The activity of Islamic banking system
Курсовой проект - Банковское дело
Другие курсовые по предмету Банковское дело
180;ah compliant. Generally, deposits in savings accounts are accepted by Islamic banks on the basis of Mudarabah where the depositor is rabb-ul-mal (investor) and the bank is the Mudarib (fund manager). The profit will be shared as per a pre-determined ratio upon, while loss will be borne by the rabb-ul-mal. Profit distribution amongst the depositors and the shareholders will be made according to the weightage assigned usually at the beginning of each month to their investments. Savings deposits are generally paced in a joint investment pool with other deposits mobilised by the Islamic banks.deposits are accepted for a fixed period of time or term and are governed by the Mudarabah contract with the bank. When deposits are for an agreed fixed term no withdrawal is normally allowed until the end of the deposit term. However, some banks are allowing early withdrawals in an agreed notice period. Term deposits are arrangement where depositors seek some return on their investments; they are taken on a Mudarabah basis. These deposits are allocated to a number of investment pools and the Islamic banks invest the pooled amount in Shariah-compliant businesses. All direct expenses are charged to the respective pools; the net proceeds are distributed between the bank and the pools and then among the depositors represented by the pool. The profits from the assets are shared between the depositors and the bank according to a pre-determined ratio agreed upon at the outset. The profit sharing weight ages are assigned based on the various tenures and the amount invested under the arrangement. And as required under Mudarabah, depositors have to be informed in advance of the formula used for sharing the net earnings of the investment pool with the bank. In case of the unlikely event of loss, the depositors have to bear the loss on a pro-rata basis while bank goes un-rewarded for all its efforts. If a bank contributes its equity capital in a pool at the time of setting up an investment pool, the relationship will be a combination of Musharakah and Mudarabah, and the bank would be entitled to a proportionate profit on its own investment in relation to the total Mudarabah investment pool. Islamic banks can also open may announce Murabaha and leasing funds in which the risk-averse investors may purchase units and be treated as rabb-ul-mal and get the quasi fixed-return from profits or rentals earned by the respective funds from the trading and leasing activities.[6]
Statistical data of development of Islamic Banks activity
The growth of the Islamic banking and financial sector coincided with the surplus of revenue of Islamic oil-exporting countries. More recently, the globalization of the economy, the liberalization of capital flow, and privatization have paved the way for the expansion of the Islamic financial sector. [7]majority of recent studies of Islamic finance have commented on the spectacular growth of Islamic assets. While the volume of Islamic financial assets at the turn of the millennium was estimated to be in excess of 150 billion dollars (Niquet, 2008), it is currently deemed to be in excess of 700 billion dollars, including nearly 300 billion dollars of assets and over 400 billion dollars of financial investments managed by Islamic banks. The growth rate of assets owned by Islamic banks, which increased from 15% in 2000 to 23% in 2008, is significantly higher than the growth rate of assets owned by conventional banks. Another remarkable and exceptional fact is that in countries such as the United Kingdom, Islamic assets have continued to grow in spite of the severity of the subprime crisis and the subsequent credit crunch (Jouini & Pastr, 2008). Islamic banking remains highly concentrated geographically, since nearly two-thirds of Islamic financial assets are located in the Gulf, while almost 20% are located in South-East Asia (Hassoune & Satel, 2008). The available studies and statistics indicate that the growth rate of Islamic assets is approximately 39% in the GCC zone as opposed to just 15-20% in the rest of the world (MIFC 2009). Another remarkable fact is apparent from the wide range of publications in the field, i.e. the good financial health of Islamic financial institutions. To cite just two examples, the average return on equity (ROE) of the Kuwait Financial House and the Al Rajhi Bank over the course of the last ten years is approximately 30%. There are two reasons which account for this high level of financial performance. In terms of resources, Islamic banks have access to a vast amount of relatively cheap deposits (the current total amount of available savings in the Gulf and south-east Asia is estimated at around 5000 billion dollars). In the realm of employment, the price of Islamic products remains relatively high. The level of risk on the main market of Islamic banks - the retail market - is relatively low. [7]
bank muslim islamic economy
Table 1 provides an overview of the descriptive statistics for the values of variables used in the assessment of efficiency scores of Islamic banks. The statistics indicate that the sample is homogeneous, since the coefficient of variation remains stable over time. The coefficient of variation, represented by the ? / , is included in a narrow interval: [1.25; 2.24] over the studied period. The interval is [1.28; 2.15] for 2005, [1.30; 2.15] for 2006, [1.19; 1.96] for 2007 and [1.01; 2.25] for 2008. Note that over the four studied years, the level of dispersion is significantly low for staff costs and operating costs (excluding staff costs). The highest level of dispersion was for the fixed assets. The other variables are characterized by an average level of dispersion. A two-stage approach was used to achieve the two objectives outlined above, i.e. the evaluation of the performance of Islamic banks operating in the GCC region and the identification of the explanatory factors of efficiency. The first stage involved elaborating a non-parametric frontier using the DEA method for the assessment of the various components of productive efficiency. The second stage involved explaining the differences in performance.
