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| Preface | |
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| Introduction | |
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| What Is Islamic Banking and Finance? | |
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| The Origins of Islamic Finance | |
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| Growth in Islamic Financing Activity | |
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| Financial Intermediaries | |
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| Current Bank Products | |
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| The Impact of Religious Scholars | |
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| Government Influence | |
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| The Potential of Islamic Banking and Finance | |
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| Goals and Method of This Book | |
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| Plan of the Book | |
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| Islamic Finance as the Application of Islamic Law | |
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| Religious Law (Shari'a and Fiqh) | |
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| Relevance of the Religious Law to Banking and Finance | |
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| Obstacles to the Application of the Islamic Law | |
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| Islamic Law and Islamic Economics | |
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| Structure and Method of Classical Law in Theory and Practice | |
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| Ijtihad, or Derivation from Revealed Sources | |
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| Shari'a and Fiqh; Divergence of Opinion; Schools of Law | |
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| Four Methods of Elaborating the Law: Interpretation, Choice, Necessity, and Artifice | |
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| Ethical and Legal Consequences of Islamic Legal Rulings | |
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| The Casuistic Style of Classical Islamic Legal Reasoning | |
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| Modern Reinterpretations | |
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| The Context for Islamic Legal Developments in Islamic Banking and Finance | |
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| Modern Islamic Legal Institutions | |
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| Islamic Legal Application in a Western Legal Environment | |
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| Qur'an and Sunna on Contract and Commerce | |
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| Property or Wealth | |
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| Trade by Mutual Consent | |
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| Debt | |
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| Usury | |
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| Gambling and Risk | |
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| Commercial Ethics | |
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| Fulfilling Contracts | |
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| Freedom of Contract | |
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| Summary | |
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| Islamic Laws of Usury, Risk, and Property | |
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| Law of Usury (Riba) | |
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| The Qur'an; Riba al-Jahiliyya | |
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| The Sunna | |
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| The Sunna on Riba in Sales | |
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| The Sunna on Riba in Loans | |
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| Plumbing the Rules of Riba | |
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| Gambling (Maysir) and Risk (Gharar) | |
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| The Spectrum of Risks and Their Prohibitions | |
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| Classical Fiqh Rules on Gharar | |
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| Fiqh Provisions on Property (Mal) | |
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| Islamic Law of Contract | |
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| Freedom of Contract | |
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| New Contracts | |
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| Stipulations | |
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| The Nominate Contract Scheme | |
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| Mutually Onerous Contracts | |
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| Gratuitous Contracts | |
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| Accessory Contracts | |
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| Four Principles of Islamic Contract Law Important in Modern Financial Practice | |
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| Non-Binding (Ja'iz) versus Binding (Lazim) | |
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| Risk of Loss (Daman) versus Trust (Amana) | |
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| Rules Governing Delay in Payment and in Performance--The Sale of Dayn for Dayn | |
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| The Promise (Wa'd) in Islamic Law | |
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| The Law of Islamic Financial Institutions and Instruments | |
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| The Model for an Islamic Financial Institution | |
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| The Two-Tier Mudaraba | |
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| Islamic Legal Hurdles Facing This Islamic Banking Model | |
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| Islamic Contracts As Used in Islamic Finance | |
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| Mudaraba | |
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| Bay' Mu'ajjal, or Credit Sale | |
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| Murabaha, or Sale with Markup | |
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| Ijara, or Lease | |
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| Salam, or Advance Purchase | |
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| Istisna', or Commissioned Manufacture | |
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| Ji'ala, or Reward | |
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| Ta'min, or Insurance | |
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| The Problem of Insurance and the (Tentative) Solution | |
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| Possible Impact of Insurance on Islamic Financial Theory and Practice | |
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| Prospects for Islamically Valid Derivatives | |
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| Khiyar al-Shart, or Stipulated Option | |
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| 'Arbun, or Down Payment | |
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| Prospects for Approval of the Option as a New Contract Type | |
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| Investment Securities and Their Negotiability | |
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| Primary Market Instruments Islamically Lawful | |
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| Primary Market Instruments Islamically Unlawful or Questionable | |
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| Secondary Market | |
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| Islamic Financial Instruments: A Primer | |
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| Financing Working Capital | |
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| The Murabaha Contract | |
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| The 'Ina Contract | |
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| The Salam Contract | |
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| The Istisna' Contract | |
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| Financing Receivables | |
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| Long-Term Financing | |
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| Leasing (Ijara) | |
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| Revenue Bonds | |
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| Equity-Like Instruments | |
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| The Mudaraba Contract | |
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| The Musharaka Contract | |
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| Preferred Stock | |
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| Attitudes Toward Risk | |
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| Illiquidity Risk | |
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| Credit Risk | |
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| Currency Risk | |
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| Capital Structure Risk | |
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| Conclusions | |
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| The Opportunity Rate of Capital and Islamic Capital Structure | |
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| Interest and Usury | |
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| The Islamic Cost of Capital | |
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| The Cost of Equity | |
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| Capital Asset Pricing Model | |
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| Arbitrage Pricing Theory | |
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| Equilibrium Analysis of a Profit-Sharing Agreement | |
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| Cost of Equity Summarized | |
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| The Cost of Debt | |
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| Murabaha | |
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| Salam | |
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| Istisna' | |
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| Ijara | |
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| Calculating the Weighted Cost of Capital | |
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| Choosing an Appropriate Capital Structure | |
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| Conclusions | |
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| Derivatives in Islamic Finance | |
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| Relevant Islamic Contracts | |
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| Islamic Contracts and Western Financial Products | |
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| Forward Contracts | |
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| Futures Contracts | |
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| Call Options | |
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| Put Options | |
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| The Khiyar al-Shart Option | |
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| The Mudarib Call | |
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| Conclusions | |
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| Innovation in Islamic Financial Products | |
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| The Intended Beneficiaries of Innovation | |
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| Capital Users | |
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| Capital Providers | |
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| Proposals Related to Murabaha (Sale with Markup) | |
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| Ownership-in-Transit | |
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| Cooperative Non-Bank Factoring Firm | |
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| Proposals Related to Salam | |
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| Parallel Salam Contracts | |
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| The Default Penalty Option | |
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| An Islamic Clearinghouse | |
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| Proposals for Innovations Related to Ijara (Lease and Hire) | |
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| Lease Pools | |
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| Staged Leases and Lease Pools | |
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| An Islamic Convertible Lease | |
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| Proposals for Innovations Related to Istisna' | |
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| Back-to-Back Istisna' Contracts | |
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| Options in Istisna' Contracts | |
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| Istisna' Contracts for Manufacturing Streams | |
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| Fungible Manufactures and Options | |
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| Ji'ala (Reward) | |
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| Conclusions | |
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| Conclusion | |
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| Glossary | |
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| Bibliography | |
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| Index | |