Some recent writings on Islamic finance have resuscitated the old ‘no risk, no gain’ precept from... more Some recent writings on Islamic finance have resuscitated the old ‘no risk, no gain’ precept from the earlier literature in the wake of current financial crisis. They argue that the basic reason for the recurrence of such crises is the conventional interest-based financial system that rests purely on transfer of risks. In contrast, Islam shuns interest and promotes sharing of risks, not their transfer. The distinction is used to make a case for replacing the conventional system with the Islamic; for that alone is the way to ensuring the establishment of a just and stable crisis free economic system. Islamic banks have faced the current crisis better than the conventional is cited as evidence. This paper is a critique of this line of argument and concludes that the case is for reform not for replacement of the current system marked with increasing duality.
A high-quality crack-free AlN cap layer on GaN layer has been achieved using an AlN buffer layer ... more A high-quality crack-free AlN cap layer on GaN layer has been achieved using an AlN buffer layer directly grown on a silicon substrate at high temperature by radio frequency (RF) plasma-assisted molecular beam epitaxy. A two dimensional (2D) growth process guide to AlN cap layer of high grade crystal quality. The nucleation and the growth dynamics have been studied by in situ reflection high energy electron diffraction (RHEED) and ex situ by high resolution transmission electron microscopy (HR-TEM). The microstructure was investigated by energy-dispersive X-ray spectroscopy (EDX). It was disclosed that AlN is single crystalline with low defect. High densities of V-shaped pits were not detected at the interface between AlN and GaN layers. Contradictory the earlier reported V-shaped defects in nitride-based alloys; these V-shaped pits were condensed on top of the AlN layer because of H2 etching of the surface when a high temperature growth discontinuity between AlN and GaN layers.
This note explains the circumstances that created the recent economic turmoil in Dubai. It analys... more This note explains the circumstances that created the recent economic turmoil in Dubai. It analyses the consequences of the bailout the government ultimately enforced. It questions the role rating agencies play in such crises and suggests regulation of their activities. Finally, it warns of challenges Dubai is likely to face in years ahead.
Abstract. For financing consumer durables like houses, cars or computers, conventional banks use ... more Abstract. For financing consumer durables like houses, cars or computers, conventional banks use what are called the equated monthly installment (EMI) models. EMI is the fixed payment a borrower makes to a lender to pay off both interest and principal each month sothat over a specified number of years, the loan amount is cleared in full. Islamic banks have followed the practice using EMI on diminishing musharakah partnership basis. The model is popularly known as the MMP, an abbreviation of its Arabic nomenclature. The defining character of this model is increasing amortization of capital through a customer buy back provision in the agreement. We have shown more than once that models of the sort invariably involve compounding of return on capital and pass the ownership of property to the client at a slower rate than the rate of capital amortization until the contract is concluded. This paper provides additional evidence and documentation to reiterate that the MMP exhibits the same c...
The financial turmoil that the 2007 subprime debacle of the US set into motion has raised a welte... more The financial turmoil that the 2007 subprime debacle of the US set into motion has raised a welter of puzzling questions for the policy makers across the world. The position seems all the more confusing in the Muslim world where the fast expanding Islamic finance operates in competition with the conventional in a dual setting. The turmoil has led many to blaming the private lure for the colossal failure of financial institutions. In contrast, others counter argue to put public policy in the dock under the exalted banner of ‘regime uncertainty’. They blames the aggravation of the trouble on the uncalled for government intervention in financial markets. Interestingly, few draw attention to moral crimes committed on either side of the fence among the causative factors. This paper seeks to investigate if the monetary policies the Central Banks follow - now including the Basel capital adequacy norms as well - would suit or suffice Islamic banking institutions competing with the conventio...
