Ma Financial Management Proposal

Liverpool John Moore s University 2010
TABLE OF CONTENT 1. INTRODUCTION TO THE TOPIC ................................ ................................ ................................ ..... 2 2. INTRODUCTION TO ISLAMIC BANK OF BRITAIN ................................ ................................ ............ 4 3. RESEARCH OBJECTIVES AND RESEARCH QUESTIONS ................................ ................................ ................ 6 4. RATIONAL ................................ ................................ ................................ ................................ ........ 7 5. LITERATURE REVIEW ................................ ................................ ................................ ..................... 8 KEY ELEMENTS OF LITER ATURE AND THEIR RELEVANCE TO THE PROPOSED RESEARCH ................................ ..... 12 RESEARCH OBJECTIVES & QUESTIONS ................................ ................................ ................................ .... 12 I TEM OF LITERATURE ................................ ................................ ................................ ........................... 12 RELEVANCE TO RESEARCH ................................ ................................ ................................ .................... 12 6. METHODOLOGY ................................ ................................ ................................ .......................... 13 7. RESEARCH ETHICS ................................ ................................ ................................ ........................... 17 8. RESEARCH CREDIBILITY ................................ ................................ ................................ .................... 18 9. PHYSICAL RESOURCES ................................ ................................ ................................ ...................... 18 9. BIBLIOGRAPHY ................................ ................................ ................................ ................................ 19 10. GLOSSARY OF ISLAMIC TERMS ................................ ................................ ................................ ......... 21
The Survival of Islamic Banking and Finance from the Evils of Recession
1. INTRODUCTION TO THE TOPIC

The history of banking long and varied, since from the time people used precious metals and in addition grain as money. Interest based banking system did not happen overnight, but it was a result of numerous factors such as the evolution from agrarian to commercial economies, the decentralisation of church, products pricing on the basis of supply and demand and money recognition as a factor of production. During the 20 th century the whole world started facing the problem of recession. The world economies were deteriorating. Nations were trying to get over the problem and come out with a solution. Although it was not until the mid 1980 s that Islamic finance started to grow exponentially, the first financial company in recent history based on Islamic Law or Sharia a was the Mit Ghamr savings project in 1963. (Natalie Schoon) Furthermore, events that occurred in 2007 and 2008 put the world in the worst situation ever and the people see solution of such problems that caused these events in Islamic Banking and Finance. 1.1 Islamic Banking System Islamic banking refers to a system of banking or banking activity that is consistent with the principles of Islamic law or Sharia a and its practical application through the development of Islamic economics. Sharia a prohibits the payment or acceptance of interest fees for the lending and accepting of money respectively, known as riba or usury, as well as investing in businesses that provide goods or services considered contrary to its principles, known as Haram or prohibited. (Wikipedia) As Muslims, we do believe that we cannot lend money to or receive money from someone and make a benefit known as interest or riba. It is forbidden to make money from money. The legitimate trade and investment in assets could be the only way to generate wealth in other words, using money in productive activities or legitimate trading. Risk is essential for any trading activity. Any profits related to the trading are shared between those who provide capital and expertise.
1.2 Sources of Sharia a Finance The term of Sharia a refers to Islamic Law as revealed in the Qur an and through the Sunnah of the Prophet Muhammad (Peace Be upon Him). The authority of Sharia a is drawn first and foremost from the specific guidance laid down in the Qur an. The second main source is the Sunnah, which is what the Prophet Muhammad (Peace Be upon Him) said, did, or approved of, and refers to the way in which the Muhammad (Peace Be upon Him) lived his life. The third source is Ijma a or consensus, which involves the interpretation and analysis of newly arising issues by eminent qualified scholars of Fiqh who will arrive at a consensus or ruling about the issue in question. The fourth source is Qiyas or analogy, which is the process of analogical reasoning from a known injunction to a new injunction. According to this method, the ruling of the Qur an and Sunnah may be extended to a new problem provided that the precedent or asil and the new problem or far a shares the same operative or effective cause or illah. The fifth source is Ijtihad, which is, the effort of a qualified Islamic jurist to interpret or reinterpret sources of Islamic law in cases where no clear directives exist. (Islamic bank of Britain) 1.3 Sharia a Advisory Council Islamic banks and banking institutions that offer Islamic banking products and services are required to establish a Sharia a Supervisory Board (SSB) to advise them and to ensure that the operations and activities of the bank comply with Sharia a principles. The Islamic bank of Britain Supervisory committee consists of well known world leading scholars in the field of Islamic finance.
1.4 Modes of Sharia a Finance Islamic banking and finance has discovered many interest free operational modes to perform all kind of banking transactions. These modes includes: Mudarabah, Musharakah, Musharakah mutnaqisah, Ijarah, Ijarah wa iktina, Ijarah with diminishing Musharakah, Murabahah, Bai salam, Bai mu ajjal or Bai baithaman ajil, Bai Istisna, Bai eenah, Auqaf, Sukuk bond, Islamic mutual funds and Sharia a baby bond, etc. The Islamic bank i have chosen to study its development and progress and survival during the harsh times of recession, is Islamic Bank of Britain.
2. INTRODUCTION TO ISLAMIC BANK OF BRITAIN

