Islamic Banking & Finance

© Islamic Development Bank, 2007

Islamic Research & Training Institute

First Published 1427H (2007)

Islamic Research and Training Institute

P.O. Box 9201, Jeddah 21413, Saudi Arabia.

e-mail: ibfd@isdb.org

King Fahad National Library Cataloging-in-Publication Data

Ali, Salman Syed, 1961−

Islamic Banking and Finance: Fundamentals and Contemporary Issues /

Salman Syed Ali and Ausaf Ahmad.

306 + (x) p.; 24x17 cm. − Jeddah 19143.

Includes references and glossary.

ISBN 9960-32-162-2

1. Finance – Islamic.

2. Banking – Islamic.

3. Law – Financial

4. Financial Service Industry – Islamic.

I. Ahmad, Ausaf. II. Title III. Conference Proceedings

332.121 – dc20

The views expressed in this book are not necessarily those of the Islamic Research

and Training Institute of the Islamic Development Bank or the Universiti Brunei

Darussalam. References and citations are allowed but must be properly

acknowledged.

iv

Contents

Foreword

Acknowledgements

vii

ix

An Overview

Salman Syed Ali and Ausaf Ahmad

1

Fundamentals

1

Islamic Banking and Finance: Philosophical Underpinnings

Mabid Ali Al-Jarhi

13

2

The Case Against Riba: Is It Compelling?

Umer Chapra

25

3

Option Contracts and The Principles of Sale of Rights in Shari[ah

Mohammed Burhan Arbouna

51

4

Unresolved issues in Islamic Banking and Finance: Deposit

Mobilization

Sayyid Tahir

81

5

Financial Distress and Bank Failure: Relevance for Islamic Banks

Salman Syed Ali

99

Contemporary Issues

6

Factors of Success of Islamic Banks: An Empirical Study

Monzer Kahaf

v

121

7

The Attitude of Bank Customers and Professional Bankers

Towards Islamic and Conventional Banks in Bangladesh

Mahmood Ahmad

169

8

Equity Fund’s Islamic Screening: Effects on its Financial

Performance

Abul Hassan and Antonios Antoniou

197

Legal Issues

9

Legal Aspects of Islamic Banking—Malaysian Experience

Norhasima Yassin

215

10 Legal Aspects of Islamic Project Finance and Asset Securitization

in Indonesia: A Vehicle for the Development of...