noman islamic fin misc
TRANSCRIPT
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Islamic Finance
Compiled By:
Noman H ChowdhuryPGD-IF(IIBI,UK),MBA(IBA),BSc(BUET)
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Presentation Outline
List of sites referred to in this presentation
Why alternative/Islamic Finance
Prospect/Potential of islamic finance Demand of islamic finance graduates
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Why Alternative/islamic Finance-1
Islamic Financial Institutions (IFIs) have been lessaffected by the global recession, according to a surveycarried out by MTI Consulting.
-http://www.arabnews.com/?page=6§ion=0&article=129198
Around 62 percent of the survey respondents citedthey had experienced little or no impact from therecent crisis which has ravaged banks and financial
institutions worldwide. The survey respondentsincluded CEOs and managing directors of Islamicfinance institutions from various countries in theMiddle East and South Asia.
-http://www.arabnews.com/?page=6§ion=0&article=129198
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Why Alternative/islamic Finance-2
The collapse of leading Wall Street institutions,
notably Lehman Brothers, and the subsequent
global financial crisis and economic recession, are
encouraging economists world-wide to consideralternative financial solutions. - Prof. Rodney Wilson
-http://www.islamonline.net/servlet/Satellite?c=Article_C&pagename=Zone-English-Muslim_Affairs%2FMAELayout&cid=1230650190574
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Why Alternative/islamic Finance-3
In contrast to conventional banks, no Islamic bank
has failed and has needed government
recapitalization which ultimately becomes a burden
on hard pressed taxpayers.In Iran where all financial operations have been
shariah-based since the Law on Usury Free Banking
was introduced in 1983, banks have been relativelyinsulated from the financial crisis -Prof. Rodney Wilson-http://www.islamonline.net/servlet/Satellite?c=Article_C&pagename=Zone-English-
Muslim_Affairs%2FMAELayout&cid=1230650190574
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Why Alternative/islamic Finance-4
Thus, if profitability declines in an economic
downturn, depositors receive lower returns, but if
profits rise they enjoy higher returns.
This profit sharing reduces risk for the banks andmeans they are less likely to become insolvent.
-Prof. Rodney Wilson
-http://www.islamonline.net/servlet/Satellite?c=Article_C&pagename=Zone-English-Muslim_Affairs%2FMAELayout&cid=1230650190574
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Why Alternative/islamic Finance-5
With irresponsible banking practices taking the
blame for bringing about the global economic
crisis, there has been a surge of interest in Islamic
finance.-http://edition.cnn.com/2009/BUSINESS/08/25/islamic.finance/index.html
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Why Alternative/islamic Finance-6
"Islamic economists believe that if the principles of
Islamic finance were followed the crisis wouldn't
have happened. We are seeing a lot of non-Muslim
countries, including the UK, France, Japan, Hong
Kong and Singapore encouraging Islamic finance,"
Professor Habib Ahmed(Durham University,UK)
"People think the Islamic system is based on faith,but it's based on justice" he said.http://edition.cnn.com/2009/BUSINESS/08/25/islamic.finance/index.html
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Why Alternative/islamic Finance-7
it is the ethics underpinning Islamic finance that
are attracting the interest of conventional finance
institutions keen to learn lessons from the banking
crisishttp://edition.cnn.com/2009/BUSINESS/08/25/islamic.finance/index.html
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Why Alternative/islamic Finance-9
This crisis of 2008 is unprecedented in its nature.Even the well-established and what is considered"too big to fail" financial institutions are being
badly affected by the crisis (Citibank, LehmanBrothers and AIG, just to name a few)
Despite slowing down, the top ten Islamic bankscontinued to show encouraging performance byrecording an average annual growth of around 30percent for 2008.
http://www.islamonline.net/servlet/Satellite?c=Article_C&cid=1234631361330&pagename=Zone-English-Muslim_Affairs%2FMAELayout
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Why Alternative/islamic Finance-10
The current crisis seems to highlight the weaknesses of the
conventional banking and finance philosophy on which the
global financial system is built upon.