The Islamic Bank of Britain was formed by a group of investors from the Middle East to take advantage of the growing market for Sharia a compliant financial services in the UK. By August 2004, the Financial Services Authority granted authorisation of the bank and subsequently led to the Islamic Bank of Britain available to the public. ( Wikipedia) The Islamic Bank of Britain has a unique business model from other conventional banking, that does not including charging of interest i.e. interest free products. The bank has eight branches throughout the UK, Manchester, London (Southall, Whitechapel, Edgware road, East Ham) Midlands (Small Heath, Alum Rock and Leicester). (Islamic Bank of Britain) The Islamic Bank of Britain has a range Sharia a Compliant financial products, these products are supervised by the Sharia a Supervisory Committee of Islamic Bank of Britain . The committee members are well known scholars in the field of Islamic Banking and Finance. All of Islamic Bank of Britain s products and services has the approval of the Sharia a Supervisory Committee. These products and services are: Sharia a Fixed Term Deposit Account, Commercial Property Finance, Current Account, Direct Savings Account, Home Purchase Plan, Master Murabaha Account, Personal Finance, Savings and Ter m Certificate, Secured Business Finance, Treasury Deposit Account, Unsecured Business Finance, Wakala treasury Deposit Account and Young Persons savings Sharia a Certificate. (Islamic Bank of Britain) The banking sector in UK operates on a normal business model, that the charging of interest. The banking sector is dominated by conventional banking and people have a strong adherence to conventional banking business models. Conventional banking was considered a key to success but the storm of credit crunch put them on soap. Many banks all over the world were bail out and failed to work and handle the evil of recession. It has been noted that Islamic banks were less affected by the credit crunch and even they resist such worst conditions. McCarthy says poor underwriting standards are to blame for the financial crisis. These big banks forgot the rules of basic credit underwriting. (Victoria Fierson) The Islamic Bank of Britain which was mainly came to operation for Muslim community in UK. It showed significant improvements in the results achieved since established. It was a very difficult period for the Islamic Bank of Britain to attract Muslim and non-Muslim as their customers. People were not aware of the operation of the interest free banking or
Sharia a Compliant Financial products and services. But as awareness increases the Islamic Bank of Britain attract more customers, personal & business, regardless of their religion. By having an eye on the good performance of the Islamic banking other conventional banki ng adopt some of Sharia a Compliant financial products to retain their customers, those desire for Islamic banking. The world is still not clear on the difference of Islamic banking & finance and Conventional banking. They consider Sharia a Compliant financial products same as those offer by the conventional banking and how Islamic banking could clear the clouds and the storm of recession.
3. RESEARCH OBJECTIVES AND RESEARCH QUESTIONS RESEARCH OBJECTIVES

