Case Studies in Islamic Banking and Finance -- Contents -- Preface -- Introduction -- About the Author -- 1 Case Study 1: Ijara Contract -- 1.1 Learning Outcomes -- 1.2 Role of Ijara in Islamic Finance -- 1.3 The Ijara Contract as a Mode of Islamic Finance -- 1.3.1 What is the Ijara Contract? -- 1.3.2 What is Car Ijara? -- 1.3.3 In what Sense is Car Ijara Interest Free? -- 1.3.4 What is the Difference between a Conventional Lease and an Islamic Lease? -- 1.3.5 The Meezan Bank Car Ijara Scheme -- 1.4 Appendix: Ijara Fatwa -- 1.5 Case Study Questions -- 2 Case Study 2: Musharaka Contract -- 2.1 Learning Outcomes -- 2.2 Role of Musharaka in Islamic Finance -- 2.3 Summary of Musharaka -- 2.4 Sharia'a Rules for Profit and Loss with Musharaka -- 2.4.1 Distribution of Profits -- 2.4.2 Sharing of Losses -- 2.5 Management of Musharaka -- 2.6 Sharia'a Rules for Musharaka -- 2.7 Case 1 -- 2.7.1 Questions -- 2.8 Case 2 -- 2.8.1 Questions -- 3 Case Study 3: Diminishing Musharaka Contract -- 3.1 Learning Outcomes -- 3.2 Diminishing Musharaka as a Mode of Islamic Finance -- 3.3 Summary of Diminishing Musharaka -- 3.4 Sharia'a Rules for a Diminishing Musharaka Contract -- 3.5 What is the Difference between Ijara Wa Iqtina and Diminishing Musharaka? -- 3.6 Applications of Diminishing Musharaka -- 3.6.1 House Purchase -- 3.6.2 Service Sector -- 3.7 Case Assumptions -- 3.8 Sharia'a Considerations to be Noted -- 3.9 Practical Shape of the Transaction -- 3.10 Case Study Questions -- 4 Case Study 4: Mudaraba Contract -- 4.1 Learning Outcomes -- 4.2 Mudaraba as a Mode of Islamic Finance -- 4.3 Mudaraba and PLS - Pure Islamic Banking -- 4.3.1 Mudaraba - Profit Sharing Agreement -- 4.3.2 Sharia'a Rules for Mudaraba -- 4.4 Case 1: Sharia'a Islamic Bank -- 4.4.1 Case 1 Questions -- 4.5 Mudaraba Contract with Various Partners -- 4.5.1 Case 2 Questions.

4.5.2 Case 3 Questions -- 4.5.3 Case 4 Questions -- 4.5.4 Case 5 Questions -- 4.5.5 Case 6 Questions -- 5 Case Study 5: Murabaha, Musharaka, Ijara and Ijara wa Iqtina Contracts -- 5.1 Learning Outcomes -- 5.2 Case 1: Murabaha Contract -- 5.3 Case 2: Musharaka Contract -- 5.3.1 Musharaka with Profits -- 5.3.2 Musharaka with Losses -- 5.4 Case 3: Ijara: Operating Lease Contract -- 5.5 Case 4: Ijara Wa Iqtina: Finance Lease Contract -- 5.6 Case 5: Mudaraba with Murabaha Contracts -- 5.6.1 Car Mudaraba with Murabaha -- 6 Case Study 6: Islamic Home Finance -- 6.1 Learning Outcomes -- 6.2 Sharia'a-Compliant Mortgages -- 6.3 Sharia'a-Compliant Structures for Islamic Home Finance -- 6.3.1 Murabaha -- 6.3.2 Ijara wa Iqtina -- 6.3.3 Diminishing Musharaka -- 6.3.4 What is the Difference between Ijara wa Iqtina and Diminishing Musharaka? -- 6.3.5 Applications of Diminishing Musharaka -- 6.3.6 Istisna'a Contract -- 6.4 Appendix 1: Manzil Home Purchase Plans (Murabaha) -- 6.4.1 Murabaha ('Deferred Sale Finance') -- 6.4.2 How does the Manzil Home Purchase Plan Work? -- 6.5 Appendix 2: Devon Bank -- 6.5.1 Residential Murabaha Purchase Agreement -- 6.6 Appendix 3: Manzil Home Purchase Plans (Ijara) -- 6.6.1 Ijara ('Lease-to-Own') -- 6.6.2 How does it Work? -- 6.7 Appendix 4: Devon Bank -- 6.7.1 Residential Ijara Sale and Lease Transaction -- 6.8 Appendix 5: Meezan 'Easy Home' Diminishing Musharaka Agreement -- 6.8.1 Islamic Financing on a Diminishing Musharaka Basis -- 6.8.2 What makes 'Easy Home' Sharia'a Compliant and how does it Differ from a Conventional Mortgage? -- 6.8.3 Why is the Profit Margin Charged by Meezan Bank Correlated to Conventional Mortgage Market Trends? -- 6.8.4 Is the Profit Rate Variable or Fixed? -- 6.8.5 What if a Customer Fails to Pay Monthly Instalments? -- 6.9 Case Study Questions -- 7 Case Study 7: Sources of Finance for Islamic Banks.

