Economics Homework Help

Read the attached two articles, “Is Islamic finance at tipping point?” and “Islamic banking rises on oil wealth, drawing non-Muslims”.

Discuss the following questions.

1. What are unique features of “SUKUK” compared to other asset-back securities? How does the “SUKUK” have an effect on the Islamic domestic economy?
2. What do you think of the impact of Islam banking on US economy and value of US dollars?
3. What do you think of the impact of Islam banking on global financial markets?

Once a topic is posted, you will have two weeks to make at least two postings, one response to the discussion topic, and one or more replies to your classmates’ postings later on.

By Dariana

What are unique features of “SUKUK” compared to other asset-back securities? How does the “SUKUK” have an effect on the Islamic domestic economy?
There are unique features that are associated with the SUKUK. For instance, they are partial ownership of the assets between the customers and banks. Additionally, the clients are allowed to appreciate the returns that have accumulated from the trading that they participate in. The banks offer the customers bondholders at a fixed rate of investment and make sure that the principle is returned at the maturity of the bond, but the investors are not given ownership. When the customers get the SUKUK, the profits are shared from the normal operations of the bank. Additionally, the SUKUK operates under the confines of religious guidelines that do not entail weapons, gambling, and alcohol.
What do you think of the impact of Islam banking on the US economy and the value of US dollars?
Islamic banking does not allow interest, which is an element that is unique from traditional banking, where customers are charged interest for the deposits that they make. This has played an essential role in the economic growth of the Islamic people in the US. The people are given loans under the religious rules of Islam, which boosts their economy. Therefore, we can conclude that Islamic banking has played a significant role in the distribution of wealth in the United States. Interest-free banking encourages individuals to borrow and invest in an economy.
What do you think of the impact of Islam banking on global financial markets?
There are several effects of Islamic banking on the global financial markets. For example, it has a positive influence on economic growth in different aspects, such as GDP per growth capital. This explains why Islamic banking is growing at a very fast rate in various economies. Islamic banking has created a forum in which IMF is able to remember certain countries and ensure that they get financial support. Additionally, Islamic banking has helped in formulating an advisory group that has played a significant role in setting the standards of procedure. Thus, Islamic banking has helped in creating diversified options in the financial markets and assisted in stabilizing the marketplace.

By maria

Hello class,

Sukuk are financial certificates structured primarily to comply with Islam’s prohibition on charging or paying interest. The fundamentals of Islamic finance require that no interest be involved in transactions, that there be no contractual deficiencies. This means that all contractual arrangements are transparent, clear to all parties, without unfair or punitive clauses and with adequate alignment of interests and no unethical activity is involved. The Islamic finance industry continues to be highly fragmented with 500 financial institutions proximally, for example retail banks, investment banks and asset managers, offering Islamic finance products in more than 80 countries. Few Islamic asset managers have a global mandate, and those that do generally have the ability to offer only one product niche. In practical terms, these fundamentals mean that sukuk differ from conventional bonds in very important ways.

Product offerings in Islamic finance have been developing rapidly, but until the emergence of the sak they were specifically limited to stocks and real estate. However, the emergence of private banking investors in the Muslim and non-Muslim world requires sophisticated marketing and expanding the investment universe. There are, therefore, certain market gaps for Shariah compliant fixed income products that asset managers with a strong international reputation in managing retail funds and experience in managing Shariah compliant funds can actually satisfy.