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  1. #1
    Kizmet is offline Moderator
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    Islamic Banking and Finance

    This is something that I know nothing about and so can not really assess A possible resource for those interested

    https://www.proshareng.com/news/Isla...-Finance/33154
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  2. #2
    SteveFoerster is offline Resident Gadfly
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    A search for MSc Islamic Banking and Finance comes up with a bunch of them.

    Some of them go further. In 2000 I worked with a Sufi group called Murabitun that thought this sort of Islamic Finance didn't go far enough and wanted to return to using only a Quranic gold dinar of 4.25 grams and a silver dirham of 3.0 grams (no, grams are not in the Quran, but that's what it works out to be). Thus was born e-dinar: https://www.e-dinar.com
    Last edited by SteveFoerster; 12-09-2016 at 09:27 AM.
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  3. #3
    Johann is offline Registered User
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    Those are beautiful coins, Steve. Amazing how some Arabic calligraphy enhances a precious metal coin even further. And from a (very) reasonable $7.50 US. From the State of Kelantan, in Malaysia.

    I think Islamic Finance is well worth learning something about, for everyone. Interesting principles - huge markets.

    J.
    Last edited by Johann; 12-09-2016 at 01:01 PM.

  4. #4
    TomE is offline Registered User
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    With the exponential growth of the world Islamic population combined with the fact that Islamic Banking and Finance (IBF) has only been a proper entity since the early 70's (there was a conference where finance ministers from pre-dominantly Muslim countries came together to talk about alternatives to Western banking practices), there could be A LOT of opportunities with this type of expertise.

  5. #5
    SteveFoerster is offline Resident Gadfly
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    Quote Originally Posted by Johann View Post
    Those are beautiful coins, Steve. Amazing how some Arabic calligraphy enhances a precious metal coin even further. And from a (very) reasonable $7.50 US. From the State of Kelantan, in Malaysia.

    I think Islamic Finance is well worth learning something about, for everyone. Interesting principles - huge markets.
    The seigniorage (i.e., markup from the London Fix prices for gold and silver) is also impressively modest. I still have one of their dinar coins that I got sixteen years ago.
    BS, Info Sys concentration, Charter Oak State College
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  6. #6
    Johann is offline Registered User
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    Quote Originally Posted by TomE View Post
    ...there could be A LOT of opportunities with this type of expertise.
    Indeed. There are some innovative practices that do away with interest -at least in its accustomed form. "Rent-to-own" home purchases are not uncommon; I know there are Islamic financing institutions in Toronto (and London, England) that facilitate these purchases for their Muslim clientele. They buy the house and re-sell it to their client on a sliding scale contract. Payments are divided between rent and equity; as equity increases, the rent portion decreases (eventually to zero) while the payments stay level until the end.

    In the non-Islamic market, all this infidel (yours truly, though neither a drinker nor a pork-eater) sees offered to him on "rent-to own" is low-end furniture or an old car - both aimed at those with damaged credit, featuring stratospheric markups and built-in usury - anything to make matters worse.

    Lots of good ideas. Indeed there's plenty to learn, here.

    J.
    Last edited by Johann; 12-11-2016 at 10:31 AM.

  7. #7
    jhp
    jhp is offline Registered User
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    Quote Originally Posted by Johann View Post
    There are some innovative practices that do away with interest -at least in its accustomed form.
    My emphasis - Only if you are Muslim.

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  9. #8
    TomE is offline Registered User
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    Quote Originally Posted by Johann View Post
    Indeed. There are some innovative practices that do away with interest -at least in its accustomed form. "Rent-to-own" home purchases are not uncommon; I know there are Islamic financing institutions in Toronto (and London, England) that facilitate these purchases for their Muslim clientele. They buy the house and re-sell it to their client on a sliding scale contract. Payments are divided between rent and equity; as equity increases, the rent portion decreases (eventually to zero) while the payments stay level until the end.

    In the non-Islamic market, all this infidel (yours truly, though neither a drinker nor a pork-eater) sees offered to him on "rent-to own" is low-end furniture or an old car - both aimed at those with damaged credit, featuring stratospheric markups and built-in usury - anything to make matters worse.

    Lots of good ideas. Indeed there's plenty to learn, here.

    J.
    Very interesting stuff here and I admittedly am quite unaware as to how much of the system operates. I'm still a bit perplexed about how the lenders or investors benefit if interest is not levied; is there some other way that the lending parties are able to profit from these types of arrangements in IBF?