The conventional system allows multiple debt creation on aparticular asset without a real underlying transaction
Quite the contrary, Islamic finance requires that financial
dealings must be backed by real assets and be in line with
the Islamic law, Shariah.http://www.islamonline.net/servlet/Satellite?c=Article_C&cid=1234631361330&pagen
ame=Zone-English-Muslim_Affairs%2FMAELayout
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Why Alternative/islamic Finance-11
The Islamic economics model in general, and
Islamic banking and finance in
particular, are viable options as the search for
more stable and safer global financial
infrastructure continues.http://www.islamonline.net/servlet/Satellite?c=Article_C&cid=1234631361330&page
name=Zone-English-Muslim_Affairs%2FMAELayout
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http://www.islamonline.net/servlet/Satellite?c=Article_C&pagename=Zone-
English-Muslim_Affairs%2FMAELayout&cid=1230650190574
Why Islamic Banking Is Successful? e of Financial Crisis
By Prof. Rodney Wilson
Rodney Wilson is director of postgraduate studies at DurhamUniversity. Formerly visiting professor at the Universities ofKuwait and Paris, the International University of Japan, and
the Qatar Foundations Qatar Faculty of Islamic Studies, heis a world expert on Islamic economics and finance, MiddleEastern political economy, and the political economy of oiland gas. He currently chairs the academic committee of theInstitute of Islamic Banking and Insurance in London and isacting as consultant to the Islamic Financial Services Board
with respect to its shariah governance guidelines.
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Prospect/potential of Islamic Finance-1
Islamic finance makes up only small part of the
world finance industry currently, and is estimated
to be worth around $700 billion globally. However
the industry has been growing at 20-30 percent
annually since 2000 and is set for continued strong
growth despite the global slowdown. Industry
experts and financial institutions predict Islamicassets will reach a whopping $1.6 trillion by 2012
-http://www.arabnews.com/?page=6§ion=0&article=129198
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Prospect/potential of Islamic Finance-2
There are already five wholly Islamic banks in
London, and the first Islamic bank will open in
France in 2009. According to the conservative
estimates of the Banker in October 2008, Islamicfinancial assets globally exceed $500 billion, a
figure that could easily double over the coming
decade.-Prof. Rodney Wilson
-http://www.islamonline.net/servlet/Satellite?c=Article_C&pagename=Zone-English-Muslim_Affairs%2FMAELayout&cid=1230650190574
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Prospect/potential of Islamic Finance-3
None of these institutions has been affected by the
global financial crisis, and their resilience bodes
well for the future.
Islamic Bank of Britain has been operating as aretail bank for over four years, and has attracted
over 40,000 customers. HSBC Amanah, the Islamic
finance subsidiary of HSBC, has been operating forten years in London.
-Prof. Rodney Wilson
http://www.islamonline.net/servlet/Satellite?c=Article_C&pagename=Zone-
English-Muslim_Affairs%2FMAELayout&cid=1230650190574
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Prospect/potential of Islamic Finance-4
Meanwhile, the industry has ballooned to more
than $1,000bn, stretching their capacity to examine
every product and instrument
-FINANCIAL TIMES TUESDAY DECEMBER 82009
Islamic finance has been growing by 15 to 20
percent per year for some time and there is a lot of
interest at the moment. People are looking foralternatives after the economic crisis.
http://edition.cnn.com/2009/BUSINESS/08/25/islamic.finance/index.html
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Prospect/potential of Islamic Finance-5
While conventional banks consolidate and retrenchworkers, Islamic banks particularly in the Gulf
Coopeartion Council countries continue to expand
and recruit new workers.http://www.islamonline.net/servlet/Satellite?c=Article_C&cid=1234631361330&pagename=Zo
ne-English-Muslim_Affairs%2FMAELayout
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Prospect/potential of Islamic Finance-6
While conventional banks worldwide are nursinglosses of more than $400 billion from the credit
crisis, Islamic banks are virtually unscathed.
