1

European University for Economics & Management

Eufom Luxembourg

Assignment in Module Financial Management

Topic:

Islamic Finance: an overview

Supervisor at the Eufom:

Dr. Bernd Biermann

Author:

Martijn Sinninghe Damsté

Grand-Duchy of Luxembourg

Matriculation: 32 89 82

February 2014

2

Table of Contents

1. Introduction 3

2. Basic elements of Islamic contracts 4

3. Islamic financial instruments 6

3.1 Introduction 6

3.2 Mudaraba 6

3.3 Musharaka 7

3.4 Murabaha 8

3.5 Sukuk 10

3.6 Other products 13

4. A look into the future 15

Appendix A – Facts on Islamic finance 16

Literature list 17

3

1. Introduction

Islamic finance can be defined as all financial activity that enables Muslims to engage in

financial activities that adhere to Islamic traditions and the rules of the Sharia, making it

possible for Muslims to do banking according to their belief.1

As the Islam encompasses a holistic view of life, Islamic law and ethics oversee financial

activity as well. This paper tries to give an overview of the most important Islamic contract

forms which are used as financial instruments in contemporary Islamic banking.

Modern Islamic banking began in 1963 in Egypt, with the founding of the Islamic savings

bank Mit-Ghamr.2 Nowadays, it has spawned a large number of complex and structured

products in order to give Muslims the access to finance following their religious principles.

The volume in terms of assets under management has shown an impressive growth.

A number of Islamic banks exist, mostly in Islamic countries. However, a large and growing

number of conventional banks are also entering the market. They do so by using a separate

legal entity, a separate branch, or a so-called ‘Islamic window’.3 Examples of conventional

banks entering the Islamic market are HSBC, BNP Paribas and Citigroup.

1 Ernst (2011), p. 17

2 Chargi (2005), p. 15.

3 An Islamic window means that the bank, although it simultaneously offers Islamic and conventional products,

keeps its Islamic activities and cashflow strictly separated from its conventional activities.

4

2. Basic elements of Islamic contracts

The basic elements of Islam are faith (Aqidah), morale and ethics (Akhlaq) and practises and

activities (Sharia). Sharia itself can be divided into two sets of rules, being the Ibadat

(interaction between Man and God) and the Muamalat (interaction between Man and Man).

As this also encompasses economic elements, Islamic Finance falls under the Muamalat. The

Sharia derives from the Quran, Sunna, Itjihad and Ijma.4

This paper does not seek to go deep into the theological and juridical backgrounds behind

Islamic financial products. This sub-chapter however seeks to mention the practical

implications of the use of Islamic contracts and financial products. The main characteristics

on Islamic financial instruments are:

Contractual principles: Without going too far into detail, it needs to be mentioned

that before all, the general contractual principles from the Sharia need to be applied.

Riba (interest): One of the best-known rules in Islamic finance is the ban on riba.5

Riba, often translated as excess or interest, is condemned in Islam, since money is

only an intermediary of goods and cannot have an intrinsic or time value.6 The Quran

condemns levying interest in a number of verses. 7

8 This does not only include all

forms of conventional interest, but also interest in kind and debt trading above or

below par, as well as penalty charges for late payment.9

Gharar (incertainty): Certainty in the terms of a transaction is a key element in the

Sharia and thus in Islamic transactions. All the terms and conditions must be laid

down as specific as possible, as well as the subject matter. This means amongst others

a ban on conventional insurance, and transactions where either the subject or price are

unknown.

Qimar (gambling) and maisir (speculation): This is prohibited, as at least one of the

parties will suffer a total loss, which is considered unethical. Both qimar and maisir

contain elements of gharar, but not every gharar is maisir or qimar.

Prohibition on subject matter: Pork, alcohol, drugs, unethical investments and

transactions10

and any products violating the principles mentioned above (including

many conventional banking products) can neither be a subject matter in sharia-

compliant contracts, nor an indirect investment.

