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FINN441IslamicBankingandFinance
FallSemester2015
Instructor
RoomNo.
OfficeHours
Email
Telephone
Secretary/TA
TAOfficeHours
CourseURL(ifany)
COURSEBASICS
CreditHours
Lecture(s)
Recitation/Lab(perweek)
Tutorial(perweek)
Dr.SaadAzmat
SDSB413
Tuesday&Thursday (4:155:15) Othertimesbyappointmentonly
saad.azmat@lums.edu.pk
04235608417
KashifSaeed
TBA
Suraj.lums.edu.pk
3
NbrofLec(s)PerWeek
NbrofLec(s)PerWeek
NbrofLec(s)PerWeek
Duration
Duration
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COURSEDISTRIBUTION
Core
Elective
OpenforStudentCategory
CloseforStudentCategory
ACFElective
COURSEDESCRIPTION
CourseDescription: BeginningwiththefundamentalguidelinesofIslaminthearenaofdealingsandbusinesstransactions,thiscoursecovers
theapplicationofcanonicalIslamiclawstomodernfinancialtransactions.Althoughthefocusisoncommercialbanking,otheraspectsoffinancial
marketplacearealsoaddressed.
CourseFocusandModules:Asanappliedcourse,thefocusison:a)distinguishingfeaturesofIslamicEconomicandFinancialsystem
b)IdentificationofnonShariahcompliantfinancialinstruments,c)PreparationofbasicShariahcompliantfinancialcontractsd)Differentaspect
ofIslamicandnonIslamicequityinvestments
Thecourseisdividedintofollowingfourmodules:
Module1:IslamicEconomics
Module2:IslamicLawofSale,Interest,MurabahaandIjarah
Module3:IslamicBanksAssetandLiabilitySideFinancing
Module4:IslamicCapitalMarkets:SukukandEquities
COURSEPREREQUISITE(S)
LahoreUniversityofManagementSciences
COURSELEARNINGOUTCOMES(CLO)
Uponsuccessfulcompletionofthecourse,studentsshould beableto:
1)CompareIslamicandconventionalfinancialsystems
2)ExaminemodesoffinancingusedinIslamicbanks
3)AnalyzefinancialInstrumentsusedinIslamiccapitalmarkets
4)EvaluateShariahcompliantequities
UNDERGRADUATEPROGRAMLEARNINGGOALS&OBJECTIVES
GeneralLearningGoals&Objectives
Goal1EffectiveWrittenandOralCommunication
Objective:Studentswilldemonstrateeffectivewritingandoralcommunicationskills
Goal2EthicalUnderstandingandReasoning
Objective:Studentswilldemonstratethattheyareabletoidentifyandaddressethicalissuesinanorganizational
context.
Goal3AnalyticalThinkingandProblemSolvingSkills
Objective:Studentswilldemonstratethattheyareabletoidentifykeyproblemsandgenerateviablesolutions.
Goal4ApplicationofInformationTechnology
Objective:Studentswilldemonstratethattheyareabletousecurrenttechnologiesinbusinessandmanagement
context.
Goal5TeamworkinDiverseandMulticulturalEnvironments
Objective:Studentswilldemonstratethattheyareabletoworkeffectivelyindiverseenvironments.
Goal6UnderstandingOrganizationalEcosystems
Objective:StudentswilldemonstratethattheyhaveanunderstandingofEconomic,Political,Regulatory,Legal,
Technological,andSocialenvironmentoforganizations.
MajorSpecificLearningGoals&Objectives
Goal7(a)DisciplineSpecificKnowledgeandUnderstanding
Objective:Studentswilldemonstrateknowledgeofkeybusinessdisciplinesandhowtheyinteractincluding
applicationtorealworldsituations.(includingsubjectknowledge)
Goal7(b)Understandingthesciencebehindthedecisionmakingprocess(forMGSMajors)
Objective:Studentswilldemonstrateabilitytoanalyzeabusinessproblem,designandapplyappropriate
decisionsupporttools,interpretresultsandmakemeaningfulrecommendationstosupportthedecisionmaker
LahoreUniversityofManagementSciences
Indicatebelowhowthecourselearningobjectives/outcomesspecificallyrelatetoanyprogramlearninggoalsandobjectives.
