1. TBLI Conference November 13th, 2009
Islamic Finance: Does It Make
a Difference?
Hans Visser
Professor Emeritus, VU University Amsterdam

2. What makes Islamic finance differ from conventional finance?
subjects
What makes Islamic finance differ from conventional finance?
What can it contribute to Socially Responsible Investment?

3. Islamic finance has to observe bans on:
- riba = interest
gharar = avoidable uncertainty, deception and delusion
maysir = gambling, speculation
haram goods and services

4. - specify the characteristics and the amounts of the counter-values;
Gharar
In order to avoid gharar, sales contract must
- make sure that both the subject and price of the sale exist, and that parties are able to deliver;
- specify the characteristics and the amounts of the counter-values;
- define the quantity, quality and date of delivery.

5. forms of Islamic finance
- profit-and-loss sharing arrangements
- murabaha = mark-up sale, usually including a credit sale, bai’muajjal
- ijara = lease
sukuk = Islamic certificates or bonds
often: sale - lease-back or headlease- sublease;
asset-based but often not asset- backed

6. hiyal = legal stratagems (sing. hila)
bai inah = repurchase by the seller (Malaysia); sale against deferred payment to client, repurchase by bank against immediate payment
tawarruq = monetisation = sale by bank against deferred payment, resale on basic materials exchange against immediate payment
makruh = undesirable, but not forbidden (Ibn Taymiyya, )

7. principles underlying the ethics of Islamic finance
- tawheed (oneness of God) and brotherhood
- fair remuneration of labour
- redistribution of private wealth
sources:
Chapra, M. Umer, 2000, ‘Is it necessary to have Islamic economics?, Journal of Socio-Economics, vol. 29 no. 1.
Choudhury, Masudul Alam, 1986, Contributions to Islamic Economic Theory, Basingstoke and London: Macmillan.

8. quard hasan loans quard hasan accounts
assets liabilities
quard hasan loans quard hasan accounts
quard = loan
hasan = benevolent

9. screening criteria Sharia Supervisory Board of Dow Jones Islamic Indexno
alcoholic drinks
pork-related products
entertainment: gambling, pornography, movies, music, hotels
tobacco
defence and weapons companies
riba: bonds, conventional financial services

10. Maulana Maududi’s ascetism
“Islam has closed all those outlets through which the greater portion of a man’s wealth is spent on his own luxuries and indulgences.”
S. Abul A’la Maududi, Economic System of Islam, 4th edn, edited by Khurshid Ahmad, English translation by Riaz Husain, Lahore: Islamic Publications Ltd. 1999, p. 31.

11. some research on Islamic funds
Girard, Eric, and M. Kabir Hassan, 2006, Faith-Based Ethical Investing: The Case of Dow Jones Islamic Indexes,
Hakim, S. and Rashidian, M., 2004, How Costly is Investor’s Compliance to Sharia?,

12. Islamic funds
Andreas G. F. Hoepner, Hussain Gulzar Rammal and Michael Rezec, Islamic Mutual Funds' Financial Performance and Investment Style: Evidence from 20 Countries, paper School of Management, University of St. Andrews, 2009,

13. https://www. ing. com. my/IFBNET/2. 0/ING. Application