Asset-backed financing: Islamic financing in in principle asset-backed, meaning

there must be a tangible asset behind the transaction, clearly linked to it.11

12

Sharia Supervisory Board: The Islamic financial institutions use the services of

Sharia Supervisory Boards (SSB) in order to ensure that their services, transactions

4 The Itjihad is the interpretation of Quran and Sunna. When no answer could be directly derived from Quran or

Sunna, interpretation or Itjihad had to be used. When done collectively, this was named Ijma. 5 Farooq (2009), p. 105

6 Ernst (2011), p. 14

7 Quran, Surat Al-i-Imran (The Family of Imran), 3:130.

8 Ibid., Surat Al Baqara (The Cow), 2:275

9 Ur Rahman (2008), p. 55

10 One can think of weapons, gambling and adult entertainment.

11 Usmani (1998) p. 12

12 Ernst (2011), p. 17 and 18

5

and investments are Sharia compliant. These SSB are not in all jurisdictions

compulsory, but are nevertheless engaged in order to increase credibility.13

Choice of law: Sharia cannot be made the governing law of a contract,14

and there are

practical objections against this as well.15

Therefore, the contract documentation

would in principle be in line with a national law (for example English or German law),

but will however be drafted in a sharia-compliant manner, which will be reviewed by

the Sharia Supervisory Board.

13

Allen & Overy, Islamic Microfinance Report for the International Development Law Organization, 25

February 2009, p. 8. 14

UK Court of Appeals, Beximco Pharmaceuticals Ltd vs. Shamil Bank of Bahrain 15

Ernst (2011), p. 18.

6

3. Islamic financial instruments

3.1 Introduction

A number of products have been developed by the Islamic banking industry. As time

progressed, these products evolved from simple interest-free saving accounts to Islamic

investment funds, Islamic securitization and the Islamic capital market. The figure below

shows a ‘classification tree’ of all different Islamic products.

Figure 1: The ‘classification tree’ of Islamic financial products and instruments. Source: El-Hawary, W. Grais,

Z. Iqbal (2004)

3.2 Mudaraba

The mudaraba is a managed partnership contract. In its structure it seems similar to a

managed fund. There exists at least one passive partner, the rab ul-mal (plurial: arbab ul-mal).

He or she contributes the working capital of the enterprise. The active partner is named

mudarib, and is responsible for the management of the enterprise exercised by the partnership.

He manages the funds on behalf of the rab ul-mal.

Islamic Financial System Profile of Contracts

Intermediation contracts Transactional Contracts

Mudaraba

Kifala

Amana

Takaful

Ju’ala

Miscellaneous

Qard Hassana

Asset-Based Securities

Equity Participation

Trade Financing

Collateralized Securities

Musharaka

Murabaha

Bai Salam

Bay Mu’ajal

Ijara

Istisna

7

Two types of mudaraba are usually seen within Islamic banking, being the restricted and the

unrestricted mudaraba. In a restricted mudaraba, the mudarib is contractually limited to

certain investments. In the unrestricted mudaraba, there are no restrictions with regards to the

investments, although it can be assumed that these investments must be Sharia compliant.

The most important features of a mudaraba are:16

A mudaraba is based on a mudaraba agreement;

The investments come solely from the arbab ul-mal or capital providing partners;

The daily management is solely performed by the mudarib, who will receive

remuneration for performing this task. This remuneration will count as a cost from the

enterprise’s point of view;

The profit can be allocated between managing and non-managing partners according

to a certain ratio, laid down in the contract. Profit can be distributed on a periodical

basis, but the invested capital should be protected.

As the mudarib does not invest anything, he is not liable for any loss. The arbab ul-

mal bear all losses, to the amount of their investments. This is a major difference with

the Dutch c.v. and its European ‘nephews’, in which the managing partners are liable

for all losses.

The mudarib is only liable for losses in case of negligence;

All goods in the enterprise are owned by the rab ul-mal;

As a general rule, mudaraba agreements are for undetermined time and can be terminated by

any of the parties.17

One can however imagine that it can be very inconvenient for a

transaction if parties can request redemption at any time, especially if this happens in the

beginning of a project or if the assets are relatively illiquid. Although there is dissent between

the different schools of thought regarding the maximum time limit of a mudaraba, it seems

acceptable to agree on a minimum time limit or a ‘lockup’ period.18

3.3 Musharaka

The word ‘musharaka’ is derived from the Arabic ‘shirkah’ meaning ‘sharing’. Musharaka is

based on a partnership in which multiple parties contribute to both the investment in and the

management of a Sharia-compliant project.

In musharaka structures employed by Islamic banks, two main types can be distinguished: the

permanent and the diminishing musharaka.

16

Usmani (1998), p. 33. 17

Ibid., p. 34. 18

Ibid., p. 35.