7.1 Learning Outcomes -- 7.2 Where do Islamic Banks get their Money from? -- 7.3 Sources of Funds for Islamic Banks -- 7.3.1 Current Accounts -- 7.3.2 Savings Deposits -- 7.3.3 Investment Deposits -- 7.4 Case Study Questions -- 8 Case Study 8: Financial Statement Analysis for Islamic Banks -- 8.1 Learning Outcomes -- 8.2 How do the Financial Statements of Islamic Banks Differ from those of Conventional Banks? -- 8.3 Case Study Activities -- 8.4 Case Study Questions -- 9 Case Study 9: Islamic Investment Prohibitions -- 9.1 Learning Outcomes -- 9.2 Muslims have Strict Rules about what they are Allowed to Invest in -- 9.3 Islamic Investment Prohibitions -- 9.4 The Prohibition of Interest (Riba) -- 9.5 Zakat and Islamic Prohibitions -- 9.5.1 Who can Receive the zakat? -- 9.5.2 How is zakat Connected with Islamic Prohibitions? -- 9.5.3 Issues Regarding zakat, Tamlik and Sadaqah -- 9.6 Case Study Questions -- 10 Case Study 10: Opening an Islamic Bank within a Western Regulatory Framework -- 10.1 Learning Outcomes -- 10.2 First Islamic Bank in the European Union -- 10.3 Issues in Creating an Islamic Bank Within a Western Regulatory Framework -- 10.3.1 Background to the Creation of the Islamic Bank of Britain (IBB) -- 10.3.2 The FSA's Approach to Banking Authorisation -- 10.3.3 IBB and the FSA -- 10.3.4 Islamic Financial Products Offered by IBB -- 10.3.5 How does IBB Ensure that its Products are Sharia'a Compliant? -- 10.3.6 Financial Statements for 2005 and 2006 -- 10.4 Case Study Questions -- 11 Case Study 11: Leverage and Islamic Banking -- 11.1 Learning Outcomes -- 11.2 Leverage and Islamic Banking -- 11.3 What is Financial Leverage? -- 11.3.1 What is the Debt to Equity Ratio? -- 11.4 Financial Terminology: a Guide -- 11.4.1 Earnings Before Interest and Taxes (EBIT) -- 11.4.2 Earnings before tax (EBT) -- 11.4.3 Earnings after tax (EAT).

11.4.4 Return on equity (ROE) -- 11.4.5 Earnings per share (EPS) -- 11.5 Case Study Assumptions -- 11.6 Case Study Questions -- 12 Case Study 12: Impact of Non-performing Loans on Islamic and Conventional Banks -- 12.1 Learning Outcomes -- 12.2 Islamic Banking Principles Involve Risk Sharing, which should make them Less Vulnerable than their Conventional Counterparts -- 12.3 Equity-Based Versus Debt-Based Banking -- 12.4 Case Study Assumptions -- 12.5 Case Study Questions -- Case Study Answers -- Glossary -- Bibliography -- Index.