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To critically analyse business models of Islamic banking and conventional banking. To evaluate the impact of Sharia a Compliant Financial products on the UK conventional banking sector and the financial management of Islamic Bank of Britain. To evaluate the performance of Islamic Bank of Britain during credit crunch. To analyse and evaluate the survival of Islamic banking and Finance from the evil of recession. To evaluate the risk managment system of Islamic banking and conventional banking.
RESEARCH QUESTIONS
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How do the business mode ls of Islamic banking and conventional banking operate? How does Sharia a finance impact conventiional banking in UK? To what extent Sharia a finance would resist recession and to what extent it would solve the problem of recession? How does Islamic banking see the risk managment process and how does Islamic law mitigate those risks?
4. RATIONAL P ERSONAL
The researcher has a great interest in this research piece of work. The researcher has strong background of accounting, auditing and taxation, this research would expand his areas of knowledge and understanding. The researcher aims to further his career in banking industry and by carrying out this research would help him, where to step in i.e. Islamic banking or conventional banking.
B USINESS
Sharia a finance seems to be a key to success for the banking industry. Failure of the conventional banking to cure the problem of recession, put the world in complete new situation. Banks play a vital role in economy recovery and boom. This piece of research work would try to dig out the background and application of Sharia a finance, and would explore the main theme behind Sharia a finance. How could we fight the credit crunch and push the wolrd towards recovery and boom. Sharia a finance encourages legitimate trading activities and investment in assets. Legitimate trading activities could push the economy towards recovery and boom.
ACADEMIC
From the academic point of view, this research would clarify the difference between Islamic banking and conventional banking. This piece of work could be used to present an overview of the strengths of Islamic banking, and how could it be used to speed the growth of banking industry and pull the world out from the curse of the credit crunch. This in sight will assess the two types of banking approaches, Islamic banking and conventional banking. Islamic finance is growing rapidly in the future, many universities in the world offer Masters, PhD in the field of lslamic banking and finance. This research work could increase academic understanding of students before step in the practical world.
5. LITERATURE REVIEW INTRODUCTION TO ISLAMIC SHARIA A

