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The Stability of Islamic Finance: Creating a Resilient Financial Environment for a Secure Future

The Stability of Islamic Finance Creating a Resilient Financial Environment for a Secure Future

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  • Publisher: John Wiley & Sons
  • ISBN: 9780470825198
  • Published In: March 2010
  • Format: Hardback , 248 pages
  • Jurisdiction: International ? Disclaimer:
    Countri(es) stated herein are used as reference only
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    This new book by a group of four Western-trained Islamic economists is greatly welcomed. It builds on and extends their earlier work on the topic and will become essential reading for all those with an interest in the economic implications of Islamic finance. The Stability of Islamic Finance develops themes that link Islamic finance to existing traditions in economics; that assess the stability properties of Islamic financial instruments, and that explain some of the key Islamic concepts in economists' terms. It will be an invaluable source for those who want to know more about the nature of the financial instruments that go to make up an Islamic financial system, and to understand how an Islamic financial system might work in a twenty-first century context. It is a provocative and insightful assessment of the economic properties of Islamic finance that deserves to be read and reflected on by Islamic and non-Islamic economists alike.
    Sir Andrew Crockett
    President, JPMorgan Chase International
    Former General Manager, The Bank for International Settlements (BIS)

    In recent years, Islamic finance has evolved from a tiny "cottage" industry to an increasingly important and respected component of global finance. The industry has developed common standards and practices, and has attracted the interest of issuers and investors outside the Muslim community. Yet, its economics and implications for financial stability are generally not well understood. The authors make an important contribution to our understanding of the industry by linking its foundations not only to the teachings of Islam, but also to classical Western economic thought. The authors also provide a convincing analysis of the structural weaknesses of conventional finance, and of the role of monetary policy in causing misallocation of resources and boom-and-bust cycles. In the process, they make a case for the inherent stability and efficiency of Islamic finance. The book is scholarly, insightful, original in scope and highly readable.
    Cesare Calari
    Managing Director, Wolfensohn Capital Partners
    Former Vice President, Finance, The World Bank

     

    The authors have written numerous books and articles on Islamic finance between them, and they bring a wealth of knowledge and experience to the topic. The Stability of Islamic Finance is an important contribution to the discussion of the Islamic finance industry as a whole and its place in broader efforts to reduce the volatility of global financial markets.
    Ms. Dr. Shamshad Akhtar
    Vice President, Middle East and North Africa, The World Bank
     

    The authors, whose academic credentials and practical experience are enviable, need to be heartily complimented for making another worthwhile contribution to the literature on Islamic economics and finance. They have convincingly shown in this valuable book how Islamic finance can help the international community avoid the severe financial crises of the kind in which it is currently embroiled. The timing of the book is perfect and those who read the book will not fail to realize that they have used their precious time in a highly productive manner.
    Dr. Umer Chapra
    Formerly Senior Economic Adviser, Saudi Arabian Monetary Agency Research Adviser, Islamic Research and Training Institute, Islamic Development Bank

    The Stability of Islamic Finance is not only timely but extremely relevant. At a time the world is asking questions on how we can avoid the next crisis and whether there are alternatives to the current system, which promotes increasingly damaging boom-bust cycles, the book provides answers to these and more. It gives us hope in that things can be better and we need not be held hostage to the present system which promotes greed, inequality, excessive consumption and the rapid deterioration of the environment. If policy makers are serious about addressing these issues and seek a change for the better, they should read The Stability of Islamic Finance.
    Sani Hamid
    Director, Wealth Management, Financial Alliance (Singapore)
    Former Director, Sovereign & International Public Finance Ratings, Standard & Poor’s

     

     

     Press Release

    March 24, 2010
    Islamic Finance Offers Stability as a Financial System
     

    The validity of the current financial regime has been in question since the 2007 global financial crisis exposed its vulnerabilities that stem from high leveraging, a complex system  of transactions and instruments, and a disconnect between the real and financial sector.