8

A permanent musharaka is a musharaka in which each partner retains his or her share until

the end of the project. Nevertheless, it is in principle possible to sell a musharaka share to a

third party. 19

A diminishing musharaka (musharaka muntahia bittamleek) is used in case a property needs

to be transferred, or in the case one or more of the partners wish to retreat from the project

after a shorter or longer period.20

The musharaka is divided into multiple units, which will be

purchased by the investing partners. Over time, one of the parties will repurchase the

musharaka units from the other party at a pre-agreed rate. This will be laid down into a

promise to purchase the units in the future. The transfer can, as desired by the parties, happen

gradually over time, or at a certain moment in the future. The second party, usually a financer,

will receive the return generated by his units, and in addition he will receive the purchase

price of the units. Losses are taken in accordance with the contribution ratio.21

Figure 2: Shirkah and musharaka Source: Usmani (1998), p. 22.

3.4 Murabaha

Murabaha is a sale with a mark-up, 22

which is currently used in Islamic transactions as the

substitute of a loan facility. In its most simple form, the seller purchases a good and sells it to

the buyer with a certain mark-up or cost-plus. Sharia-compliant mortgages can be structured

based on the murabaha concept.23

24

19

Usmani (1998), p. 23-28 20

Ibid., p. 57-59 21

Ibid., p. 24 22

Ibid., p. 65 23

An example of this was the proposed Dutch Islamic mortgage of the Leiden bank Bilaa-Riba (literal meaning:

‘no interest’), which eventually was abandoned as it was not possible to claim the fiscal benefits, which are

available to conventional borrowers. http://www.telegraaf.nl/overgeld/huis-hypotheek/article20647023.ece 24

Ernst (2011), p. 32.

Shirkah

Shirkat ul-aqd (joint enterprise)

Shirkat ul-milk (joint ownership)

Shirkat ul-wujooh (partnership in goodwill)

Shirkat ul-a’mal (partnership in services)

Shirkat ul-aqd (partnership in trade)

Optional Compulsory

MUSHARAKA

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Example: B purchases a car for € 20,000 from A. C is interested in the car and B reveals that he paid €

20,000 for it and that he wishes to sell it for € 22,500, giving him a profit of € 2,500. C agrees and B

and C enter into a murabaha.

Murabaha in its original sense means a sale in which the seller discloses his purchase costs

and adds a certain mark-up to it. Taking this is mind, it should be mentioned that murabaha is

in fact a sale and not a loan, and that the murabaha was originally not intended to serve as a

way of financing. This does as well mean that the Sharia rules for a sale will apply firstly, and

that without establishing a valid sale one cannot establish a valid murabaha. Related to

murabaha is musawama (bargaining), a sale without any reference to costs or mark-up. 25

Payment for a murabaha may be on the spot, but may also be on a deferred basis. When

murabaha is used as a mode of financing, payment is usually deferred. A (simple) murabaha

is usually constructed as follows: 26

The bank and the buyer enter into negotiation;

The buyer makes a (binding or non-binding) promise to buy the designated asset(s). In

many jurisdictions a binding promise can be enforced against the promisor;

The bank purchases the asset(s) and pays the seller at the spot. The seller delivers the

assets to the bank;

The bank enters into a murabaha agreement with the client. The price of the asset(s) is

the purchase price of the bank with a mark-up, payable in instalments.

If desired an agent is appointed, who will purchase, hold and if necessary sell the assets on

behalf of the bank or the client. It is not uncommon to use interest rates such as LIBOR as a

benchmark for the markup. Although this might sound paradoxal to take interest rates as

benchmarks for Islamic transaction, this does not affect the validity of the murabaha, as all

the necessary elements are in place.27

In some cases a so-called commodity murabaha is used. This involves a murabaha transaction

in which a certain commodity (usually metals) is sold from a broker to the Islamic bank, and

then by murabaha against deferred payment and against a mark-up to the buyer. It is however

important to note that any commodities (originally) used by means of exchange for money

(gold, silver, barley, dates, wheat and salt) are not acceptable.28

The buyer however, does not

keep these metals, but will immediately sell them to a third party, usually a second broker. In

this way the buyer will have liquidities available, which he can use for the project he wishes

to invest it in.29

25

Usmani, (1998) p. 65 and further. 26

Securities Investment Institute and École Supérieure des Affaires (2009), p. 69-71. 27

Usmani (1998), p. 81. According to Usmani, this practise is, although undesirable, not forbidden. 28

Securities Investment Institute and École Supérieure des Affaires (2009), p. 75. 29

Ibid., p. 73-74.

10

Example: A client finances a project by means of a commodity murabaha facility. The bank will

purchase a commodity, for example platinum, for € 10,000,000. This will be sold to the client for the

purchase price plus a mark-up, for example € 10,500,000. The client does not have to repay this

amount immediately, but can sell it back to the market for the market price, still being € 10,000,000.

