Capital and Profit Sharing in Islamic Equity
Subtitle: Issues and Prospects
Publisher: The Other Press
Published: 2012
Place of publication: Kuala Lumpur, Malaysia
Language: eng
Format: Paperback
Number of pages: 183
ISBN-13: 9789839541786
Description: Due to significant changes that have taken place in the nature and essence of money and monetary value, and the dominance of interest-based debt financing, the nature of capital and sharing of profit and loss have become complex issues. The book analyses in detail the practical relevance of these in the operation of Islamic financial institutions, and attempts to provide some new insight on the relevant shari?ah regulations. It studies capital in joint ventures financed by Islamic banks, and scrutinises the method currently used by Islamic banks for determining the profit sharing ratio between the bank and the client.
Table of contents: title: Preface; title: 1 Equity financing and Islamic banks; title: • Background; title: • Problems in implementing equity structures; title: • Solutions to the current impasse; title: 2 Capital in equity financing; title: • Introduction; title: • Existence and presence of capital; title: • Existence of capital at the inception of partnerships and companies; title: • Relevance of existence of capital in the context of Islamic banking; title: • Shari‘ah perspective of existence and presence of capital; title: 3 Issues on capital; title: • Knowledge of the amount of capital; title: • Initial investment by the client in musharakah with Islamic banks; title: • Should the whole capital be made available?; title: • Implications of the requirement that capital be available; title: 4 Practice of Islamic banks and Shari‘ah; title: • Analysis of the practice of Islamic banks on the issue; title: • Contemporary Shari‘ah approach; title: • Observations on ensuring existence and presence of capital; title: • Has the identity of money altered?; title: 5 Debt as equity capital; title: • Converting debt due to a partner into capital; title: • Practice of Islamic banks in converting debt; title: • Shari‘ah perspective; title: • Bank deposits as capital; title: 6 Commodity capital; title: • Commodities (illiquid assets) as capital; title: • Islamic banks and equity ventures on illiquid (commodity) capital; title: • Shari‘ah perspective of illiquid capital; title: • Summary of Shari‘ah position regarding illiquid assets as shirkah capital; title: • Involvement of the mutual sale; title: • Application of illiquid capital in equity financing-implications; title: • The format best suited; title: • Reclaiming assets at termination of venture; title: • Conclusions; title: 7 Profit and loss sharing in equity financing; title: • Introduction; title: • Relevance of profit and loss sharing in the context of Islamic banks; title: • Method of determining the profit distribution ratio; title: • Illustration; title: • Appraisal of the use of rate of return and period in equity financing; title: 8 Ideal in profit sharing; title: • Ideal ratio; title: • Determining profit ratio based on capital and labour contributions; title: 9 Possible alternatives for determining profit ratio; title: • Equal weightage for capital and labour; title: • Quantification of labour; title: • Illustration; title: • Adjusted weightage for capital and labour; title: • Assessing capital and labour weightage ratio; title: • Illustration; title: • Comparison of the above methods; title: • Conclusions; title: 10 Altering the agreed profit / sharing ratio; title: • Relevance of adjusting profit ratio to equity financing by Islamic banks; title: • Shari‘ah perspective of stipulating profit and loss sharing ratios at inception; title: • Allocation of a lump sum to either partner; title: • Allocation of a lump sum in addition to a proportionate share; title: 11 Right to profits exceeding a stated amount; title: • Stipulation on unilateral entitlement to profits exceeding a specific amount; title: • Contemporary Shari‘ah approach to the issue; title: • Observations; title: 12 Reserving right to alter profit ratio; title: • Stipulation reserving right to alter profit sharing ratio initially agreed; title: • Shari‘ah perspective of revising agreed profit sharing ratio; title: • Contemporary Shari‘ah approach; title: • Observations; title: • Conclusions; title: 13 Conclusions; title: Bibliography; title: Index