Category Archives: Articles on Islamic Finance

Risk Management Tools in Islamic Banking


Salman Ahmed Shaikh In this article, we discuss the major risks that Islamic banks face in their commercial operations and the tools with which they mitigate these risks. Credit Risk Credit risk is generally defined as the risk that the … Continue reading

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Islam and Institution of Interest Based Lending


Danial Pirani In modern times, the institution of interest is regarded as critical for the stability of an economy. Nearly all the economic and financial institutions are, in one way or the other, connected to the interest based transactions. Interest … Continue reading

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Potential of Islamic Finance to Lead New Financial Architecture


Salman Ahmed Shaikh The financial crisis of 2007-2009 and ongoing sovereign debt crisis in Europe has challenged the conventional wisdom. Massive levels of debt and consumption beyond means and speedy financial innovation with lax regulation has put major economies in … Continue reading

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Challenges for Islamic Banking in Pakistan


Salman Ahmed Shaikh Islamic banking in Pakistan is an established industry with 12% market share achieved in just over a decade. There are 5 full fledged Islamic banks and more than 15 other commercial banks that operate Islamic banking windows … Continue reading

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Sukuk Market in Pakistan Set for Take-Off


Salman Ahmed Shaikh Sukuk is an alternative Islamic finance instrument for conventional bonds. Sukuk is a certificate that represents ownership in underlying real asset(s). Islamic law does not permit interest and hence conventional coupon paying bonds are impermissible as per … Continue reading

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Need for Complimentarity between Islamic Finance and Islamic Economics


Salman Ahmed Shaikh There are 5 full-fledged Islamic banks operating in Pakistan and more than 15 conventional banks with Islamic banking branches. The growth in Islamic finance industry has been consistently high ever since the establishment of Meezan Bank in … Continue reading

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Role of Islamic Banks in Energy Finance in Pakistan


Salman Ahmed Shaikh Energy crisis in Pakistan has worsened in recent years leading to loss of output, increased incidence of manufacturing unemployment, cost push inflation, capital flight, low manufacturing capacity utilization and loss of export markets. The contributing factors to … Continue reading

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Economic Merits of Islamic Modes of Financing


Salman Ahmed Shaikh Keeping aside the technical debates and unsettled issues regarding the legitimacy of some of the Islamic banking operations, in this article, we try to highlight if there are any key elements of economic merit in this system … Continue reading

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Future Research Directions in Islamic Economics


Salman Ahmed Shaikh The recent literature on Islamic economics hardly makes use of mathematics even for expositional purposes. Mathematics is a language. It keeps argument and logic straight. Just like growth models could talk of seemingly non-mathematical concepts like public … Continue reading

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Effect of Zakat on Asset and Capital Markets


Salman Ahmed Shaikh Zakat is a religious obligation to pay a part of wealth and production to the government. In its economic character, Zakat is a combination of a net worth tax and production tax. Zakat is levied as per … Continue reading

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