This money can be used for the project. Over time, as the project generates revenues, the client repays

the bank € 10,500,000 in instalments.

Figure 3: A commodity murabaha (own work)

Although a murabaha can be seen as a substitute of a loan facility, there are some notable

differences. Firstly, the bank must have at a certain point a form of ownership of the asset(s).

This is an essential element.30

Moreover, late payment fees or early payment discounts are

not allowed, although it is accepted that a bank may elect at its own discretion to provide

such discount in case of early payment.31

Late payment fees, which form income for the bank,

would be considered riba, while an increase in the price or mark-up would be seen as

violation of the contract. Also, the practise of using the roll-over practise in murabaha

transactions is considered against the Sharia.32

3.5 Sukuk

An enterprise can issue securities in order to raise money from the capital markets. Bonds

make up a large portion of the capital market. Conventional bonds are however not

acceptable for Islamic enterprises, as they carry interest (riba), and represent debt while being

sold below or above nominal value.33

This means that a large portion of the capital market

would be inaccessible for Islamic enterprises.

The Sharia-compliant equivalent fulfilling the need for accessing the capital markets is the

sakk (plurial sukuk). Sukuk are defined as:

30

Usmani (1998) p. 75, p. 91-96. 31

Securities Investment Institute and École Supérieure des Affaires (2009), p. 71, Usmani (1998) p. 100. 32

Usmani (1998) p. 98-99. 33

Securities Investment Institute and École Supérieure des Affaires (2009), p. 173.

Bank Client Market Market

Sale € 10 million

Sale € 10.5 million Repayment in instalments

Sale € 10 million

Project (Use of sale proceeds)

11

Certificates of equal value representing after closing subscription, receipt of the value

of the certificates and putting it to use as planned, common title to shares and rights

in tangible assets, usufructs and services, or equity of a given project or equity of a

special investment activity.34

Sukuk can be seen as a bridge between Islamic finance and the capital markets. As sukuk are

typically linked to defined assets, they share characteristics with conventional asset-backed

securities.

It is common practise to issue sukuk by means of a Special Purpose Vehicle (SPV). The SPV

receives the proceeds of the sukuk and uses these to purchase the investment or to enter into

the underlying islamic transaction. Any assets are held in trust by the SPV on behalf of the

sukukholders.35

Sukuk can in principle be listed on an exchange and traded, under the

condition that the underlying product permits trading.36

This can be as well seen as another

step towards true securitizations.

Sukuk are however in a number of ways significantly different from conventional securities.

The main difference from both shares and bonds is the fact that sukuk in fact make the holder

partial owner of the underlying assets.37

This means that in principle sukukholders are

entitled to a share in the returns generated by the asset or venture, but also that they suffer

any losses or value declines in proportion to their investment. Costs typically related to the

ownership of the assets, as well as all transaction costs, will have to be borne by the

sukukholders.

It is common practise to link sukuk to a financial instrument, such as ijara, murabaha,

musharaka, etc. The most common types of sukuk are, as recognized by AAOIFI: 38

Mudaraba sukuk

Musharaka sukuk

Ijara sukuk

Salam sukuk

Istisna sukuk

The following types of sukuk are recognized but less common.

Sukuk of ownership of existing usufructs

Sukuk of ownership of future usufructs

34

AAOIFI, Sharia Standard no. 17 35

Securities Investment Institute and École Supérieure des Affaires (2009), p. 175 36

Salam sukuk, for example, are not traded. The reason is that salam represent debt, and that trading (above or

below par) would imply riba. 37

Bonds can be secured but never give ownership rights. Shares also do also not provide ownership rights in the

underlying company, but merely financial, voting and information rights. 38

AAOIFI, Sharia Standard no. 17

12

Sukuk regarding ownership of certain services

Sukuk regarding ownership of certain services to be made available in the future

Participation sukuk based on mudaraba

Participation sukuk based on musharaka

Participation sukuk based on investment agency

Muzara’a sukuk are sukuk linked to sharecropping.

Musaqa sukuk are sukuk linked to irrigation projects.

Mugarasa sukuk are sukuk relating to agricultural or horticultural projects.

Other types of sukuk are concession- and hybrid sukuk.