    Published by John Wiley & Sons (Asia) Pte Ltd, The Stability of Islamic Finance: Creating a Resilient Financial Environment for a Secure Future develops an analytical case for the inherent stability of an Islamic financial system, a system that is based on equity financing and risk sharing. The authors, who have written numerous books and articles on Islamic finance between them, bring a wealth of knowledge and experience to the discussion of the Islamic finance industry and its place in broader efforts to reduce the volatility of global financial markets.

    Focusing on the historical, analytics and empirical discussion of the comparative stability of the two systems, this book first considers episodes of turbulence and instability in a historical context recalling the occurrence of such events from mid-19th century to the present. It then offers various theoretical explanations along with solutions and alternative financial systems that avoid instability provided by various scholars dating back to mid-19th century to present. Discussing the architecture of an Islamic financial system, it shows that the Islamic financial system shares at its core many characteristics of a stable financial system proposed by Western scholars throughout history to avoid the inherent instability of the present dominant system.

    Scholarly, insightful, yet highly-readable, this book makes a convincing case for the world to shed its reliance on debt, interest and leveraging, and revamp the global financial system to rely more heavily on equity and risk sharing, the foundation of an Islamic financial system.

  • Foreword.

    Acknowledgments.

    Glossary of Arabic Terms.

    Introduction.

    CHAPTER 1 The Nature of Capital and the Rate of Return.

    CHAPTER 2 The Origins of Financial Panics and Recessions.

    CHAPTER 3 Monetary Policy and Financial Crises.

    CHAPTER 4 The Internationalization of Financial Crises.

    CHAPTER 5 The Role of the Credit Multiplier in Financial Crises.

    CHAPTER 6 The Inherent Stability of Islamic Finance.

    CHAPTER 7 A Theoretical Model of the Inherent Stability of Islamic Finance.

    CHAPTER 8 Asset Pricing and Risk in Islamic Finance.

    CHAPTER 9 Islamic Financial Intermediation and Markets.

    CHAPTER 10 Risk Profile of Islamic Financial Intermediaries.

    CHAPTER 11 Financial Engineering, Derivatives and Financial Stability.

    CHAPTER 12 Corporate Governance and Financial Crises.

    CHAPTER 13 The Performance of Islamic Financial Intermediaries and Products.

    Conclusion.

    Bibliography.

    Index.

  • PROF. HOSSEIN ASKARI received all his university education, including a Ph.D. in economics, at MIT. He has taught at MIT, Tufts University, the University of Texas at Austin and is now the Iran Professor of International Business and International Affairs at the George Washington University. He served for two and a half years on the Executive Board of the IMF and was Special Advisor to the Minister of Finance of Saudi Arabia. In the mid-1980s he was the director of a multinational team that developed the first energy plan and energy planning models for Saudi Arabia. He has written extensively on economic development in the Middle East, international trade and finance, agricultural economics, oil economics, economic sanctions, and on Islamic economics and finance.


    DR. ZAMIR IQBAL works as Lead Investment Officer in the Treasury of the World Bank in Washington, D.C. He earned his Ph.D. in International Finance from the George Washington University, where he also serves as adjunct faculty of International Finance. He has extensive experience with capital markets, structured products, risk management, financial sector development, and financial modeling. His research interests include Islamic finance, financial engineering, structured finance and risk management. He is co-author of several books on Islamic banking and finance.


    DR. NOUREDDINE KRICHENE received his Ph.D. in economics, University of California, Los Angeles, 1980; joined the International Monetary Fund (IMF) in 1986; and held the position of advisor at the Islamic Development
    Bank.


    DR. ABBAS MIRAKHOR received his Ph.D. in Economics from Kansas State University in 1969. After teaching at various universities in the USA and in Iran he joined the staff of the Research Department of the IMF in 1984. He became an Executive Director of the IMF from 1990 until his retirement in 2008. He is the author of a number of articles and books on Islamic economics and finance. He is now the first holder of the INCEIF Chair in Islamic Finance.

     

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