Islam as a complete code of life encompasses every aspect of human life. It provides directives as to how economic and financial activities should operate based on moral and just economic system. The source of Islamic morality stems from Sharia a. The following diagram shows the position of banking and financial activities within the framework of Islamic Sharia a.
Islam
Aqidah (Faith & Belief)
Sharia a (Practices & Activities)
Akhlaq (Moralities & Ethics)
Ibadah (Man-to-God worship)
Muamalat (Man-to-man activities)
Political activities
Economic activities
Social activities
Other Economic activities (Kabir Hassan)
Banking & Financial actitivities
Information on Islamic banking could be found in many forms, for example: dissertations (M. Kabir Hassan, 2009, Shakeel Ahmad, 2004, Khan, 1983), books written by many lea ding well known authors (Natalie Schoon, 2009, Hennie Van Greuning & Zamir Iqbal, 2008 Alexander Von Pock, 2007, Mahmud A El Gamal, 2006, Zubir Iqbal, Abbas Mirakhor, 1987), many published research reports (Ahmad, 1987), and thousands of journal articals. As charging of interest or Riba is forbidden in Islam. The Islamic banks have had to develop Sharia a Compliant financial products, the results came out with a number of interest free financail productsto serve the Muslim community. (Ali & Ali, 1994) Conventional banks and institutions have joined the race for providing Islamic products. They have special branches or departments for Islamic products and services in the UK (HSBC, Barclays, Lloyds TSB, Halifax, Netwest bank). This research work would try reveal the difference between conventional banking and Islamic banking, the main characteristics that differenate them from each other. (Shakeel Ahmad, 2004) Islamic banking and finance has great emphasis on profit while conventional banking put emphasis on interest. We would have an eye on the difference between profit and interest. (Faisal A. Alkassim, 2005, Shakeel Ahmad, 2004) As making money from money is not permissible in Islam. Therefore, Islamic banks have had developed a number of financial instruments through which they could attain growth and stability in the economy. (Shakeel Ahmad, 2004) The pie chart shows that Islamic banks lend most of its money through Murabahah contracts, followed by Musharakah, and Mudarabah. (Faisal A. Alkassim, 2005) Islamic derivatives comprises both futures and embedded options. Ebrahim (2001) recommendes to design, develop and implement Islamic hedging and rsik minimising facilities such as Islamic Futures (Bai Al Salam/Istisna). (Shakeel Ahmad, 2004) As market for the Isamic Sharia a Compliat financial products developed so there were the development and issue of Islamic bonds such as Sukuk bonds. AAOIFI defines Sukuk as being: Certificates of equal value representing after closing subscription, receipt pf the value of the certificates and putting it to use as planned, common title to shares and rights in tangible assets, usufructs and services, or equity of a given project or equity of a special investment activity . (Aims Academy for International Modern Studies) Islamic equity funds, the fiqh opinion is that, if objectivesof the company are legally consistent with Sharia a rules then its business is accept Exhibit and Muslim investors could
buy shares of this company. This is the principle. (The Islamic fiqh Academy, 1992) (Osman Babikir Ahmed, 2001) Islamic Sharia a prohibits trading or investment from certain activities, are as follows: y y y y y y y y Financial services based on riba (Interest); Gambling; Manufacture or sale of non-halal products or related products; Conventional insurance; Entertainment activities that are non-permissible according to Sharia a; Manufacture or sale of tobacco-based products or related products; Stock broking or share trading in Sharia a non-compliant securities; Other activities deemed non -permissible according to Sharia a;
(Sharia a Negative List) Islamic banking has some impediments to grow and flourish in the whole world. These are categorised broadly as follows: y y y y y y y y y Social impediments Educational impediments Psychological impediments Economic impediments Political impediments Structural impediments Institutional impediments Technological impediments Religious impediments