As sukuk fulfil a role, which is similar to (asset-backed) bonds, many define sukuk as

‘Islamic bonds’. This is not correct. Sukuk do in fact share certain characteristics with both

shares and bonds, they have a bit of both.39

Nevertheless, it would in my view not be correct

either to call them ‘bonds with equity characteristics’ or to place them in one line with the

various hybrid instruments which exist. Sukuk are independent financial instruments, derived

from the application of the Sharia.

39

Securities Investment Institute and École Supérieure des Affaires (2009), p. 173.

13

Bond Sakk Share

Nature Debt of issuer Undivided ownership share in Equity share in corporation

specific assets or business

ventures

Rights Interest Profit on asset Dividend

Principal Principal Information rights

Information (1) Information (1) Voting rights

Voting rights (1) Voting rights (1)

Assets Mostly not required A minimum of certain Not required

percentage tangible assets

Claim Creditor claim Ownership claim on certain In principle no claim

assets or business venture

(Sharia-compliant)

Security Unsecured although Ownership rights in assets Unsecured

security is possible, or venture

especially in the case of Possibly additional credit

asset-backed securities enhancement

Enforcement or Yes No No

guarantee of principal and return

possible

Purpose Any Must be Sharia-compliant Any

Secundary market Yes Yes, Islamic securities with Yes, if public company

open market value

Trading Sale of debt instrument Sale of ownership interest Sale of share

Responsibility of None For defined duties relating Liability up to extent of

holders to underlying assets or participation

venture limited to extent of

participation

Structuring regulation Contract law Contract law Company law

Securities law Securities law Securities law

Sharia / Sharia Spv. Board

(1) Dependent on transaction documentation

Figure 4: The main differences between a bond, a share and a sakk (own work).

3.6 Other products

Sharia-compliant banking encompasses a number of other products. This paper aims to give

an overview of the most important products and giving a full overview does therefore fall

outside of the scope of this paper. However, in order to obtain a complete overview, the

following products deserve mentioning:

Arbun: An arbun is a down payment on a sale in which the buyer does not receive the

goods and does not pay the price in full. Similar to a call option, he can choose to

exercise the arbun, or to forfeit it. In the latter case, the down payment will not be

refunded.

14

Ijara: An ijara is a transaction in which an object is transferred to another party who

will have the right to use it in return for a financial consideration.40

Salam: Salam is a sale whereby the seller undertakes to supply some specific goods to

the buyer at a future date in exchange of an advanced price fully paid at spot.41

42

As

the price is advanced, salam can be used for financing.

Istisna: Istisna is the second type of sale in which a product is sold before it comes

into existence. It is an assignment to a manufacturer to manufacture a certain asset.

This instrument is typically used for the financing of larger projects and assets, such

as real estate.43

Takaful: Takaful can be defined as in Islamic co-operative or mutual insurance.44

Amanah (trust) and Wadia (deposit). Although Amanah and Wadia derive from

different Sharia standards, both are used for current accounts. Current accounts under

this form bear no interest. Also, in principle no overdraft facility is offered. In case of

unauthorized overdraft, the Islamic bank can levy a penalty. However, such penalty

cannot form income for the bank and must be donated to charity.

Hiba: A voluntary gift from one party to the other. Islamic banks sometimes provide

such gifts to accountholders. However, the major difference with interest is that such

gifts cannot be legally enforced.

Qard Hassan: Qard Hassan or benevolent loan is an interest-free loan.

Hawala: Hawala is an informal value transfer system, in use in a great part of the

Islamic world and South Asia. However, the reputation of hawala has recently been

smudged by accusations of misuse of the system for money laundring and terrorism

financing.45

Wakala: A wakala is an agency or representation contract, in which the agent has to

perform a certain task (often for a fee) on behalf of the principal.

Waqf: A waqf is comparable to the Anglo-Saxon trust. The Waqf is a legal and

religious institution wherein a person dedicates some of his properties for a religious

or a charitable purpose.46

40

Usmani (1998), p. 109. 41

Ibid., p. 128. 42

Salam is one of the exceptions amongst Islamic instruments, as the sold assets do neither need to exist nor

need to be in the possession of the buyer. Under strict conditions this is allowed. 43

Usmani (1998), p. 138. 44

Securities Investment Institute and École Supérieure des Affaires (2009), p. 195. 45

El Qorchi, S. M. Maimbo and J. F. Wilson (2003). 46

Usmani (1998), p. 154-155.

