PUBLICATIONS - A new approach to derivatives : financial engineering with Islamic Rules (Atila Yanpar - SPK)

A NEW APPROACH TO DERIVATIVES: FINANCIAL ENGINEERING WITH ISLAMIC RULES

ATİLA YANPAR

Capital Markets Board of Turkey, Expert

Despite their importance in financial sector development, derivatives are still not generally accepted as legitimate products in Islamic finance. Conventional derivatives and the world of Islamic financial products has chasm between each other as they have different approaches in important issues like interest and ambiguity. While recent events in the world economy have sparked a global debate on derivatives and the damage caused by them, strict Sharia rules saved Islamic finance institutions from the worst of the crisis. On the other hand, due to lack of sufficient instruments for protection against volatility in currency, interest rate and commodity prices, the ability of Islamic finance institutions to survive future shocks is in question. As the Islamic banks are struggling to develop hedging tools with regard to doubt on their usage casted by religious differences, this article explores the validity of derivatives in accordance with basic legal principles of the Sharia and summarizes the key objections of scholars that challenge the permissibility of derivatives under Islamic law. In conclusion, the article delivers suggestions for Sharia compliance of derivatives and Turkish Derivatives Exchange future contracts. (access here)

PUBLICATIONS - Islamic Finance News GUIDE 2012

Turkey: A bumper year for Islamic finance 

 Aytug Buyukatak and Burak Gencoglu

The Turkish financial market maintained its constant development in 2011 and recent reports from reputable international financial institutions project that this development will continue in 2012. In 2011, Sukuk was introduced to the Turkish market by a participation bank, Kuveyt Turk Katılım Bankası, based on the new communiqué on lease certificates which entered into force for the first time on the 4th April 2010. Another significant development for the Turkish legal and financial system is the new Turkish Commercial Code (TCC) and Code of Obligations, which will both enter into force on the 1st July 2012.

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Turkey article

WORLD - PUBLICATIONS - Ernst and Young - World Islamic Banking Competitiveness Report 2011-2012

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WORLD - Islamic banking assets could reach $1.8 trillion by end of 2016

JEDDAH: Islamic banks may be bolstered by a nearly doubling of assets within five years, as borrowers seek alternative methods of financing due to a cutback in lending at European and US banks, according to a report by Deutsche Bank.

The bank expects that mortgage financing, particularly in Saudi Arabia, could provide $100 billion in assets to the overall industry. (source)

WORLD - PUBLICATIONS - Have Islamic banks been more resilient than conventional banks to the 2007-2008 financial crisis ? (Aug 2011)

The recent global financial crisis has induced a series of failures of many conventional banks and led to a renewal of Minsky’s (1986) critics about the inherent instability of the fractional-reserve banking. In this context, many economists advocate for the return to narrow banking and/or for favoring the development of Islamic banking, supposedly more resilient to the financial crises.

This paper attempts to answer empirically the following two questions: i) Have Islamic banks (IBs) been more resistant than their conventional peers (CBs) to the 2007-2008 financial crisis? ii) Could the presence of Islamic banks enhance the stability of conventional banks? 

These are the main findings. Before the financial crisis, IBs were more profitable than CBs. Then, in 2007-2008, only the large IBs remained more profitable than the large CBs. However, IBs became less profitable in 2009 when the crisis’s pass-through to the real economy had sufficiently increased.

Moreover, we show that CBs were more resistant to the crisis than IBs. Hence, IBs illustrated a degree of resilience and stability during the first (financial) wave of the crisis. However, they have been impacted during the second (real) wave because of their higher exposure to real estate and their limited reliance on risk sharing instruments. Nevertheless, we find a positive externality of large IBs on the soundness of large CBs, which could be justified by their asynchronous reactions to the crisis. (source)

MALAYSIA - PUBLICATONS - Isra Bulletin Vol 9 - July 2011

• The World’s First Comprehensive Islamic Financial Markets Textbook
• Malaysia & India Invites Constitutional Issues in Islamic Finance
• When Crime Hurts: Takaful Claims under the Practice of ‘Aqilah & Diyah
• An Islamic Bank Charges its Customers Fees to use the ATM Machine of another Bank
• Buying Imported Goods of Defined Specifications, Still at Sea, to Resell to Traders
• 2011 ISRA New Staff & Internship Students

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MALAYSIA - PUBLICATIONS - ISRA Research Papers 25 and 26

Analysis Of Legal Disputes In Islamic Finance And The Way Forward: With Special Reference To A Study Conducted At Muamalat Court, Kuala Lumpur, Malaysia Hakimah Yaacob	Pioneering Thoughts On Commodity Hawalah: Facilitating The Trading Of Debt?  Prof. Dr. Ashraf Md Hashim & Eqhwan Mokhzanee Muhammad
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ARTICLE - The Behavior of Conventional and Islamic Bank Deposit Returns in Malaysia and Turkey

Author/Editor: Cevik, Serhan ; Charap, Joshua

Authorized for Distribution: July 01, 2011

Summary: This paper examines the empirical behavior of conventional bank deposit rates and the rate of return on retail Islamic profit-and-loss sharing (PLS) investment accounts in Malaysia and Turkey, using monthly data from January 1997 to August 2010. The analysis shows that conventional bank deposit rates and PLS returns exhibit long-run cointegration and the time-varying volatility of conventional bank deposit rates and PLS returns is correlated and is statistically significant. The pairwise and multivariate causality tests show that conventional bank deposit rates Granger cause returns on PLS accounts. These findings have policy implications in terms of price stability and financial stability.

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PUBLICATIONS - ISRA Buttelin - Vo 8, 2011 - Takaful : what's next ?

• Takaful : What Next
• Recent Fiasco in Qatar: The Need for Good Governance (Shari‘ah Governance)
• Sukuk: An Overview
• Suspicious Transaction Reporting in Malaysia’s Anti-Money Laundering and Counter Financing of Terrorism Regime: A Siyasah Shar‘iyyah Perspective
• Takaful under IFRS: Is It Appropriate?
• Exclusive Interview with Dato’ Syed Moheeb bin Syed Kamarulzaman

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PUBLICATIONS - ARTICLES - Determinants of Corporate Social Responsibility Disclosure: The Case of Islamic Bank

Sayd Farook, Roman Lanis and Kabir M. Hassan

Determinants of Corporate Social Responsibility Disclosure: The Case of Islamic Bank 

May 201, 36 p.

Abstract:     
Islamic banks offer distinct financial services and as such have grown significantly in Bahrain, Bangladesh, Jordan, Kuwait, Malaysia, Qatar, Turkey and U.A.E over the past two decades. They are unique in the sense that they are accountable to fulfil a social and ethical role inherent in their character as an ‘Islamic’ institution. They also have a duty to discharge their accountability through disclosing corporate social responsibility (CSR) information consistent with the principles of Islam. However, recent anecdotal evidence finds that Islamic banks may not be fulfilling their social role in accordance with the prescriptions of Islam because they disclose less CSR information than expected. It has been suggested that disclosure may also be driven by the extant economic incentives. Hence, the exact nature of the CSR disclosure process by Islamic banks remains unclear due to a paucity of a priori research and statistical analysis of extant data. In light of that, this study develops an a priori model linking CSR disclosure to socio-political influences and corporate governance factors. Then resultant hypotheses are tested using regression analyses on a sample of 47 Islamic banks’ annual reports from 14 countries. 

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ARTICLES - Union of Arab Banks Magazine - Albaraka Participation Bank - Over 25 years of contribution to the Turkish economy

An article has been published and can be accessed HERE.