  10. #9
    Johann is offline Registered User
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    Yes - several ways. One is my example, given above. The rent component is structured to include a return on the lender's investment. It's OK to charge rent, but not interest. Other methods involve partnership and share of profits. Islamic banking includes religion-compliant major credit cards. Google "Islamic Visa" and you will see many examples. There are plenty of sites that will give you an introduction to the basic concepts - mudharabah also spelled mudaraba, murabaha, takaful etc. Here's an intro from the Federal Reserve Bank of Boston. https://www.bostonfed.org/-/media/Do...micfinance.pdf Islamic Finance is likened to socially-conscious investing.

    You have your choice of many other introductions. Just Google "Introduction to Islamic Finance."

    J.
    Last edited by Johann; 12-12-2016 at 03:21 PM.

  11. #10
    jhp
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    Quote Originally Posted by Johann View Post
    Yes - several ways. One is my example, given above. The rent component is structured to include a return on the lender's investment. It's OK to charge rent, but not interest. Other methods involve partnership and share of profits. Islamic banking includes religion-compliant major credit cards. Google "Islamic Visa" and you will see many examples. There are plenty of sites that will give you an introduction to the basic concepts - mudharabah also spelled mudaraba, murabaha, takaful etc. Here's an intro from the Federal Reserve Bank of Boston. https://www.bostonfed.org/-/media/Do...micfinance.pdf Islamic Finance is likened to socially-conscious investing.

    You have your choice of many other introductions. Just Google "Introduction to Islamic Finance."

    J.
    As long as you are Muslim.

  12. #11
    SteveFoerster is offline Resident Gadfly
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    Quote Originally Posted by jhp View Post
    As long as you are Muslim.
    I don't see why one would have to be Muslim to learn about Islamic finance. The Murabitun guys seemed perfectly happy to work with me and my employer at that time.
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  13. #12
    TomE is offline Registered User
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    Quote Originally Posted by Johann View Post
    Yes - several ways. One is my example, given above. The rent component is structured to include a return on the lender's investment. It's OK to charge rent, but not interest. Other methods involve partnership and share of profits. Islamic banking includes religion-compliant major credit cards. Google "Islamic Visa" and you will see many examples. There are plenty of sites that will give you an introduction to the basic concepts - mudharabah also spelled mudaraba, murabaha, takaful etc. Here's an intro from the Federal Reserve Bank of Boston. https://www.bostonfed.org/-/media/Do...micfinance.pdf Islamic Finance is likened to socially-conscious investing.

    You have your choice of many other introductions. Just Google "Introduction to Islamic Finance."

    J.
    Thanks and great link. Very interesting stuff. I have a friend who works at Morgan Stanley who I forwarded it to. I'm interested in his perspectives on some of the differences between IBF and his own experiences.

  14. #13
    Johann is offline Registered User
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    Quote Originally Posted by SteveFoerster View Post
    I don't see why one would have to be Muslim to learn about Islamic finance. The Murabitun guys seemed perfectly happy to work with me and my employer at that time.
    I agree, Steve. Big banks and Visa, etc. can collaborate with Muslim-led companies, for sure. And any person who wants to, can learn about Islamic finance. Plus, I'm sure you don't have to be Muslim to enrol at many fine Universities that teach undergrad and advanced degrees in Islamic Finance - particularly the ones in countries with a non-Muslim majority, e.g. UK.

    I have no religion whatsoever (no, not even atheism) and I've learned a bit. I wouldn't have the gall to ask for a home-loan on Islamic terms. Muslim organizations that grant them should (and do) help their own - not others. But if it struck me (and them) as a good idea, I might invest in securities of an Islamic company - who knows?

    J.
    Last edited by Johann; 12-13-2016 at 02:05 PM.

  15. #14
    Johann is offline Registered User
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    Hope blowing my (Canadian) horn for a minute doesn't upset anyone too much.
    Canada poised to be hub of Islamic finance - Business - CBC News
    There - all done.

    J.

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  17. #15
    Johann is offline Registered User
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    And another (Canadian) site that shows how home purchases are financed under Islamic rules. Zero Mortgage Canada and Halal Home Financing Options

    J.

  18. #16
    Johann is offline Registered User
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    Well, now for the other side. Not everyone agrees, I guess. https://www.thestar.com/business/200...a_con_job.html

    I'm with the un-named executive on this. As he sees it, it's a personal religious choice. I say yes - it's not much different than Catholics who prefer to bank with their local Parish Credit Union. There's one of those about three blocks from me.

    J.
    Last edited by Johann; 12-13-2016 at 03:02 PM.

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