Theory and Practice of Modern Islamic Finance

The Case Analysis from Australia

by Abu Umar Faruq Ahmad

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Synopsis

Theory and Practice of Modern Islamic Finance seeks to contribute to the existing body of work in the area of Islamic finance through examining the extent of divergence in practice of Islamic financing from the traditional Shari`ah in the Australian context. The author makes a discursive analysis of the regulation of Islamic finance in Australia in terms of (a) the financing instruments used, (b) certainty of transactions between participants in the system, and (c) institutional risk management of Islamic financial institutions. The work's objectives are two-fold: (a) to analytically study the extent to which Islamic Financial Services Providers (IFSPs) of Australia differ from the traditional Shari`ah in their current practices of Islamic legal financial system by their use of different financial products and techniques, and (b) to create awareness and transparency about the various products and instruments used by IFSPs of Australia.

REVIEWS

"This book is an important contribution, particularly for those who wish to know more about modern Islamic finance. It equips the reader with sound Islamic juristic methodologies in order to appreciate the workings of Islamic commercial law and also helps to contextualise the products and regulatory framework for expanding markets such as Australia. The book is also significant when considering the proximity of Australia to countries like Indonesia and Malaysia and its trade with them. The book nonetheless focuses on Australian products and their regulatory challenges. This provides an insight into how to consider the practical side of Islamic finance in a given jurisdiction and, thus, combines theory and practice. The challenges are documented lucidly and can be used as a model for analysing other jurisdictions."
Faizal Manjoo, The Muslim World Book Review, 34:2, 2014

"It is indeed a most comprehensive, methodologically sound, well organised, lucid, comprehensively documented and analysed, and convincingly argued and concluded research. It systemically addressed all the research questions raised and very convincingly and successfully resolved them to logical conclusions. The study can convincingly claim to have made a breakthrough in the frontier of knowledge in the field of Islamic finance"
Professor R. I. Molla, Multimedia University, Malaysia

"Discussions of the topics throughout the book are logically coherent and presented in plain language. It is an insightful, well researched, logically organised and lucidly presented research work having overwhelming strengths and very limited weaknesses. I have no hesitation to say that this book may provide useful guidelines for dealing with the emerging issue of Islamic finance around the world.."
Dr. S. M. Solaiman, The University of Wollongong, Australia

"I have gone through for the most part of author’s present work and found that it was excellent. I must congratulate him for preparing a research work of such standard. It was due to his extreme commitment, sense of professionalism, and perseverance."
Professor A. B. Rafique Ahmad, Pro-VC, International Islamic University Chittagong, Bangladesh

"I read this book on Islamic finance with lots of interest. It is one of the finest pieces of writing, in terms of content, eyes to detail, referencing and scholarly analysis. It is often a challenge to simplify such a complex subject without loosing the necessary details. There are very few Islamic books that introduce all jurisdictions. This book filled in this gap through making an unbiased objective reading. The book have covered very valid governance issues such as the conflict of interest of the regulators (Shari`ah Board), the products resembling conventional loans and the reluctance of sharing the full risk. While Islamic Institutions may shy away from the author, his talent will be highly sought in academia and research circles."
Dr. Shahadat Chowdhury, School of Civil and Environmental Engineering, University of New South Wales, Sydney, Australia

This book appears to be the only major research monograph on Islamic finance in Australia. The historical, rational and critical methodology of this book follows the scientific research methodology of the great twentieth century philosopher of science Karl Popper. The clarity and logical rigour resulting from this approach is one of the major strengths of this work. Chapters 1-3 and 5 are of excellent quality and reflect Dr Ahmad's authoritative knowledge in the field of Islamic law. Chapters 6-11 reflect not only Dr Ahmad's expertise in Islamic financial law, evident in previous chapters but also his extensive practical experience in his advisory and consultancy work. The book raises many questions for future research, including, how to resolve the perceived divergence of financial practice from Islamic law and the development of a fully satisfactory theoretical framework for Islamic financial regulation.
International Journal of Islamic and Middle Eastern Finance & Management Vol. 3,3.

"The study is to be commended for its choice of subject matter as well as for the empirical focus on Australia. The book does a good job of bringing together some insight into the practices of IFSPs in Australia. Readers interested in broad coverage will find the material of some interest, and reasonably well presented throughout. Overall, the book engages with a very interesting topic and provides initial insights."
Journal of Islamic Accounting and Business Research Vol. 1,2.

About The Author

Dr. Abu Umar Faruq Ahmad is a world-renowned Shari'ah Scholar who advises on a wide range of matters relating to the laws of Islamic banking and finance, as well as Shari`ah compliance of Islamic banks (IBs) and Islamic financial services providers (IFSPs), and promotes Islamic financial products in the global financial markets. He is Senior Researcher at International Shari`ah Research Academy for Islamic Finance (ISRA), and Associate Professor at INCEIF – the Global University of Islamic Finance, Kuala Lumpur, Malaysia.

Dr. Ahmad received his Master of Laws (Hons) and PhD at the University of Western Sydney, Australia, with two prestigious University wide research scholarships for his doctoral study in which he earned an ‘A’ (high distinction) for the quality of his research.

Dr. Ahmad has published several books, book chapters, and refereed journal articles. He has also presented papers at a number of conferences in Asia, Australia, America, Europe and Africa. He is the founding editor of the International Journal of Excellence in Islamic Banking and Finance and Co-editor of ISRA International Journal of Islamic Finance. He also currently sits on the Editorial Advisory Board for 3 Emerald published journals, namely International Journal of Islamic and Middle Eastern Finance and Management, Journal of Islamic Accounting and Business Research, Humanomics: The international journal of systems and ethic; and Australian Journal of Basic and Advanced Sciences, The Open Law Journal, and Global Islamic Finance Magazine. In Addition, he acts as an ad-hoc reviewer of American Journal of Islamic Social Sciences, Thunderbird International Business Review, Review of Islamic Economics, African Journal of Business Management, and Islamic Economic Studies.