The current financial turmoil has led many writers in the area of Islamic finance to revive an ol... more The current financial turmoil has led many writers in the area of Islamic finance to revive an old edict in Islamic finance – no risk, no gain. I have discussed this axiom in my earlier writings and have not come across anything in recent advocacy of its proponents that could make me change my position. Thus the object of this brief note is not to reopen that dialogue. In view of the theoretical heat that recent writings have generated, empiricists are prompted to test the hypothesis: Equity financing is better than reliance on debt for economic stability and growth, Muslim countries being the reference point. For this purpose, it is not difficult to select a sample and specify the relevant variables. But as growth in GDP is pivotal variable here the choice of production function for the work becomes important as there is a variety of frame works available. This note discusses the selection issue. More specifically, can we safely use a Model with technology remaining unchanged or it...
Islamic economics has of late landed in confusion and neglect and much concern is being voiced on... more Islamic economics has of late landed in confusion and neglect and much concern is being voiced on this state of affairs. The divergence of views on various aspects of the subject tends to grow, cohesive efforts are missing. It is in this context that the present paper takes a look at the nature and significance of Islamic economics and examines the issues of its definition, nature and scope, the questions of methods and methodology, system approach, the problems that seems to hinder its growth, the challenges Islamic economics faces today and how the same can be faced. Since the differences between the Islamic and mainstream economic disciplines stem from the divergent worldviews that condition them, the discussion opens on the topic as background material. This paper is a part of draft Chapter of a book under preparation on Islamic economics and finance. Comments and suggestions are welcome but the paper or its parts cannot be put to any commercial or unfair use.
Purpose ― The aim of the study is to explore the causes and impact of predatory online publishing... more Purpose ― The aim of the study is to explore the causes and impact of predatory online publishing on Islamic economics and finance. Design/methodology/approach ― The method adopted involves a library literature scan to identify the origin and expansion of predatory publishing, as references listed in the paper show. The personal experience and observation of the author over the decades of teaching at various universities endorses the evidence. Findings ― The focus on “publish or perish” has led to a division of Islamic scholars into puritans and modern economists. It has also caused the overuse of mathematical and parametric modeling to the disadvantage of the discipline, which is essentially imbued with unquantifiable ethical norms and values. Practical implications ― The study seeks to induce fruitful and purposive change in the research designs and direction of Islamic economics and finance. Originality/value ― This research initiates discussion on predatory publishing, an issue ...
This is a detailed comment on a discussion paper of Munawar Iqbal published in an earlier issue o... more This is a detailed comment on a discussion paper of Munawar Iqbal published in an earlier issue of the same journal.It argues that it is difficult to quantify israf (frivolous expenditure on consumption.Therefore, a better way of analysing the impact of israf would be to start with a no-israf model of income determination. Then introduce israf into the picture israf to see the impact on the situation. The comments present such a model.
This paper provides an appraisal of some of the researches conducted in recent years for evaluati... more This paper provides an appraisal of some of the researches conducted in recent years for evaluating the efficiency of Islamic banks. It is restricted to studies using parametric (SFA) and non-parametric (DEA) models. It finds that they leave much to be desired and the conclusions they arrive at are of suspect validity for a variety of reasons. On a more important side, the criteria – cost or profit – they invariably use for measuring efficiency albeit valid miss the essence of what Islamic banking aims to achieve. These banks must of course pay their way but more than that they have to meet certain social objectives and priorities. The fulfillment of social responsibilities even at the expense of reduced profits has to be the main justification for their existence.
In my latest article on Islamic home financing models in the ISRA Journal, June 2013,I had shown ... more In my latest article on Islamic home financing models in the ISRA Journal, June 2013,I had shown that the Zubair Diminishing Balance Model (ZDBM) does not involve compounding of return and the transfer of ownership to the customer perfectly matches the payments’ rate; the two norms Islamic models must meet. It is satisfying to note that Nabil in the same issue of the journal takes up these issues in a comprehensive and tightly argued conceptual paper and convincinglyvindicates my position on the compounding issue. However, he argues that the transfer of ownership in the ZDBM also does not meet the stated ideal even as it is closer to the norm than other constructs. The objective of this paper is to clarify my position on this latter issue albeit I shall put on record a more clinging demonstration of interest compounding in the conventional formula as many Islamic banks use it not only in home financing but in other deferred payment contracts as well.