Surprisingly, Islamic banks, such as Al-Rajhi Bank of
Saudi Arabia, Kuwait Finance House, Dubai Islamic
Bank and Maybank Islamic, grow steadily during
the crisis.
http://www.islamonline.net/servlet/Satellite?c=Article_C&cid=1234631361330&pagename=Zo
ne-English-Muslim_Affairs%2FMAELayout
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http://ibfmalaysia.blogspot.com/2009/11/top-500-islamic-financial-institutions.html
Islamic banking assets continued double-digitgrowth this year, even as conventional bank growth
stagnated, according to The Banker's "Top 500
Islamic Financial Institutions" survey, published in
association with HSBC Amanah.
Assets rose by 28.6%, to $822bn from $639bn in
2008. This is in striking contrast to The Banker's
2009 "Top 1000 World Bank Rankings" released inJuly, which showed annual asset growth of just
6.8% at conventional banks.
Prospect/potential of Islamic Finance-7
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http://ibfmalaysia.blogspot.com/2009/11/top-500-islamic-financial-institutions.html
David Dew, Deputy CEO of HSBC Amanah, said:
"It is important that the Islamic Finance industry
continues to analyse its growth critically if it is tobecome a truly credible alternative to conventional
banking in a significant number of markets.
Prospect/potential of Islamic Finance-8
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Grais & Pellegrini (2006) reported that the globalIslamic financial services industry consisted of 284institutions offering Islamic financial services (IIFS)
operating in 38 countries, both Muslim and non-Muslim.
Sol (2007) identified that there were more than300 Islamic financial institutions spread over 51
countries, plus well over 250 mutual funds thatcomply with Islamic principles.
Prospect/potential of Islamic Finance-9
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http://ibfmalaysia.blogspot.com/2009/11/top-500-islamic-financial-institutions.html
The major contributors to asset growth for Islamic
funds: Gulf Cooperation Council (GCC) countries
(US$262.7bil);
Asia (US$67.1bil); Australia/Europe/the United States (US$35.3bil);
and non-GCC Middle East countries, Middle Eastand North Africa (US$248.3bil).
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GLOBAL ISLAMIC BANKINGASSETS
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MARKET SHARE
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SUKUK GLOBAL ISSUANCE
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Demand of Islamic Finance Graduates-1
The top five scholars make up almost a third
of all the 956 sharia board positions, a recent
report by Funds@Work says, and the top
three each sit on more than 60 boards each FINANCIAL TIMES TUESDAY DECEMBER 8 2009
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Demand of Islamic Finance Graduates-2
Now, a slew of academic courses arespringing up to meet the demand of those
wanting to break into an expanding market
"There is a huge demand for Islamic finance
courses now, so large that it's difficult to cope
with," Professor Habib Ahmed,Durham
University, England, told CNNhttp://edition.cnn.com/2009/BUSINESS/08/25/islamic.finance/index.html
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Demand of Islamic Finance Graduates-3
With students coming from Asia and the MiddleEast to get the qualifications that will help them
take advantage of the Islamic finance boom,
Ahmed says it is difficult for universities to findqualified teaching staff. "Most people with PhDs in
Islamic finance are working in the industry, making
a lot of money," he told CNN. http://edition.cnn.com/2009/BUSINESS/08/25/islamic.finance/index.html
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Demand of Islamic Finance Graduates-4
This September will see new courses andpostgraduate qualifications in Islamic finance
springing up throughout the UK and elsewhere in
Europe, reflecting the fact that it has become one of
the fastest-growing sectors of the global bankingindustry.
http://www.guardian.co.uk/education/2009/jul/28/business-
schools-islamic-finance
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Demand of Islamic Finance Graduates-5
Khalid El Sheik applied for Bangor's Islamic financeMA because, having taken a first degree in computer
science in Sudan before switching to a career in
marketing, he saw it as a chance to mark himself outfrom other students and to have a head start in an
area that was likely to offer plenty of future
employment opportunities. His fellow students at
the university, including one from China, had thesame idea, he says.
http://www.guardian.co.uk/education/2009/jul/28/business-
schools-islamic-finance
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