Islamic Economic Finance Course Outline

1

1. Name of Course Islamic Economics & Finance 2
2. Course Code:
3. Names of Academic
Staff:
Mohsin Ali
Timur Rustemov
4. Rationale for inclusion of the course in the program:

The primary purpose of this course is to provide a reference point represents
state-of-the-art thinking, theories and practices on all of the major topics in Islamic
finance. The rationale to include this course in the academic programme is
because this course will enable students to strengthen their basics which would
enable them to understand advance level courses as this course has linkages and
minor to the other course offers in the following semester.
5. Semester and
Year Offered
Semester 6
Year 2
6. Total Student Learning
Time (SLT):120hours

Face to face (F2F):
42hours
Total guided and
independent learning
(non F2F):
78hours
L= Lecture
T=Tutorial
P=Practical
O=Others
L T P O

78h 42h

0

0

0
7. Credit Value: 3
8. Prerequisite: Nil
9. Learning Outcomes:

On completion of this module the students will be able to:

1. Apply the knowledge of Islamic finance in related industries;
2. demonstrate understanding about the issues in Islamic financial
transactions;
3. explain the role and functions of Islamic Financial Institutions;
4. understand the regulatory structure of Islamic financial institutions;
5. identify the role and functions of Islamic Capital Markets;
6. attain and illustrate the knowledge of risk management tools in Islamic
banking and finance;
7. acquire knowledge on products and services offered by Non-banking
Islamic financial institutions;
8. confer criticism on Islamic banking and finance.
10
.
Transferable skills
Skills Development of the skills Skills assessments
Teamwork Students are required to
work in groups to prepare
their field project/survey.
Teacher’s observation-
rubric
Peer evaluation-rubric
Participation&
Communication
Skills
Written and
communications-via written
and presenting their field
Teacher’s observation

2
project/survey.

11
.
Teaching-learning strategy

Teaching and learning will be via lecture and discussion. Students are also
required to do their own self-study through guided projects, assignments and
homework activities.

Assessment strategy:

The assessment consists of assignments, presentations, quizzes, participation during
classes and examinations.

12
.
Synopsis

Studying Islamic finance is important for the dual purpose of having better sustenance and
religious imperatives. Islam does not like the concept of the “pious person” as distinct from
the “worldly person”. It enjoins a system of devotions/worship as well as guides on the
economy, political affairs and international relations.
13
.
Mode of Delivery
Lecture; Class Discussion and Self-study.
14
.
Assessment Methods and Types

Mid-term Examination
Group Project
Presentation
Quizzes
20%
20%
10%
10%
Final Exam 40%
Total 100%
15
.
Mapping of the Course to the Program Aims

Course PEO1 PEO2 PEO3 PEO4 PEO5
Islamic Finance X X X X

X

16
.










Mapping of the course to the Program Learning Outcomes

PLO
1
PLO
2
PLO
3
PLO
4
PLO
5
PLO
6
PLO
7
PLO
8
1 CO 1 X X X X X
2 CO 2 X X X X
3 CO 3 X X X X X X
4 CO 4 X X X X X
5 CO 5 X X X
6 CO 6 X X X X X
7 CO 7 X X X X
8 CO 8 X X X X X X


Topic F2F Non SLT

3
L T P O F2F
1
1. An Overview Of Islamic finance

1.1 Introduction of Shariah
1.2 Maqasid al Shariah
1.3 Introduction to Islamic economic system
 Ownership and property rights
 Laissez faire economy
 Factors of production
1.4 Distinguishing features of Islamic finance
 Basic prohibitions
 Business ethics and norms
1.5 Prohibition of interest in major religions
1.6 Pillars of contracts and sources of prohibitions
1.7 Role of Islamic bank as a financial intermediary
1.8 Concept of Legitimate profit in Islam
4 8 12
2
2. Issues in Islamic financial instruments

2.1 Financial Instruments in use
2.2 Issues in contemporary sale contracts
2.3 Issues in lease contract
2.4 Agency problem in Mudharabah contract
2.5 Application & Concept of Waad, Waadan and
Muawadah
2.6 Hybrid contracts in Islamic finance – Issues,
application and challenges
2.7 Fiat Money vs Gold Dinar
6 12 18
3
Overview of Islamic financial institutions

3.1 Importance/Need of bank
 Transaction cost
 Asymmetric information
 Lender of last resort
3.2 Islamic Financial institutions and markets
 Islamic banks
 Islamic capital market – Islamic money
market, Sukuk market and equity market
 Takaful and Re-takaful
3.3 Foreign exchange market in the Islamic framework
3.4 Derivatives for hedging purposes – Issues and
challenges
3.5 Islamic alternatives to conventional derivative
instrument
 Islamic Currency forward
 Islamic Profit rate swap
3.6 Insurable interest and its application in Takaful
3.7 Microfinance
3.8 Comparison between Islamic and conventional
microfinance
5 12 17
4
3. Regulatory structure of Islamic financial institutions

4.1 Justification/Need for the regulation
4.2 Regulatory structure of Islamic financial institutions
 AAOIFI standards
 IFSB guidelines for CAR
 IFSB guidelines on corporate governance
4.4 Comparison of BASEL and IFSB CAR
4.3 Role and functions of Shariah supervisory board
 Issue of confidentiality
 Issue of independence
6 10 16

4
 Issue of competency
4.4 Legal framework of Islamic financial industry in
Malaysia
5
4. Islamic capital market

5.1 Classification of capital market
5.2 Introduction to Islamic debt market
5.3 Sukuk – concept, various structures and their
applications
5.4 Tradability of Sukuk – Issue of Bai Dayn
5.5 Other vital issues in Sukuk such as terms and
structure of Sukuk
5.6 Stock screening criteria
 Qualitative screening
 Quantitative screening
5.7 Short selling – Concepts and issues
6 10 16
6
Risk management in Islamic financial institutions

6.1 Definition and concept of risk management
6.2 Risk management from Islamic perspective –
Evidence from Quran and Sunnah
6.3 Risks faced by Islamic financial institutions
6.4 Importance of Operational risk in Islamic banks
6.5 Unique risks faced by Islamic banks
6.6 Derivatives – Importance, necessity and Issues
6.7 Islamic derivate instruments – Structure and its
application
6.8 Need for financial engineering in Islamic finance
6 10 16
7
Non-Banking Financial Institutions

7.1 Takaful
7.2 Retakaful
7.3 Fund Management Companies
7.4 Pension Funds
7.5 Unit Trust
7.6 Exchange Traded Funds
7.7 Importance in Islamic Finance Sphere
6 10 16
8
Criticism of Islamic banking and finance

8.1 Time value of money and Islamic banking
8.2 Divergence between theory and Practice
8.3 Islamic banks to act as Social welfare institutions?
8.4 The way forward
3 6 9
TOTAL Student Learning Time (h) 42 78 120

Reference:
1. Asyraf Wajdi (Editor), Islamic Financial System: Principles & Operations, ISRA
2. Zamir Iqbal and Abbas Mirakhor, (2011) An Introduction to Islamic finance,
Theory and Practice, 2
nd
edition, John Wiley and Sons.
3. Ayub, Muhammad (2007). Understanding Islamic Finance. John Wiley & Sons.
4. Mahmoud A. El –Gamal (2006), Islamic finance – Law, Economics and
Practice, Cambridge University Press