Dilemmas and Challenges in Islamic Finance: Looking at Equity and Microfinance (Islamic Business and Finance Series)

The phenomenal growth of Islamic finance in the last few decades has been accompanied by a host of interesting questions and challenges. One of the critical challenges is how Islamic financial institutions can be motivated to participate in the 'equity-like' profit-and-loss sharing (PLS) contracts. It is observed that Islamic banks are reluctant to participate in the pure PLS scheme which is manifested by the rising concentration of investment on murabaha or mark-up financing. This phenomenon has been the hotbed of academic criticism on the contemporary practice of Islamic banking. This book explains the 'murabaha syndrome' in light of the incentive provided by the current institutional framework and what are the changes required in the governance structure to mend this anomaly Cover Title Copyright Contents List of figures List of tables List of contributors Foreword Foreword Foreword Preface Acknowledgements Introduction Part I Dilemmas and challenges on the prohibition of riba and gharar 1 Heterodox vs. Islamic views on interest and uncertainty: Commonalities and contradictions 2 A critique to a naïve critique to ‘murabaha’ ‘tawarruq’ syndrome 3 An inquiry into the scope of ‘acceptable’ gharar Part II Issues in Islamic equity finance and microfinance 4 Altruism and reciprocity in Islamic equity fund: New Institutional and philosophical speculations 5 Anatomy of Islamic venture capital: Typology of Bahraini/Indonesian Islamic venture capital 6 Sukuk environment and challenges in Bangladesh and Malaysia (with the supplement of the Japan-sukuk case) 7 A comparative study between the Grameen and Islamic modes of microfinance in Bangladesh with reference to Islamic microfinance in Pakistan 8 An impact assessment of Islamic Saving–Loan and Financing Cooperatives in Indonesia: Preliminary findings from the artificial neural networks technique Part III Dilemmas and challenges in governance structure 9 Anatomy of governance structure in the mode of Islamic finance: An emphasis on the governance over Shari’ah boards 10 A comparative study on Shari’ah compliance frameworks: Is the integrated or separated model well suited to Bangladesh? 11 Alternative views upon the ‘division of work’ and ‘specialization’ towards a new mode of profit–loss sharing Conclusion References Index The phenomenal growth of Islamic finance in the last few decades has been accompanied by a host of interesting questions and challenges. One of the critical challenges is how Islamic financial institutions can be motivated to participate in the 'equity-like' profit and loss sharing (PLS) contracts. It is observed that Islamic banks are reluctant to participate in the pure PLS scheme which is manifested by the rising concentration of investment on murabaha or mark-up financing. This phenomenon has been the hotbed of academic criticism on the contemporary practice of Islamic banking Islamic banks are reluctant to participate in a pure PLS scheme, manifested by the rising concentration of investment on Murabaha. This book explains the "Murabaha syndrome' and what the changes required are to mend this anomaly.