The Art of Islamic Banking and Finance: Tools and Techniques for Community-Based Banking (Wiley Finance)

Product Details

A detailed look at the fast-growing field of Islamic banking and finance

The Art of Islamic Banking and Finance is a modern American take on what it means to incorporate Islamic finance principles into everyday banking and investment techniques by introducing a new brand of banking for all people of all faiths: The Riba-Free (RF) banking.

The author is considered the father of RF (Islamic) banking in America. He has been a banker and an Imam/scholar for over 40 years in America since 1968. He started the tedious process with a finance company, LARIBA, in Pasadena, California in 1987. This is the first book ever in the field to trace the origins of prohibiting the renting of money at a price called interest rate and over-indulging in debt. The book reviews in great details the theological foundations of prohibiting interest in the Jewish Bible, the Christian Bible, and the Qur'aan. The author then discusses money and how fiat money is created, the role of the Federal Reserve, and the banking system in America. The book also discusses for the first time ever how to include an important aspect of RF (Islamic) finance using commodity indexation and marking the items to be financed to market in order to avoid participating in economic "bubbles." The author discusses how these rules work, how they affect consumer behavior, and how they change the role of the banker/financier.

• Covers a new pioneering model that is based on the Law (Shari'aa) and how it is applied in every transaction from joint ventures and portfolio management to home mortgages and personal financing
• Shows how to incorporate the Law (Shari'aa) into American financing and banking systems
• Points to RF (Islamic) finance and banking as a way to emphasize socially responsible investing

The Art of Islamic Banking and Finance also includes a discussion on the emergence of a culture of RF (Islamic) banking and finance today, which is based on the real Judeo-Christian-Islamic spirit and very effective when compared to twentieth-century models that use financial engineering and structuring techniques to circumvent the Law (Shari'aa). The book also includes case studies based on the actual experience of the author and detailed analysis of the superior results realized by applying this new brand of banking to financing.

• ISBN13: 9780470449936
• Condition: New
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Customer Reviews ::

ishtiaque ahmed review - kappu -
I just got graduated from MSU with a major in finance and was looking for a job. One day, somehow I came to know about LARIBA - The Bank of Whittier. I did some research online and figured out that this is a banking system which provides services based on faith (religion). I got quite interested as I am a Muslim. I did shoot them an email to enquire about a job related to my field. I got a reply that they got a position at their California branch but wanted me to read this book before called "The Art of Islamic Banking and Finance". So I got this book from Barnes & Noble's and started reading.

Prior to this I had no idea what to expect. All I knew is, it is a banking system that doesn't charge interest. However, I had no idea how does it work and how do you make profit without charging interest. First I thought it is only about Islamic faith based finance but as I kept reading I figured out that the book presents a banking system which is three (Judeo-Christian and Islamic) faith based. The author did a great job about bringing and quoting all the verses from the Bible (both old and new testament) and the Quran which demands an interest free monetary and banking system: the RF banking system (riba free or interest free).

The author also did explain briefly about the current interest based banking and monetary system to make sure that the reader could do comparisons and contrasts between the two systems. The current system is all making money out of money with interest loans and the use of tools like futures, options and derivatives and other speculative tricks. However, the author talks about how to earn money through hard work and the assumption of risk in the free market economy, not through gambling and speculation. The author also explains the financial meltdown because of the subprime mortgages and how the balloon payment of interest on these mortgages had a big part on it. The RF system takes fiat money not as a commodity that demands a rental fee and neither does it reproduce itself. It only grows when used in investing on economic activities within the community. The RF system (riba free or interest free) is based on renting assets and services based on the current rental or lease rate (marking it to the market) pioneered by the free market force of supply and demand. It also states that the value of different things in fiat currency should be attached to reference commodities using the commodity indexation rule. This way it is more practical and easier to recognize economic bubble; investment practices could be adjusted to avoid it. These models and assumptions are certainly well backed up by the religious, historical and mathematical data the author has provided in the book.

The RF banking system (riba free or interest free) demands a socially responsible and ethical banking system which is a total contrast to Wall Street. RF banking is not about money lending, but about financing and investing on tangible assets and services only on financially and economically viable projects while respecting the laws of the land. It doesn't finance alcohol related businesses, gaming, gambling or any other unethical or harmful activities which is prohibited by the Judeo-Christian-Islamic value system. There are many Islamic banks around that claims to be Islamic and are providing services using the cost plus, joint ventures and lease to own model. These banks and their models in reality are not very different than interest based banking system and what happened is their customers ended up losing their savings.

The world financial and banking system today is in demand of a major financial change and renovation. The book is not about demolishing the current interest based financial structure but about an option or back up plan in the form of RF banking system where both can co-exist. When we talk about banks people might get the first impression that all banks and bankers are the same; all they know is how to make money on money. However, this book might give the reader a very different perspective on this unique banking system and its bankers and implement it because of its basis on faith, logic, practical application and respect for its customers.

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