However, these impediments could be reduced by the application specific strategies related to each impediment. (Shakeel Ahmad, 2004) In my research i would make a comparison between two banks, conventional (National bank of Dubai), and Islamic (Dubai Islamic Bank). (annual reports, 2007,2008,2009 of respective banks) This comparison would explore the strengths and weaknesses of conven tional banking and Islamic banking. This overview would also explore the resistance by each approach face from recession. How they tackle the problem of recession? This research would also have a critical eye on the establishment of Islamic Bank of Britain. How does Islamic Bank of Britain manage its financial activities in a region based on conventional banking? The above studies would be applied in that regard to achieve some useful results of Islamic Bank of Britain. What strategies it has adopted to fight in a very
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highly competitive market? How does it take the market and the banking sector? What are the major products it offer to the society, both Muslim and non -Muslim customers? What is the backbone of Islamic Bank of Britain, which protects it from the clouds of recession and how much resistance it has,? This research would give an idea about the financial products Islamic bank of Britain provides to the people, and their market viability and a small overview of the growth or performance comparison with other conventional banks. Islamic Bank of Britain was allowed to operate in August 2004, during the period until December 2004 the bank made a loss of 3.1m. The FSA has taken investigation about the loss figure and the FSA has been satisfied that this figure resulted by the initial costs legal and professional. (Annual report, 2004) In the period ending December 2005 the Islamic Bank of Britain had 25,403 customers while in the year ending December 2009 the bank has customer base of up to 50000. (Annua l reports, 2005 and 2009) The bank results have shown a considerable increase in customer base, customer deposits, customer financing (Annual Report, 2009). The performance and improvements in operations of Islamic Bank of Britain during the period from December 2004 to December 2009 has shown a great success and a potential market in UK. Despite of highly competitive sector and despite of the small size of the Islamic Bank of Britain proved that Islamic banking and finance could resist the challenges of recession and would contribute to drag the economy towards recovery and boom.
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KEY ELEMENTS OF LITER ATURE AND THEIR RELE VANCE TO THE PROPOSE D RESEARCH RESEARCH OBJECTIVES QUESTIONS & ITEM OF LITERATURE RELEVANCE TO RESEARCH
To critically analyse the business models of Islamic banking and conventional banking. How do the business models of Islamic banking and conventional banking operate?
These items of literature listed Natalie Schoon, 2009 give the main theme behind Zubair Iqbal, Abbas the two kinds of banking, Mirakhor, 1987 Islamic banking & conventional M. Kabir Hassan, 2005 banking.
To evaluate the impact of Sharia a compliant financial products on conventional banking sector of UK and the financial management of Islamic Bank of Britain. How does Sharia a finance impact conventional banking sector in UK? To evaluate the performance of the Islamic Bank of Britain during the period of credit crunch. To analyse and evaluate the survival of Islamic Banking and Finance from the evils of recession. To what extent Sharia a finance would resist recession and to what extent it could solve the problem? To evaluate the risk management systems of Islamic banking and conventional banking. How does Islamic banking see the process of risk management and what are the controls Islamic banking does have to mitigate those risks?
Shakeel Ahmad, 2004, Annual reports of respective banks, Hennie Van Greuning, Zamir Iqbal, 2008, Ahmad Abbas, 2005
These items of literature examine financial products market in the UK. These items would also help in assessing the financial management of Islamic Bank of Britain.
Annual Reports of respective banks, Faisal A. Alkassim, 2005, Ahmed Abbas, 2005, Romzie Rosman, 2008, M. Fahim Khan, 2010,
These items of literature would examine the resistance of Islamic banking and finance from the evils of credit crunch, the factors that contributes the survival of Islamic banking and finance.
Romzie Rosman, 2008, Martin Cihak, Heiko Hesse, 2008, Muhammad Al-Bashir Muhammad Al-Amine, 2008
These items of literature would insight of the risk management systems from both perspectives, Islamic banking and conventional banking.
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6. METHODOLOGY RESEARCH PHILOSOPHY

