Law, economics and practice, cambridge university press, 2006. Technically, a financing technique adopted by islamic banks, it is a contract in which the seller allows the buyer to pay the price of a commodity at a future date in a lump sum or in installments. A glossary of islamic terminology by bassam sulaiman abughosh and wafaa zaki shaqra 1992, hardback, 271 pgs. Islamic financial companies have developed many different products to meet customer needs and provide shariacompliant alternatives to widely available conventional options. Basically, islamic finance is a financial system designed on risk sharing and prohibition of debt financing leveraging. Its literal meaning is to invite others to islam and is the islamic equivalent to the christian word, mission. Islamic finance is an old concept but a very young discipline in the academic sense. In answering these questions, vissers systematic treatment of the belief system and a discussion on the acceptability of disputed instruments of islamic finance distinguish the book from others in its field. This glossary is not limited to islamic terms and contains arabic and english terms that are also referred to in the study of.
This makes the analysis of the health and soundness of deposit takers central to any assessment of financial system stability. An ethical approach to preventing future financial crises a new book titled islamic finance and the new financial system claims to have the answer. Ahl albait the words occur in the holy quran when angels came to. Global finance magazine what is islamic finance and how. Glossary definition of glossary by the free dictionary. A comparative study of islamic financial system and. One of the main principles of the islamic finance system. A mudarabah certificate can be for a specific purpose or for a general purpose. Hawala is a mechanism for settling international accounts, by book transfers. Alijarah thumma albai aitab lease contract followed by ownership of asset through a sale contract. Under islamic financial principles, an asset recovery effort can be a tough task for an individual who does not have any idea about islamic banking or islamic financial terminology. It is the reference used in the islamic calender, instead of a. Worthington school of accounting and finance, university of wollongong islamic finance is one of. Islamic finance glossary of terms and contracts arabic.
The islamic financial system is not much different from the products and services in the traditional financial system but it operations are essentially based on a certain set of moral and ethical principles. Earning profit is legitimised only by risk sharing and engaging in an economic venture. The islamic financial services industry has developed from early theoretical writings om interestfree finance in the 1940s 1960s into the growing global establishment of islamic financial institutions in the 21st century. Earning profit is legitimised only by risksharing and engaging in an economic venture. Islamic financial systems international monetary fund.
Glossary the fundamental principle of islamic finance is that money has no intrinsic value. Principles of an islamic financial system the basic framework for an islamic financial system is a set of rules and laws, collectively referred to as shariah, governing economic, social, political, and cultural. From its beginning, islam gave a positive approach to wealth creation, recognized private property, and emphasized fulfillment of. An islamic financial system avoids interest and interestbased assets hassan and lewis 2007 offered a comprehensive description of islamic modes of financing which are based on profit and loss sharing investment, types of risks in islamic banking, and financial innovations, including access to capital markets and securitization, introduced. Refers to commission, fees or wages charged for services. Islamic finance, based on religious principles which avoid interest and pure monetary speculation, is growing rapidly, supported by large pools of shariacompliant funds in the gulf and the. Earning profit is legitimized only by engaging in an economic venture, risk sharing and. All the undertakings of the banks in the system follow. Alaariyah means loan of a particular piece of property, the substance of which is not. A general term which conveys the meaning of justice, equity and fairness. This refers to a public land which is reserved for the use of a person or a group, excluding other.
Introduction to islamic banking and finance is supported by a detailed, easy to use instructor manual, powerful test bank generator and dynamic powerpoint slides. Outline of lectures on islamic banking and finance. Technically, a financing technique adopted by islamic banks that takes the form of murabaha. Glossary of islamic finance terms, courtesy of meezan bank limited ayaan. Some of these cookies are essential to the operation of the site, while others help to. Glossary of islamic banking terms islamic bankers resource centre. In these circumstances, unawareness and confusion exist as to the form of the islamic financial system and instruments. Glossaries for translators working in spanish, french, japanese, italian, etc. An arrangement whereby a valuable asset is places as collateral for a. The islamic financial services industry has developed from early theoretical writings om interestfree finance in the 1940s 1960s into the growing global establishment of islamic financial institutions in. Rent with eventual sale hirepurchase financial lease. Advanced diploma in islamic finance, students can now specialise in areas of their choice which provides a more relevant and focused learning and development.
