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Islamic Finance

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by

Mustapha Hilali

on 4 October 2016

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Transcript of Islamic Finance

Table of Contents
1 . Origins

2. Main principles and products

3. Evolution and assets

4. Limits
ORIGINS
First Islamic Bank created by Mit Ghamr in Egypt in 1963

In 1975 : Still only one Islamic Bank in the world

Nowadays: 300 worldwide

Finance in compliance with Sharia laws
Sharia law: law of the Islamic World

Islamic Finance prohibit investments in sectors like :

Alcohol
Gambling
Pornography
Armaments
Tobacco
Banks which give or receive interest rates
EVOLUTION & ASSETS
Islam : 1.6 billions of muslims in the world
1963 : Beginning of « Islamic Banking » in muslim countries
Main difference with conventional finance
Introduction
Innondations et SIG au Maroc
HILALI Mustapha
Lemaire Gregoire
NO INTEREST RATE
MAIN PRINCIPLES AND PRODUCTS
There are five main principles

No interest rate
No speculation and randomness
Backing assets on real property
Sharing of profits and losses
Fairness
PRODUCTS
Eight main instruments in three main categories

Financial instruments
Participatory tools
Instruments of no-banking institutions
Financial instruments:

Al Mourabaha: a short-term funding

Al Salam: a term sale used for agriculture

Al Istisnaa: a term sale used for manufactured products

Al Ijaraa: a "credit- lease" contract
Participatory tools

Al Moudharaba: cooperation between an investor and an entrepreneur

Al Mocharakah: a kind of « joint-venture »
Instruments of no-banking institutions

Sukuk: the equivalent of an issued obligation

Takaful: an insurance concept
Mains banks in the Middle East:

Al Rajhi Bank (Saudi Arabia): $ 40 billions
Kuwait Finance House (Kuwait): $ 38.7 billions
Dubai Islamic Bank (UAE): $ 24.9 billions
Abu Dahbi Islamic Bank (UAE): $ 13.1 billions
Albaraka Banking Group (Bahrain): $ 11.1 billions
KUWAITI STOCK EXCHANGE
Europe

London: main place of Islamic Finance in Europe

First Islamic Bank in 2004 : Islamic Bank of Britain
What about France?

In 2008: Christine Lagarde made a speech about the interest of France concerning Islamic Finance

Problems on taxation: double taxation: VAT and Zakât

Income missed for France: Middle East funds
Islamic banks were the only banks which did not know the “Subprime crisis” because of the non-speculation, the non-use of interest rates and the backing on real values.

Islamic Finance permits to help the poorest people: development of “Finance éthique et solidaire” in France.
LIMITS
Economic: depend too much on petrol industry & low profits
Socio-cultural:
a) For Muslims
b) Occidental point of view
Regulatory: Different laws and perceptions between countries
Credibility: Misunderstanding
Human resources: lack of qualified people
CONCLUSION
An alternative to the conventional financial system


A bright future as well
Full transcript