This brief note looks at the suggested use of universal banking as a tool to mitigating risk in f... more This brief note looks at the suggested use of universal banking as a tool to mitigating risk in financing operations’ arising at both ends of the market – demand and supply. It concludes that the issue of adopting universal banking in the Islamic system is of little significance for risk reduction. It essentially raises the issue of mega banks versus smaller units in the Islamic system where the discretion would opt for the latter.
This review questions Chuodhury's use of topological spaces for criticising the risk-return i... more This review questions Chuodhury's use of topological spaces for criticising the risk-return issues in mainstream financial literature. It highlights the failure of the work in producing an understandable Islamic alternate framework for the purpose.
This article discusses briefly various aspects and forms of deficit financing in modern economies... more This article discusses briefly various aspects and forms of deficit financing in modern economies. It deals with deficit financing (i) within countries and (ii) between the member countries of the International Monetary Fund (IMF} and that institution as aid provider to a member in difficulty. In (i) it elaborates on the use of deficit financing as an instrument to part fund development, role in crisis management and inflationary consequences. In (ii) it briefly sees deficit financing on a global scale, explain IMF conditionality and the sort of programs it envisaged the aid seeking members to follow; it presents illustration and critique of the instrument each case.. In conclusion it contains some observations including a few policy suggestions.
Shelter is one of the basic needs for human beings. Its availability for the people is an Islamic... more Shelter is one of the basic needs for human beings. Its availability for the people is an Islamic imperative. In view of the appalling living conditions of a substantial proportion of the population in most countries around the world, especially Muslim, Islamic banks have entered the field with various schemes for home financing. In this infant industry, this effort is understandably guided by the profit motive, but a social dimension has to surface in the course of time. Unfortunately, the models banks currently use for home financing remain under the juridical gaze, more so as the practice is not always found to be transparent. This paper looks at Islamic home financing models in a broader societal context. It evaluates the efficacy of the current financing structures practised and suggests a new approach. The proposed model is shown as superior to the existing ones. It meets the norms of equity, fair play and openness and does not, presumably, violate any other Islamic norm. Fina...
This paper attempts to provide an overview of a vast and important debate from an Islamic angle. ... more This paper attempts to provide an overview of a vast and important debate from an Islamic angle. It presents the concept of distributional equity in a pure Islamic system. It is argued that this system would ensure distributional equity through reliance on two sets of controls. First is a set of ethical and regulatory measures which would prevent inequities from happening. Essentially these preventive measures are obligatory and voluntary expenditures from their income by the Muslims. Second is a set of corrective measures which would be activated by the Islamic state if inequities do in fact arise. These corrective measures are quite varied and include most of the familiar monetary, fiscal, legal, and administrative tools of modern economic policy subject to Islamic constraints. The foundation of the Islamic scheme is the all pervading concept of Amanah that seeks to convert the material ambitions of man into the means of attaining spiritual heights .In the light of the argument de...
Purpose The purpose of this paper is to explore the causes and impact of predatory online publish... more Purpose The purpose of this paper is to explore the causes and impact of predatory online publishing on Islamic economics and finance. Design/methodology/approach The method adopted involves a library literature scan to identify the origin and expansion of predatory publishing, as references listed in the paper show. The personal experience and observation of the author over the decades of teaching at various universities endorses the evidence. Findings The focus on “publish or perish” has led to division of Islamic scholars into conservative and modern economists, and it led to the overuse of mathematical and parametric modeling to the disadvantage of the discipline essentially imbued with unquantifiable ethical norms and values. Practical implications The study seeks to induce fruitful and purposive change in the research designs and direction of Islamic economics and finance. Originality/value This research initiates discussion on predatory publishing, an issue so far untouched i...