PROGRAMLEARNINGGOALSAND
OBJECTIVES
COURSELEARNINGOBJECTIVES
COURSEASSESSMENTITEM
Goal1EffectiveWrittenandOral
Communication
Studentsgetanumberof opportunitiesto
demonstratetheirabilitytocommunicate
effectively(CLO#23)
Ethicalperspectivesinsomeofthecase
studiesarehighlighted(CLO#1)
MajorGoal: Analyticalthinkingand
problemsolvingskillsareessentialfor
successinthiscourse(CLO#14)
Applicationofinformationtechnologyin
preparingcasesanalysesandassignments
(CLO#2)
Studentsworkingroupsof3 personsto
workontheirgroupproject.(CLO#14)
Developstudentsunderstandingofthe
impactoffinancialsystemsonthe
economy(CLO#1)
MajorGoal: Comprehensivecoverageof
topicsinIslamicBankingandFinance
(CLO#14)
NA
CP,ProjectandExams
Goal2EthicalUnderstandingand
Reasoning
Goal3AnalyticalThinkingandProblem
SolvingSkills
Goal4ApplicationofInformation
Technology
Goal5TeamworkinDiverseand
MulticulturalEnvironments
Goal6UnderstandingOrganizational
Ecosystems
Goal7(a)DisciplineSpecificKnowledge
andUnderstanding(SubjectKnowledge)
Goal7(b)Understandingthescience
behindthedecisionmakingprocess
ProjectandExams
CP,Quizzes,Project,andExams
Project,Cases
Project
CP,Quizzes,Assignments,andExams
CP,Quizzes,AssignmentsandExams
NA
GRADINGBREAKUPANDPOLICY
Thecoursegradeisbasedonthefollowingcriteria:
Source
%ofTotal
ClassParticipation+Attendance
10
Quizzes/Assignments
15
GroupProject
20
MidTerm
20
Final
35
Total
100
ClassParticipationandAttendance:Studentsareexpectedtoattendallclasses.Ifyouarenotpresentatthebeginningofaclassor
leaveclassduringthesessionwithoutinstructorspriorpermission,youwillbeconsideredabsentfortheday.Youmustreviewthe
assignedmaterialsinadvanceoftheclassinordertocontributemeaningfullytoclassdiscussions.
Quizzes:quizzeswillbegivenontheassignedmaterial(readings,cases,assignments,etc)duringtheterm.Nomakeupquizzeswill
begiven.However,thelowestquizgradeincludingazeroforamissedquizwillbedisregarded.
AssignedCasePresentationandWrittenReport:Studentsarerequiredtoformgroupsof3each.
Examination:ThefinalexaminationwillcompriseablendofMCQsandopenendedquestions,caselets,oranintegrativecasefor
analysis.
LahoreUniversityofManagementSciences
EXAMINATIONDETAIL
Midterm
Exam
FinalExam
Yes/No:Yes
CombineSeparate:
Duration:
PreferredDate:
ExamSpecifications:
Yes/No:Yes
CombineSeparate:Combined
Duration:2Hours
ExamSpecifications:
COURSEOVERVIEW
WEEK/
LECTURE/
MODULE
TOPICS
RECOMMENDED
READINGS
Module1:IslamicEconomics
PreliminariesandOverview
IntroductiontoIslamicEconomics
MBGCh.13
ComparisonofWesternandIslamicEconomic
MBGCh.13
Systems
Azmat(2009)onMuslimSpain
SESSIONOBJECTIVES
Introductionandpreliminary
reflectiononIslamicEconomicand
FinancialSystem
DevelopbuildingblocksofIslamic
EconomicandFinancialSystem
Understandthedistinguishing
featuresofIslamicEconomicSystem
andcomparethemtoCapitalismand
Communism
Module2:IslamicLawofSale,Interest,MurabahaandIjarah
5
6
IslamicLaw&LegalTheory
CanonicalContractsinIslam
UnderstandingTimeValueofMoney
7&8
RibaAlQard
RibaAlFadl
10
Sale(Bai)inIslam
Murabaha/BaiMuajjal
Mudarabah/Musharakah
11&12
13
ReadingssetonIslamic
Jurisprudence
IntroduceIslamiclegaltheoryand
derivationofIslamiclaw.
