Understanding Islamic Finance / Edition 1

Hardcover (Print)
Used and New from Other Sellers
Used and New from Other Sellers
from $17.49
Usually ships in 1-2 business days
(Save 75%)
Other sellers (Hardcover)
  • All (11) from $17.49   
  • New (8) from $31.20   
  • Used (3) from $17.49   


"Muhammad Ayub has provided the most comprehensive treatment todate of the contracts, products and systems used in Islamicfinance. He explores how the concepts are rooted in the Islamiceconomic system in a way that will appeal to academics while at thesame time giving a coherent account of the products thatfinance practioners should find helpful."
Professor Rodney Wilson, Director of PostgraduateStudies, Durham University

"The author has rendered a great service to the field of Islamicfinance through this painstaking encyclopedic effort that couldhave only been undertaken by a dedicated scholar-teacher-trainerlike Dr Ayub. This detailed compilation of the views of the fourmajority jurisprudential schools of thought in Islam on mattersrelating to financial transactions, presented and explained inclear language and applied to contemporary developments in Islamicbanking and finance, is highly useful to students and practitionersof Islamic finance. The book is of particular significance forfinancial engineers who wish to design financial instrumentscompatible with the requirements of Islamic jurisprudence"
Dr Abbas Mirakhor, Executive Director, IMF WashingtonDC

"Understanding Islamic Finance is the fruit of many years ofhard work by the author based on his understanding of Islamic lawand the principles of Islamic economics. Islamic economic systembeing a rule-base system can be understood very well when viewed asa set of contracts. Therefore, this book provides the vital bridgebetween the legal foundation and the theory of economic andfinancial systems in Islam. This bridge helps the reader betterunderstand Islamic finance."
Dr Zamir Iqbal, World Bank, Washington DC

Read More Show Less

Product Details

  • ISBN-13: 9780470030691
  • Publisher: Wiley
  • Publication date: 12/4/2007
  • Series: Wiley Finance Series , #458
  • Edition description: New Edition
  • Edition number: 1
  • Pages: 542
  • Sales rank: 1,370,537
  • Product dimensions: 6.91 (w) x 9.69 (h) x 1.42 (d)

Meet the Author

MUHAMMAD AYUB is Director Training, Development andShari’ah Aspects at IIBI, London. Formerly, he was with theState Bank of Pakistan (central bank) where he headed the IslamicEconomics Division and Shari’ah Compliance Division as SeniorJoint Director in the Research and Islamic Banking Departments. Healso served as Head of Islamic Banking at NIBAF, the training wingof SBP. Besides contributing a large amount of material, he hasbeen serving as Master Trainer on theory and practice of Islamicfinance.
For last two decades, he has been involved in R&D forfacilitating I.B. Industry, Products Development, IB Prudentialregulations, Risk management and Shari’ah related controlsand audit of Islamic banking institutions. This, along with hisassociation with various Commissions set up from time to time onapplication of Islamic banking system, has lent him a pragmatic andbalanced approach, a prerequisite for presenting such a book.

Read More Show Less

Table of Contents

List of Boxes and Figures.