Some recent writings on Islamic finance have resuscitated the old ‘no risk, no gain’ precept from... more Some recent writings on Islamic finance have resuscitated the old ‘no risk, no gain’ precept from the earlier literature in the wake of current financial crisis. They argue that the basic reason for the recurrence of such crises is the conventional interest-based financial system that rests purely on transfer of risks. In contrast, Islam shuns interest and promotes sharing of risks, not their transfer. The distinction is used to make a case for replacing the conventional system with the Islamic; for that alone is the way to ensuring the establishment of a just and stable crisis free economic system. Islamic banks have faced the current crisis better than the conventional is cited as evidence. This paper is a critique of this line of argument and concludes that the case is for reform not for replacement of the current system marked with increasing duality.
A high-quality crack-free AlN cap layer on GaN layer has been achieved using an AlN buffer layer ... more A high-quality crack-free AlN cap layer on GaN layer has been achieved using an AlN buffer layer directly grown on a silicon substrate at high temperature by radio frequency (RF) plasma-assisted molecular beam epitaxy. A two dimensional (2D) growth process guide to AlN cap layer of high grade crystal quality. The nucleation and the growth dynamics have been studied by in situ reflection high energy electron diffraction (RHEED) and ex situ by high resolution transmission electron microscopy (HR-TEM). The microstructure was investigated by energy-dispersive X-ray spectroscopy (EDX). It was disclosed that AlN is single crystalline with low defect. High densities of V-shaped pits were not detected at the interface between AlN and GaN layers. Contradictory the earlier reported V-shaped defects in nitride-based alloys; these V-shaped pits were condensed on top of the AlN layer because of H2 etching of the surface when a high temperature growth discontinuity between AlN and GaN layers.
This note explains the circumstances that created the recent economic turmoil in Dubai. It analys... more This note explains the circumstances that created the recent economic turmoil in Dubai. It analyses the consequences of the bailout the government ultimately enforced. It questions the role rating agencies play in such crises and suggests regulation of their activities. Finally, it warns of challenges Dubai is likely to face in years ahead.
Abstract. For financing consumer durables like houses, cars or computers, conventional banks use ... more Abstract. For financing consumer durables like houses, cars or computers, conventional banks use what are called the equated monthly installment (EMI) models. EMI is the fixed payment a borrower makes to a lender to pay off both interest and principal each month sothat over a specified number of years, the loan amount is cleared in full. Islamic banks have followed the practice using EMI on diminishing musharakah partnership basis. The model is popularly known as the MMP, an abbreviation of its Arabic nomenclature. The defining character of this model is increasing amortization of capital through a customer buy back provision in the agreement. We have shown more than once that models of the sort invariably involve compounding of return on capital and pass the ownership of property to the client at a slower rate than the rate of capital amortization until the contract is concluded. This paper provides additional evidence and documentation to reiterate that the MMP exhibits the same c...
The financial turmoil that the 2007 subprime debacle of the US set into motion has raised a welte... more The financial turmoil that the 2007 subprime debacle of the US set into motion has raised a welter of puzzling questions for the policy makers across the world. The position seems all the more confusing in the Muslim world where the fast expanding Islamic finance operates in competition with the conventional in a dual setting. The turmoil has led many to blaming the private lure for the colossal failure of financial institutions. In contrast, others counter argue to put public policy in the dock under the exalted banner of ‘regime uncertainty’. They blames the aggravation of the trouble on the uncalled for government intervention in financial markets. Interestingly, few draw attention to moral crimes committed on either side of the fence among the causative factors. This paper seeks to investigate if the monetary policies the Central Banks follow - now including the Basel capital adequacy norms as well - would suit or suffice Islamic banking institutions competing with the conventio...
