Islamic Finance

Mills, Paul S.; Presley, John R.

doi:10.1057/9780230288478

Cited by 68 publications

(18 citation statements)

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“…A "just" rate of profit is admissible and must derive from one's own work (Mills and Presley, 1999). No reward can be obtained without strength and honest effort, and working represents a moral duty.…”

Section: Fundamentals Of Islamic Investingmentioning

confidence: 99%

“…The guidelines of Islamic investments are based on tawhid -a total adherence to the willing of God -revealed to the world by the words of the Prophet Mohammed (Mills and Presley, 1999). A hadith attributed to the Prophet states that "every loan that attracts a benefit is riba (usury)", and for this reason Islam prohibits the charging of interest.…”

Section: Introductionmentioning

confidence: 99%

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Islamic Mutual Funds as Faith-Based Funds in a Socially Responsible Context

Forte

Miglietta

2007

SSRN Journal

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Defining social investing and its boundaries is a challenging task. Since the religious beginning of ethical investments, many overlapping investment styles have been grouped into the bucket of socially responsible investments, or SRI. This includes, for instance, faith-based investments. In this paper we study the underlying principles of SRI and Islamic funds as investment classes, and try to determine whether Islamic mutual funds, as faith-based investments, can be included into the category of socially responsible mutual funds, or if they exhibit distinguishing characteristics that indicate that they would be more fittingly grouped in a separate investment family. We address the question from both a qualitative and quantitative point of view. Comparing ideas, ratios and investment styles underlying SRI and comparing them to Islamic portfolios, we identify the potential inconsistencies related to some of the investment decisions. Together with a qualitative assessment of the differences and similarities, we discuss, in the quantitative section of our study, the different sector and country composition of two generic portfolios, SRI and Islamic (proxied by relevant European indices), derived from the application of the investment screens. In addition, through a cointegration analysis on FTSE indices, we show that FTSE Islamic, exhibits peculiar and interesting portfolios' differences in terms of econometric profile, compared to conventional and SRI indices. This paper attempts to unify the studies regarding SRI, with the available studies on Islamic investments. To the best of authors' knowledge, this is the first time that SRI and Islamic indices are analysed and compared. JEL Classification : G12, G14

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Section: Fundamentals Of Islamic Investingmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Islamic Mutual Funds as Faith-Based Funds in a Socially Responsible Context

Forte

Miglietta

2007

SSRN Journal

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“…While the share of Islamic banking is still small compared to conventional finance at about 1 percent of the global banking system, there is growing interest in sharia-compliant institutions and instruments. Some researchers have argued that Islamic financial institutions are a viable alternative to promote economic growth and are better-suited to absorb macro-financial shocks because of structural advantages over the conventional banking model (Dridi and Hasan, 2010;Ebrahim and Safadi, 1995;Khan, 1986;and Mills and Presley, 1999). On the other hand, El-Gamal (2005) and others have concluded that Islamic finance simply seeks to replicate the functions of conventional financial instruments and is primarily a form of rent-seeking legal arbitrage.…”

Section: Introductionmentioning

confidence: 99%

The Behavior of Conventional and Islamic Bank Deposit Returns in Malaysia and Turkey

Charap¹,

Cevik²

2011

IMF Working Papers

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This paper examines the empirical behavior of conventional bank deposit rates and the rate of return on retail Islamic profit-and-loss sharing (PLS) investment accounts in Malaysia and Turkey, using monthly data from January 1997 to August 2010. The analysis shows that conventional bank deposit rates and PLS returns exhibit long-run cointegration and the time-varying volatility of conventional bank deposit rates and PLS returns is correlated and is statistically significant. The pairwise and multivariate causality tests show that conventional bank deposit rates Granger cause returns on PLS accounts. These findings have policy implications in terms of price stability and financial stability.Keywords: Interest rates; Islamic banks; causality; time-varying volatility correlation JEL Classifications: E42; E43; E49; F59; G14; G15; O16 IntroductionIslamic banking has emerged as a mainstream alternative to conventional finance in a growing number of countries.2 Along with the global expansion of conventional modes of financing, the Islamic banking industry has grown significantly since its inception in the early 1970s and moved beyond the confines of a niche market, largely due to greater financial liberalization and an unprecedented inflow of petrodollars to the Middle East (Imam and Kpodar, 2010). The combined balance sheets of Islamic banks grew from $150 billion in 1990 to about $1 trillion in 2010, with more than 300 sharia-compliant institutions operating in 80 countries. While the share of Islamic banking is still small compared to conventional finance at about 1 percent of the global banking system, there is growing interest in sharia-compliant institutions and instruments. Some researchers have argued that Islamic financial institutions are a viable alternative to promote economic growth and are better-suited to absorb macro-financial shocks because of structural advantages over the conventional banking model (Dridi and Hasan, 2010;Ebrahim and Safadi, 1995;Khan, 1986;and Mills and Presley, 1999). On the other hand, El-Gamal (2005) and others have concluded that Islamic finance simply seeks to replicate the functions of conventional financial instruments and is primarily a form of rent-seeking legal arbitrage. The purpose of this study is to offer an empirical analysis of the behavior of conventional bank deposit rates and the rate of return on retail sharia-compliant profit-and-loss sharing (PLS) investment accounts in two countries where both systems operate.

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“…Advocates of Islamic banking argue that the profit mark-up of Murabaha financing is not considered as "interest" because profit is made on the Exchange of Money for goods and not Money for Money. To be Shariah-compliant, the bank must enter into separate contracts with the supplier and the customer, take physical possession of the goods, and de-link the mark-up from the period of repayment (Mills and Presley, 1999) As Islamic banks are not permitted to hold liquid assets like treasury bills, due to riba, banks in London such as the Bank of London, started accepting deposits on a basis that there would be a mark up as a result of a Murabaha transaction, with a short term trade being the transaction on the London Metal Exchange.…”

Section: Main Islamic Financing Products and Institutionsmentioning

confidence: 99%

The Internationalization of Islamic Banking and Finance: The Co-Evolution of Institutional Changes and Financial Services Integration

Durán¹,

García-López

2012

IJBM

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The basis for Islamic finance lies in the Shariah. In this paper we point out the co-evolution of institutional
change and the banking expansion in Islamic countries; there are certain parallelism between the quantitative and
qualitative developments of the Islamic financing industry and the emergence of supportive institutions. There
are certain convergences of Islamic banking products and institutions towards traditional banking functioning but
keeping their principles. The Islamic financial institutions are effective instruments towards financial and
economic integration at regional and global level. The Islamic economy has also showed a lesser impact of the
global crisis than the western economy.

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Islamic Finance

Cited by 68 publications

References 0 publications

Islamic Mutual Funds as Faith-Based Funds in a Socially Responsible Context

Islamic Mutual Funds as Faith-Based Funds in a Socially Responsible Context

The Behavior of Conventional and Islamic Bank Deposit Returns in Malaysia and Turkey

The Internationalization of Islamic Banking and Finance: The Co-Evolution of Institutional Changes and Financial Services Integration

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