A practical guide for robust sharī'ah governance ofthe Islamic banking industry Debate in the market on the extent of sharī'ahcompliance of Islamic banks, their products, and activities haspiqued stakeholders' interest. In Foundations of Sharī'ahGovernance of Islamic Banks, Karim Ginena and Azhar Hamidexplore the depths of sharī'ah governance to unravelits mysterious dimensions, and equip academics and practitionerswith a solid understanding of the subject, which has become aserious challenge and thus deserves dedicated attention. The authors make a strong case for the need to contain thesharī'ah risk that Islamic banks experience, andpresent a compelling argument for how this should be done. Ginenaand Hamid propose a robust sharī'ah governance modelthat comprehensively tackles thisrisk, and helps improve the extentof sharī'ah compliance of market players. The authorsdetail the internal, external, and institutional arrangementsneeded to promote responsible sharī'ah governance, andcritically analyze current laws, regulations, and industrypractices on the topic. The chapters of the book do thefollowing: Examine the roots, characteristics and objectives ofsharī'ah and its relation to financial dealings; Probe the role of regulators in sharī'ahgovernance, explore the different approaches adopted by bankingsupervisors, and provide examples of relevant legal and regulatorymeasures; Explain to bank directors and management the fiduciary dutythey assume with respect to sharī'ah compliance, anddetail how they could discharge this responsibility in line withbest practices; Elaborate on the purpose of the Sharī'ahSupervisory Board (SSB), its responsibilities, competence criteria,internal regulations, and key governance guidelines; additionally,they explore different SSB models; Describe the internal sharī'ah control systemincluding its six components, and examine the internalsharī'ah audit function as well as different stages ofconducting a sharī'ah audit; Clarify the role of a sharī'ah auditor, withguidance on reporting lines, scope of duties, authority, andpractical ways on fulfilling tasks, such as a samplesharī'ah risk assessment grid and auditchecklists; Discuss the newly emerging external sharī'ahadvisory firms that are expected to play a key role in the comingyears and the services they provide. Through an effective treatment of each of these elements, andthe way that they interact with one another, the book offers afresh take on how robust sharī'ah governance of Islamicbanks can be successfully accomplished. It is a comprehensiveresource for academics, regulators, directors, lawyers, auditors,consultants, employees, and customers of Islamic banks interestedin learning more about these challenges. This essential readingpersuasively extends the discourse on the subject and addressescritical sharī'ah issues that have policy implicationsfor decision makers in jurisdictions aiming to attract thefast-growing Islamic finance industry or increase their marketshare.
This book is an essential read for those who want to understand Islamic banking, and more so, for those engaged in the Islamic Banking industry anywhere in the world.
Master's Thesis from the year 2011 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, University of Applied Sciences Essen, course: General economics, language: English, abstract: The global financial crisis which began in mid-2007 revealed the significant risks posed by large, complex and interconnected institutions and the fault-lines in the regulatory and oversight systems. The drying up of market liquidity caused lacks of funding for financial institutions and their reactions to the market stress increased the market tensions which highlighted the strong link between banks funding liquidity and market liquidity. Over the past two decades preceding the crisis, banks in advanced countries significantly expanded in size and increased their outreach globally. In many cases, they moved away from the traditional banking model towards globally active large and complex financial institutions. The majority of cross-border finance was intermediated by some of these institutions with growing interconnections within and across borders. The result were trends in the banking industry which include a sharp rise in leverage, significant reliance on short-term funding, significant off-balance sheet activities, maturity mismatches and increased share of revenues from complex products and trading activities. This development has moved on to a systematic risk and it has been identified a need in the financial sector to measure those aspects, to assess the resilience of the financial sector to liquidity shocks and give guidance to the policy of central banks and regulators. At the same time, the financial industry has started a fast process of consolidation worldwide. Regulators, organized in the Basel Committee on Banking Supervision (BCBS) have responded to the financial crisis by proposing new regulation which is known as “Basel III”. The reform program leads to fundamental changes and implements capital and liquidity reforms. The liquidity reform represents the first attempt by international regulators to introduce harmonized liquidity minimum standards for financial institutions. Extensive efforts through the Basel Committee, with the “Basel III” program, are being considered internationally and domestically to revise these deficiencies and failures, in order to safeguard the stability of the financial system. The key objective is to promote a less leveraged, less risky, and thus a more resilient financial system that supports strong and sustainable economic growth. The bulk of the proposals have focused on revising existing regulations applicable to financial institutions and to influence the extent and consequences of their risk taking.
Master's Thesis from the year 2011 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, University of Applied Sciences Essen, course: General economics, language: English, abstract: The global financial ...
Banks of all sorts are troubled institutions. The cost of public bail-outs associated with the subprime crisis in the United States alone may be as high as US$5 trillion. What is the problem with banks? Why do they seem to be at the centre of economic and financial turmoil down through the ages? In this provocative and timely book, Rethel and Sinclair seek answers to these questions, arguing that banks suffer from perennial problems, and that developments in the financial markets and government in recent decades have simply exacerbated these issues. The book examines banking activity in America, Asia and Europe, and how specific historical circumstances have transformed banks' behaviour and attitude to risk. While many see government as a constraint on banks, Sinclair and Rethel argue that what governments do in terms of regulation shapes banks and their motivations, as can be seen in the shortcomings of current reform proposals. Instead, more far-reaching, alternative ways of regulating and shaping banks are needed. A concise, essential overview of a pressing global issue.
The book examines banking activity in America, Asia and Europe, and how specific historical circumstances have transformed banks' behaviour and attitude to risk.
Essay from the year 2003 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 1,9 (B+), Oxford Brookes University (Business School), course: Practise of International Banking, 21 entries in the bibliography, language: English, abstract: Derivatives trading is now the world's biggest business, with an estimated daily turnover of over US$2.5 trillion and an annual growth rate of around 14 per cent (Swan, 1999). Derivatives markets have ancient origins, and a long and complex history of trading and regulation. This work examines the history of derivatives and their impacts on the structure of international banks in order to show the implications of modern international banking in comparison to domestic banking. Mishkin (2003) describes banks as financial institutions that accept deposits and grant loans. In this definition banks are the financial intermediaries that the average person contacts most frequently for its financial dispositions, savings, investments and payments. The structure of a bank therefore seems to be adjusted to the purpose of its business activity. Mishkins traditional definition of a bank includes to those financial institutions we refer to as mutual savings banks, savings and loan associations, commercial banks and credit unions. Their traditional core business is to provide the settlement of national payments and to transform funds from savers over time as well as to process market information (Canals, 1997). They focus on domestic or regional, eventually even local markets and realize their profits from interest margins and balance sheet activities. Therefore they employ an asset- and liability management in order to avoid liquidity and credit risks.
This work examines the history of derivatives and their impacts on the structure of international banks in order to show the implications of modern international banking in comparison to domestic banking.
What is the role of central banks in ensuring financial stability? This paper addresses this controversial subject, in part by drawing on the experiences in Europe, Japan, and the United States, and by examining four questions. What is meant by financial stability? Do central banks have a natural role in ensuring financial stability? What does a central bank need to execute this role effectively? How far have central banks actually gone in safeguarding financial stability? The experience drawn on in the paper suggest that central banks: have a natural role to play; at times may require supervisory information to execute this natural role; and have incurred risks to their balance sheets to ensure financial stability.
What is the role of central banks in ensuring financial stability?