The current financial turmoil has led many writers in the area of Islamic finance to revive an ol... more The current financial turmoil has led many writers in the area of Islamic finance to revive an old edict in Islamic finance – no risk, no gain. I have discussed this axiom in my earlier writings and have not come across anything in recent advocacy of its proponents that could make me change my position. Thus the object of this brief note is not to reopen that dialogue. In view of the theoretical heat that recent writings have generated, empiricists are prompted to test the hypothesis: Equity financing is better than reliance on debt for economic stability and growth, Muslim countries being the reference point. For this purpose, it is not difficult to select a sample and specify the relevant variables. But as growth in GDP is pivotal variable here the choice of production function for the work becomes important as there is a variety of frame works available. This note discusses the selection issue. More specifically, can we safely use a Model with technology remaining unchanged or it...
Islamic economics has of late landed in confusion and neglect and much concern is being voiced on... more Islamic economics has of late landed in confusion and neglect and much concern is being voiced on this state of affairs. The divergence of views on various aspects of the subject tends to grow, cohesive efforts are missing. It is in this context that the present paper takes a look at the nature and significance of Islamic economics and examines the issues of its definition, nature and scope, the questions of methods and methodology, system approach, the problems that seems to hinder its growth, the challenges Islamic economics faces today and how the same can be faced. Since the differences between the Islamic and mainstream economic disciplines stem from the divergent worldviews that condition them, the discussion opens on the topic as background material. This paper is a part of draft Chapter of a book under preparation on Islamic economics and finance. Comments and suggestions are welcome but the paper or its parts cannot be put to any commercial or unfair use.
Purpose ― The aim of the study is to explore the causes and impact of predatory online publishing... more Purpose ― The aim of the study is to explore the causes and impact of predatory online publishing on Islamic economics and finance. Design/methodology/approach ― The method adopted involves a library literature scan to identify the origin and expansion of predatory publishing, as references listed in the paper show. The personal experience and observation of the author over the decades of teaching at various universities endorses the evidence. Findings ― The focus on “publish or perish” has led to a division of Islamic scholars into puritans and modern economists. It has also caused the overuse of mathematical and parametric modeling to the disadvantage of the discipline, which is essentially imbued with unquantifiable ethical norms and values. Practical implications ― The study seeks to induce fruitful and purposive change in the research designs and direction of Islamic economics and finance. Originality/value ― This research initiates discussion on predatory publishing, an issue ...
This is a detailed comment on a discussion paper of Munawar Iqbal published in an earlier issue o... more This is a detailed comment on a discussion paper of Munawar Iqbal published in an earlier issue of the same journal.It argues that it is difficult to quantify israf (frivolous expenditure on consumption.Therefore, a better way of analysing the impact of israf would be to start with a no-israf model of income determination. Then introduce israf into the picture israf to see the impact on the situation. The comments present such a model.
This paper provides an appraisal of some of the researches conducted in recent years for evaluati... more This paper provides an appraisal of some of the researches conducted in recent years for evaluating the efficiency of Islamic banks. It is restricted to studies using parametric (SFA) and non-parametric (DEA) models. It finds that they leave much to be desired and the conclusions they arrive at are of suspect validity for a variety of reasons. On a more important side, the criteria – cost or profit – they invariably use for measuring efficiency albeit valid miss the essence of what Islamic banking aims to achieve. These banks must of course pay their way but more than that they have to meet certain social objectives and priorities. The fulfillment of social responsibilities even at the expense of reduced profits has to be the main justification for their existence.
In my latest article on Islamic home financing models in the ISRA Journal, June 2013,I had shown ... more In my latest article on Islamic home financing models in the ISRA Journal, June 2013,I had shown that the Zubair Diminishing Balance Model (ZDBM) does not involve compounding of return and the transfer of ownership to the customer perfectly matches the payments’ rate; the two norms Islamic models must meet. It is satisfying to note that Nabil in the same issue of the journal takes up these issues in a comprehensive and tightly argued conceptual paper and convincinglyvindicates my position on the compounding issue. However, he argues that the transfer of ownership in the ZDBM also does not meet the stated ideal even as it is closer to the norm than other constructs. The objective of this paper is to clarify my position on this latter issue albeit I shall put on record a more clinging demonstration of interest compounding in the conventional formula as many Islamic banks use it not only in home financing but in other deferred payment contracts as well.
