VIEWS: 15 PAGES: 6 POSTED ON: 5/29/2011
Product Development and Islamic Financial Engineering Professor M. Kabir Hassan 1. Course Description Islamic finance is one of the fastest growing and most innovative financial disciplines in the international financial market. It is growing at a rate of 15% each year, and is expected to be about $2 trillion by 2010 in size. It is one of the least understood both by the western financial community and indeed by those in Islamic communities. This course offers a clear and understandable examination of this dynamic area of finance, and is essential for bankers, lawyers, institutional investors and corporate executives. This course will help participants to fully understand the fundamental religious principles underlying modern Islamic finance and banking. It will provide participants with the opportunity to understand the religious principles and their interpretation, as well as the diversity and adaptive mechanisms of Islam. This course will primarily focus on financial innovations in Islamic finance. 2. Course Highlights Understanding key Islamic financial products Understanding Shariah principles in Islamic product design Structuring rules for Islamic financial products Principles of Islamic securitization, Islamic bonds and certificates Structuring Hybrid Islamic Financial Contracts Islamic Mutual Funds, REITs and Hedge funds 3. Target Audience Accountants and Auditors Asset Managers Business Consultants Business and Strategy Development Managers Chief Executive Officers Chief Financial Officers Company Secretaries Corporate Strategists, Developers and Planners Financial Analysts Financial Brokers Financial Directors Financial Managers Financial Planners Fund Managers General Managers Investment Analysts Managing Directors Merchant Bankers Pension Fund Trustees Policy and Strategy Directors Portfolio Managers Risk Directors and Managers Structured Finance Specialists Treasury Directors and Managers Central Bankers 4. Course Schedule and Topical Outline Fundamentals of Islamic Banking and Finance Fundamental Concept Islamic Financial System Norms and Ethics in Islamic Financial System Prohibition of Riba and Gharar Basics of Islamic Financial System Concepts and Type of Riba Riba al-jahlia Riba al-fadl Permissible Financing Methods Credit Plus Sales (Murabaha) Credit Sales (Bai-Bithman Ajil) Leasing (Ijara) Partnerships (Musharaka and Mudaraba) Islamic Forwards (Salams and Istisna) Tripartite Resale (Tawarruq) Repurchase (Bi-al-Einah) Bill Discounting (Bai-al-Dayn) Bai al-arboon, Khiyar al Shart Fee-Based Products Letter of Credit (Wakala) Letter of Guarantee (Kafala) Advanced Financial Products and Islamic Law of Contracts Permissible Investment Methods Investing in Equities Islamic Mutual Funds Permissible Insurance Products Insurance Based on Tabarru Insurance Based on Mudaraba Insurance Based on Wakala Islamic Law of Contracts Islamic Business Principles Contracts of Exchange Contracts allowing transfer of the usufruct Partnership contracts Security and Agency Contracts Rules regarding foreign exchange contracts 2 Basic Constructs of Islamic Financial Engineering Combination of contracts Distinction between tying arrangements and Combination of Contracts Tying arrangements (Ishtirat Aqd fi aqd) and Combination of contracts (Ijtima al–uqud) Prohibition of Ishtirat Aqd fi Aqd or Bay’tayn Fi Bay’ah Transactios Legal Ruling of Combination of Contracts Determining Combinable and Non-Combinable Contracts Principles of Freedom of Contracts Terminology Based Criterion Objective-Based Criterion Quality-based Criterion Criteria for Unilateral Termination Legitimacy of Combination of Contracts Combination must not violate Shariah Impermissible Transactions Combination must not involve contradictory contracts Case Study of Combination of Contracts Loan and Musharaka Loan and Mudaraba Two Sales in one Deal Money Exchange and Money Transfer Prepayment and Combination of Contract Wakala (agency) and Kafala (guarantee) Mudaraba and Musharaka Musharaka and Kafala Mudaraba and Kafala Derivatives, Options and Hedging Contracts in Islamic Finance The Forward Commodity Market Salam and Forward Contract Istisna and Forward Contract Bai-al Sifa and Forward Contract Hedging, Speculation and Futures Market Arbun Risk Management and Options Arbun in Commodities and Services Arbun in Shares Trading Arbun in Salam and Istisna Arbun as the Islamic Alternative to Options The Sale of Pure Rights and Options Sale and Exchange of Right of Precedence Sale of Right and Intellectual Property Exchange of Right to bargain for purchase of property Definitions of Shariah Options Basic Features of Shariah Opitons Parameters of Valid Options Basic Features of Financial Options 3 Similarities and Differences of Shairah and Financial Options Examples of Financial Options in Islamic finance Financial Option and concept of sale contract Financial Options and Floating Contracts Financial Options and Arbun Sale Similarities and Differences between Financial options and Arbun Financial Options and Concept of Property Concept of Right and Financial Options Case Studies of Shariah Options Hamish jiddiyah and Call option Ijara and Financial Options Ju’ala Contract and Financial Options Options and Combination of Sale and Contract of Gift Financial Options and Payment of Price in Shari’a Options Case Studies: Hedging in Islam Mitigating Currency Exposure (Long-term Hedging) Mitigating Currency Exposure (Short-term Hedging) Minimizing Price Risk Forward Price Agreement Forward Foreign Exchange Market Case Studies in Financial Engineering Straight Forward Islamic Swaps Synthetic Currency Forward Contract Currency Swap Partnership-based Currency Swap Sukuk-Based Currency Swaps Development of Islamic Benchmark Innovations in Islamic Financial Products Securitization in Islamic Finance Special Purpose Vehicle-Silent Partnership An Example of Merger through SPV Securitization of Musharaka Securitization of Murabaha Securitization of Ijarah Securitization of Salam Securitization of Istisna Case Study: Pre-Delivery Islamic Financing Case Study: Post-Delivery Refinancing through Sale and Lease-Back Islamic Mutual Funds Islamic Mutual Funds: Background and Information Rules of Shariah-based Investing Shariah Supervision Quantitative Screening Purification Charity/Zakah Shariah Advocacy Monitoring and Reporting 4 Community-based Investment and Socially Responsible Investing Distribution Channel Human Capital Development Private Equity, Venture Capital and Islamic Finance Venture Capital Life-Cycle Fundraising Funding Sources Venture Fund Structures Investing Identifying Potential Investments and Due Diligence Structuring the Transaction Common Stock Preferred Stock - Redeemable Preferred Stock - Convertible Preferred Stock - Participating Convertible Preferred Stock Vesting Covenants Valuation Exit Strategies Putting the venture capital ideas under Islamic Perspective Sharia Views on Equities The Fundamental Sharia Principle of Muamalat Structuring Issues Preferred Stock Valuing Company Using Discount Rate A workable Solution Under Existing Structures 4. Instructor Profile Dr. M. Kabir Hassan is a financial economist with consulting, research and teaching experiences in development finance, money and capital markets, corporate finance, investments, monetary economics, macroeconomics and international trade and finance. He has published five books, and over 70 articles in refereed academic journals. He has presented over 100 research papers in professional conferences in such countries as the United States, the United Kingdom, Australia, Canada, Malaysia, Turkey, Portugal, Morocco, Qatar, Oman, United Arab Emirates, Bahrain, Iran, Sudan, Saudi Arabia, Egypt, Kuwait, Indonesia, Brunei, South Africa and Bangladesh. He has also presided over many sessions at professional and international seminars. Dr. Hassan has great experience in the privatizing process of public sector industries. He has great experience in training through workshops, seminars, and formal classes. Dr. Hassan worked on impact of globalization of financial markets on developing countries, privatization of commercial banks in developing countries, impact of trade liberalization on the efficiency of industry, efficiency and performance analysis of commercial banks, financial sector reform in developing countries, euro impact of the MENA countries, and regional economic integration either as consultant of the USAID, the World Bank, IDB, ICDT, Government of Bangladesh, USIA and the Nathan Associates. Dr. Hassan visited International Monetary Fund (IMF) as a Visiting Scholar, and written on capital market, interest rate and monetary policies in developing countries. He has also visited Federal 5 Reserve Bank of New York to work on Islamic banking and finance. Dr. Hassan earned a B.A. in Mathematics and Economics with Phi Beta Kappa Honors from Gustavus Adolphus College (a four-year liberal arts college) in 1985 from Minnesota, a M.A. in Economics in 1987 from University of Nebraska-Lincoln, and a Ph.D. in Finance in 1990 from University of Nebraska-Lincoln. Dr. Hassan is a tenured Professor at the University of New Orleans. He was also Visiting Professors at Drexel University, USA, North South University, Bangladesh and American University-Beirut, Lebanon. Dr. Hassan’s primary teaching responsibilities are in the area of financial markets and institutions, corporate finance and international finance. Dr. Hassan teaches commercial bank management and financial management at the MBA level, financial markets and institutions and seminar in markets and institutions at the Ph.D. level. Dr. Hassan teaches Bank Management and Financial Administration in the Executive MBA program of UNO both in New Orleans and Jamaica. Dr. Hassan runs executive development seminars on financial decision making, international banking and finance in the U.S., Jamaica and Bangladesh on a regular basis. Dr. Hassan has received many awards and recognition for his outstanding teaching and research performances. Dr. Hassan has received the Outstanding Teaching Award seven times at the University of New Orleans. Dr. Hassan has supervised fifteen students for Ph.D. degrees. He has served as outside examiner for doctoral theses of students from India, New Zealand, Sweden and Bangladesh. He has received a number of research grants to conduct research in international banking and finance areas. Dr. Hassan has been involved with many civic and cultural organizations. He is on the board of directors of Academy of Financial Services, Asian Pacific American Society, New Orleans Museum of Arts, Association for Economic and Development Studies on Bangladesh, USA. Dr. Hassan is currently the elected Chair of Academy of International Business-SW. A frequent traveler, Dr. Hassan gives lectures and consulting advice in the US and abroad. 6
"Product Development and Islamic Financial Engineering"