VHCh.5(TheNominateContract
Scheme);MBGCh.9
ExplaintheinjunctionsofIslamic
financialtransactionsandexamine
rulesforconditionsandstipulations
Handouts
Explainthebuildingblocksoffinance
andtheconceptoftimevalueof
money.
Pg256SupremeCourtJudgment/
UnderstandtheIslamicconceptof
Interestanditsapplicationto
moderndaybanking.
VHCh.4(IslamicLawofUsury,Risk& UnderstandtheIslamicconceptof
Property)
RibaAlFadlanditsapplications.
MTU(SomeBasicRulesofSale)
Evaluatetheconditionsforboth
MBGCh.10&11
bindingandvoidIslamicsales
contracts
Discussthedistinguishingfeaturesof
GuestSpeaker
Murabahaanditsuseontheasset
sideofIslamicbanks
Usmani(1999)
Islamicconceptofpartnershipandits
useonboththeassetandliability
sideofIslamicbanks
LahoreUniversityofManagementSciences
Module3:IslamicBanksAssetandLiabilitySideFinancing
14
MusharkahandtheIdealIslamicFinancing
Model
Khan(2010);Usmani(2010)
15
16
MT
Ijarah
DiminishingMusharakah;Comparisonbetween
MM,IjarahandDM
SalamandIstisna
MTUp.157181;
AssetandLiabilitySideManagementofIslamic
Banks
PanelDiscussiononIslamicFinance
CaseStudyofBankIslamiand
MeezanBank
GuestSpeaker
17
18
19
20
Examinetheidealnatureof
MusharkahandMudarbahand
analyzetheimpedimentsintheir
implementation.
Discussthedistinguishingfeaturesof
Islamicleasing
MBGCh.15
Discussthedistinguishingfeaturesof
DManditsuseinIslamichouse
financing
MTUp.185200;
AlAmine(2001)
Examinethedistinguishingfeatures
ofSalamanditsuseinagriculture
financing.Alsodiscussthe
characteristicsofIstisnaandits
applicationtoprojectfinancing
Analyzetheassetandliabilityside
featuresofIslamicbanks
Module4:IslamicCapitalMarkets:SukukandEquities
21&22
23&24
25
26
27
EquityInvestmentsandIslamicEquityFunds
SukukI(IslamicBonds):
CaseofDJIM
UnderstandingIslamicequity
screeningcriteria
Ali(2005)
DiscussIssuesrelatedtoSukuk
structuring
EvaluateAAOIFIversusnonAAOIFI
compliantSukuk
UnderstandhowIslamicfinancecan
beimplementedinasecularlegal
setting.
ExplainIslamicprohibitionof
derivatives
Analyzetheimpactofthesubprime
financialcrisisontheIslamicfinancial
industry
Discussthefuturedirectionthe
Islamicfinancialindustrymighttake.
CaseStudyofMuslimBank
CaseStudyofMuslimFund
ImplementingIslamicfinancialsolutions
IslamonDerivatives
IslamicFinanceandtheCurrentFinancialCrisis
GuestSpeaker
Usmani(2010)
Brunnermeier(2009)
28
FutureofIslamicFinance
TEXTBOOK(S)/SUPPLEMENTARYREADINGS
MuftiTaqiUsmani,AnIntroductiontoIslamicFinance(MTU).
MuftiImranUsmani,MeezansBanksGuidetoIslamicBanking(MBG)
Vogel,F.E.andHayes,S.L.IslamicLawandFinance:Religion,RiskandReturn(VH)
RECOMMENDEDREADING:
MuhammadAyub,UnderstandingIslamicFinance