slides

• Islamic commercial ethics


  Stewardship, Integrity, Sincerity, Piety, Righteousness and Perfection at work
• Charitable distribution


  Zakat: mandatory, Sadaqat: voluntary
• Wealth creation


  Earnings should be directly linked to economic activity and production
• Enterprise and asset bias

  Commercial transaction is either associated with an underlying asset or represent an investment in an enterprise
• The three basic elements of Islam


  • Faith and Belief (The Aqidah)
  • Moralities and Ethics (The Akhlaq)
  • Practices and Activities and Fiqh (set of practical rulings and laws that are the outcome of the legal interpretation as interpreted by Muslim jurists)
• Fiqh (Islamic jurisprudence)


  • Ibadat
  • Muamalat: Political Activities, Social Activities, Economic Activities
• Shari'ah compliance


  Can be achieved by adopting national regulation, voluntary Shari'ah-compliant standards and the directives and resolutions of the firms' internal Shari'ah boards
• Voluntary standards


  Issued by standard setting bodies such as AAOIFI and IFSB
• Fiqh


  Islamic jurisprudence, or the legal rules as they have been interpreted by the scholars or jurists in this field
• Primary sources of Shari'ah

  • The Quran (Text of Allah)
  • The Sunnah (The Saying of the Prophet (SAW), The acts of the Prophet (SAW), Tacit approval: the absence of a reaction of the Prophet (SAW))
• Secondary sources of Shari'ah (Fiqh)

  • Ijtihad (Scholarly Interpretation or legal reasoning): Public welfare (Istislah), Common plight (Umoom Balwa), The traditions (Urf), Juridical Preference (Istihsan)
  • Qiyas (Analogy)
  • Ijma' (consensus)
• Schools of thought


  • Hanbali
  • Maliki
  • Shafi'i
  • Hanafi
  • Ja'afari
• Shari'ah Supervisory Board (SSB)


  An independent body of specialised jurists in Fiqh al-Muamalah (Islamic Commercial law) entrusted with the duty of directing, reviewing and supervising the activities of Islamic financial institution in order to ensure that they are in compliance with Islamic Shari'ah rules and principles
• Shari'ah Advisory Board


  Mainly entrusted to issue Fatwas / religious opinions on products and issues
• The Islamic Fiqh Academy


  Created in Jeddah, Saudi Arabia in 1981 to debate contemporary matters related to Islam
• The process of Ijma' (consensus) is difficult to achieve in practice
• The Mit Ghamr Savings Bank in Egypt was established in 1963 as the first Islamic bank
• The Pilgrimage Funds Board (Tabung Haji) in Malaysia was established in 1963 to invest deposits in a Shari'ah-compliant manner
• The Islamic Development Bank was established in Jeddah in 1975 by the Organisation of Islamic Conference
• Dubai Islamic Bank was established in 1975 as the first commercial bank to establish Islamic finance operations
• The oil boom in the 1970s was a significant catalyst to the development of the Islamic finance industry
• Kuwait Finance House and Bank Islam Malaysia Berhad were established in 1977 and 1983 respectively, with both commercial and social objectives
• International standard setting and benchmarking agencies such as AAOIFI, IIRA, IIFM, and IFSB were developed to facilitate harmonization, market discipline, transparency, and rating of Islamic financial institutions
• Islamic finance received great attention after the 2008 global financial crisis
• The operating structures of Islamic banks offered by conventional banks include the windows model, dedicated branches, and subsidiaries
• AAOIFI has issued standards for Shari'ah, accounting, auditing, governance, and ethics
• IFSB issues standards and technical notes to promote and enhance the soundness and stability of the Islamic Financial Services Industry
• IIFM works on standardization of Islamic products, documentation, and related processes
• IIRA is a credit rating agency focused on the Islamic Financial services Industry
• The components of the Islamic Finance Industry include equity and capital market, investment funds, Takaful, Waqf & Zakat, and Islamic micro-Finance