The first installment of a global finance faq web series on islamic finance. It lacks the required extent and level of theories and models needed for expansion and implementation of the framework. A term that refers to the islamic world and means house of islam. Aqd is a central term in islamic business law, which means. Islamic banking terms glossary hong leong islamic bank. Islamic banking is a banking system based on the principles of islamic law also known as shariah and guided by islamic economics. Literally means the people of the book the holy quran and the sayings and. Definitions, sources, principles and methods alsadek h. The basic framework for a financial system in islam is a set of laws and rules, collectively referred to as shariah, governing social, political, economic and cultural aspects of islamic. Glossary of islamic finance terms and contracts a absentes a contract where the parties are not present at the time of agreement accounting and auditing organisation for islamic financial. The following definitions are intended to assist readers in their understanding of.
The term islamic finance is used to refer to financial activities conforming to islamic law sharia. Glossary of islamic finance terms the five pillars of islamic finance the ban on interest interest must not be charged or paid on any financial transaction, as interest or the intrinsic value of the money is. Separating concepts in islam from concepts specific to arab culture, or from the language itself, can be difficult. Pdf a comprehensive glossary of terms in islamic commercial. Just like conventional financial systems, islamic finance features banks, capital markets, fund managers, investment firms, and insurance companies.
Islamic law also forbids the payment or receipt of interest. Islamic finance is a way of doing financial transactions and banking while respecting islamic law or sharia. The term islamic banking refers to a system of banking or banking activity. Shariahcompliant investments are structured on the exchange of ownership in tangible assets. This makes the analysis of the health and soundness of deposit takers central to. Also spoken with regard to economic role of the islamic state. This forces credit to be either interestfree, or, more commonly, to take the form of a partnership or joint venture. List of books and articles about islamic banking online. Gharar is a sophisticated concept that covers certain types of uncertainty.
Contract, consisting of all tenets of a contract arbun. The price fixed for the commodity in such a transaction can be the same as the spot price or higher or lower than the spot price. Definition and meaning an economic system is an organized way in which a country allocates resources and distributes goods and services across the whole nation or a given geographic area. The range of financial transactions that conform to the sharia, or islamic law.
It is usually applied in the agricultural sector where the bank advances money for various inputs to receive a share in the crop, which the bank sells in the market. However, these entities are governed both by islamic law and the finance industry rules and regulations that. The concept of ijarah muntahia bi tamleek is an alternative to finance leasing and in particular hirepurchase financing. Nurul islam deputy managing director islami bank bangladesh limited. A financial instrument devised by islamic investment companies to mobilize funds for investment. Down payment deposit to retain a right to transact future date al ayn. Middle english glosarie, from latin glossarium, from. The major proposition of islamic finance system is the. Islamic finance is governed by the sharia islamic law, sourced from the quran and the sunnah. System of accountability in an islamic state in order to check unlawful practices. Islamic finance financial definition of islamic finance. Many arabic concepts have an arabic secular meaning as well as an islamic meaning.
This holy book of the muslims consisting of the revelations made by god to the prophet muhammad, peace be on him, during his prophet hood of about 23 years. The islamic calendar starts from the year prophet muhammad s. Derives from the word ilah which means the one deserving all worship, the. Introduction a financial system that is based on islamic principles and values, which eliminates riba and ensure a profit sharing mechanism in the financial system. In its preislamic usage, the term was applied to the ruling family of a clan or tribe, and thus it implies a certain nobility and right to rule. Islamic finance is a financial system that operates according to islamic law which is called sharia and is, therefore, shariacompliant. It lacks the required extent and level of theories and models needed for expansion and implementation of the framework provided by islam. Islamic finance, based on religious principles which avoid interest and pure monetary speculation, is growing rapidly, supported by large pools.