2

Economic Development and Islamic Finance

375 Pages · 2013 · 5.21 MB · English

  • Economic Development and Islamic Finance

    ddd


    eee


    zzz


    E orioriori


    c hhh


    o ututut


    n AAA


    o e e e


    m ururur


    sss


    i ooo


    c D sclsclscl


    DiDiDi


    e


    v c c c


    e bliblibli


    l uuu


    o PPP


    p


    m


    e


    n


    t


    a ddd


    eee


    n zzz


    d ririri


    ooo


    I hhh


    sl ututut


    a AAA


    m e e e


    rrr


    i uuu


    c sss


    ooo


    F clclcl


    in sss


    a DiDiDi


    n c c c


    c bliblibli


    e uuu


    PPP


    DIRECTIONS IN DEVELOPMENT


    ddd


    eee Finance


    zzz


    ririri


    ooo


    hhh


    ututut


    AAA


    e e e


    rrr


    uuu


    ososos Economic Development and


    clclcl


    sss


    DiDiDi


    c c c Islamic Finance


    bliblibli


    uuu


    PPP


    Iq


    b


    a


    l a Zamir Iqbal and Abbas Mirakhor, Editors


    n


    d


    M ddd


    eee


    ir zzz


    akh orioriori


    o hhh


    r ututut


    AAA


    e e e


    rrr


    uuu


    sss


    ooo


    clclcl


    sss


    DiDiDi


    c c c


    bliblibli


    uuu


    PPP Economic Development and Islamic Finance Directions in Development


    Finance


    Economic Development and


    Islamic Finance


    Zamir Iqbal and Abbas Mirakhor, Editors © 2013 International Bank for Reconstruction and Development / The World Bank


    1818 H Street NW, Washington DC 20433


    Telephone: 202-473-1000; Internet: www.worldbank.org


    Some rights reserved


    1 2 3 4 16 15 14 13


    This work is a product of the staff of The World Bank with external contributions. Note that The World


    Bank does not necessarily own each component of the content included in the work. The World Bank


    therefore does not warrant that the use of the content contained in the work will not infringe on the rights


    of third parties. The risk of claims resulting from such infringement rests solely with you.


    The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views


    of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank


    does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations,


    and other information shown on any map in this work do not imply any judgment on the part of The World


    Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.


    Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and


    immunities of The World Bank, all of which are specifically reserved.


    Rights and Permissions


    This work is available under the Creative Commons Attribution 3.0 Unported license (CC BY 3.0) http://


    creativecommons.org/licenses/by/3.0. Under the Creative Commons Attribution license, you are free to


    copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following


    conditions:


    Attribution—Please cite the work as follows: Iqbal, Zamir, and Abbas Mirakhor, eds. 2013. Economic


    Development and Islamic Finance. Directions in Development. Washington, DC: World Bank.


    doi:10.1596/978-0-8213-9953-8. License: Creative Commons Attribution CC BY 3.0


    Translations—If you create a translation of this work, please add the following disclaimer along with the


    attribution: This translation was not created by The World Bank and should not be considered an official


    World Bank translation. The World Bank shall not be liable for any content or error in this translation.


    All queries on rights and licenses should be addressed to the Office of the Publisher, The World Bank,


    1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org.


    ISBN (paper): 978-0-8213-9953-8


    ISBN (electronic): 978-0-8213-9954-5


    DOI: 10.1596/978-0-8213-9953-8


    Cover photos: © Giorgio Fochesato / iStockphoto.com. Used with permission; further permission required


    for reuse.


    Cover design: Naylor Design.


    Library of Congress Cataloging-in-Publication Data


    Economic development and Islamic finance / [edited by] Zamir Iqbal and Abbas Mirakhor.


    pages cm


    ISBN 978-0-8213-9953-8 — ISBN 978-0-8213-9954-5 (ebook)


    1. Finance—Islamic countries. 2. Finance—Religious aspects—Islam. 3. Economic development—Islamic


    countries. I. Iqbal, Zamir. II. Mirakhor, Abbas.


    HG187.4.E26 2013


    332.0917’67—dc23 2013013763


    Economic Development and Islamic Finance • http://dx.doi.org/10.1596/978-0-8213-9953-8 Contents


    Foreword xi


    Acknowledgments xiii


    Contributors xv


    Abbreviations xix


    Overview 1


    Views on Economic Development 3


    The Islamic Concept of Economic Development 5


    Summary of Chapters 10


    References 22


    pArt 1 theoretical Foundation 23


    Chapter 1 Epistemological Foundation of Finance: Islamic and


    Conventional 25


    Abbas Mirakhor and Wang Yong Bao


    An Ideal Conventional Financial System 26


    An Ideal Islamic Finance System 31


    Achieving the Ideal: Uncertainty, Risk, and Equity Markets 41


    Summary and Conclusion 53


    References 57


    Background Reading 60


    Chapter 2 Islamic Finance Revisited: Conceptual and Analytical


    Issues from the Perspective of Conventional Economics 67


    Andrew Sheng and Ajit Singh


    Introduction 67


    The Central Tenet of Islamic Finance: Absolute Prohibition


    against Interest Rates 69


    Ethical Foundations of Islamic Finance 76


    Modigliani and Miller Theorems 78


    Risk Sharing, Risk Shifting, and the Risks of Bankruptcy 81


    The Stock Market and Islamic Finance 82


    Economic Development and Islamic Finance • http://dx.doi.org/10.1596/978-0-8213-9953-8 xa0xa0v vi Contents