Table 2. Benchmark Performance Measures of Islamic Banks vis--vis Conventional Banks
According to the information given on the table 2 Average of Commercial Banks with words asset size in the countries where Islamic Banks are present. Commercial banks are selected in a way they are words to Islamic Banks in size, measured in total assets. All commercial banks are selected the third quartile by size in each country in 2001. The value of each ratio represents the average in the period 1994-2001. [8]
Figure 1. Share of Islamic Banks in Total Banking System in Selected Countries, 2006 (Percent)
Because the number of banks alone does not give a full picture of how important Islamic banks are, we compare the number of Islamic banks with the total number of banks across countries (Figure 1). Even in countries with only a few Islamic institutions, such as Brunei, Islamic banks have a strong presence. What we see is that in the Gulf region in general and in some African countries with sizeable Muslim population, the number of Islamic banks is relatively large. In other regions, the share of Islamic banks is in the single digits, indicating less importance. [8]
Deposit accounts
All the Islamic banks have three kinds of deposit accounts: current, savings and investment.
Current accounts. Current or demand deposit accounts are virtually the same as in all conventional banks. Deposit is guaranteed.
Savings accounts. Savings deposit accounts operate in different ways. In some banks, the depositors allow the banks to use their money but they obtain a guarantee of getting the full amount back from the bank. Banks adopt several methods of inducing their clients to deposit with them, but no profit is promised. In others, savings accounts are treated as investment accounts but with less stringent conditions as to withdrawals and minimum balance. Capital is not guaranteed but the banks take care to invest money from such accounts in relatively risk-free short-term projects. As such lower profit rates are expected and that too only on a portion of the average minimum balance on the ground that a high level of reserves needs to be kept at all times to meet withdrawal demands.
Investment account. Investment deposits are accepted for a fixed or unlimited period of time and the investors agree in advance to share the profit (or loss) in a given proportion with the bank. Capital is not guaranteed. [8]
Loans and Debts
There are different ways through which funds could be raised to meet individuals and organizations needs and funding requirements. Raising loans is one of the various ways these requirements can be fulfilled. In the terminology of Islamic framework, Qard and Dayn relate to the giving or taking of loans. However, the word Dayn has a broader connotation then the word Qard. Dayn incurs in any way which leaves a debt as a liability to another party to be paid later without any profit over the principal amounts. Whereas, Qard could be defined as an interest-free loan for needy borrowers extended on a goodwill basis; in particular Qard al Hasan provides funds for humanitarian and welfare purposes without any profit accruing to the lender. In fact, Qard consists on giving ownership of anything having value for the benefit of another by way of virtue. The ownership of the loaned objects is transferred to the borrower who can use, buy, sell, or donate them as the borrower wishes. Qard is only applied when one gets obliged to return the equivalent of the thing t