There is a number of research philosophies, the research work could be done by having a single philosophy in mind or two or more philosophies at the same time. The selection of the research philosophy or philosophies depends on what the researcher perceives to be related to the research work. As for as my research work is concerned, these philosophies would be based on realism and critical rationalism. Realism is the belief in reality and as a Muslim we do belief that Sharia a is the law in reality. Wherever in the world or in the Universe the Sharia a found would be same. The researcher would use the Sharia a to assess and evaluate strategies, methodologies and models of Islamic banking and finance. The critical rationalism approach, as critical rationalists believe that scientific theories can and should be rationally criticised and should be subjected to test which may falsify them. (Changing mind website, 2009) Apart from realism, critical rationalism approach would be used to assess and evaluate strategies, methodologies and models of conventional banking and a comparison between Islamic banking and finance and conventional banking would be made. For this purpose i would study conventional banking articles, journals, books and research in the past and the results would be compared with the Sharia a.
RESEARCH APPROACH
The research approach adopted would give a fair idea of the structure of the research work. As my research is based on Sharia a that no one can change or interpret in different ways, Sharia a is the code of life, the practices and activities. From general to specific, in that regard deductive approach will the most appropriate approach to carry out the research work. General rules that should be adopted in economic and then to make them more specific the application on banking and financial activities would be carried out. Both qualitative and quantitative data would be used to check the effectiveness of Islamic banking and conventional banking. By using the qualitative, a detailed case study, and qua ntitative techniques would be used, the growth rate for, financing loan, deposits and assets would be assessed for both, Islamic banks and conventional banks. Islamic Bank of Britain is a small bank as compared to other conventional banks operating in UK, despite its small size and speciality it has proved that Islamic banking has the capacity to grow in boom or recession. The Islamic Bank of Britain has made loss for the first 5 months
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year ending December 2004 but later it has achieved considerable growt h in banking sector. The final phase would conclude the results achieved by both, Islamic banking (Islamic Bank of Britain) and conventional banking (UK banking sector).
RESEARCH STRATEGY
The research strategy depends upon the area of concern or research topic. An appropriate research strategy would be that which solve the issues of the research area. For this research work, i have decided case study research involves an empirical investigation of a particular contemporary phenomenon within its real life context using multiple sources of evidence. (Saunders et al. 2009) In past, a lot of studies have been carried out in various parts of the world regarding Islamic banking and finance. Many countries have adopted Sharia a finance in recent years because their capitalist and communist economies went into recession, only Islamic banking and finance resist the credit crunch and despite the decrease in growth rate of Islamic banking and finance, it showed increase in its growth rate. The time frame for this research work is limited, therefore i will be using Snap Shot Case Study while it is not practical to use other forms of case studies i.e. Pre and post case studies. Case study approach would enable the researcher to carry out the research in deep detail and cover important bits.
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DATA SOURCES
The research work would be done by using mainly secondary data sources, as it would not be practical to use primary data sources, all data sources related to research objectives and research questions are secondary but reliable data sources. The table below shows the details in this regard:
OBJECTIVES & QUESTIONS To critically analyse the business models of Islamic banking and conventional banking. How do business models of Islamic banking and conventional banking operate? To evaluate the impact of Sharia a compliant financial products on conventional banking sector in UK and the financial management of Islamic Bank of Britain. How does Sharia a finance impact conventional banking sector in UK? To evaluate the performance of IBB during the period of credit crunch. To analyse and evaluate the survival of Islamic banking & finance from the evils of recession. To what extent Sharia a finance could resist recession and to what extent it could solve the problem? To evaluate the risk management system of Islamic banking and conventional banking. How does Islamic banking see the risk management process and how does Islamic banking mitigate those risks?
DATA SOURCES
RELEVANCE TO RESEARCH
Secondary information These data sources will be consists of online books, used to review business articles, and dissertations. models of Islamic banking and conventional banking. I will also review the efficiency operating models.
Secondary information such as published annual reports of Islamic Bank of Britain and other conventional banks. Previous academic research on banking industry would also be procured.
These sources would enable to assess the impact of Sharia a compliant financial products on conventional banking sector in UK and evaluate the outcomes.
Secondary information, such annual accounts, information from independent bodies such banking union in UK. Annual reports of bail out companies and banks. Or those banks who could not resist recession. Annual accounts of National bank of Dubai & Dubai Islamic bank. Secondary information from academic research and published articles and journals, books published recently covering the risk analysis of banking sector.
This information would assist me in carrying out the financial performance of IBB. It would also assist me to make another comparison of UAE banks. With the help of this information i will be able to conclude the resistance Islamic banking sector does have. These sources would give me an insight to assess and evaluate risk management processes of both, sectors in detail.
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DATA COLLECTION STRATEGY