1 Introduction.

1.1 Economic Scenario in the Neoclassical Framework.

1.2 Conventional Debt: A Recipe for Exploitation.

1.3 Growth per se May not Lead to Socio-economicJustice.

1.4 Social Welfare Activities of the States.

1.5 The Main Culprit.

1.6 The Need of the Hour.

1.7 Economics and Religion.

1.8 Islamic Principles Can Make the Difference.

1.9 Regulating Trade and Business.

1.10 Islamic Finance Passing Significant Milestones.

1.11 Could it Work to Achieve the Objectives?

1.12 About this Book.

2 Distinguishing Features of the Islamic EconomicSystem.

2.1 Introduction.

2.2 Islamic Sharīàh and its Objectives.

2.3 Why Study Islamic Economics?

2.4 Islamic Economics: What should it be?

2.5 Paraphernalia of Islamic Economics.

2.6 Summary.

3 The Main Prohibitions and Business Ethics in IslamicEconomics and Finance.

3.1 Introduction.

3.2 The Basic Prohibitions.

3.2.1 Prohibition of Riba.

3.3 Business Ethics and Norms.

3.4 Summary and Conclusion.

4 The Philosophy and Features of Islamic Finance.

4.1 Introduction.

4.2 The Philosophy of Islamic Finance.

4.3 Debt versus Equity.

4.4 Islamic Banking: Business versus Benevolence.

4.5 Exchange Rules.

4.6 Time Value of Money in Islamic Finance.

4.7 Money, Monetary Policy and Islamic Finance.

4.8 Summary.


5 Islamic Law of Contracts and Business Transactions.

5.1 Introduction.

5.2 Māl (Wealth), Usufruct and Ownership.

5.2.1 Defining Various Related Terms.

5.3 General Framework of Contracts.

5.4 Elements of a Contract.

5.5 Broad Rules for the Validity ofMu’āmalāt.

5.6 W’adah (Promise) and Related Matters.

5.7 Types of Contracts.

5.8 Commutative and NonCommutative Contracts.

5.9 Conditional or Contingent Contracts.

5.10 Summary.

6 Trading in Islamic Commercial Law.

6.1 Introduction.

6.2 Bai' – Exchange of Values.

6.3 Legality of Trading.

6.3.1 Trade (Profit) versus Interest: Permissibility versusProhibition.

6.4 Types of Bai'.

6.5 Requirements of a Valid Sale Contract.

6.6 Riba Involvement in Sales.

6.7 Gharar – A Cause of Prohibition of Sales.

6.8 Conditional Sales and “Two Bargains in OneSale”

6.9 Bai' al’Arbūn (Downpayment Sale).

6.10 Bai' al Dayn (Sale of Debt).

6.11 Al ’Inah Sale and the Use of Ruses (Hiyal).

6.12 Options in Sales (Khiyar).

6.13 Summary.

7 Loan and Debt in Islamic Commercial Law.

7.1 Introduction.

7.2 The Terms Defined.

7.3 Illegality of Commercial Interest.

7.4 Loaning and the Banking System.

7.5 Guidance from the Holy Qur’ān on Loans andDebts.

7.6 The Substance of Loans.

7.7 Repayment of the Principal Only.

7.8 Time Value of Money in Loans and Debts.

7.9 Instructions for the Debtor.

7.10 Instructions for the Creditor.

7.11 Husnal Qadha (Gracious Payment of Loan/Debt).

7.12 Remitting a Part of a Loan and Prepayment Rebate.

7.13 Penalty on Default.

7.13.1 Insolvency of the Debtor.

7.14 Hawalah (Assignment of Debt).

7.15 Security/Guarantee (Kafalah) in Loans.

7.16 Bai´ al Dayn (Sale of Debt/Debt Instruments).

7.17 Impact of Inflation on Loans/Debts.

7.18 Summary.


8 Overview of Financial Institutions and Products:Conventional and Islamic.

8.1 Introduction.

8.2 What is Banking or a Bank?

8.3 The Strategic Position of Banks and FinancialInstitutions.

8.4 Categories of Conventional Financial Business.

8.5 The Need for Islamic Banks and NBFIs.

8.6 The Issue of Mode Preference.

8.7 Islamic Investment Banking.

8.8 Islamic Financial Markets and Instruments.

8.9 Summary and Conclusion.

9 Murabaha and Musawamah.

9.1 Introduction.

9.2 Conditions of Valid Bai'.

9.3 Murabaha – a Bai' al Amānah.

9.4 Bai' Murabaha in Classical Literature.

9.5 The Need for Murabaha.

9.6 Specific Conditions of Murabaha.

9.6.1 Bai' Murabaha and Credit Sale(Murabaha–Mu’ajjal).

9.7 Possible Structures of Murabaha.

9.8 Murabaha to Purchase Orderer (MPO).

9.9 Issues in Murabaha.

9.10 Precautions in Murabaha Operations.

9.11 Musawamah (Bargaining on Price).

9.12 Summary.

10 Forward Sales: Salam and Istisna’a.

10.1 Introduction.

10.2 Bai' Salam/Salaf.

10.3 Benefits of Salam and the Economic Role of Bai' Salam.

10.4 Features of a Valid Salam Contract.

10.5 Security, Pledge and Liability of the Sureties.

10.6 Disposing of the Goods Purchased on Salam.

10.6.1 Alternatives for Marketing Salam Goods.

10.7 Salam – Post Execution Scenarios.

10.8 Salam-Based Securitization – SalamCertificates/Sukuk.

10.9 Summary of Salam Rules.

10.10 Salam as a Financing Technique by Banks.

10.11 Istisna’a (Order to Manufacture).

11 Ijarah – Leasing 279.

11.1 Introduction.

11.2 Essentials of Ijarah Contracts.

11.3 General Juristic Rules of Ijarah.

11.4 Modern Use of Ijarah.

11.5 Islamic Banks’ Ijarah Muntahia-bi-Tamleek.

11.6 Summary of Guidelines for Islamic Bankers on Ijarah.

12 Participatory Modes: Shirkah and its Variants.

12.1 Introduction.

12.2 Legality, Forms and Definition of Partnership.

12.3 Basic Rules of Musharakah.

12.4 The Concept and Rules of Mudarabah.

12.5 Mudarabah Distinguished from Musharakah.

12.6 Modern Corporations: Joint Stock Companies.

12.7 Modern Application of the Concept of Shirkah.

12.8 Diminishing Musharakah.

12.9 Diminishing Musharakah as an Islamic Mode of Finance.

12.10 Summary and Conclusion.

13 Some Accessory Contracts.

13.1 Introduction.

13.2 Wakalah (Agency).

13.3 Tawarruq.

13.4 Ju’alah

13.5 Bai´ al Istijrar (Supply Contract).

14 Application of the System: Financing Principles andPractices.

14.1 Introduction.

14.2 Product Development.

14.3 The Nature of Financial Services/Business.

14.4 Prospects and Issues in Specific Areas of Financing.

14.5 Islamic Banks’ Relationship with ConventionalBanks.

14.6 Fee-based Islamic Banking Services.

14.7 Summary and Conclusion.

Appendix: The Major Functions of a SharīàhSupervisory Board in the Light of the AAOIFI’SShar¯ıàh Standard.