This brief note looks at the suggested use of universal banking as a tool to mitigating risk in f... more This brief note looks at the suggested use of universal banking as a tool to mitigating risk in financing operations’ arising at both ends of the market – demand and supply. It concludes that the issue of adopting universal banking in the Islamic system is of little significance for risk reduction. It essentially raises the issue of mega banks versus smaller units in the Islamic system where the discretion would opt for the latter.
This review questions Chuodhury's use of topological spaces for criticising the risk-return i... more This review questions Chuodhury's use of topological spaces for criticising the risk-return issues in mainstream financial literature. It highlights the failure of the work in producing an understandable Islamic alternate framework for the purpose.
This article discusses briefly various aspects and forms of deficit financing in modern economies... more This article discusses briefly various aspects and forms of deficit financing in modern economies. It deals with deficit financing (i) within countries and (ii) between the member countries of the International Monetary Fund (IMF} and that institution as aid provider to a member in difficulty. In (i) it elaborates on the use of deficit financing as an instrument to part fund development, role in crisis management and inflationary consequences. In (ii) it briefly sees deficit financing on a global scale, explain IMF conditionality and the sort of programs it envisaged the aid seeking members to follow; it presents illustration and critique of the instrument each case.. In conclusion it contains some observations including a few policy suggestions.
Shelter is one of the basic needs for human beings. Its availability for the people is an Islamic... more Shelter is one of the basic needs for human beings. Its availability for the people is an Islamic imperative. In view of the appalling living conditions of a substantial proportion of the population in most countries around the world, especially Muslim, Islamic banks have entered the field with various schemes for home financing. In this infant industry, this effort is understandably guided by the profit motive, but a social dimension has to surface in the course of time. Unfortunately, the models banks currently use for home financing remain under the juridical gaze, more so as the practice is not always found to be transparent. This paper looks at Islamic home financing models in a broader societal context. It evaluates the efficacy of the current financing structures practised and suggests a new approach. The proposed model is shown as superior to the existing ones. It meets the norms of equity, fair play and openness and does not, presumably, violate any other Islamic norm. Fina...
This paper attempts to provide an overview of a vast and important debate from an Islamic angle. ... more This paper attempts to provide an overview of a vast and important debate from an Islamic angle. It presents the concept of distributional equity in a pure Islamic system. It is argued that this system would ensure distributional equity through reliance on two sets of controls. First is a set of ethical and regulatory measures which would prevent inequities from happening. Essentially these preventive measures are obligatory and voluntary expenditures from their income by the Muslims. Second is a set of corrective measures which would be activated by the Islamic state if inequities do in fact arise. These corrective measures are quite varied and include most of the familiar monetary, fiscal, legal, and administrative tools of modern economic policy subject to Islamic constraints. The foundation of the Islamic scheme is the all pervading concept of Amanah that seeks to convert the material ambitions of man into the means of attaining spiritual heights .In the light of the argument de...
Purpose The purpose of this paper is to explore the causes and impact of predatory online publish... more Purpose The purpose of this paper is to explore the causes and impact of predatory online publishing on Islamic economics and finance. Design/methodology/approach The method adopted involves a library literature scan to identify the origin and expansion of predatory publishing, as references listed in the paper show. The personal experience and observation of the author over the decades of teaching at various universities endorses the evidence. Findings The focus on “publish or perish” has led to division of Islamic scholars into conservative and modern economists, and it led to the overuse of mathematical and parametric modeling to the disadvantage of the discipline essentially imbued with unquantifiable ethical norms and values. Practical implications The study seeks to induce fruitful and purposive change in the research designs and direction of Islamic economics and finance. Originality/value This research initiates discussion on predatory publishing, an issue so far untouched i...
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