    Interim Summary of the Main Findings and Two Further


    Questions 83


    Islamic Finance and Economic Development 85


    The Real Challenge of Islamic Finance 86


    Conclusion 87


    Notes 88


    References 88


    Chapter 3 The Foundational Market Principles of Islam, Knightian


    Uncertainty, and Economic Justice 93


    S. Nuri Erbas¸ and Abbas Mirakhor


    Introduction 93


    The Foundational Islamic Market Principles 97


    Knightian Uncertainty and the Islamic View of Uncertainty 99


    Institutional Development, Trust, and Uncertainty 101


    Islamic Contracts and Risk Sharing 106


    Research Agenda for Islamic Economics: A Proposal 118


    Concluding Remarks 119


    Notes 120


    References 125


    pArt 2 Developmental Aspects 131


    Chapter 4 Finance and Development in Islam: A Historical


    Perspective and a Brief Look Forward 133


    Murat Çizakça


    Introduction 133


    Basic Characteristics of an Islamic Economy and Finance 134


    Implementation 135


    Historical Evidence 136


    Stagnation and Decline 141


    Relevance for Today: What Needs to Be Done? 143


    Conclusion 145


    Notes 146


    References 147


    Chapter 5 Economic Development in Islam 151


    Hossein Askari


    The Evolution of Western Thinking on Development 152


    Economic Development in Islam 158


    Concluding Comments 175


    Notes 175


    References 176


    Economic Development and Islamic Finance • http://dx.doi.org/10.1596/978-0-8213-9953-8 Contents vii


    Chapter 6 Islam’s Perspective on Financial Inclusion 179


    Zamir Iqbal and Abbas Mirakhor


    What Is Financial Inclusion and Why Is It Important? 181


    Issues with the Conventional Approach to Financial


    Inclusion 183


    The Concept of Financial Inclusion in Islam 185


    Redistributive Instruments of Islam 188


    Public Policy Implications 191


    Government as the Risk Manager Promoting


    Risk Sharing 192


    Need for Developing a Supportive Institutional


    Framework 193


    Institutionalization of Islamic Redistributive Instruments 195


    Conclusion 198


    Notes 199


    References 200


    Chapter 7 Financial Inclusion and Islamic Finance: Organizational


    Formats, Products, Outreach, and Sustainability 203


    Habib Ahmed


    Introduction 203


    Inclusive Finance: Scope and Constraints 205


    Islamic Finance and Inclusive Finance 209


    Islamic Inclusive Finance: An Overview and Comparison 213


    Organizational Formats, Services, Outreach, and


    Sustainability 220


    Conclusion 224


    Notes 225


    References 226


    Chapter 8 Theory and Instruments of Social Safety Nets and Social


    Insurance in Islamic Finance: Takaful and Ta’min 231


    Kamaruddin Sharif and Wang Yong Bao


    Islamic Social Safety Nets 232


    The Institutional Framework of Social Safety Nets in Islam 234


    The Concept of Social Security in Islam 239


    Social Insurance: Takaful and Ta’min 241


    Takaful in Practice 245


    Conclusion 248


    Notes 248


    References 249


    Chapter 9 Islamic Capital Markets and Development 253


    Obiyathulla Ismath Bacha and Abbas Mirakhor


    Introduction 253


    Economic Development and Islamic Finance • http://dx.doi.org/10.1596/978-0-8213-9953-8 viii Contents


    Are Capital Markets Necessary? 253


    Issues Concerning Capital Markets 255


    Concept of Islamic Capital Markets 257


    Equity and Sukuk Markets in an Islamic Capital Market 260


    The Reality of Capital Markets in the Muslim World 268


    Concluding Remarks: Implementing the Risk-Sharing


    Framework 270


    Notes 272


    References 272


    Chapter 10 Islamic Stock Markets in a Global Context 275


    Andrew Sheng and Ajit Singh


    Introduction 275


    Do Stock Markets Help Economic Development? 278


    Lessons for Islamic Stock Markets 280


    Stock Markets and Economic Efficiency: Further Lessons


    for Islamic Stock Markets 284


    Issues of Globalization and of Long-Term Growth for


    Islamic Stock Markets 289


    Conclusion 291


    Notes 292


    References 293


    pArt 3 policy Formulation 297


    Chapter 11 A Survey of the Economic Development


    of OIC Countries 299


    Hossein Askari and Scheherazade Rehman


    Introduction 299


    Fundamental Islamic Economic Doctrines 300


    The Performance of OIC Countries 306


    Concluding Remarks on Islam and Economic Performance


    and Prosperity 317


    Notes 322


    References 323


    Chapter 12 Islam and Development: Policy Challenges 325


    Azura Othman and Abbas Mirakhor


    Introduction 325


    The Islamic Economy and the Role of the State 326


    Policy Tools in Macroeconomic Management 328


    Policy Instruments in an Islamic Economy 332


    Challenges in Policy Implementation 338


    Summary 342


    Notes 343


    References 344


    Economic Development and Islamic Finance • http://dx.doi.org/10.1596/978-0-8213-9953-8


    Please note: To fully download this free PDF,EBook files you need know All free.
    Found by internet command,site not saved pdf file
You May Also Like

Related PPT Template in the same category.