems regarding on inequality income and the power of zakat in order to alleviate the poverty. All the articles are done from year 2006 until 2010. This summary consists of 4 sections which is introduction, articles summary, criticize of the article summary and conclusion. The summary regarding Islamic macroeconomics will be explained in the next section. 2.0 ARTICLE SUMMARY 2.1 ISLAMIC MACROECONOMICS This subtopic is very important to understand deeply about the overview of the Islamic Macroeconomics. According to Choudury (2006), the paper aims to offer a new perspective on the nature of Islamic economics and the researcher wants to address the issue of the mainstream tradition without noticing the micro-interface of the theoretical nature of Islamic economics. Besides, the author wants to examine the nature of Islamic economics as an interdisciplinary paradigm that explains interaction over the domains of the moral guidance which is ‘Ilm, laws and the formative world-systems according to such discursive impulses and process (Shuratic). The author had focused his study on systemic unity of knowledge, meaning of ethics and morality are derived from the epistemological premise of unity of knowledge. The researcher had used the method of comparative study of received literature in the history of economic thought and contrasts the ethical foundations of Islamic economics...
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