In order to carry out this piece of research work, a good sampling strategy would be needed to complete this work. As my research work includes Islamic Bank of Britain to check its viability in a country based on conventional banking and an overview of the growth of IBB, along its impact on the banking sector overall. The increasing growth rate indicates its strengths in achieving favourable results. Another sample I will be using the UAE banks, conventional bank (National Bank of Dubai) and Islamic (Dubai Islamic Bank). This information would give a deeper insight of the two sectors. An analysis would be carried out what makes them successful and growing and what hampered their growth rate. A sample of Sharia a compliant financial products and conventional banking financial products would also be selected and their respective strengths and weaknesses would be assessed.
DATA ANALYSIS STRATEGY

Data analysis strategy is a technical task in this research piece of work. The presentation of data would give meaning to this research design and would be used in various perspectives to answer the research objectives and questions. The usage of graphs and charts along with ratio analysis will be exhibited to present data systematically and descriptively. Ratio analysis and descriptive techniques are helpful to this research design as the main objective of the research is to evaluate the Islamic banking performance during the period of credit crunch. And how does the growing demand for Sharia a finance impact the profitability sustainability of conventional banking.
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7. RESEARCH ETHICS
This research will be governed by the Economic and Social Research Council (ESRC) ethical guidelines (ESRC, 2005). In this research work ethical values have not been sacrificed, but the principles of ethics have been strictly adhered and proper controls needed to preserve the ethical issues. The table below explains the main ethical pri nciples along with controls in place.
ETHICAL PRINCIPLES CONTROLS y Research should be designed, y It is the foremost duty to ensure that reviewed and conducted in such a the data sources are reliable and way as to ensure integrity and complete. This could be done by quality. assessing multiple independent data sources, in order to remove any ambiguity or errors. y Concerned parties or people should y This principle is not related to my be fully informed about the purpose, research work because the methods and applications of the information that will be used in my research, together with any risks research is mostly published and related to research. available to public at large. y Confidentiality and anonymity y The information that would be used related to this research must be for this research is published on the respected. public domain. However any specific data requested from participants would be discretely for the research purpose. y Participation should be voluntary. y All participants in this research are not forced to work; full freedom would be given to them. My friends and colleagues help me in this research on their own discretion. y Harm or damage to any participant y This research work is designed as should be avoided. participants will not be inquired with questions that offend them.
The research should be independent and any conflict of interest or partiality should be explicit to the participants.
I am not attached to any company therefore; the question of conflict of interest does not apply to this research.
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8. RESEARCH CREDIBILITY
This research piece of work is obtained from reliable information sources; data published on the public domain such as dissertations, articles, journals and books by leading academic writers, and published annual reports of respective banks. This research work is in conformity to the required schedule given us by our mentor Tim Harris. All required methodologies and techniques would be proper applied, such research objectives and questions, rationale, literature review, research philosophies, research approach, research strategy, data sources and ethical stance as at first place. This research is valid as information from different sources gathered to reach a valid conclusion.
9. PHYSICAL RESOURCES
These are the physical resources that would be required for this research work, laptop, broadband, stationary, books, journals, newspapers and mobile etc. The budget for this research work would not be more than 350. It would cover all essential expenses related to this research design.
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9. BIBLIOGRAPHY
y y Ahmad. S (2004) Islamic Banking and Finance in the Contemporary world, [Online]. Retrieved from: http://74.125.77.132/search?q=cache:FKm MwUFqHMJ:www.biharanjuman.org/Dissertation_XLRIIslamic_Finance_Shakeel_Ahmad.doc+islamic+banking+dissertation&cd=2&hl=en&ct =clnk&gl=uk [Accessed 25 March 2010] Alkassim. M. Faisal, (2005), the Profitability of Islamic and Conventional Banking in the GCC Countries, [Online]. Retrieved fr om: http://www.failaka.com/downloads/Profitability_Islamic_Banking.pdf [Accessed 3 April 2010] Changing minds website, (2009), Critical rationalism, [Online]. Retrieved from: http://www.changingminds.org/explanations/research/philosophies/rationalism.ht ml [Accessed 31 March 2010] Dubai Islamic Bank, Annual reports (2005, 2006, 2007, 2008 and 2009), [Online]. Retrieved from: http://www.dib.ae/en/ir_financial-reports.htm [Accessed 17 April 2010] Economic and Social Research Council, Research Ethics framework, [Online]. Retrievedfrom:http://www.esrc.ac.uk/esrcinfocentre/images/esrc_re_ethics_frame_ tcm6-11291.pdf [Accessed 5 April 2010] El-Gamal. M (2006), Islamic finance, Law, Economics and Practices, [Online]. Retrieved from: http://books.google.co.uk/books?id=2ElRUvoVRxYC&printsec=frontcover&dq=islami c+banking+%26+finance&as_brr=3&rview=1&cd=2#v=onepage&q=islamic%20bankin g%20%26%20finance&f=false [Accessed 20 March 2010] Iqbal.Z, Mirakhor. A (1987), Islamic Banking, [Online]. Retrieved from: http://books.google.co.uk/books?rview=1&as_brr=3&q=islamic+banking+%26+finan ce&btnG=Search+Books [Accessed 25 March 2010] Islamic Bank of Britain, (2010) Modes of Sharia a Finance, [Online]. Retrieved from: http://www.islamic-bank.com/sharia-finance/modes-sharia-finance/ [Accessed 15 March 2010] Islamic Bank of Britain, regulatory information, Annual reports (2004, 2005, 2006, 2007, 2008 and 2009), [Online]. Retrieved from: http://www.islamicbank.com/investor-relations/regulatory-information/ [Accessed 20 March 2010] Islamic Bank of Britain,(2010) certificates of Endorsement, [Online] retrieved from: http://www.islamic-bank.com/sharia-finance/certificates-endorsement/ [Accessed 18 March 2010]
y y
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Khan. M Fahim, (2010), Islamic Banking and finance in European Union, [Online].Retrievedfrom:http://books.google.co.uk/books?id=oPstuILq5B4C&printsec =frontcover&dq=islamic+banking+%26+finance&lr=&as_brr=3&rview=1&cd=49#v=o nepage&q&f=false [Accessed 10 April 2010] National Bank of Dubai, Annual reports (2005, 2006, 2007, 2008 and 2009) [Online]. Retrievedfrom:http://www.emiratesnbd.com/investors/resultsAndPresentations/an nualReports.cfm [Accessed 15 April 2010] Schoon.N (2009), Islamic Banking and Finance, [Online]. Retrieved from: http://books.google.co.uk/books?id=FWtF5zUwz kEC&printsec=frontcover&dq=islam ic+banking+%26+finance&as_brr=3&rview=1&cd=3#v=onepage&q&f=false [Accessed 15 March 2010] Sharia a Negative List, (2009), [Online]. Retrieved from: http://www.islamicbankingway.com/2009/11/11-shariah-negative-list.html [Accessed 5 April 2010] Van Grueing. H, Iqbal.Z , (2008). Risk Analysis for Islamic Banks, [Online]. Retrieved from:http://books.google.co.uk/books?id=EjlsEs4yPMC&pg=PA278&dq=islamic+banking+%26+finance&as_brr=3&rview=1&cd=2 6#v=onepage&q=islamic%20banking%20%26%20finance&f=false [Accessed 1April 2010]
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10. G LOSSARY OF ISLAMIC TERMS