15

4. A look into the future

Islamic finance has steadily grown over the last decades and still has a large expansion

potential, since it is so far only servicing a small part of the potential market, being the world

Muslim population.47

There is however still scepticism, also amongst Muslims.48

Furthermore, under influence of the media, some analysts, not to mention the general public,

make an association with fundamentalism.49

Finally, not all legal and tax systems take into

account interest-free products.50

On the other side, Islamic economic principles are forming the base of a completely different

system of private law and economic thought, which can propose banking products to those

who were previously not interested because it was not possible to enter into banking without

violating their religious principles. Many different products have sprouted from this tree,

fulfilling each a different need in a growing niche market.

Non-Muslims and national governments can benefit from Islamic banking as well. Countries

can present themselves as a centre for Islamic finance, as is currently the case with the UK.

Islamic banks can provide economic activity and employment, also for non-Muslims. In

addition, they can reach Muslim investors by issuing sovereign sukuk, which the Bundesland

Sachsen-Anhalt did in 2004.51

For a country largely dependent on its financial sector, such as

Luxembourg, Islamic finance can provide interesting new opportunities.

47

Maslakovic (2013), p. 4. 48

Draz, Ahmad, Ali (2011), p. 8-9. 49

Ernst (2007), p. 11. 50

An example is the failed launch of the ‘halal mortgage’ in the Netherlands. This product was murabaha-based

but became a failure due to the fact that the Dutch tax legislation only grants tax facilities with regards to paid

interest and not to a mark-up on a murabaha, making a murabaha mortgage in the Netherlands financially less

attractive than a conventional mortgage. http://www.telegraaf.nl/overgeld/huis-hypotheek/article20647023.ece 51

http://www.zawya.com/sukuk/profile/6516428/SaxonyAnhalt_Sukuk/ The sukuk matured in 2009.

16

Appendix A Facts on Islamic Finance

Source: Maslakovic (2013)

Source: Maslakovic (2013)

0

200

400

600

800

1000

1200

1400

1600

2006 2007 2008 2009 2010 2011 2012

Total global assets under management at Year-end (x $ 1 billion)

Total global assets undermanagement at Year-end (x $ 1billion)

Islamic finance per country

Iran 36%

Malaysia 17%

Saudi Arabia 14%

UAE 7%

Kuwait 6%

Bahrain 5%

Qatar 4%

Turkey 2%

UK 1%

Others 8%

17

Literature list

Books and articles:

A. Chargi, Origin and Development of Commercial and Islamic Banking Operations,

Islamic Economics Volume 18, No. 2, 2005.

A. Ernst, Promoting Islamic Finance and Islamic Banking – A legal analysis of the

potential for Islamic Banking products in Germany, Institut für Rechtspolitik an der

Universität Trier, 2011

M.U. Draz, F. Ahmad, S. Ali, The Prevailing Skepicism about Islamic Banking and

the Re-asseement of Interest-Free Financial Products: An Explanatory Study, Kuala

Lumpur/Lanzhou/Lahore, 28 November 2011

M.O. Farooq, Riba, Interest and Six Hadiths: Do We Have a Definition or a

Conundrum?, Review of Islamic Economics, Vol. 13, No. 1, 2009.

D. El-Hawary, W. Grais, Z. Iqbal, Regulating Islamic Financial Institutions: The

Nature of the Regulated, World Bank Research Working Paper 3227, March 2004.

M. Maslakovic, UK, the leading western centre for Islamic finance, Financial Markets

Series, www.thecityuk.com, October 2013

M. Taqi Usmani, An Introduction to Islamic Finance, Karachi 1998.

M. El Qorchi, S. Munzele Maimbo and J. F. Wilson, International Monetary Fund and

World Bank, Informal Funds Transfer Systems: An Analysis of the Informal Hawala

System, paper IMF and World Bank, March 24, 2003.

Quran

S. ur Rahman, Managing Defaulters by IFIs According to Shari’ah Law, Journal of

Islamic Banking and Finance, v. 25, No. 1, Jan-Mar 2008, pp. 55-60

Securities Investment Institute and École Supérieure des Affaires, Islamic

Qualification Workbook, edition 3, London 2009

Online articles:

http://www.telegraaf.nl/overgeld/huis-hypotheek/article20647023.ece , 23 July 2008,

reviewed on 27 December 2013

http://www.zawya.com/sukuk/profile/6516428/SaxonyAnhalt_Sukuk/

Jurisprudence:

Court of Appeals, Beximco Pharmaceuticals Ltd vs. Shamil Bank of Bahrain EC,

[2004] EWCA Civ 19

Other source material

Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI),

Sharia Standard no. 17, November 2002.