15 Sukuk and Securitization: Vital Issues in Islamic CapitalMarkets.

15.1 Introduction.

15.2 The Capital Market in an Islamic Framework.

15.3 Securitization and Sukuk.

15.4 Summary and Conclusion.

16 Takaful: An Alternative to Conventional Insurance.

16.1 Introduction.

16.2 The Need for Takaful Cover.

16.3 The Sharīàh Basis of Takaful.

16.4 How the Takaful System Works.

16.5 Takaful and Conventional Insurance Compared.

16.6 Status and Potential of the Takaful Industry.

16.7 Takaful Challenges.

Appendix: Fatāwa (Juristic Opinions) on Different Aspectsof Insurance.

17 An Appraisal of Common Criticism of Islamic Banking andFinance.

17.1 Introduction.

17.2 The Common Myths and Objections.

17.3 Appraisal of Conceptual Criticism.

17.4 Appraisal of Criticism on Islamic Banking Practice.

17.5 Conclusion.

18 The Way Forward.

18.1 Introduction.

18.2 Agenda for the Policymakers.

18.3 Potential, Issues and Challenges for Islamic Banking.

18.4 Conclusion.




Arabic/Urdu References.

Suggested Further Reading.


Read More Show Less

Customer Reviews

Average Rating 5
( 1 )
Rating Distribution

5 Star


4 Star


3 Star


2 Star


1 Star


Your Rating:

Your Name: Create a Pen Name or

Barnes & Noble.com Review Rules

Our reader reviews allow you to share your comments on titles you liked, or didn't, with others. By submitting an online review, you are representing to Barnes & Noble.com that all information contained in your review is original and accurate in all respects, and that the submission of such content by you and the posting of such content by Barnes & Noble.com does not and will not violate the rights of any third party. Please follow the rules below to help ensure that your review can be posted.

Reviews by Our Customers Under the Age of 13

We highly value and respect everyone's opinion concerning the titles we offer. However, we cannot allow persons under the age of 13 to have accounts at BN.com or to post customer reviews. Please see our Terms of Use for more details.

What to exclude from your review:

Please do not write about reviews, commentary, or information posted on the product page. If you see any errors in the information on the product page, please send us an email.

Reviews should not contain any of the following:

  • - HTML tags, profanity, obscenities, vulgarities, or comments that defame anyone
  • - Time-sensitive information such as tour dates, signings, lectures, etc.
  • - Single-word reviews. Other people will read your review to discover why you liked or didn't like the title. Be descriptive.
  • - Comments focusing on the author or that may ruin the ending for others
  • - Phone numbers, addresses, URLs
  • - Pricing and availability information or alternative ordering information
  • - Advertisements or commercial solicitation


  • - By submitting a review, you grant to Barnes & Noble.com and its sublicensees the royalty-free, perpetual, irrevocable right and license to use the review in accordance with the Barnes & Noble.com Terms of Use.
  • - Barnes & Noble.com reserves the right not to post any review -- particularly those that do not follow the terms and conditions of these Rules. Barnes & Noble.com also reserves the right to remove any review at any time without notice.
  • - See Terms of Use for other conditions and disclaimers.
Search for Products You'd Like to Recommend

Recommend other products that relate to your review. Just search for them below and share!

Create a Pen Name

Your Pen Name is your unique identity on BN.com. It will appear on the reviews you write and other website activities. Your Pen Name cannot be edited, changed or deleted once submitted.

Your Pen Name can be any combination of alphanumeric characters (plus - and _), and must be at least two characters long.

Continue Anonymously
Sort by: Showing 1 Customer Reviews
  • Posted October 28, 2008

    more from this reviewer

    Comprehensive work on Islamic finance

    Muhammad Ayub provides a thorough report on the major economic and political ramifications of Islamic finance, now practiced in more than 75 countries. This system follows specific, religion-grounded financial policies. For instance, it accommodates Riba, the Islamic prohibition of certain kinds of gains, including interest. Ayub makes it clear that Islamic finance, backed by billions in petrodollars, could come to compete with Western capitalist practices, which he roundly criticizes. His book is simultaneously academic, religious, legal, political and economic (as well as being rhetorical at times, with some challenging long and winding sentences). He also states some apparently opinion-based observations as facts, often with no references, but he knows his subject area and he sounds authoritative throughout, though you may differ with his political viewpoint. getAbstract finds this book critically important for anyone whose work is touched by Islamic banking or finance.

    Was this review helpful? Yes  No   Report this review
Sort by: Showing 1 Customer Reviews

If you find inappropriate content, please report it to Barnes & Noble
Why is this product inappropriate?
Comments (optional)