IJARA: Ijara is a form of leasing. It involves a contract where the bank buys and then leases an item. IJARA-WA-IKTANA: Ijara-wa-iktana is similar to Ijara, except that included in the contract is a promise from the customer to buy the equipment at the end of the lease period, at a pre-agreed price. Rentals paid during the period of the lease constitute part of the purchase price. Often, as a result, the finale will be fo r a token sum. IJARA WITH DIMINISHING MUSHARAKA: The principle of Ijara with diminishing Musharaka can be used for home-buying service. Diminishing Musharaka means that we reduce our equity in an asset with any additional capital payment you make, over and above your rental payments. MUDARABA: Mudarabah refers to an investment on your behalf by a more skilled person. It takes the form of contracts between two parties, one who provides the funds and the other who provides the expertise and who agrees to the division of any profits made in advance. MUDARIB: In a Mudarabah contract, the expert who manages the investment is known as a Mudarib. MURABAHA: Murabaha is a contract for purchase and resale and allows the customer to make purchases without having to take out a loan and pay interest. Islamic Bank of Britain purchases the goods for the customer, and resells them to the customer on a deferred basis, adding an agreed profit margin. The customer then pays the sale price for the goods over instalments, effectively obtaining credit without paying interest. MUSHARAKA: Musharaka means partnership. It involves you placing your capital with another person and both sharing the risk and reward. The difference between Musharaka arrangements and normal banking is that you can set any kind of profit sharing ratio, but losses must be proportionate to the amount invested. QARD: A Qard is a loan, free of profit. This arrangement is used for current accounts. RIBA: Riba means interest, which is prohibited in Islamic law. An y risk-free or guaranteed interest on a loan is considered to be usury. WAKALA: Wakala is an agency contract, which usually includes in its terms a free for the expertise of the agent. You own banks as your agent and pay a fee for banks expertise.
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Ma Financial Management Proposal

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Liverpool John Moore s University 2010

Liverpool John Moore s University 2010

1. INTRODUCTION TO THE TOPIC

Liverpool John Moore s University 2010

Liverpool John Moore s University 2010

2. INTRODUCTION TO ISLAMIC BANK OF BRITAIN

Liverpool John Moore s University 2010

Liverpool John Moore s University 2010

3. RESEARCH OBJECTIVES AND RESEARCH QUESTIONS RESEARCH OBJECTIVES

Liverpool John Moore s University 2010

Liverpool John Moore s University 2010

5. LITERATURE REVIEW INTRODUCTION TO ISLAMIC SHARIA A

Aqidah (Faith & Belief)

Sharia a (Practices & Activities)

Akhlaq (Moralities & Ethics)

Ibadah (Man-to-God worship)

Muamalat (Man-to-man activities)

Other Economic activities (Kabir Hassan)

Banking & Financial actitivities

Liverpool John Moore s University 2010

Liverpool John Moore s University 2010

Liverpool John Moore s University 2010

Liverpool John Moore s University 2010

Liverpool John Moore s University 2010

6. METHODOLOGY RESEARCH PHILOSOPHY

Liverpool John Moore s University 2010

Liverpool John Moore s University 2010

Liverpool John Moore s University 2010

DATA COLLECTION STRATEGY

DATA ANALYSIS STRATEGY

Liverpool John Moore s University 2010

Liverpool John Moore s University 2010

Liverpool John Moore s University 2010

Liverpool John Moore s University 2010

Liverpool John Moore s University 2010

10. G LOSSARY OF ISLAMIC TERMS

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